Q4 2025 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. Welcome to Corning Incorporated Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session.

To ask a question during the session, you would need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

It is my pleasure to introduce to you Ann Nicholson, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning, everybody. Welcome to Corning Incorporated Fourth Quarter 2025 Earnings Call. With me today are Wendell Weeks, Chairman and Chief Executive Officer, and Ed Schlesinger, Executive Vice President and Chief Financial Officer. I'd like to remind you that today's remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties, and other factors that could cause actual results to differ materially.

These factors are detailed in the company's financial reports. You should also note that we'll be discussing our consolidated results using core performance measures unless we specifically indicate our comments relate to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business. For the fourth quarter, differences between GAAP and core EPS included noncash mark-to-market adjustments associated with the company's translated earnings contracts and foreign denominated debt, as well as constant currency adjustments.

As a reminder, the mark-to-market accounting has no impact on our cash flow. Reconciliation of core results to the comparable GAAP value can be found in the Investor Relations section of our website at corning.com. You may also access core results on our website with downloadable financials in the interactive analyst center. Supporting slides are being shown live on our webcast, and we encourage you to follow along.

Also available on our website for downloading. And now I'll turn the call over to Wendell. Thank you, Ann, and good morning, everyone.

Today, we announced fourth quarter and full year 2025 results. We delivered another excellent quarter. Year over year, sales grew 14% to $4.41 billion, and EPS grew 26% to $0.72. We expanded the operating margin by 170 basis points to 20.2%, achieving our springboard target a full year early. Additionally, we expanded ROIC by 150 basis points to 14.2%.

For the full year 2025, versus the prior year, we delivered double-digit sales growth with EPS growing twice as fast as sales and free cash flow growing three times faster than sales. Today also marks the second anniversary of SpringBoard, and the plan has certainly been a tremendous success to date. Since our quarter four, 2023 launch point, we have transformed the financial profile of our company. We expanded the operating margin by 390 basis points to 20.2%.

We grew EPS by 85% to $0.72, and we expanded ROIC by 540 basis points to 14%. We also nearly doubled free cash flow in 2025 to $1.72 billion from $818 million in 2023. In total, we now have a highly profitable launch point for future growth. And excitingly, we have even stronger long-term growth ahead. Today, we are upgrading our original SpringBoard plan to now add $11 billion in incremental annualized sales by 2028, up from our original $8 billion.

So we feel great about our position entering 2026. In quarter one, we expect year-over-year growth to accelerate with core sales up approximately 15% to a range of $4.2 to $4.3 billion. Looking at 2026, our internal SpringBoard plan now adds $6.5 billion in incremental annualized sales by the end of the year, up from our previous $6 billion plan. And our high-confidence SpringBoard plan now adds $5.75 billion, up from our previous $4 billion plan. Quite simply, our strategies are working.

We are seeing remarkable demand for our innovations in manufacturing capabilities, and we see a larger long-term growth opportunity through 2026 and beyond. Recently secured customer contracts, including the one we just announced with Meta, only increase our confidence. We've been getting a lot of questions about the Meta Agreement from our investors. So before I talk about SpringBoard in more detail, let me take a moment to outline the key elements.

Just yesterday, we announced that Corning Incorporated and Meta announced a multiyear, up to $6 billion agreement to support Medis apps, technologies, and AI ambitions using our newest innovations in optical fiber, cable, and connectivity solutions. This long-term partnership with Meta reflects our commitment to develop, innovate, and manufacture the critical technologies to power next-generation data centers here in the U.S. Together with Meta, we are strengthening domestic supply chains and helping ensure that advanced data centers are built using U.S. innovation and U.S. advanced manufacturing.

Meta will serve as the anchor customer for the expansion and upgrading our manufacturing and technology capabilities across our operations in North Carolina. We are concluding similar long-term agreements with other major customers to dedicate capacity for them as well. Taken together, these agreements enable Corning Incorporated to provide our customers with secure U.S. origin production of our most advanced GenAI high-density innovations. Now we are also seeking to appropriately share the cost and risk of such expansions with our customers, and we structure our agreements accordingly.

These structures include components like customer prepayments and stringent long-term customer commitments to provide revenue assurance. For longtime followers of Corning Incorporated, you would recognize the model is quite similar to our extremely successful Gen ten and a half agreements with our display customers, and most recently, Apple's $2.5 billion commitment to produce 100% of iPhone and Apple Watch cover glass in our Kentucky facility. Basically, we are taking the proven approach in our glass businesses and applying it to optical communications. As a result, we will serve our customers, grow organically, and share risk appropriately so that we can deliver the strong returns for our investors that are outlined in our SpringBoard plan and underpin our upgraded plan.

So now let's talk more about the SpringBoard upgrade. I'll start with the basics of the plan. When we introduced SpringBoard in quarter three, 2023, we used this chart to explain our incremental sales opportunity using our quarter four projected sales of $3.25 billion as the starting point, which put us at a $13 billion annualized run rate. The y-axis represents incremental annualized sales above our quarter four 2023 run rate.

And the x-axis represents time for the following five years. Now let's fill in some numbers. Here is our original internal non-risk adjusted plan, which reflected potential growth of $8 billion in annualized sales run rate by 2028, with $5 billion by 2026. We took this opportunity and translated it into a high-confidence plan to help inform investors. To do that, first, we focused on a three-year timeframe.

Second, we probabilistically adjusted for different potential outcomes in each of our market access platforms, including market dynamics, timing of secular trends, successful adoption of our innovations, as well as volume pricing and market share across all of our businesses. And, of course, the potential that some of our markets may go through down cycles. We purposely drew this as a wedge. We were trying to guide every quarter for the next twelve quarters.

We said it obviously would not be a straight line. But we were also not dealing with a hockey stick when we built the plan. We expected to see strong growth early. And we did.

In March, we upgraded our internal and high-confidence plans by a billion dollars. That's $6 billion and $4 billion respectively. So as I previously noted, we've made excellent progress and achieved our upgraded high-confidence sales target a full year ahead of plan. Adding $4.6 billion of incremental annualized sales since the launch of SpringBoard.

As you can see, we are also performing well against our internal plan. We look ahead, we expect our strong momentum and progress to continue. Of course, at its core, our SpringBoard plan was about more than our ability to grow organically. It was about enhancing our profitability base.

We provided you with one metric to track our progress, an operating margin target of 20% by 2026. As we executed SpringBoard, you can see that we expanded our operating margin significantly. In the fourth quarter, we achieved the 20% target a full year ahead of plan. This is just one example of how significantly we have transformed the financial profile of the company over the past two years. To illustrate my point, let's compare a snapshot of key metrics at the launch of SpringBoard versus today.

In just two years, we've grown sales 35% to $4.4 billion. We've improved the operating margin by 390 basis points to 20.2%. Growing EPS 85% to $0.72, expanded ROIC 540 basis points, to 14.2%. And for free cash flow, let's look at full-year numbers.

In 2025, we delivered $1.72 billion, and that's almost double what we delivered in 2023. In total, the first two years of SpringBoard have simply been a tremendous success. We established a new base from which to launch another round of strong, more profitable growth. And that takes us to our upgrade. Let's look at the highlights of the sales growth we now anticipate, having completed our recent planning cycle.

First, as I showed you, our original SpringBoard plan added $8 billion in incremental annualized sales through 2028. We are upgrading our internal plan to now add $11 billion in incremental annualized sales. This represents a double-digit growth rate from the quarter we just closed through 2028. This upgrade also impacts this year. Our internal plan now adds $6.5 billion in incremental annualized sales by 2026, up from the previous $6 billion plan. Our high-confidence plan now adds $5.75 billion in sales by 2026, up from the previous $4 billion plan.

You will note our increasing confidence in delivering our growth objectives. Two years into the three-year plan, we've hit key milestones and advanced strategic initiatives like our announcements with Meta and Apple that increase our probability of success. We feel really good about our performance going into year three of SpringBoard. To wrap things up this morning, as we mark the second anniversary of SpringBoard, the plan has clearly been a success.

We've transformed the financial profile of our company, and we've established a powerful base for future growth. Excitingly, we are now pursuing an even larger growth opportunity on that enhanced profile with significantly higher returns. We feel great about our position as we enter 2026. And this morning, we wanted to make sure that we shared our new top-line growth numbers with you because it's such a significant upgrade. We will get back to you in the coming months to do a more detailed review of our upgraded SpringBoard plan.

We would like your input and ideas on the most helpful way to portray the plan and the associated metrics. It's really so interesting, isn't it? Here we are celebrating our 170th birthday as a company this year, a feat so few companies ever attain. I think it's pretty cool that we're on this exciting journey from our original 2023 to essentially doubling the size of the company in the coming years.

So thank you for joining us in this exciting hour of Corning Incorporated's history. I'm really looking forward to continuing the dialogue and updating you on our progress. Now let me turn things over to Ed for more detail on our results and outlook. Ed?

Thank you, Wendell. Good morning, everyone. In the fourth quarter, we delivered outstanding results that not only capped off a record year but also illustrated the tremendous success of our SpringBoard plan to date. So this morning, I will provide details on our performance, our upgraded SpringBoard plan, and our approach to capital allocation.

Let's start with our results. Year over year in Q4, sales grew 14% to a record $4.4 billion. EPS grew 26% to $0.72. Operating margin expanded to 20.2%. ROIC grew 150 basis points to 14.2%, and we delivered strong free cash flow of $732 million.

We delivered both our high-confidence sales plan and our operating margin target of 20% a full year early. For the full year, we grew sales 13% to a record $16.4 billion. EPS grew more than twice as fast as sales at 29% to $2.52. Operating margin expanded 180 basis points to 19.3%, and we delivered strong free cash flow of $1.7 billion. Turning to our business segments, in Optical Communications, Q4 sales were $1.7 billion, up 24% year over year.

Net income was $305 million, up 57% year over year, and net income margin was 18%. For the full year, sales were $6.3 billion, up 35% year over year. Net income was $1 billion, up 71% year over year. The majority of growth in optical was driven by the outstanding adoption of our new GenAI products.

For the full year, our enterprise business, where we capture sales for inside the data center, grew 61% year over year, and the hyperscale data center portion of our business grew significantly faster. We also saw year-over-year sales growth in our Carrier Networks business, which was up 15% for the full year. This growth was primarily driven by sales to interconnect data centers. The growth we are seeing in optical communications is an important component of the SpringBoard upgrade we are providing today.

We expect this segment to continue to drive significant growth. Our recent Meta announcement is a great proof point. Moving to display, fourth-quarter sales were $955 million, and net income was $257 million. For the full year, we provided a target for net income in the range of $900 million to $950 million and net income margin of 25%.

We exceeded both goals this year, delivering $993 million of net income and a net income margin of 17%. Looking ahead, in the first quarter, we expect the glass market and our volume to be down mid-single digits sequentially, in line with normal seasonality. As a reminder, we successfully implemented double-digit price increases in 2024 to ensure we can maintain stable U.S. dollar net income in a weaker yen environment. We've hedged our exposure for 2026, and we have hedges in place beyond 2026 through 2030. We continue to expect to deliver annual net income of $900 million to $950 million with a net income margin of approximately 25%, consistent with the last five years.

Turning to specialty materials, the business delivered a strong fourth quarter with sales up 6% year over year to $544 million and net income up 22% to $99 million. For the full year, we outperformed end markets with sales growing 10% to $2.2 billion and net income growing significantly faster at 41% to $367 million. Results were driven by increased demand for premium products and growth in our Gorilla Glass Solutions business, with industry-leading flagship devices featuring our latest cover materials. Looking ahead, we expect our more Corning content approach to increase demand for our innovations and manufacturing capabilities, and we anticipate significant growth in this segment as part of our upgraded SpringBoard plan.

Our expanded partnership with Apple creates a larger, longer-term growth driver. And we continue to innovate and advance the durability of our products to offer consumers industry-leading glass solutions for mobile device applications. A great recent example is the new Samsung Galaxy Z Trifold, a multi-folding device designed with our ultra-thin, bendable glass solution on the interior, Gorilla Glass Ceramic Tube on the exterior, and camera lens covers featuring Gorilla Glass with DX. Turning to automotive, segment sales of $440 million were down slightly year over year in Q4, and for the full year, they were down 3%.

The heavy-duty diesel market in North America and Europe remained weak. Net income of $63 million was up 3%, and for the full year, net income was up 7% driven by strong manufacturing performance. For 2026, industry analysts forecast light-duty vehicle production to be flat to down slightly, and for the heavy-duty market to remain flat. We remain focused on executing our More Corning growth strategy in automotive as additional content is required in upcoming vehicle emissions regulations, and as technical glass and optics gain further adoption in vehicles.

Turning to life sciences, full-year sales of $972 million were consistent with the prior year, and full-year net income was $61 million. Finally, Hemlock and Emerging Growth businesses' Q4 sales were $526 million, up 62% versus the prior year, driven by growth in polysilicon and module sales for the solar industry. Q4 net income of $1 million was down year over year. As we have shared with you, we are ramping capacity to make additional polysilicon wafers and modules to build a much larger solar business.

The cost of that ramp is the primary drag on net income. As a reminder, we plan to build solar into a $2.5 billion revenue stream by 2028, with profitability levels at or above the Corning average. Now let's turn to our outlook. For the first quarter, we expect year-over-year growth to accelerate, with sales growing approximately 15% year over year to a range of $4.2 billion to $4.3 billion.

We expect EPS to grow significantly faster at about 26% to a range of $0.66 to $0.70. As was the case in Q4, our Q1 guidance includes the continued temporary impact of our solar ramp of approximately $0.03 to $0.05 as we continue to bring up capacity to meet committed demand. We expect our sales to increase and our profitability to improve as we move through the year. For the full year, we expect capital expenditures to be about $1.7 billion, a few hundred million above our depreciation level. Even with that, we expect to generate significantly more free cash flow year over year while continuing to invest strongly in our growth vectors, aided by customer financial support.

Stepping back, as we mark the second anniversary of SpringBoard, the plan has been a tremendous success. Over the last two years, we fundamentally transformed the financial profile of the company. From Q4 2023 to Q4 2025, we expanded the operating margin by 390 basis points to 20.2%, grew EPS 85% to $0.72, and expanded ROIC 540 basis points to 14.2%. We also doubled full-year free cash flow to $1.7 billion in 2025 compared to 2023. We are operating from a much stronger profitability base.

You see the margin and cash improvements already reflected in our fourth-quarter 2025 results. Additionally, you just heard from Wendell that we are upgrading our SpringBoard sales plan. Our internal plan now adds $11 billion in incremental annualized sales by 2028, up from our original $8 billion plan. To put this in perspective, when we started SpringBoard in Q4 2023, our annualized sales run rate was $13.1 billion.

Delivering our internal SpringBoard plan puts our annualized sales run rate at $24 billion by 2028, almost doubling our sales run rate over this time period. Importantly, the combination of stronger sales growth with a dramatically enhanced financial profile will result in much more cash generation. We are also upgrading our internal and high-confidence plans for 2026. Our internal plan now adds $6.5 billion in incremental annualized sales by 2026, up from our previous $6 billion plan. And our high-confidence plan now adds $5.75 billion in incremental annualized sales by 2026, up from our previous $4 billion plan.

We've significantly closed the difference between the high-confidence internal plans because of our increased visibility, the success of new products, and customer commitments to our innovations. One thing I'd like to note is that we are not changing our operating margin target at this time. We developed our original target to build an exciting, highly profitable platform to support higher growth returns on our innovations. At this level of profitability, we would be delighted with more growth.

Our target is to continue to be at 20% or above on operating margin. And to help you with your modeling, we'll handle profitability expectations through our normal guidance process. We expect to share more with you about our upgraded SpringBoard plan in the coming months. And since our upgraded plan will generate higher cash flows, I want to take a moment to share our approach to capital allocation.

We prioritize investing in organic growth opportunities that drive significant returns. Overall, we believe this approach creates the most value for our shareholders over the long term. And our investors have confirmed they see the value in this approach. So for the larger growth opportunity in our upgraded SpringBoard plan, we need to invest.

As we invest, we will use a variety of tools to share the cost and risk with our customers, including customer prepayments and stringent long-term customer commitments to ensure we generate strong returns on our investments and secure our planned cash flows. We also seek to maintain a strong and efficient balance sheet. We are in great shape. We have one of the longest debt tenors in the S&P 500. Our current average debt maturity is about 21 years, and we have no significant debt coming due in any given year.

Finally, we expect to continue our strong track record of returning excess cash to shareholders. We already have a strong dividend. Therefore, as we go forward, our primary vehicle for returning excess cash to shareholders will be share buybacks. We have an excellent track record.

Over the last decade, we repurchased 800 million shares, close to a 50% reduction in our outstanding shares. Because of our growing confidence in SpringBoard, we started to buy back shares again in 2024, and we have continued to do so every quarter since then. And we expect to continue buying back shares going forward. Now before we move to Q&A, we just reported quite a lot of news.

So let me reiterate the key takeaways. First, our current performance is outstanding. We delivered fantastic results for 2025, and we entered Q1 with exciting momentum and accelerating growth. Second, over the first two years of SpringBoard, we fundamentally transformed our financial profile, establishing a higher profitability base from which to grow going forward.

And third, we now see an even larger growth opportunity. Therefore, we just upgraded our SpringBoard plan in both the near term and longer term. Because of our improved financial profile and higher growth expectations, we expect to generate significantly more cash as we go forward, creating a very compelling plan for shareholder value creation. I look forward to engaging with you to discuss our upgraded SpringBoard plan in more detail, to get your input on the most helpful way to portray our plan, and of course, to update you on our progress.

Now, before we move to Q&A, I'm going to turn it back to Wendell for a moment.

Thanks, Ed. I just want to let everyone know that our beloved Vice President of Investor Relations, Ann Nicholson, will be retiring after forty years of exceptional service to Corning Incorporated. Now I first met Ann when she was a young process engineer, and I was a shift supervisor almost thirty-nine years ago. We have followed each other through many roles in subsequent decades.

My personal favorite was when she was my supervisory effectiveness instructor, a long time ago. Again, thank you for my success as a supervisor. More importantly, Ann, thank you for being such a good friend, an adviser, and a trusted colleague. And most importantly, thank you for showing what it means to be Corning Blue.

Thank you, Wendell. Alright, operator, we'll now turn it over to questions.

Please press 11 again. The first question will come from Wamsi Mohan with Bank of America. Your line is open.

Yes. Thank you so much, Wendell. We'll all have to get together and share Ann's stories on this news. I guess, on my question, you noted that there are similar long-term agreements with other major customers to dedicate capacity.

Could you help us think about if any of that is already baked into your SpringBoard plan? And secondarily, the optical fiber market has been very tight globally. Would you say that you're experiencing supply constraints at the moment? And do you have a view on how pricing could evolve on the fiber side given these constraints?

Okay. Let's start with the similar agreements to Meta that we are in the process of concluding. First, let's size them. They are of a similar size and scale, each of them, to the Meta agreement.

So very significant, obviously. What is our approach to these in the SpringBoard plan? As you have noted, we tend to be very thoughtful and conservative as we give these upgrades. So we have not yet included everything that those could mean because we have yet to conclude all of those agreements.

And also remember this: we are dedicating capacity for these customers we are in the process of building now. So we won't see the financial impact really until you get into '27, and then it will continue to build to 2028. So that is the way I would portray those. Before I get to the second question, Wamsi, did that address your question, and do you have any further follow-ups on that question?

No. That's good by now. Thank you.

Okay. As far as the optical fiber market, I would say on a generic basis, it is our opinion that there is enough fiber in the world to meet demand. Now what our capacity expansions are about is our new high-density products in fiber, in cable, and in connectivity. And for those, we are experiencing very, very robust demand.

And that is why we continue to expand our capacity and improve our productivity in these products. If we could make more of these new products, we could sell more. And it is for those types of products that we are dedicating this capacity through these agreements. Is that a good answer to your question, Wamsi?

Yeah. Is there a pricing element, Wendell, that we are not yet maybe seeing that potentially as you are talking about these fairly massive amounts of demand coming in, would that change the economics around pricing for you?

Yes. So what you tend to experience here is over time, you'll see a mix of that impact of these more valuable innovations. These innovations enable our customers to have better and more reliable optical performance in about half the space with significantly reduced installation cost. Whenever we create this much value, usually, some of that value creation will end up accruing to our shareholders.

We would assume that that will be so in this case as well as we begin to master our manufacturing of these product sets. So over time, the more valuable our innovations are, we would expect our profitability to improve.

Okay. Great. Thank you so much, Wendell.

Next question. Our next question will come from Joshua Spector with UBS. Your line is open.

Yeah. Hi. Good morning, and congrats, Ann. I wanted to ask first just on similar lines of the capacity that's being added.

So if we think about Meta as a share of your enterprise sales today, versus what this agreement implies, are they going to disproportionately buy more from you after this agreement? And are you adding capacity to match that added sales, or is it less than that, meaning your capacity might tighten a bit as it relates to this agreement?

Okay. So to the first is sort of relatively scale. Last year, Ed, maybe help me with some of the numbers. Our enterprise business was about $3 billion for the year. Roughly two-thirds of that would be the hyperscalers, of which Meta was one.

Yeah, that's right. We were a little over $3 billion in enterprise, Wendell's right. And I think a good note was our enterprise business in total grew 60%, the hyperscale portion of that grew almost double that rate in 2025.

So with this sort of significant agreement, you're obviously seeing continued very high growth into the future. Now you ask the question of does this mean that relative to our other customers, Meta will be catching a lot more? I think that's the thrust of your question. And what I just was sharing with you is we are concluding other similar size and scale agreements, several of them, with other major customers.

So what I think we tend to think about it as is not so much a shift in what portion of our product sets our various customers get; it is being the overall pie is going to get much bigger. And then people will decide, so you know what slice of that they want. Does that address your question, Josh?

It does. I mean, I guess what I'm trying to figure out here, does this mean if we thought hyperscalers were going to grow at x percent in Meta within one of them, we are baking something like that into our estimates of what your growth would be. Does this, it sounds like this kind of codifies that growth and maybe secures them some of that capacity as you grow into the future versus, you know, Corning capturing more share of that pie.

I want to make sure I understand if maybe you are capturing more share of that pie or not. Thank you so much, Josh. So you will have your point of view on sort of the rate of optical growth in Gen AI and our hyperscalers. It is true that our new products and the reaction to those new products are increasing the demand for our products relative to the demand of others' products mainly because of the unique advantages these innovations are offering.

Now how all that will shake out, I am not sure, but I like our hand a lot better than I would like anybody else's.

Excellent. Thank you.

Thanks, Josh. Next question.

And the next question will come from Meta Marshall with Morgan Stanley. Your line is open.

Thanks. Great, and congrats on the quarter. I just wanted to ask one clarifying question about the Meta deal, just since you mentioned kind of expansions of high-capacity cable. Would any of what is included in that deal be included in the carrier line item, or is that all kind of being counted in enterprise today and going forward?

And then maybe on a second question, just if you could kind of give a sense of CapEx for the year as you start to kind of make out some of these capacity investments?

Well, first, I'd like to thank you for participating in that CNBC special that was done. Meta, I appreciate it. And then I'll turn it over to Ed for the answers to your question.

Yes. So on the accounting of the Meta deal, you can think of our accounting protocol as when we're selling to a hyperscaler directly like Meta, we account for that in our enterprise business. And when we're selling to a carrier, like Lumen or AT&T, for example, we account for that in our carrier business. The only thing that gets a little bit confusing is that data center interconnect has typically, at least to date for us, long-haul data center interconnect has gone through carriers.

So our customers, for example, Lumen, are building out networks for data centers. We think of that as outside the data center. That sits in our carrier business. But the Meta deal would be all in enterprise.

Does that make sense?

That does, yep.

Okay. And I'm sorry. Can you repeat the second part of your question?

Just the CapEx, how we should think about CapEx in terms of 2026?

Yes, so we plan to spend about $1.7 billion in CapEx. For reference, we spent a little under $1 billion this year. Our depreciation level happens to be around that $1.3 billion level. So we're spending a little bit more in '26. We plan to spend a little bit more.

That is good. You know, we have a lot of growth opportunities. We want to ensure that we invest in those opportunities. You know, optical is a place that you can think about where we'll direct a lot of that capital.

And, of course, as we shared on the call, we look to ensure we get a really strong return on those investments. Sometimes that gets accounted for by customers providing upfront payment. Sometimes that gets accounted for by the nature of our agreement with the customer, so that may show up in the operating cash flow, the cash section, or against our capital. But you can think of us as spending around that $1.7 billion.

Great. Thank you.

Yeah. Next question, please.

And our next question will come from George Notter with Wolfe Research. Your line is open.

Hi. Thanks a lot, guys. Just to continue on that line of questioning, the $1.7 billion, does that include specific CapEx associated with the Meta project, or is that just you—there's kind of a gross and a net number here, I think. And I guess I'm trying to figure out—I think the basic idea here for you guys is you're trying to get your customers to pay for more of your capital expansions or capacity expansions, and I guess I'm just trying to figure out, you know, how much of this is ascribed to the customer and how much of this is on Corning.

Thanks.

Yes, so as we've shared, we use a number of tools to derisk our investments. Sometimes when we do an upfront payment from a customer, it goes against the capital. And sometimes it actually doesn't. It may be a refundable down payment that they get through a take-or-pay mechanism or some other mechanism in a contract.

We don't disclose and we typically don't disclose the details of any specific agreements. I can say that for sure some of the capital we plan to spend in 2026 for the Meta deal.

Got it. Okay. And then just one other question. You know, certainly not every major customer—certainly, you'll have customers in the optical business that won't sign contracts like this. I assume that with those other customers, those guys will be looking at price increases. Is that a part of the strategy here? Thanks.

So first of all, to add on it, our plan with that $1.7 billion, we're integrating, and the cash flows that we're thinking about, we're integrating all of the various customer agreements we believe that we will complete, and we're addressing that as thoughtfully as we can. So more to come in that space over time, but that is what we think we'll invest this year. As far as our other customers, well, for long-standing customers like our carrier customers, they are not related to these particular product sets. And so we will continue to serve them and serve them in an excellent way.

And what we're seeking here is just to make sure that we have assured revenue streams against any capacity that is dedicated specifically to those customers. They're scaling this rapidly.

Thank you.

Next question?

And the next question will come from Steven Fox with Fox Advisors. Your line is open.

Hi. Good morning. First of all, congrats to Ann. Pretty sure you could probably do another forty years if you wanted to.

But congrats, and thanks for all your help. I guess just on everything that was announced around Optical, I was wondering if you could fill in the blanks on two things. One is you seem to be pushing more and more assets towards U.S., North America production, and I was curious how you feel about international markets for Corning Incorporated in the coming years. And secondly, Ed, I understand not changing the operating margin target yet for the company as a whole, but it seems like everything you talked about around optical is pretty positive for optical's own operating margins.

So, like, maybe you could sort of give us some clues as to how that could influence the overall corporate average. Thanks.

Let me start on the first one about the global mix of our sales. We today are about 60% outside the U.S. and about 40% in, and we would expect something in that zone to continue. But what will really drive the location of our factories will tend to be where our customers are because we seek to locate close to them. So if a lot more gets built in the West on the AI side, then we would expect to have more of that be here.

If, on the other side, in the glass side, let's say, or in our automotive emissions business or any of our other new innovations, more outward to build in Asia, that's where we would locate that manufacturing. And just remember, throughout all of this, what happens to us every year is we're continuously improving our productivity. Which is where we tend to get the product to be able to support ever-increasing revenue, and then if we don't have a revenue opportunity for that, in the specific market, then what we seek to do is develop new markets for that capability like we did for Gorilla, from display and then automotive from Gorilla.

So that tends to be our approach with deep dedication to the locations we build the factory.

Yeah. Steve, on margins, you know, I'm going to step back for a second and then I'll come to your question. I think when we first created SpringBoard and launched it, improving our operating margin, our profitability, and our cash generation was such a huge component of the plan. Because of where we were operating from, our financial profile.

We needed to get our returns up. We needed to generate more cash, and we've significantly done that. Feel great about it. Optical has actually been a huge component of that.

We've been talking specifically about their net income margin over the last year or two, and that's now at 18%, significantly above where it was when we started this plan. So I think that actually is a good, you know, sort of background for how we think about going forward. So from here forward, I think you're right; it is highly likely that our operating margin goes above 20%. It could do that for, you know, periods of time.

It could be, you know, nicely above 20%. But we really like the financial profile, and we want to focus on improving our return on invested capital, and we want to generate more cash. So we want to make sure we capture all the growth that we can in this next window of time. So that's primarily why we're not putting a new target out.

We expect to be at 20% or above 20%, and we expect to grow significantly. And we think that return profile is very compelling.

Great. That's super helpful. Thank you.

Next question.

Next question will come from Asiya Merchant with Citi. Your line is open.

Great. Thanks for the question, and congrats again, Ann, on the retirement. You'll be missed. Wendell, if I may, a question for you on the optical side of things.

You've talked a lot about, you know, CPO and the scale-up opportunity. So given the growth profile that you guys are talking about here, with additional commitments from hyperscalers coming forth, can you just remind us if scale-up is included in that outlook through, let's say, 2028? Or are we looking at that opportunity further beyond? Thank you.

So the straightforward answer before I give others more color is we do not have a significant revenue amount for scale-up included in this most recent SpringBoard upgrade. So that would be on top depending on your opinion on timing. For those of you who are less close to scale-up, what Asiya is asking about is because transmitting information with photons is greater than three times lower power usage than using electrons, even in very short lengths inside switches or servers, and that advantage increases dramatically the longer you want to go or the higher the bit rate; it can be 20 times or more.

There is a widespread, deep technical effort going on to bring more optics into the scale-up piece of the network, closer and closer to the GPUs and inside of the boxes, closer and closer to the switch ASICs. Though I, the innovator in me, believes deeply that it is inevitable that those links go to photons. I also believe that our innovations will play a significant role in those new links. I believe that's inevitable.

Calling timing is more difficult. There are scenarios where the timing would be within this timeframe between now and 2028. There are scenarios where it will be primarily starting immediately in 2028 and beyond. What we seek to do with SpringBoard is to not over-speculate, and if we don't have, really quite compelling evidence of the timing of something as significant and large as the scale-up opportunity it is, we will tend to view the timeline from a conservative point of view. Does that answer your question?

Yes. That's great. Thank you. If I may, one for Ed as well.

Ed, you talked a little bit about operating margins for or net income margins for Optical. Can you just remind us like within the SpringBoard how we should think about margins for the solar business that's ramping up here and expected to, I think, drive margins which are at or accretive to corporate? If you can just remind us where we are in that ramp and what it looks like within the updated SpringBoard. Thank you.

Yeah. Thanks. So as we've shared, in Q1, we're expecting sort of a similar Q4, you know, situation as we're significantly ramping an extremely large factory, and so there's a drag on our margins, our profit dollars as well. We sized that in the fourth quarter originally at about $0.03. It was a little more than that.

In the first quarter, we expect to be in the $0.03 to $0.05 range. So if you were to take that drag, just the drag part, not even the higher sales, and eliminate that from our financials, clearly, our margins would go up. Obviously, our profit dollars would go up. And specifically, that would hit, you know, in that Hemlock and Emerging Innovations segment, which is where we have solar.

So I think there's a nice opportunity for us there to improve margins as we continue to ramp. And we expect sales to go up, our profitability to improve through the year of 2026, and we expect to get this business to sort of size and scale we would expect it to be, including margins at or above the Corning average by 2028.

Next question.

The next question will come from Tim Long with Barclays. Your line is open.

Thank you. If I could as well, one on the optical side. If you could go back to the carrier piece, you know, just want to, you know, understand how you're thinking about this business going forward. Think historically we've seen pretty big cycles here, a few good years and then some catch-up, you know, inventory, whatever.

But now there's a lot more data center in that line. So when you think about the carrier business over the next few years, do you think that the cyclicality of the business has changed, and it's a little bit more secular? Love your thoughts on that. And then second, maybe if we could just touch on display.

I think the yen has moved back in the last few weeks, but it was getting up there. So Ed, if you could just talk—I get you're managing to that 25% and $900 million to $950 million of net income. Is there a scenario? And I know you have hedges where we might need to see more price increases, or where are we with the flow-through of the last set of price increases?

Thank you.

Yes. So on carrier, I'll start there. In 2025, our business was up about 15%. The majority of that growth was data center interconnect.

I certainly see that data center interconnect portion of the carrier business being driven by data center interconnect spend. That said, I think you'll see fiber-to-the-home growth as well. So I do think Carrier will grow over the next several years, and we factored in scenarios and how we think of that in our SpringBoard plan. But probably the largest driver is data center interconnect.

Does that answer your question?

Yeah. Yeah. That's helpful. Thanks.

On to display. So the way I think about the display is our goal is to generate $900 million to $950 million of net income, cash, out of that business. We did better than that this year. We're, you know, we're a little higher on income, and our margin percentage was a little above our target.

And we expect to be able to maintain that, and we could certainly be above that at times. You know, we could certainly be above that in 2026. To the extent we need to adjust for weaker yen than what we have, and we have a 120 yen in there, we will do what we need to do on price or otherwise to ensure that we can deliver that level of profitability.

Thanks, Ed.

Alright. Thank you. We'll take one last question.

Okay. And our last question comes from John Roberts with Mizuho. Your line is open.

And congrats as well, Ann. Hope you're headed to someplace warm. What percent of bare fiber is currently used internally for cabling? And are you importing any bare fiber into the U.S.?

I don't actually know the answer to that question off the top of my head. And everybody's looking at me like I should. So, John, let us take a moment to gather that information, and we'll chat with you.

Okay.

Thank you.

Great. Okay. So, just quickly thank everybody for joining us today. I wanted to let you know before we go that we're going to attend the Susquehanna Tech Conference on February 27 and the Morgan Stanley Tech Conference on March 3. Additionally, we'll be scheduling management visits to investor offices in select cities.

Finally, a web replay of today's call will be available on our site starting later this morning. Thanks again for joining us and for the well wishes for me. Operator, that concludes our call. Please disconnect all lines.

Thank you for participating, and you may now disconnect.