Q2 2024 Corning Inc Earnings Call

Operator: Welcome to the Corning Incorporated Quarter 2 2024 Earnings Call. To place yourself into the Q&A queue, please push star 11. It is my pleasure to introduce Anne Nicholson, Vice President of Investor Relations. Thank you, and good morning, everybody.

Unknown Executive: Welcome to the Corning Incorporated Quarter 2, 2024 earnings call.

Welcome to the Corning incorporated quarter, two 2024 earnings call.

Unknown Executive: To place yourself into the Q&A queue, please push star 1-1.

Speaker Change: Place yourself into the Q&A queue. Please push star one one.

Ann Nicholson: It is my pleasure to introduce to you Ann Nicholson, Vice President of Investor Relations. I'd like to remind you that today's remarks contain forward lifting statements that fall within the meaning of the Private Security's 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.

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

Ann H. S. Nicholson: Thank you and good morning, everybody welcome to Corning's second quarter 2024 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.

Ann H. S. Nicholson: Welcome to Corning's second quarter 2024 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.

Ann H. S. Nicholson: These factors are detailed in the company's financial statement. We should also note that we'll be discussing our consolidated results using core performance measures unless we specifically indicate our comments related to gap data. Our core performance measures are non-gap measures used by management to analyze. For the second quarter, the difference between GAAP and Core EPS primarily reflected constant currency adjustments, translated earnings contract gains, and translation gains on Japanese yen-denominated debt, as well as restructuring and primarily non-cash asset write-off charges. As a reminder, gap mark to market accounting has no impact on our cash flow.

Ann H. S. Nicholson: And the meaning of the private Securities Litigation Reform Act of 1995.

Ann H. S. Nicholson: <unk> involve risks uncertainties and other factors that could cause actual results to differ materially.

Ann H. S. Nicholson: Actors are detailed in the company's financial reports.

Ann Nicholson: You should also note that we'll be discussing our consolidated results using core performance measures unless we specifically indicate our comments relate to gap data. A core performance measures are non-GAAP measures used by management to analyze the business. For the second quarter, the difference between gap and core EPS primarily reflected constant currency adjustments, translated earnings, contract gains, and translation gains on Japanese yen-denominated debt, as well as restructuring and primarily non-cash asset right off charges. As a reminder, gap marked a market accounting has no impact on our cash flow.

Ann H. S. Nicholson: Should also note that we will be discussing our consolidated results using core performance measures unless we specifically indicate our comments relate to GAAP data.

Speaker Change: Our core performance measures are non-GAAP measures used by management to analyze the business for the second quarter. The difference between GAAP and core EPS, primarily reflecting constant currency adjustments translated earnings contract gains and translation gains on Japanese yen denominated debt as well as restructuring and primarily noncash asset write offs charges as a reminder.

Speaker Change: Under GAAP Mark to market accounting has no impact on our cash flow a reconciliation of core results to the comparable GAAP value can be found in the Investor Relations section of our website at Corning Dot 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.

Ann Nicholson: A 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.

Unknown Executive: Supporting slides are being shown live on our webcast. We encourage you to follow along. They're also available on our website for downloading.

Ann H. S. Nicholson: A reconciliation of core results to the comparable gap 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. Reporting slides are being shown live on our webcast. We encourage you to follow along. They're also available on our website for download.

Speaker Change: Encourage you to follow along they're also available on our website for downloading.

Wendell Weeks: And now I'll turn the call over to Wendell. Thank you, Ann, and good morning, everyone. Today, we announced strong second quarter of 2024 results. We returned to year-over-year growth, and we exceeded the sales and EPS guidance we shared going into the quarter in April. The outperformance was driven primarily by the strong adoption of our new optical connectivity products for generative AI.

Ann H. S. Nicholson: And now I'll turn the call over to Wendell. Thank you, Anne. And good morning, everyone.

Speaker Change: And now I'll turn the call over to Wendell.

Wendell P. Weeks: Today, we announced strong second quarter 2024 results. We returned to year-over-year growth, and we exceeded the sales and EPS guidance we shared going into the quarter in April. The outperformance was driven primarily by the strong adoption of our new optical connectivity products for generative AI. So why don't we start today with a quick explanation of why this application provides a great growth opportunity for our shareholders? Traditional data centers contain a network of interconnected switches and CPUs. Gen-AI requires a second network within data centers to connect every GPU to every other GPU in the cluster, creating a neural network.

Thank you Anne and good morning, everyone.

But today, we announced strong second quarter 2020 for our results.

Wendell: We returned to year over year growth and we exceeded the sales and EPS guidance, we shared going into the quarter.

Wendell: In April.

Wendell: The outperformance was driven primarily by the strong adoption of our new optical connectivity products regenerative AI.

Wendell Weeks: So why don't we start today with a quick explanation of why this application provides a great growth opportunity for our shareholders. A traditional data center contains a network of interconnected switches and CPUs. GNI requires a second network within data centers to connect every GPU to every other GPU in the cluster, creating a neural network. Now, because GPUs have more processing capacity than CPUs, they need higher bandwidth links connecting them. The result is about 10 times the number of fiber connections in this new network versus a traditional data center. Now this not only provides volume, which is great, but also the opportunity to innovate with the major players in this space.

Speaker Change: So why don't we start today with a quick explanation of what.

Speaker Change: Why this application provides a great growth opportunity for our shareholders.

Our traditional data centers contain a network of interconnected switches Cpus.

Wendell P. Weeks: Now, because GPUs have more processing capacity than CPUs, they need higher bandwidth links connecting them. The result is about 10 times the number of fiber connections in this new network versus a traditional data center. Now this not only provides volume, which is great, but also the opportunity to innovate with the major players in this space. So, over the past four years, we've helped key customers design the optical links needed for this second network in their next-generation AI data center. We invented new-to-the-world fibers, cables, connectors, and custom-integrated solutions. These new products dramatically reduce installation time and on-site labor.

Jenny: Jenny I requires a second network within data centers to connect every GPU to every other GPU and the cluster, creating a neural network.

Jenny: That'd be cause gpus have more processing capacity than Cpus, they need higher bandwidth links connecting them.

The result is about 10 times the number of fiber connections in this new network versus a traditional data center.

Speaker Change: This not only provides volume which is great.

Jenny: But also the opportunity to innovate with the major players in this space.

Wendell Weeks: So, over the past four years, we've helped key customers design the optical links needed for this second network in their next generation AI data centers. We invented new to the world fibers, cables, connectors, and custom integrated solutions. These new products dramatically reduce installation time and on-site labor, save space, and lower embodied carbon. All while reducing installed cost and increasing the overall reliability of the network. As I noted, strong adoption of these Gen AI products primarily drove our outperformance in the second quarter. In fact, it drove record sales in the enterprise portion of our optical business, which grew more than 40% year over year.

Jenny: So over the past four years, we've helped key customers design the optical links needed for this second network in their next generation Datacenters.

Jenny: We invented new to the world fibers cables connectors and custom integrated solutions.

Jenny: These new products dramatically reduce installation time and onsite labor.

Wendell P. Weeks: Safe Space, and lower embodied carbon, all while reducing installed cost and increasing the overall reliability of the network. As I noted, strong adoption of these Jet AI products primarily drove our outperformance in the second quarter. In fact, it drove record sales in the enterprise portion of our optical business, which grew more than 40% year over year. I've been talking about the Gen AI opportunity inside the data center. Gen-AI also increases bandwidth requirements between data centers.

Jenny: Saves space and.

Jenny: Lower embodied carbon.

Jenny: All while reducing installed cost and.

Jenny: Increasing the overall reliability of the network.

Jenny: As I noted strong adoption of these gen AI products, primarily drove our outperformance in the second quarter.

Jenny: In fact, it drove record sales in the enterprise portion of our optical business, which grew more than 40% year over year.

Jenny: Yeah.

Wendell Weeks: I've been talking about the Gen AI opportunity inside the data center. Gen AI also increases bandwidth requirements between data centers. We've reached an agreement with Lumen Technologies that reserves 10% of our global fiber capacity for each of the next two years to facilitate Lumen's build of a new network to interconnect AI-enabled data centers. This will be the first outside plant deployment of Corning's new Gen AI fiber and cable system that will enable Lumen to fit anywhere from two to four times the amount of fiber into their existing conduit.

Speaker Change: I've been talking about the journey I opportunity inside the data center.

Jenny: Jenny I also increases bandwidth requirements between data centers.

Wendell P. Weeks: We've reached an agreement with Lumen Technology that reserves 10% of our global fiber capacity for each of the next two years to facilitate Lumen's build of a new network to interconnect AI-enabled data centers. This will be the first outside plant deployment of Corning's new Gen-AI fiber and cable system that will enable Lumen to fit anywhere from two to four times the amount of fiber into their existing conduit. Now, Gen A high is just one of the many growth opportunities we've included in the plan we call Springboard, which adds more than $3 billion in annualized sales with strong incremental profit and cash flow within the next three years.

Jenny: Yeah.

Speaker Change: We've reached an agreement with luminous technologies that reserves, 10% of our global fiber capacity for each of the next two years to facilitate lumens build of a new network to interconnect AI enabled data centers.

Speaker Change: This will be the first outside plant deployment of corning's, new journey fiber and cable system that will enable lumen to fit anywhere from two to four times the amount of fiber into their existing conduit.

Wendell Weeks: Now, Gen AI is just one of the many growth opportunities we've included in the plan we call Springboard, which adds more than $3 billion in annualized sales with strong incremental profit and cash flow within the next three years. We've been sharing some of the key points on Springboard for the last few quarters. But today, I want to outline our plan in a more comprehensive way. We built a tremendous opportunity for our shareholders, and we want to help you understand how we think about Springboard.

Jim: No Jim.

Speaker Change: Hi, it's just one of the many growth opportunities. We have included in the plan, we call springboard, which adds more than $3 billion in annualized sales with strong incremental profit and cash flow within the next three years.

Wendell P. Weeks: We've been sharing some of the key points about Springboard for the last few quarters, but today, I want to outline our plan in a more comprehensive way. We have built a tremendous opportunity for our shareholders, and we want to help you understand how we think about Springboard. Let's start with the core component.

Speaker Change: We've been sharing some of the key points on springboard for the last few quarters, but today I want to outline our plan in a more comprehensive way.

Speaker Change: We built a tremendous opportunity for our shareholders and we want to help you understand how we think about springboard, let's start with the core components.

Wendell Weeks: Let's start with the core components. First, we previously shared with you that the first quarter would be the low quarter for the year. And as our results show, we begun our march up. Sales grew 11% sequentially to $3.6 billion in the second quarter. And we returned to year-over-year growth. And the third quarter guidance we provided in our release this morning shows that we expect to continue growing in the third quarter with sales of approximately $3.7 billion. Second, we expect to add more than $3 billion in annualized sales within the next three years as cyclical factors and secular trends converge and drive demand for our capability.

Wendell P. Weeks: First, we previously shared with you that the first quarter would be the low quarter for the year, and as our results show, we've begun our march up. Sales grew 11% sequentially to $3.6 billion in the second quarter, and we returned to year-over-year growth, and the third-quarter guidance we provided in our release this morning shows that we expect to continue growing in the third quarter with sales of approximately $3.7 billion. Second, we expect to add more than $3 billion in annualized sales within the next three years as cyclical factors and secular trends converge and drive demand for our capabilities.

Speaker Change: First we previously shared with you that the first quarter would be the low quarter for the year.

Speaker Change: And as our results show, we began our March up.

Speaker Change: Sales grew 11% sequentially to three $6 billion in the second quarter.

Speaker Change: And we returned to year over year growth.

Speaker Change: And the third quarter guidance, we provided in our release. This morning shows that we expect to continue growing in the third quarter with sales of approximately $3.7 billion.

Speaker Change: Second we expect to add more than $3 billion in annualized sales within the next three years are cyclical factors and secular trends converge and drive demand for our capabilities.

Wendell Weeks: Police. Our market positions are strong, and we're seeing encouraging signs of markets improving. And we continue to innovate new products set tied to secular trends to drive growth above market levels. Third, as we capture this growth, we expect to deliver powerful incremental profit and cash flow. We have the required capacity and technical capabilities in place to service that $3 billion in the three-year window. In the cost and capital are already reflected in our financials. Our second quarter results and third quarter guidance serve as a strong proof point of our powerful incremental. We grew EPS 24% sequentially, more than double our sales growth rate.

Wendell P. Weeks: Our market positions are strong, and we're seeing encouraging signs of markets improving. And we continue to innovate new product sets tied to secular trends to drive growth above market levels. As we capture this growth, we expect to deliver powerful incremental profit and cash flow. We have the required capacity and technical capabilities in place to service that $3 billion in the three-year window.

Speaker Change: Our market positions are strong and we're seeing encouraging signs of market is improving.

Speaker Change: And we continue to innovate new products set tied to secular trends to drive growth above market levels.

Speaker Change: Third.

Speaker Change: As we capture this growth, we expect to deliver powerful incremental profit and cash flow.

Speaker Change: We have the required capacity and technical capabilities in place to service that $3 billion in the three year window and the constant capital already reflected in our financials.

Wendell P. Weeks: And the cost and capital are already reflected in our finances. Our second quarter results and third quarter guidance serve as a strong proof point of our powerful incrementals. We grew EPS 24% sequentially, more than double our sales growth rate. And as you can see in our guidance, we expect EPS to grow about three times faster than sales in the third quarter. Gross margin improved sequentially year over year by 110 and 170 basis points, respectively, and operating margin expanded 190 basis points versus quarter one.

Speaker Change: Our second quarter results and third quarter guidance serve as a strong proof point of our powerful incrementals.

Speaker Change: We grew EPS, 24% sequentially more than double our sales growth rate.

Wendell Weeks: And as you can see in our guidance, we expect EPS to grow about three times faster than sales in the third quarter. Gross margin improves sequentially in year over year by 110 and 170 basis points, respectively. Operating margin expanded 190 basis points versus Quarter One. We also generated strong free cash flow.

Speaker Change: As you can see in our guidance, we expect EPS to grow about three times faster than sales in the third quarter.

Speaker Change: Gross margin improved sequentially and year over year by 110, and 170 basis points respectively.

Speaker Change: Operating margin expanded 190 basis points versus quarter one.

Wendell P. Weeks: We also generated strong free cash flow, and with the success of Springboard, we expect to be able to accelerate the return of cash to shareholders. In fact, due to our growing confidence in the plan, we began buying back shares in the second quarter and will do so again in the third quarter. So I just walked through the core components of Spring.

Speaker Change: We also generated strong free cash flow and with the success of springboard, we expect to be able to accelerate the return of cash to shareholders.

Wendell Weeks: And with the success of Springboard, we expect to be able to accelerate the return of cash to shareholders. In fact, due to our growing confidence in the plan, we began buying back shares in the second quarter and will do so in the third quarter.

Speaker Change: In fact due to our growing confidence in the plan, we began buying back shares in the second quarter and will do so in the third quarter.

Wendell Weeks: So I just walked through the core components of Springboard. Now I want to provide more context on our sales opportunity because this is an extraordinary time for the company. I've had the chance to talk with many of you recently, and you've probably heard me say material science is really slow until it gets wicked fast. You hit these moments of inflection. Up for example, I just noted our new product suite for Gen AI. To do all that, we had a dedicated team that I've been part of for the last four years. Capitalizing on a deep insight and customer relationships to develop these products long before they become a seemingly overnight success.

Speaker Change: So I'll just walk through the core components of springboard.

Wendell P. Weeks: Now I want to provide more context on our sales opportunity because this is an extraordinary time for the company. I've had the chance to talk with many of you recently, and you've probably heard me say... Material Science is really slow until it gets wicked fast. You hit these moments of inflection.

Speaker Change: Now I want to provide more context on our sales opportunity because this is an extraordinary time for the company.

Speaker Change: And has a chance to talk with many of you recently and you've probably heard me say.

Speaker Change: Material science is really slow.

Speaker Change: Until it gets wicked fast.

Speaker Change: You hit these moments of inflection.

Wendell P. Weeks: For example, I just mentioned our new product suite for Gen AI. To do all that, we had a dedicated team that I've been part of for the last four years, capitalizing on our deep insight and customer relationships to develop these products, long before they became a seemingly overnight success. Some strategies take even longer to come to fruition. Meaningful innovation takes time. And then you hit these critical milestones, and everything starts happening in quick succession.

Speaker Change: For example, I just noted our new product suite for Gen AI.

Speaker Change: To do all that we had a dedicated team that I've been part of for the last four years capitalizing on our deep insight and customer relationships to develop these products.

Speaker Change: Long before.

Speaker Change: They become a seemingly overnight success.

Wendell Weeks: Some strategies take even longer to come to fruition. Meaningful innovation takes time. And then you hit these critical milestones, and everything starts happening in quick succession.

Speaker Change: Some strategies take even longer to come to fruition.

Speaker Change: Meaningful innovation takes time.

Speaker Change: Then you hit these critical milestones.

Speaker Change: Everything starts happening in quick succession.

Wendell P. Weeks: We. Part 1 of this moment. Over the next several quarters, we expect to share a number of customer announcements. You'll see more commercialized innovations and Steady March Up in our quarterly performance. So I want to give you a structure to help you put those coming milestones into the context of our total springboard plan as they happen. I'm going to use this chart to explain our incremental sales opportunity. We introduced Springboard in Quarter 3 last year, using our Quarter 4 projected sales of $3.25 billion as the starting point, which put us at a $13 billion annualized run rate.

Wendell Weeks: We are at one of these moments. Over the next several quarters, we expect to share a number of customer announcements. You'll see more commercialized innovations and a steady march up in our quarterly performance.

Speaker Change: We.

Wendell P. Weeks: The Wire represents incremental sales above our quarter four 2023 run rate, and the Exxon simply represents time for the following five years. Now let's fill in some numbers. Here is our internal, non-risk-adjusted plan. Now there's a lot to take away from this slide.

Speaker Change: One of these moments.

Speaker Change: Over the next several quarters, we expect to share a number of customer announcements youll see more commercialized innovations and a steady march up in <unk>.

Speaker Change: Our quarterly performance.

Wendell Weeks: So I want to give you a structure to help you put those coming milestones into the context of our total springboard plan as they happen. I'm going to use this chart to explain our incremental sales opportunity. We entered the springboard in Quarter 3 last year using our Quarter 4 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 sales above our Quarter 4, 2023 run rate. And the X-axis simply represents time for the following five years. Now let's fill in some numbers. Here is our internal non-risk adjusted plan.

Speaker Change: Yeah.

Speaker Change: So I wanted to give you a structure.

Speaker Change: You put those coming milestones into the context of our total springboard plan as they happen.

Speaker Change: I'm going to use this chart to explain our incremental sales opportunity.

Speaker Change: We introduced springboard in quarter, three last year, using our quarter four projected sales of $3 billion to $5 billion as the starting point, which put us at a $13 billion annualized run rate.

Speaker Change: Yeah.

Speaker Change: The y axis represents incremental sales.

Speaker Change: Our quarter four 2023 run rate.

Speaker Change: And the X axis simply represents time for the following five years.

Now lets fill in some numbers.

Speaker Change: He was our internal non risk adjusted plan now.

Wendell Weeks: Now there's a lot to take away from this slide. The first is we have a significant sales opportunity. We're looking at potential growth of $8 billion in annualized sales run rate by the end of 2028, with $5 billion by the end of 2026. We expect growth across all our market access platforms driven by a combination of upward cyclical and secular trends.

Speaker Change: Now there is a lot.

Speaker Change: The takeaway from this slide.

Wendell P. Weeks: The first is... We have a significant sales opportunity. We're looking at potential growth of $8 billion in annualized sales run rate by the end of 2028, with $5 billion by the end of 2026. We expect growth across all our market access platforms, driven by a combination of upward cyclical and secular trends, and will provide insight behind the springs or drivers of that growth. Now, this is our internal plan. When we say it's not risk adjusted, what we mean is that the projections are based on a number of assumptions, including markets recovering back to historical trend lines with continued growth thereafter, successful adoption of new innovations across a number of markets and platforms, and successful execution of all our operational milestones for productivity and for price.

Speaker Change: The first is.

Speaker Change: We have a significant sales opportunity.

Speaker Change: We're looking at potential growth of $8 billion in annualized sales run rate by the end of 2028 with $5 billion by the end of 2026.

Ed: We expect growth across all our market access platforms, driven by a combination of upwards cyclical and secular trends Ed will provide insight behind the <unk>.

Edward Schlesinger: Ed will provide insight behind the springs or drivers of that growth.

Ed: Springs or drivers of that growth.

Wendell Weeks: Now this is our internal plan. When we say it's not risk adjusted, what we mean is that the projections are based on a number of assumptions, including markets recovering back to historical trend lines with continued growth thereafter. Successful adoption of new innovations across a number of markets and platforms. And successful execution of all our operational milestones for productivity and price. That said, we've taken this opportunity and translated it into a high-confidence plan to help inform investors.

Ed: Now this is our internal plan when we say, it's not risk adjusted what we mean is that the projections are based on a number of assumptions including me.

Ed: Markets recovering back to historical trend lines with continued growth thereafter.

Successful adoption of new innovations across a number of markets and platforms.

Ed: And successful execution of all our operational milestones for productivity and price.

Wendell P. Weeks: That said, we've taken this opportunity and translated it into a high-confidence plan to help inform investors. To do that, first, we refocused on the next three years. 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 our businesses and the potential that some of our markets may go through down cycles. And this is how we come to the high-confidence springboard plan for our shareholders, to help inform their investment decisions. It's also important to note that we purposely drew this as a wedge.

Ed: That said, we've taken this opportunity and translated it into a high confidence plant to help inform investors.

Wendell Weeks: To do that, first, refocused on the next three years. 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 our businesses. And the potential that some of our markets may go through downslides.

Ed: To do that first.

Ed: Refocused the next three years.

Ed: Second we probable mystically 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.

Ed: Rising and market share across all our businesses.

Ed: And the potential that some of our markets may go through down cycles.

Wendell Weeks: Eagles. And this is how we come to the high-confidence springboard plan for our shareholders to help inform their investment decisions. It's also important to note that we purposely drew this as a wedge. We weren't trying to guide every quarter for the next 12 quarters. It obviously won't be a straight line. But we are also not dealing with a hockey stick. When we built the plan, we expected to see strong growth this year.

Ed: And this is how we come to the high confidence springboard plan for our shareholders to help inform their investment decisions.

Ed: It's also important to note that we purposely drew this theres a wedge.

Wendell P. Weeks: We weren't trying to guide every quarter for the next 12 quarters. It obviously won't be a straight line. We are also not dealing with a hockey stick.

Ed: We weren't trying to guide every quarter for the next 12 quarters. It obviously won't be a straight line.

Ed: But.

Ed: We are also not dealing with a hockey stick when we built the plan we expected to see strong growth this year.

Wendell P. Weeks: When we built the plan, we expected to see strong growth this year. So, how are we doing so far? We are off to a terrific start.

Wendell Weeks: So, how are we doing so far? We are off to a terrific site.

Ed: So how are we doing so far.

Speaker Change: We are off to a terrific start.

Wendell Weeks: Let me explain the $1.3 billion dot point. You see on the chart here. Our quarter to 2024 sales were $3.6 billion. Our quarter for 2023 sales were $3.27 billion. The difference is $330 million. And when you annualize that, you get to $1.3 billion. And that trend continues into quarter three. The additional sequential growth increases our run rate in the third quarter by $1.7 billion. As you can see, we are running well ahead of our Springboard plan run rate.

Wendell P. Weeks: Let me explain the 1.3 billion dollar dot point you see on the chart here. Our quarter two 2024 sales were $3.6 billion. Our quarter four 2023 sales were $3.27 billion. The difference is $330 million.

Speaker Change: Let me explain the $1.3 billion Dod point, you see on the chart here.

Speaker Change: Our quarter, two 2024 sales were $3 6 billion.

Speaker Change: Our quarter four 2023 sales were $3.27 billion.

Speaker Change: The difference is $330 million.

Wendell P. Weeks: And when you annualize that, you get to $1.3 billion. And that trend continues into quarter three. The additional sequential growth increases our run rate in the third quarter by 1.7 billion dollars. As you can see, we are running well ahead of our springboard plan. That being said...

Speaker Change: And when you annualize that you get to $1.3 billion.

Speaker Change: Yeah.

Speaker Change: And that trend continues into quarter three.

Speaker Change: The additional sequential growth increases our run rate in the third quarter by $1.7 billion.

Speaker Change: As you can see we are running well ahead.

Speaker Change: Of our springboard planned run rate.

Wendell Weeks: That being said, please remember we are only two quarters into a 12-quarter plan. Springboard is a milestone-based plan. Evolving over the next three years, we have plenty of opportunity ahead of us. A lot of springs yet to activate will update you as we hit significant milestones. Clearly, we are off to a very strong start, well above the run rates we need to deliver.

Speaker Change: That being said.

Wendell P. Weeks: Please remember, we're only two quarters into a 12-quarter plan. Springboard is a milestone-based plan evolving over the next three years. We have plenty of opportunity ahead of us, a lot of springs yet to activate, and we will update as we hit significant milestones. Clearly, we're off to a very strong start, well above the run rates we need to deliver. So as I wrap up this morning, I think you can see why we're energized about spring.

Speaker Change: Please remember.

Speaker Change: We're only two quarters into a 12 quarter plan springboard as a milestone based plan evolving over the next three years, we have plenty of opportunity ahead of US a lot of springs, yet to activate.

Speaker Change: We'll update you as we hit significant milestones.

Speaker Change: Clearly we're off to a very strong start well.

Speaker Change: Well above the run rates, we need to deliver.

Wendell Weeks: So, as I wrap up this morning, I think you can see why we are energized about Springboard. And we are pleased with our early progress, including, of course, the encouraging response to our Gen-AI products. We expect to have a lot more news over the next few months, as milestones start to hit. And we are scheduling around those.

Speaker Change: Yeah.

Speaker Change: So as I wrap up this morning.

Speaker Change: I think you can see why.

Speaker Change: <unk> energized about springboard.

Wendell P. Weeks: And we're pleased with our early progress, including, of course, the encouraging response to our Gen AI product. We expect to have a lot more news over the next few months as milestones start to hit, and we're scheduling around. We're planning another investor event in September, as well as a full Investor Day in early 2025. It's important to note that as we proceed forward with Springboard, we'll continue to seek the guidance of our board of directors.

Speaker Change: And we're pleased with our early progress including of course, the encouraging response to igen AI products.

Speaker Change: We expect to have a lot more news.

Speaker Change: Over the next few months as milestone start to hit.

Speaker Change: And we are scheduling around those we're planning another investor event in September.

Wendell Weeks: We are planning another investor event in September, as well as a full investor day in early 2025. Also, it is important to note that as we proceed forward with Springboard, we will continue to seek the guidance of our board of directors. To that end, we will be refreshing our board composition to more closely align the skill set profiles of the board with our springboard. Plan.

Speaker Change: As well as a full investor day in early 2025.

Speaker Change: Also it is important to note that as we proceed forward with springboard will continue to seek the guidance of our board of directors to that end, we will be refreshing our board composition to more closely align the skill set profiles of the board with our springboard plan now.

Wendell P. Weeks: To that end, we will be refreshing our board composition to more closely align the skill set profiles of the board with our Springboard. Now, let me turn it over to Ed for some more detail and perspective on the quarter and on Springboard. Thank you, Wendell. Good morning, everyone.

Edward Schlesinger: Now let me turn it over to Ed for some more detail and perspective on the quarter and on Springboard. Thank you, Wendell. Good morning, everyone. We're off to a great start. We believe our second quarter results are a strong proof point of both the sales and the incremental profit and cash flow opportunity in our Springboard Plan. So before I dive into the results, I'd like to share some of the major growth drivers we see across our market access platforms. Wendell shared with you our internal non-risk adjusted plan, which is $8 billion in incremental sales by the end of 2028 and $5 billion by the end of 2026.

Speaker Change: Now, let me turn it over to Ed for some more detail and perspective on the quarter and on springboard.

Ed: Thank you Wendell good morning, everyone.

Edward A. Schlesinger: We're off to a great start. I believe our second quarter results are a strong proof point of both the sales and the incremental profit and cash flow opportunities in our springboard. So, before I dive into the results, I'd like to share some of the major growth drivers we see across our market access platform. Wendell shared with you our internal non-risk adjusted plan, which is $8 billion in incremental sales by the end of 2028 and $5 billion by the end of 2026. I'm going to share some of the cyclical and secular drivers of this growth while focusing in on the three-year window. Let's start with optical communication.

Ed: We're off to a great start.

Ed: Leave our second quarter results are a strong proof point of both the sales and the incremental profit and cash flow opportunity and our springboard plan.

Ed: So before I dive into the results I'd like to share some of the major growth drivers, we see across our market access platforms.

Ed: Wendell shared with you our internal non risk adjusted plan, which is $8 billion in incremental sales by the end of 2028 and $5 billion by the end of 2026, I'm going to share some of the cyclical and secular drivers of this growth while focusing in on this.

Edward Schlesinger: I'm going to share some of the cyclical and secular drivers of this growth while focusing in on the three-year window. Let's start with optical communications. The Gen AI opportunity Wendell spoke about adds a significant amount of growth. We expect our enterprise business to grow at a 25% compound annual growth rate from 2023 to 2027, driven by the adoption of our connectivity solutions for generative AI, and this is already underway. We delivered record sales and enterprise in the second quarter, which grew more than 40% year over year. In our carrier business, customers are reaching the end of their inventory drawdowns and beginning to order closer to their current deployment levels.

Wendell: Three year window.

Wendell: Let's start with optical communications.

Edward A. Schlesinger: The Gen AI opportunity Wendell spoke about adds a significant amount of growth. We expect our enterprise to grow at a 25% compound annual growth rate from 2023 to 2027, driven by the adoption of our connectivity solutions for generative AI. And this is already underway.

Speaker Change: The jet AI opportunity Wendell spoke about adds a significant amount of growth, we expect our enterprise business to grow at a 25% compound annual growth rate from 2023 to 2027, driven by the adoption of our connectivity solutions for generative AI.

Speaker Change: And this is already underway, we delivered record sales in enterprise in the second quarter, which grew more than 40% year over year.

Edward A. Schlesinger: We delivered record sales in enterprise in the second quarter, which grew more than 40% year over year. In our carrier business, customers are reaching the end of their inventory drawdown, and are beginning to order closer to their current deployment. Additionally, government efforts to bring high-speed internet to rural communities through the Broadband Equity Access and Deployment Program will contribute to growth beginning in 2025 and add significant sales over the next several years.

Speaker Change: In our carrier business customers are reaching the end of their inventory drawdowns and beginning to order closer to their current deployment levels.

Edward Schlesinger: Additionally, government efforts to bring high-speed internet to rural communities through the Broadband Equity Access and Deployment Program will contribute to growth beginning in 2025 and add significant sales over the next several years.

Speaker Change: Additionally, government efforts to bring high speed Internet to rural communities through the broadband equity access and deployment program will contribute to growth beginning in 2025 and adds significant sales over the next several years.

Edward Schlesinger: In display, we're not counting on TV unit growth. Instead, we expect to capitalize on the trend of larger screens, with about an inch of screen size growth per year, to add low to mid-single-digit volume growth. Additionally, as we've previously explained, we're currently undertaking currency-based price adjustments to maintain appropriate returns in our display business. In automotive, we have a triple-digit automotive glass business today, and we expect sales in that business to almost triple by 2026.

Edward A. Schlesinger: In display, we're not counting on TV unit growth. Instead, we expect to capitalize on the trend of larger screens, with about an inch of screen size growth per year, adding low to mid single-digit volume. Additionally, as we've previously explained, we're currently undertaking currency-based price adjustment to maintain appropriate returns in our display. In the automotive business, we have a triple-digit automotive glass business today, and we expect sales in that business to almost triple by 2026. Recently announced U.S. EPA regulations will require the adoption of GPFs in the U.S. starting with model year 2027.

Speaker Change: In display we're not counting on TV unit growth.

Speaker Change: Instead, we expect to capitalize on the trend of larger screens with about an inch of screen size growth per year at low to mid single digit volume growth. Additionally.

Speaker Change: Additionally, as we've previously explained we're currently undertaking currency based price adjustments to maintain appropriate returns in our display business.

Speaker Change: In automotive, we had a triple digit automotive glass business today, and we expect sales in that business to almost triple by 2026.

Edward Schlesinger: Recently announced U.S. EPA regulations will require the adoption of GPS in the U.S. starting with model year 2027. This adoption offers hundreds of millions of dollars of growth for us in the U.S. alone. Even in the face of BEB adoption, we expect sales to start in 2026. And finally, we expect to build entirely new map as we leverage the Inflation Reduction Act to support the build-out of a U.S. Solar supply chain. These are just some of the growth drivers in our $5 billion opportunity. As Wendell shared, we probabilistically adjusted this opportunity to the $3 billion high-confidence springboard plan we've been sharing with you since the third quarter of 2023.

Speaker Change: Recently announced U S. EPA regulations will require the adoption of GPS in the U S. Starting with model year 2027. This adoption offers hundreds of millions of dollars of growth for us in the U S alone.

Edward A. Schlesinger: This adoption offers hundreds of millions of dollars of growth for us in the U.S. alone. Even in the face of BEV adoption, we expect sales to start in 2026. And finally, we expect to build an entirely new map as we leverage the Inflation Reduction Act to support the build-out of a U.S. solar supply chain. These are just some of the growth drivers in our $5 billion opportunity. As Wendell shared, we probabilistically adjusted this opportunity to the $3 billion High Confidence level since the third quarter of 2023. We expect to have strong incremental profit and cash flow as we capture the growth. And we're starting from a strong operating base.

Speaker Change: Even in the face of BB adoption, we expect sales to start in 2026.

Speaker Change: And finally, we expect to build entirely new map as we leverage the inflation reduction act to support the build out of a U S solar supply chain.

Speaker Change: These are just some of the growth drivers in our $5 billion opportunity.

Speaker Change: As Wendell shared we'd probably stick we adjusted this opportunity to the $3 billion high confidence springboard plan, we've been sharing with you since the third quarter of 2023.

Edward Schlesinger: We expect to have strong incremental profit and cash flow as we capture the growth. And we're starting from a strong operating base. Our productivity ratios are at best demonstrated levels. And we've raised price to more appropriately share inflation with our customers. Our improvement in gross margin is a great proof point. In the second quarter of 2024, gross margin was 37.9%. And 30 basis points from 33.6% in the fourth quarter of 2022 on the same level of sales.

Wendell: We expect to have strong incremental profit and cash flow as we capture the growth.

Wendell: And we're starting from a strong operating base our productivity ratios are at best demonstrated levels and we've raised price to more appropriately share inflation with our customers.

Edward A. Schlesinger: Our productivity ratios are at best-demonstrated levels, and we've raised prices to more appropriately share inflation with our customers. Our improvement in gross margin is a great proof point. In the second quarter of 2024, gross margin was 37.9%, up 430 basis points from 33.6% in the fourth quarter of 2022 on the same level of sales.

Speaker Change: Our improvement in gross margin is a great proof point in the second quarter of 2024 gross margin was 37, 9% up 430 basis points from 33, 6% in the fourth quarter of 2022 on the same level of sales.

Edward Schlesinger: With that, let me share some highlights from our second quarter results. Sales grew 11%, sequentially reaching $3.6 billion in the quarter, returning us to year-over-year growth. The outperformance versus our April guidance of $3.4 billion was primarily driven by the strong adoption of our new optical connectivity products for GNI. EPS grew 24% sequentially, more than twice as fast as sales, coming in at 47 cents, also above our April guidance range. Gross margin improved sequentially and year over year by 110 and 170 basis points, respectively. Operating margin expanded 190 basis points versus the first quarter.

Edward A. Schlesinger: With that, let me share some highlights from our second quarter results. Sales grew 11% sequentially, reaching $3.6 billion in the quarter, returning us to year-over-year growth. The outperformance versus our April guidance... $4 billion was primarily driven by the strong adoption of our new optical connectivity products for Gen AI. Gross margin grew 24% sequentially, more than twice as fast as sales, coming in at 47 cents, also above our April guidance. Operating margin expanded by 190 basis points versus the first quarter, and we generated strong free cash flow of $353 million.

Speaker Change: With that let me share some highlights from our second quarter results.

Speaker Change: Sales grew 11% sequentially, reaching $3 6 billion in the quarter, returning us to year over year growth the outperformance versus our April guidance of $3 4 billion was primarily driven by the strong adoption of our new optical connectivity products Virgin AI.

Speaker Change: EPS grew 24% sequentially more than twice as fast as sales coming in at 47 also above our April guidance range gross margin improved sequentially and year over year by 110, and 170 basis points respectively.

Speaker Change: Operating margin expanded 190 basis points versus the first quarter, and we generated strong free cash flow of $353 million.

Edward Schlesinger: And we generated strong free cash flow of $353 million.

Edward A. Schlesinger: In optical, next, next, let me turn to our segment results for Optical Communication. Sales for the second quarter were $1.1 billion, up 20% sequentially, reflecting a return to growth for the segment. Year-over-year, sales increased four percent, enterprise network sales were up 42% driven by AI-related activities, but carrier sales were actually down, as customers continue to draw down their inventory.

Edward Schlesinger: Next, let me turn to our segment results. In optical communications, sales for the second quarter were $1.1 billion. Up 20% sequentially, reflecting a return to growth for the segment. Year over year, sales increased 4%. Enterprise network sales were up 42% driven by AI-related connectivity solutions. Carrier sales were actually down 10%, as customers continued to draw down their inventory. Encouragingly though, carrier network sales grew sequentially as customers began to order closer to their current deployment levels. We delivered strong incremental profit in optical, with net income for the quarter at $143 million, up 43% sequentially on the 20% sales growth.

Speaker Change: In optical next next let me turn to our segment results in optical communications sales for the second quarter were $1 1 billion up 20% sequentially, reflecting a return to growth for this segment year over year sales increased 4%.

Speaker Change: Enterprise network sales were up 42% driven by AI related connectivity solutions.

Speaker Change: <unk> sales were actually down 10% as customers continue to draw down their inventory encouraging encouragingly, though carrier network sales grew sequentially as customers began to order closer to their current deployment levels.

Edward A. Schlesinger: Encouragingly, though, Carrier Network sales grew sequentially as customers began to order closer to their current defaults. We delivered strong incremental profit in Optical, with net income for the quarter at $143 million, up 43% sequentially on 20% sales. Moving to Display Technology, second quarter sales were $1 billion, up 16% sequentially as panel makers ran at higher utilization rates. Second Quarter to support the mid-year promotion. Glass price was consistent with the first. Net income was $258 million, up 28 percent.

Speaker Change: We delivered strong incremental profit in optical with net income for the quarter at $143 million up 43% sequentially on the 20% sales growth.

Edward Schlesinger: Moving to display technologies, second quarter sales were $1 billion, up 16% sequentially as panel makers ran at higher utilization rates in the second quarter to support mid-year promotions. Glass price was consistent with the first quarter. Net income was $258 million, up 28% sequentially. Year over year, sales were up 9%, and net income was up 24% driven by higher volume and price.

Speaker Change: Moving to display technologies second quarter sales were $1 billion up 16% sequentially as panel makers ran at higher utilization rates in the second quarter to support mid year promotions glass price was consistent with the first quarter net.

Speaker Change: Net income was $258 million up 28% sequentially year over year sales were up 9% and net income was up 24% driven by higher volume and price.

Edward A. Schlesinger: Year over year, sales were up 9%, and net income was up 24%, driven by higher volume and price. Now, let me spend a minute on our approach to display price going forward. As we've said before, we plan to make currency-based price adjustments and maintain appropriate returns in our display bin. We're in the midst of doing just that, and we will update you on our progress at an appropriate time. With respect to the yen, we have hedges in place for 2025 and beyond, but they're not at the one at the 2024 core rate of 107. But they're much better than the current spot.

Edward Schlesinger: Now, let me spend a minute on our approach to display price going forward. As we've said before, we plan to make currency-based price adjustments to maintain appropriate returns in our display business. We're in the midst of doing just that, and we will update you on our progress at an appropriate time. With respect to the end, we have hedges in place for 2025 and beyond. They're not at the 2024 corate of 107, but they're much better than the current spot rate. We expect the combination of our currency-based price adjustments and our hedges to deliver an appropriate level of profitability for the display business.

Speaker Change: Now, let me spend a minute on our approach to display price going forward.

As we've said before we plan to make currency based price adjustments to maintain appropriate returns in our display business.

Speaker Change: We're in the midst of doing just that.

Speaker Change: And we will update you on our progress at an appropriate time.

Speaker Change: With respect to the yen, we have hedges in place for 2025 and beyond they're not at the one at the 2024 core rate of 107%.

Speaker Change: But they are much better than the current spot rate.

Edward A. Schlesinger: We expect the combination of our currency-based price adjustment and our hedges to deliver an appropriate level of profitability for the display business. For your modeling purposes, you can think about appropriate profitability as being the average of the last five years of net income margin from our segment's report. Turning to specialty materials, sales in the second quarter were $501 million, up 18% year-over-year, driven by continued strong demand for premium glasses for mobile devices.

Speaker Change: Expect the combination of our currency based price adjustments and our hedges to deliver an appropriate level of profitability for the display business.

Edward Schlesinger: For your modeling purposes, you can think about appropriate profitability as being the average of the last five years of net income margin from our segment reports. Turning to specialty materials, sales in the second quarter were $501 million, an 18% year-over-year increase, driven by continued strong demand for premium glasses for mobile devices and semiconductor-related products. Net income was $63 million, up 91% year-over-year, reflecting value and manufacturing.

Speaker Change: For your modeling purposes, you can think about appropriate profitability as being the average of the last five years of net income margin from our segment reports.

Speaker Change: Yes.

Speaker Change: Turning to specialty materials sales in the second quarter were $501 million up 18% year over year, driven by continued strong demand for premium glasses for mobile devices and semiconductor related products.

Edward A. Schlesinger: Semiconductor Related Products. Net income was $63 million, up 91%. Reflecting Vines and Manufacturing. In environmental technologies, second quarter sales were $431 million, down 6% year-over-year, reflecting the impact of the Class VIII truck down cycle in North America, as anticipated. Net income was $97 million, down 9% year-over-year on decreased bonds.

Speaker Change: Net income was $63 million up 91% year over year, reflecting volume and manufacturing.

Edward Schlesinger: In environmental technologies, second quarter sales were $431 million, down 6% year-over-year, reflecting the impact of the class eight truck down cycle in North America, as anticipated. Net income was $97 million, down 9% year-over-year on decreased volume. We expect to have a duty market weakness to continue in the second half of this year and sales in environmental to be down sequentially in the third quarter.

Speaker Change: Yes.

Speaker Change: Environmental technologies second quarter sales were $431 million down 6% year over year, reflecting the impact of the class eight truck down cycle in North America as anticipated.

Speaker Change: Net income was $97 million down 9% year over year on decreased volume.

Edward A. Schlesinger: We expect the heavy-duty market weakness to continue in the second half of this year and sales and environmental to be down sequentially in the third quarter. In life sciences, sales in the second quarter were $249 million, up 8% year over year. Net income was $17 million, up 55%. Turning to Hemlock and emerging growth businesses, sales in the quarter were $296 million, down 21% year-over-year, primarily reflecting lower pricing for solar-grade polysilicon. Now, let me turn to our outlook... For the third quarter, we expect sales to grow to approximately $3.7 billion, driven primarily by our optical communications business, including the continued adoption of our new optical connectivity solutions for GenAI products, which we expect will more than offset the expected slowdown in the U.S. Class A truck market. We expect EPS in the range of 50 cents to 54 cents.

Speaker Change: We expect the heavy duty market weakness to continue in the second half of this year and sales in environmental to be down sequentially in the third quarter.

Edward Schlesinger: In life sciences, sales in the second quarter were $249 million of 8% year-over-year. Net income was $17 million of 55% year-over-year.

Speaker Change: In life Sciences sales in the second quarter were $249 million up 8% year over year net.

Speaker Change: Net income was $17 million up 55% year over year.

Edward Schlesinger: Turning to hemlock and emerging growth businesses, sales in the quarter were $296 million, down 21% year-over-year, primarily reflecting lower pricing for solar-grade polysilicon.

Speaker Change: Turning to hemlock and emerging growth businesses sales in the quarter were $296 million down 21% year over year, primarily reflecting lower pricing for solar grade polysilicon.

Edward Schlesinger: Now, let me turn to our outlook. For the third quarter, we expect sales to grow to approximately $3.7 billion, driven primarily by our optical communications business, including the continued adoption of our new optical connectivity solutions for Gen-AI products, which we expect will more than offset the expected slowdown in the US Class A truck market. We expect EPS in the range of $0.50 to $0.54, with EPS growing three times the rate of sales. As we previously shared, our sales are running well ahead of our springboard plan, and our incrementals are strong. In fact, if you compare our projected Q3 sales and EPS guide to Q4 2023, which is our springboard base, sales are up approximately 13%, and EPS is up approximately 33%.

Speaker Change: Now, let me turn to our outlook.

Speaker Change: For the third quarter, we expect sales to grow to approximately $3 7 billion.

Speaker Change: Driven primarily by our optical communications business, including the continued adoption of our new optical connectivity solutions for Jan AI products, which we expect will more than offset the expected slowdown in the U S class eight truck market.

Speaker Change: We expect EPS in the range of 50 to 54 with.

Edward A. Schlesinger: EPS is growing three times the rate of sales. As we previously shared, our sales are running well ahead of our spring, and our incrementals are strong. In fact, if you compare our projected Q3 sales and EPS guide to Q4 2023, which is our springboard base, sales are up approximately and EPS is up approximately 33%. Additionally, in Q3, we anticipate another quarter of strong free cash flow. As it relates to cash, our capital allocation priorities remain the same.

Speaker Change: With EPS growing three times the rate of sales.

Speaker Change: As we previously shared our sales are running well ahead of our springboard plant.

Speaker Change: And our Incrementals are strong.

Speaker Change: In fact, if you compare our projected Q3 sales and EPS guide to Q4, 2023, which is our springboard base sales are up approximately 13% and EPS is up approximately 33%.

Edward Schlesinger: Additionally, in Q3, we anticipate another quarter of strong free cash flow. As it relates to cash, our capital allocation priorities remain the same. We prioritize investing for organic growth opportunities. We believe this creates the most value for our shareholders over the long-term. As we've shared today, in the midterm, we have the technical capabilities and capacity in place to add more than $3 billion in annualized sales with minimal cash investment. And you can see that reflected in our capex expectations for 2024 of $1.2 billion. We also seek to maintain a strong and efficient balance sheet.

Speaker Change: Additionally, in Q3, we anticipate another quarter of strong free cash flow.

Speaker Change: As it relates to cash our capital allocation priorities remain the same.

Edward A. Schlesinger: Prioritize investing for organic growth opportunities. We believe this creates the most value for our shareholders over the long term. As we've shared today, in the midterm, we have the technical capabilities and capacity in place to add more than $3 billion in annualized sales with minimal cash investment. And you can see that reflected in our CapEx expectations for 2024 of $1.2 billion. We also seek to maintain a strong and efficient balance sheet. We're in great shape. We have one of the longest debt tenors in the S&P 500. Our current average debt maturity is about 23 years, with about only $1 billion in debt over the next five.

Speaker Change: Prioritize investing for organic growth opportunities. We believe this creates the most value for our shareholders over the long term.

Speaker Change: As we've shared today in the mid term, we have the technical capabilities and capacity in place to add more than $3 billion in annualized sales with minimal cash investment and you can see that reflected in our capex expectations for 2024 of $1 $2 billion.

Speaker Change: We also seek to maintain a strong and efficient balance sheet. We're in great shape, we have one of the longest debt tenders in the S&P 500, our current average debt maturity is about 23 years with about only $1 billion in debt coming due over the next five years and we have no significant debt coming due.

Edward Schlesinger: We're in great shape. We have one of the longest debt tenors in the S&P 500. Our current average debt maturity is about 23 years, with about only 1 billion in debt coming due over the next five years. And we have no significant debt coming due in any given year.

Edward Schlesinger: And finally, we expect to continue our strong track record of returning excess cash to shareholders. Since 2013, we bought back half of our outstanding shares for almost 800 million shares. This generated about $15 billion of value for our shareholders. Because of our growing confidence in Springboard, we started to buy back shares in a second quarter, and we expect to continue to share buybacks in the third quarter.

Speaker Change: In any given year.

Edward A. Schlesinger: And we have no significant debt coming due in any way. And, finally, we expect to continue our strong track record of returning excess cash to shareholders. Since 2013, we have bought back half of our outstanding shares for almost 800 million shares. This generated about $15 billion of value for our shareholders. Because of our growing confidence in Springboard, we started to buy back shares in the second quarter, and we expect to continue to buy back shares.

Speaker Change: And finally, we expect to continue our strong track record of returning excess cash to shareholders. Since 2013, we bought back half of our outstanding shares for almost $800 million shares this generated about $15 billion of value for our shareholders.

Speaker Change: Because of our growing confidence in springboard, we started to buy back shares in the second quarter and we expect to continue share buybacks in the third quarter.

Edward Schlesinger: In summary, we're off to a great start on our springboard plan. We're well on track to deliver on our $3 billion-plus sales opportunity. Our second quarter results and our third quarter guidance are strong proof points of the incremental profit and cash flow. We expect to deliver as we capture the sales growth.

Edward A. Schlesinger: In summary, we're off to a great start this spring. We're well on track to deliver on our $3 billion plus sales opportunity. Our second quarter results and our third quarter guidance are strong proof points of the incremental profit and cash flow we expect to deliver as we capture sales. I look forward to sharing more in the coming months as we make progress on our springboard plan and continue to create value for shareholders. With that, I'll turn it back.

Speaker Change: In summary, we're off to a great start on our springboard play.

Speaker Change: We're well on track to deliver on our $3 billion plus sales opportunity, our second quarter results and our third quarter guidance are strong proof points of the incremental profit and cash flow, we expect to deliver as we capture the sales growth.

Edward Schlesinger: I look forward to sharing more in the coming months as we make progress on our springboard plan and continue to create value for shareholders.

Speaker Change: I look forward to sharing more in the coming months as we make progress on our springboard plan and continue to create value for shareholders.

Unknown Executive: With that, I'll turn it back to you.

Unknown Executive: Thanks, Ed. Okay, we're ready for our first question. Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by. We compile the Q&A roster.

Ann H. S. Nicholson: Thanks, Ed. Okay, we're ready for our first question. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: I'll turn it back to Mark Thanks.

Mark: Thanks, Ed Okay, we're ready for our first question.

Speaker Change: Yeah.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again please.

Speaker Change: Please standby, we compile the Q&A roster.

Asiya Merchant: And our first question will come from ASEA Merchant from City. Your line is open. Great. Good morning. Thank you for the opportunity and for the congratulations on the strong results. I'll talk to Coastline if I may, especially on the JMEI. If you could, you know, maybe double-click a little bit on this. The customers who are demanding the JMEI products that you've talked about and the visibility that you have over the next couple of quarters and even as you look into your springboard plan over the next 12 quarters. What kind of visibility do you have in sustaining this momentum that you have outlined?

Operator: Please stand by while we compile the Q&A roster, and our first question will come from Asiya Merchant from Citi. Your line is open. Great. Good morning. Thank you for the opportunity and for the congratulations on the strong results. On the optical side, if I may, especially on the GenEI, if you could, you know, maybe double-click a little bit on this.

Asiya Merchant: And our first question will come from <unk> merchant from Citi. Your line is open.

Asiya Merchant: The customers who are demanding the GenEI product that you've talked about and the visibility that you have over the next couple of quarters and even as you look into your spring forward plan over the next 12 quarters, you know, what kind of visibility do you have in sustaining this momentum that you have outlined? Thank you. Visibility for strong growth is relatively high. And that is because what we do is we take the wiring diagram for the brand new data centers that are getting put in place.

Speaker Change: Great. Good morning, Thank you for the opportunity and.

Speaker Change: Congratulations on the strong results.

Speaker Change: Optical side, if I may, especially on the journey.

Speaker Change: Could maybe double click a little bit on this.

Speaker Change: The customers who are demanding.

Speaker Change: <unk> products that you've talked about and the visibility that you have over the next couple of quarters and even as you look into your straightforward plan over the next 12 quarters.

Speaker Change: Visibility do you have in sustaining this momentum that you have outlined thank you.

Wendell Weeks: Thank you. A visibility for strong growth is relatively high. And that is because what we do is we take the wiring diagram for some of these brand new data centers that are getting put in place, and we're building that customized system that they'll use. to Connect. So, we've been working on most of these products, first the core components, for the last few years, directly with those customers from what they'll need. Then we start to actually put it all together to be drop ship at exactly the right day for them. So, in a way, we're already beginning to build some of their network needs.

Speaker Change: Our visibility for strong growth.

Speaker Change: Is relatively high.

Speaker Change: And that is because what we do.

Speaker Change: As we take the wiring diagram for some of these brand new data centers that are getting put in place and we're building that customized system to tell us to connect.

Asiya Merchant: And we're building that customized system that they'll use. So we've been working on most of these products, first the core components, for the last few years directly with those customers on what they'll need. And then we start to actually put it all together to be drop-shipped on exactly the right day for them. So in a way, we're already beginning to build some of their networks. Well ahead of when they will, so we have pretty good visibility. So far, what's driving the outperformance? Is that it?

Speaker Change: So we've been working on most of these products pushed the core components for the last few years directly with those customers for what they will need.

Speaker Change: Then we start to actually put it all together to be drop ship at exactly the right day for them.

Speaker Change: So in a way we're already beginning to build.

Speaker Change: Some of their network needs.

Wendell Weeks: Well ahead of when they will install them. So, we have pretty good visibility on that. So far, what's driving the outperformance is that the word of mouth on our product has been very positive, and other folks who we haven't been consistently working with over this time period have come to us to help them solve some of the challenges. And so, as a result, we're picking up new customers for us into this new ecosystem that is building around putting together these backend networks. So far, what we're seeing is most of our variants has been upside variants, if that helps you at all.

Speaker Change: Well ahead of when they will install them. So we have pretty good visibility on that.

Speaker Change: So far what's driving the outperformance.

Speaker Change: Is that.

Wendell P. Weeks: Word of mouth on our product has been very positive, and other folks who we haven't been consistently working with over this time period have come to us to help them solve some of their challenges. And so as a result, we're picking up new customers for this new ecosystem that is building around putting together these packages. So, so far, what we're seeing is that most of our variance has been upside down. That helps you. Yeah, that's great.

The word of mouth on our product has been very positive.

Speaker Change: Other folks who we haven't been consistently working with over this time period have come to us to help them solve some of the challenges and so as a result, we're picking up new customers for us.

Speaker Change: To this new ecosystem that is building around putting together. These back end networks. So so far what we're seeing is most of our areas has been upside there is.

Speaker Change: That helps you at all.

Unknown Executive: Yeah, that's great.

Asiya Merchant: And so is the competitive mode that maybe Corning has an obstacle on the enterprise side much greater in your mind as you think about the opportunity ahead versus, let's say, a couple of quarters ago, or even with your prior solution? Thank you. So the competitive mode that we're trying to build here is driven around us doing a new-to-the-world fiber, cable, and connectivity system. And we're really the only company in the world who can put that all together.

Wendell Weeks: And so, is the competitive mode that maybe Corning has an obstacle on the enterprise side much greater in your, as you think about the opportunity ahead versus, let's say, a couple of quarters ago, or even with your prior solution. Thank you. So the competitive mode that we're trying to build here is driven around us doing a new to the world fiber cable and connectivity system. And we're really the only person in the world who can put that all together. And the strength of that mode will reflect directly on these new super high density systems that we're putting in place, where you should think about it almost like Moore's Law, where we're doubling the amount of light guides within the same volume area.

Speaker Change: Yeah. That's great. So is the competitive moat that maybe has an optical on the NFC side much greater.

Speaker Change: As you think about the opportunity ahead versus let's say a couple of quarters ago or even with your prior solution. Thank.

Speaker Change: Thank you.

Speaker Change: So the competitive moat that we're trying to build here is driven around us doing a new to the world fiber cable and connectivity system and we're really the only person in the world who can put that all together.

Asiya Merchant: And the strength of that moat will reflect directly on these new super-high density systems that we're putting in place, where you should think about it almost like... [inaudible] We're doubling the amount of light guides within the same volume area. Geometric Volume.

Speaker Change: The strength of that mode will reflect directly on these new Super high density systems that we're putting in place where you should think about it almost like.

Moore's law.

Speaker Change: Sure.

Speaker Change: We're doubling the amount of light guides.

Within the same volume area.

Wendell Weeks: St. Jim at your volume area. And while increasing the performance of the component, there are very few people who can do this, and the way we're doing it to increase the optical performance is protected intellectual property. So we believe our competitive advantages will increase in this segment. Great. Thank you.

Speaker Change: St Joe Metro volume area.

Wendell P. Weeks: And while increasing the performance, componentry. There are very few people who can do this, and the way we're doing it to increase the optical performance is protected intellectual property. So we believe our competitive advantages will increase in this segment. Great. Thank you. Okay, next question, please. Thank you. Our next question comes from Samik Chatterjee from J.P. Morgan. Your line is open.

Speaker Change: And while increasing the performance of the Componentry, there's very few people who can do this and the way we're doing it to increase the optical performance is protected intellectual property. So we believe our competitive advantages will increase.

Speaker Change: In this segment.

Speaker Change: Great. Thank you.

Samik Chatterjee: Next question, please. Thank you. Our next question comes from Somic Chatterjee from JP Morgan. Your line is open. Hi. Thanks for taking my question. I guess, when will you in the slide that you mentioned the 8 billion springboard opportunity by 2026? Roughly half of that is from optical. I'm just wondering if you can give us a bit more color on how to sort of split that opportunity between carrier and enterprise. And then maybe if you can talk about the magnitude of what this Lumen agreement means in terms of revenue, how to think about the opportunity specifically to Lumen in terms of revenue over the next couple of years.

Speaker Change: Okay next question. Please thank.

Speaker Change: Thank you. Our next question comes from some mix chatter G from Jpmorgan. Your line is open.

Samik Chatterjee: Hi, thanks for taking my question. I guess, Wendell, in the slide deck, you mentioned the $8 billion springboard opportunity by 2026. Roughly half of that is from optical.

Sumikchatterjee: Hi, Thanks for taking my question I guess when do you.

Speaker Change: The slide deck, you mentioned, the 8 billion springboard opportunity.

Speaker Change: By 2002.

Speaker Change: <unk> six roughly half of that is from up to date I'm.

Speaker Change: I'm just wondering if you can give us a bit more color on how to sort of split that opportunity between carrier and enterprise and then maybe if you can talk about the magnitude of what this lumen.

Wendell P. Weeks: I'm just wondering if you can give us a bit more color on how to sort of split that opportunity between carrier and enterprise, and then maybe if you can talk about the magnitude of what this Lumen agreement means in terms of revenue, and how to think about the opportunity specifically for Lumen in terms of revenue over the next couple of years. Thank you. Well, to your first question, it is both in the carrier and enterprise, but the majority is coming out of the enterprise, as you see the fundamental change in compute driven by Gen AI and its related networks. We can come back to that if you want. Let's just start with sizing.

Speaker Change: Agreement means in terms of revenue how to think about the opportunity specifically at the moment in terms of revenue over the next couple of years. Thank you.

Wendell Weeks: Matthew. Well, to your first question, it is both in carrier and enterprise, but the majority is coming out of the enterprise piece, as you see the fundamental change in compute driven by Gen AI and its related networking requirements. And we can come back to that if you want. Lumen, let's just start with sizing. When we say 10% of our global fiber capacity, I think the way you can think about it, it's a, you won't be far off as you size it. If you just take your sort of expected view of what our total revenue will be in Op-Bell, and you take 10% of it, and that's going to get you in the zone, Samik.

Speaker Change: Well to your first question.

Speaker Change: The.

Speaker Change: It is both in carrier and enterprise.

Speaker Change: But.

Speaker Change: The majority is coming out of the enterprise piece as you see the fundamental change in compute driven by Gen AI and its related.

Networking.

Speaker Change: Requirements.

Speaker Change: And we can come back to that if you want.

Speaker Change: Blooming.

Speaker Change: Let's just start with sizing.

Wendell P. Weeks: When we say 10% of our global fiber capacity... I think a way you can think about it is, you won't be far off as you size it. If you just take your sort of expected view of what our total revenue will be in Optel, and you take 10% of it, that's going to get you in the zone. Uh, what makes the, uh, the glumen..., transaction so exciting for us is that we've always had a significant business connecting data centers to each other and the network at large. And because that's how data gets in and out of the cloud.

Speaker Change: When we say 10% of our global fiber capacity.

Speaker Change: I think a way you can think about it.

Speaker Change: You won't be far off as you size it.

Speaker Change: If you just take.

Speaker Change: Youre sort of expected view, but our total revenue will be in auto and you take 10% of it that's going to get you in this one.

Wendell Weeks: Right? What makes the Lumen transaction so exciting for us is that we've always had a significant business connecting data centers to each other in the network at large. And because that's how data gets in and out of the cloud. The technical question has been with the advent of a new GPU-based backend network for Gen AI within data centers. Will there be a dramatic increase in the need for fiber to connect these Gen AI-enabled data centers to each other and the network? The answer is going to depend on where is the power located and how that interacts with the architecture of the large language model and how and where both inference and training are accomplished.

Speaker Change: <unk> right.

Speaker Change: What makes the.

Speaker Change: The.

Speaker Change: <unk>.

Speaker Change: Transaction still exciting for us.

Speaker Change: Is that.

Speaker Change: We've always had a significant business connecting datacenters to each other.

Speaker Change: And the network at large.

Speaker Change: And because thats, how data gets in and out of the cloud right.

Wendell P. Weeks: The technical question has been, with the advent of a new GPU-based back-end network for Gen AI within data centers, will there be a dramatic increase in the need for fiber to connect these Gen-AI enabled data centers to each other and the network? The answer is going to depend on where the power is located and how that interacts with the architecture of the large language, and Hao, and where both.

Speaker Change: The technical question has been with the advent of a new GPU based backend network for Gen. AI with in data centers will there be a dramatic increase in the need for fiber to connect these gen AI enabled.

Speaker Change: Data centers to each other.

Speaker Change: And the network.

Speaker Change: The answer is going to depend on where is the power located and how that interacts with the architecture of the large language model.

Speaker Change: And how and where both.

Wendell P. Weeks: Inference and training are accomplished. What's exciting about the Lumen deal is that it is certainly a strong proof point in favor of a bull case for that segment of the network. Does that make sense to you, Samik, if I've been responsive to your question? Yeah, and I guess if I just sneak one more part, what do you think about the scope of similar agreements with other carriers as well, in terms of just solidifying the springboard opportunity with them? Thank you. And I'll wrap it up and pass it on.

Speaker Change: Inference and training are accomplished.

Samik Chatterjee: It's exciting about the Lumen deal is that it is certainly a strong proof point in favor of a bold case for that segment of the network. Does that make sense to you, Samik? Have I been responsive to your question? Yeah, and I guess if I just sneak one more part, how, what do you think about the scope of similar agreements with other carriers as well in terms of just the solidifying the springboard opportunity with them? Thank you, and I'll wrap past it on.

Speaker Change: It's exciting about the alumina deal is that it is certainly a strong proof point in favor of a bull case.

Speaker Change: For that segment of the network.

Cemig: Does that make sense to cemig, if I'd been responsive to your question.

Speaker Change: Yes.

I guess, if I just sneak one more part what do you think about the scope of similar agreements with other carriers as well.

Speaker Change: So just the.

Speaker Change: It's hard to find the springboard opportunity with them. Thank you.

Speaker Change: Pass it on.

Wendell Weeks: I don't want to speculate at this time, right? What is great about what Lumen has done is they're going to be the first customer to apply our new tech, sort of double the amount of fiber they can place in their existing conduit, and that is super exciting. I would believe that that is so exciting that it will generate lots of interest.

Wendell P. Weeks: I don't want to speculate at this time, but what is great about what Lumen has done is they're going to be the first customer to apply our new tech, sort of double the amount of fiber they can place in their existing conduit. And that is super exciting. I would believe that that is so exciting that it will generate lots of interest. Okay, next question. Thank you. Our next question will come from Steven Fox from Fox Advisors, LLC. Your line is open. Hi, good morning.

Speaker Change: I don't want to speculate at this time right.

Speaker Change: What.

Speaker Change: Is great about.

Lumen is done is there going to be the first.

Speaker Change: Our customer to apply our new tech.

Speaker Change: Sort of.

Speaker Change: Double.

Speaker Change: The amount of fiber they can place in their existing conduit.

Speaker Change: And that is super exciting.

Speaker Change: Hi.

Speaker Change: We believe that that is so exciting that it will generate lots of interest.

Speaker Change: Yes.

Unknown Executive: Hey, next question. Thank you.

Speaker Change: Thank you.

Speaker Change: The next question.

Steven Fox: Our next question will come from Steven Fox, from Fox Advisors LLC. Your line is open. Hi, good morning. Maybe just one more question on optical for me also. Can you just, Wendell, you guys mentioned that 25% Keger for the enterprise business over the next few years. There's a lot of concern, I think, that while there's optimism for this type of growth rate, that it could be more adversity in nature, you know, have some puts and takes as you go through the quarters. How do we get comfortable with the idea that you have enough customer diversity, project diversity, that this is sort of a steady type of growth prospect for Jenni AI over the next few years.

Speaker Change: Thank you.

Speaker Change: Our next question will come from Steven Fox from Fox Advisors LLC. Your line is open.

Steven Bryant Fox: Maybe just one more question on Optical for me also. Can you just, Wendell, you guys mentioned that 25% CAGR for the enterprise business over the next few years? There's a lot of concern, I think, that while there's optimism for this type of growth rate, it could be more bursty in nature, you know, have some puts and takes as you go through the quarters. How do we get comfortable with the idea that you have enough customer diversity, project diversity, that this is sort of a steady type of growth prospect for GNI AI over the next few years?

Steven Bryant Fox: Hi, Good morning, maybe just one more question on optical for me also can you just.

Steven Bryant Fox: <unk> you guys mentioned that 25% CAGR for the enterprise business over the next few years.

Speaker Change: There's a lot of concern I think that while there is optimism for this type of growth rate that it could be more bursty in nature.

Speaker Change: Have some puts and takes as you go through the quarters, how do we get comfortable with the idea that you have enough customer diversity project diversity that this is sort of a.

Speaker Change: Steady type of growth prospect for.

Wendell Weeks: Thanks.

Over the next few years thanks.

Wendell Weeks: Great question, Steve. And the way that we have addressed that since this is far from our first rodeo, right, is if you think about it, when we put together that $5 billion springboard plan, right, that is us believing what it is we truly think will happen. Then when we start to probabilistically adjust to drop that five down to that three, we're after things exactly like you're talking about where you can get whenever you're chasing a new tech, right? You can get these pieces where you'll have a bunch of project builds, and then it'll slow while as that gets consumed, and then again.

Steven Bryant Fox: Thanks. Great question, Steve, and the way that we have addressed that since this is far from our first rodeo is, if you think about it, when we put together that $5 billion Springboard plan. That is, us believing what we truly think will happen.

Speaker Change: Great question.

Speaker Change: Steve.

Speaker Change: <unk>.

Speaker Change: The way that we have addressed that.

Speaker Change: This is far from our first rodeo.

Speaker Change: If you think about it when we put together that $5 billion springboard plan.

Speaker Change: Alright.

Speaker Change: That is.

Speaker Change: US, believing what it is we truly think will happen.

Wendell P. Weeks: Then, when we start to probabilistically adjust to drop that five down to that three, we're after things exactly like you're talking about, where you can get, whenever you're chasing a new tech, right, you can get these pieces where you'll have a bunch of project builds, and then it'll slow a while as that gets consumed, and then again. And that's how we saw it, to address that as you Does that make sense to you, Steve? Yeah, it does.

Speaker Change: Then when we start to probabilistic Lee adjust to drop that five down to that three were after things exactly like you are talking about where you can get whenever you're chasing a new tech right. You can get these pieces, where you'll have a bunch of project builds and then.

Speaker Change: It'll slow while as that gets consumed and then again and Thats, how we sought.

Steven Fox: And that's how we sought to address that as we start to think through your modeling. Does that make sense to you, Steve? Yeah, it does.

Speaker Change: To address.

Speaker Change: On that as we start to think through.

Speaker Change: For modeling.

Speaker Change: Does that make sense to you Steve.

Steven Bryant Fox: Maybe just to push that a little bit further, like, do you see that happening over the next few quarters, or are we so early stages that there's sort of a consistent route to the growth around Gen-AI? Thank you. A few creditors, like Edwin, I think he, together with a number of them, are guided for enterprise growth at a 25% rate. And then the first quarter we showed up, post providing that guidance, we grew at 40.

Wendell Weeks: Maybe just to push that a little bit further, like do you see that happening over the next few quarters, or are we so early stages that there's sort of a consistent route to the growth around Jenni AI? For the next few quarters, like you just saw us do, is Edwin, I think he was together with a number of you, a guided for enterprise to grow at a 25% rate. And then the first quarter we show up post providing that guidance, we grew at 40. Right now, in the near term, our visibility is pretty high, and we feel really comfortable about the 25% guidance that Ed has given you.

Steve: Yes, it does.

Speaker Change: Just push that a little bit further like do you see that happening over the next few quarters or are we still early stages that there's sort of a consistent out to the growth around the agenda.

Speaker Change: For the next <unk>.

Steve: Few quarters like.

Edwin: You just saw US do is Edwin I think he was together with with a number of you.

Speaker Change: <unk> for enterprise to grow at a 25% rate.

Speaker Change: And then the first quarter, we show up post providing that guidance we grew at 40%.

Wendell P. Weeks: Right now, in the near term, our visibility is pretty high, and we feel really comfortable about the 25% guidance that Ed has. Great. Thank you very much.

Speaker Change: Right now in the near term our visibility.

Speaker Change: Is pretty high and we feel really comfortable about the 25% guidance that Ed has given you.

Unknown Executive: Great.

Unknown Executive: Thank you very much. Thank you.

Great. Thank you very much.

Operator: Thank you, and as a reminder to ask a question, please press star 11 and again that's star 11 to ask a question. One moment for our next question, please. And our next question will come from Martin Yang from OPCO. Your line is open.

Unknown Executive: And, as a reminder to ask a question, please press star 11. And again, that's star 11 to ask a question.

Speaker Change: Thank you and as a reminder to ask a question. Please press star one one and again that's star one one to ask a question.

Unknown Executive: One moment for our next question, please.

Speaker Change: One moment for our next question please.

Martin Yang: And our next question will come from Martin Yang from Oppco. Your line is open. I think it's a question. Just a quick confirmation on 3Q guidance. Is it right to assume there's no price increase assumed or display in 3Q?

Speaker Change: And our next question will come from Martin Yang from Opco. Your line is open.

Zhihua Yang: Hi, thank you for taking the question. Just a quick confirmation on 3Q guidance. Is it right to assume there's no price increase assumed for display in 3Q? Yeah, Martin.

Zhihua Yang: Alright. Thank you for taking my question just a critical information on the <unk> guidance.

Zhihua Yang: Is it right to assume there is no price increase assumed or display in <unk>.

Edward Schlesinger: Yeah, Martin. So thanks for that question. You know, in general, as we always do with our guidance, we sort of have a number of potential outcomes that drive where we guide you to, and we've provided a range on EPS and approximately 3.7 billion in our mind also has a range encapsulated around that well. So we're not specifically guiding anything in display price at this time because we're in the midst of, you know, speaking with our customers about a currency-based price adjustment, but that doesn't mean there won't be an impact in Q3.

Edward A. Schlesinger: So thanks for that question. You know, in general, as we always do with our guidance, we sort of have a number of potential outcomes that drive where we guide and provide a range on. PSN, you know, approximately 3.7 billion in our mind also has a range encapsulated around that well.

Speaker Change: Yes, Martin so thanks for that question.

Speaker Change: In general as we always do with our guidance, we sort of have a number of potential outcomes that drive where we guide you to when we provided a range on.

Speaker Change: EPS and approximately $3 7 billion in our mind also has a range encapsulated around that well. So we're not specifically guiding anything in display price at this time, because we are in the midst of.

Edward A. Schlesinger: So we're not specifically guiding. Blaine Price At this time, because we're in the midst of, with our customers about a current Price Adjustment, but that doesn't mean there won't be any. Got it. Thank you. Okay, great. Next question. Thank you. Our next question will be from Rupal Bhattacharya. Your line is open. Hi, thanks for taking my questions. I'm filling in for Wa

Speaker Change: Speaking with our customers about our currency based price adjustment, but that doesn't mean, there won't be an impact in Q3.

Unknown Executive: God, thank you.

Speaker Change: Got it thank you.

Unknown Executive: Great, next question. Thank you.

Speaker Change: Okay, Great next question.

Speaker Change: Thank you.

Ruplu Bhattacharya: Our next question will be from Ruplu Bhattacharya; your line is open. Hi, thanks for taking my questions. I'm filling in for Wamsi today. Ed, you saw strong growth both sequentially and year-on-year in gross margins this quarter. How should we think about gross margin trend over the next few quarters, and what are the drivers for margin growth? And I'll follow it. Yeah, thanks. Great question. You know, I think in general, the drivers for us on gross margin are we have the capacity and the technical capabilities in place to support a higher level of sales. So, in general, we're not having to add fixed cost as our sales go up.

Speaker Change: Our next question will be from route Plow Bhattacharya. Your line is open hi, Thanks for taking my questions Im filling in for <unk> today.

Rupal Bhattacharya: Ed, you saw strong growth, both sequentially and year on year, in gross margins this quarter. How should we think about gross margin trends over the next few quarters? And what are the drivers for margin? Yeah, thanks. Great question.

Speaker Change: Ed you saw strong growth both sequentially and year on year in gross margins. This quarter, how should we think about gross margin trend over the next few quarters and what are the drivers for margin growth.

Speaker Change: Follow up.

Edward A. Schlesinger: You know, I think in general, the drivers for us on gross margin are that we have the capacity and the technical capabilities in place to support a higher level of sales. So, in general, we're not having to add fixed costs as our sales go up. So that is really what's going to drive both gross margin and operating margin for us as we go forward. And I do think there is room for our gross margin to continue to go up as sales go up. I think our guide implies that.

Speaker Change: Yes, Thanks, Great question.

Speaker Change: I think in general the drivers for US on gross margin are we have the capacity and the technical capabilities in place to support a higher level of sales. So in general we're not having to add fixed cost as our sales go down so that is really what's going to drive both gross margin and <unk>.

Edward Schlesinger: So that is really what's going to drive both gross margin and operating margin for us as we go forward. And I do think there is room for our gross margin to continue to go up as sales go up. I think our guide implies that for Q3. Thanks for that.

Speaker Change: Operating margin for us as we go forward and I do think there is room for our gross margin to continue to go up as sales go up I think our guide implies that for Q3.

Rupal Bhattacharya: Thanks for that, and if I can ask a follow-up question on the display segment, what is your expectation for panel maker utilization rates in calendar 3Q? And as you're implementing these currency-based price adjustments, do you see any impact of that on your glass market share? And Ed, when should we expect a reset of the core yen rate? Yeah, so I'll take those sort of one at a time. So I think, you know, on utilization, when we spoke about Q2, we expected it to increase significantly from Q1. It did that. It was actually even better than our expectations. They ran a little hot.

Edward Schlesinger: And if I can ask a follow-up on the display segment, what is your expectation for panel maker utilization rates in calendar 3Q? And as you're implementing these currency-based price adjustments, do you see any impact of that on your glass market share? And Ed, when should we expect a reset of the core yen rate? Thank you. Yeah, so I'll take those sort of one at a time. So I think, you know, on utilization, when we spoke about Q2, we expected it to increase significantly from Q1. It did that. It actually was even better than our expectations.

Speaker Change: Thanks for that and if I can ask a follow up on the display segment.

Speaker Change: What is your expectation for panel maker utilization rates in calendar <unk> and as you're implementing these currency based price adjustments do you see any impact of that on your glass market share and Ed when should we expect the reset of the core yen rate. Thank you.

Speaker Change: Yes, so I'll take those sort of one at a time, so I think.

Speaker Change: On utilization when we spoke about Q2, we.

Speaker Change: We expected it to increase significantly from Q1, it did that it actually was even better than our expectations. They ran a little hot.

Edward Schlesinger: They ran a little hot. I think as we think about Q3, you know, they're likely to run at that level or a little lower to sort of average out for the year. You know, we think they're running, you know, more or less in line to meet expected retail demand. And with respect to the core rate, you know, right now we have hedges in place for 2025 and beyond. We're in the middle of a currency-based price adjustment with our customers. We're going to come back when all that's complete, and we'll share our thoughts on how all that will work.

Edward A. Schlesinger: I think as we think about Q3, they're likely to run at that level or a little lower to sort of average out for the year. We think they're running, you know, more or less in line. And with respect to the core rate, you know, right now, we have hedges in place for 2025 and beyond. We're in the middle of a currency-based price adjustment with our customers. We're going to come back when all that's complete, and we'll share our thoughts on how all that will work, but I think the most important thing is that when you think about our profitability going forward, our goal is to get the combination of the price adjustments and our hedges so we get a net income margin or net income percent of sales that averages out at about the last five years.

Speaker Change: As we think about Q3, they are likely to run at that level or a little lower to sort of average out for the year.

Speaker Change: We think they are running more or less in line to meet expected retail demand.

Speaker Change: And with respect to.

Speaker Change: The core rate right now we have hedges in place for 2025 and beyond we're in the middle of a currency based.

Speaker Change: This adjustment with our customers, we're going to come back with.

Speaker Change: When all that is complete and we will share our thoughts on how all that will work, but I think the most important thing is that when you think about our profitability going forward. Our goal is to get the combination of the price adjustments and our hedges to get net net income margin or net income percent of sales that averages out at about the last.

Edward Schlesinger: But I think the most important thing is that when you think about our profitability going forward, our goal is to get the combination of the price adjustments and our hedges to get a net income margin or net income per cent of sales that averages out at the bout the last five. of the years. Ruplu, I apologize if you had missed any of your components of your question. I think to share in our intention would be to hold our share as a result of our overall approach to this industry and our currency-based upward price adjustment. Thank you for all the details.

Rupal Bhattacharya: And, you know, Rupal, I apologize if you had, did I miss any of your components of your question? I think just share, and our intention would be to hold our share, overall approach to this industry, and our currency base. Upward Price. Thank you for all the questions. Next question. Thank you. Our next question... will come from Mehdi Hosseini from Susquehanna International Group. Your line is open. Yes, thanks for taking my question. This is for the team.

Speaker Change: Five years and I apologize if you did I Miss any of your components of your question I think just share and our intention would be to hold our share.

Speaker Change: As.

Speaker Change: As a result of.

Speaker Change:

Speaker Change: Overall approach to this industry and our currency base upward price adjustments okay.

Unknown Executive: I appreciate. Next question. Thank you.

Speaker Change: Okay. Thank you for all the details I appreciate it.

Speaker Change: Next question.

Mehdi Hosseini: Our next question will come from Mehdi Hosseini from Susquehanna International Group. Your line is open. Yes, thanks for taking my question.

Speaker Change: Thank you.

Speaker Change: Our next question.

Mehdi Hosseini: Will come from maybe hosseini from Susquehanna International Group. Your line is open.

Mehdi Hosseini: And I want to go back to optical and try to better understand the profitability of this business. I understand secular growth and AI and everything that brings. But when I think about profitability, the net income margin is more than half of what it is for display.

Mehdi Hosseini: Yes, thanks for taking my question.

Mehdi Hosseini: This is for the team, and I want to go back to optical and try to better understand the profitability of this business. I understand the secular growth and AI and everything that brings. But when I think about profitability, net income margin is is is more than is less than half of what it is for display.

Speaker Change: This is for the team.

Speaker Change: Go back to optical.

Mehdi Hosseini: Im trying to better understand the profitability of this business I understand the secular growth.

Mehdi Hosseini: But when I think about profitability.

Mehdi Hosseini: Net income margin is more than.

Speaker Change: It is less than half of what it is for display so how should I think about the revenue growth that will be sufficient.

Edward Schlesinger: So how should I think about the revenue growth that would be sufficient to meet dollars of net income comparable to display assuming that the display is just going to go sideways from here over the desk clear. Yeah, thanks, Mehdi. So I think stepping back, you know, if you think about our sales group growing 11% and EPS growing 21% in the second quarter, and then our guide implying, you know, a sales growth rate in the, you know, low single digits and EPS growing three times faster than that. I think we can continue to have EPS growth outpacing sales, you know, regardless of where that growth comes from, primarily because we have the cost, the technical capabilities, the capacity in place to support the growth.

Edward A. Schlesinger: So how should I think about the revenue growth that would be sufficient to meet dollars of net income comparable to display, assuming that display is just going to go sideways from here? Hopefully, that's clear. Yeah, Mehdi.

Speaker Change: To meet.

Speaker Change: <unk> net income.

Speaker Change: Comparable to display assuming that the display is just going to go sideways from here.

Speaker Change: Hopefully that's clear.

Mehdi Hosseini: So I think stepping back is the best option. You know, if you think about our sales group growing 11% and EPS growing 21% in the second quarter and then our guide implying, you know, a sales growth rate in the low single digits and EPS growing three times faster than that, I think we can continue to have EPS growth outpacing sales, primarily because we have the cost, the technical capabilities, and the capacity in place to support the growth.

Speaker Change: Yeah, Thanks, Matt So I think stepping back.

Speaker Change: If you think about our sales group growing 11% and EPS growing.

Speaker Change: 21% in the second quarter, and then our guide implying.

Speaker Change: Our sales growth rate in the low single digits and EPS growing three times faster than that I think we can continue to have EPS growth outpacing sales.

Speaker Change: Regardless of where that growth comes from primarily because we have the cost the technical capabilities that capacity in place to support the growth.

Edward Schlesinger: I also think that the margins are quite attractive in the optical business and especially in the data center space and the AI data center space, you know, where we expect to see growth.

Mehdi Hosseini: I also think that the margins are quite attractive in the optical business and especially in the data center space and the AI data center space, where we expect to see growth. Would you be able to significantly increase full obstacle margin net income? In the past, it has averaged about 13%. So looking forward, could it be significantly above 13%? I think it could be above 13%.

Speaker Change: Also think that the margins are quite attractive in the optical business and especially in the data.

Speaker Change: Data center space in the AI data center space, where we expect to see growth.

Edward Schlesinger: Let me be more concise and clear. Would you be able to significantly up for full optical margin net income in the past, it has average by 13%. So looking forward, could it significantly be above 13%. I think it can be above 13%. Okay, thank you.

Speaker Change #100: Let me be.

More concise and clear.

Speaker Change #101: Would you be able to significantly outperform optical margin net income.

Speaker Change #101: The past.

Speaker Change #101: Average <unk>.

Speaker Change #101: 10%, so looking forward could it significantly be above 13%.

Speaker Change #102: I think it can be above 13%.

Speaker Change #103: Okay. Thank you.

Unknown Executive: Next question.

Edward A. Schlesinger: Okay, thank you. Our next question comes from Josh Spector from UBS. Your line is open. Hey, guys. This is James Cannon. I'm on behalf of Josh.

Unknown Executive: Thank you.

Speaker Change #104: Next question.

James Cannon: Our next question comes from Josh Specter from UBS.

Speaker Change #104: Our next question comes from Josh Spector from UBS. Your line is open.

James Cannon: Your line is open. You guys, this is James Canada for Josh. Congrats on the strong quarter of enterprise sales. I was just wondering if you could frame you called out a 10% decline in on the carrier side of that business, if you could just frame how that compares to what you did last quarter and maybe kind of what you're seeing in terms of the trajectory for the third quarter. Yeah, so our carrier business is increasing sequentially. I think that's the good news. So although we're still down year over year because last year you still had carriers sort of building inventory, and now they're still in the process of drawing down their inventory.

Speaker Change #104: Hey, guys. This is James Cameron on for Josh Congrats on a strong quarter of enterprise sales.

Joshua David Spector: Congratulations on the strong quarter of enterprise sales. I was just wondering if you could, uh..., frame, you called out a 10% decline on the carrier side of that business, if you could just frame how that compares to what you did last quarter and maybe kind of what you're seeing in terms of the trajectory for the third quarter. Yeah, so, um... Our carrier business is increasing sequentially. I think that's the good news.

Speaker Change #105: I was just wondering if you could.

Speaker Change #106: Frame you called out a 10% decline in.

Speaker Change #107: On the carrier side of that business. If you could just frame how that compares to what you did last quarter and maybe kind of what youre seeing in terms of the trajectory for the third quarter.

Speaker Change #108: Yes so.

Speaker Change #109: Our carrier business is increasing sequentially.

Edward A. Schlesinger: So although we're still down year over year, because last year you still had carriers sort of building inventory, and now they're still in the process of drawing down their inventory, that's really causing that year over year decline. But the good news is that order rates are going up. Sales were up sequentially, and I think we would expect that trend. What we're seeing is that our carrier order rates are now starting to approach what we see as their deployment. And so that's also encouraged.

Speaker Change #110: I think thats the good news so although we're still down year over year, because last year, you still had carriers sort of building inventory.

Speaker Change #110: And now they are still in the process of drawing down their inventory, that's really causing that year over year decline, but the good news is order rates are going up sales were up sequentially and I think we would expect that trend to continue.

James Cannon: That's really causing that year-over-year decline. But the good news is order rates are going up; sales were up sequentially. And I think we would expect that trend to continue. What we're seeing is that our carrier order rates are now starting to approach what we see is their deployment rates. And so that's also encouraging. So we have sort of that upward spring still in front of us when you begin to think of your year over your growth rates, James.

Speaker Change #110: Yes, what we're seeing is that our carrier order rates are now starting to approach what.

Speaker Change #110: What we see as their deployment rates.

Speaker Change #110: And so that's also encouraging so we have sort of that.

Edward A. Schlesinger: So we have sort of that. Upward Spring, still in front of us, when you begin to think of your year-over-year growth. Okay, I get it.

Speaker Change #110: Upward spring still in front of us when you begin to think of your year over year growth rates change.

James Cannon: Okay, got it. And then just as a follow-up, kind of another way to ask the last question, I think, but as enterprise becomes a bigger piece of the optical portfolio, can you just frame how the two, how those two pieces of the business compare margin-wise? Enterprise versus carrier: enterprise tends to be higher margin and carrier. Primarily because it uses more of those customized connectivity systems. And so that is, as you move up the stack in the degree of sophistication that we offered to our customers, as that helps them reduce their installation cost. We end up sharing a portion of that value.

James Patrick Cannon: And then just as a follow-up, kind of another way to ask the last question, I think, but as enterprise becomes a bigger piece of the Optical Portfolio, can you just frame how the two parts of the business compare, margin wise? Enterprise. Enterprise tends to be higher-margin than carrier, primarily because it uses more of those customized connectivity systems. And so that is, as you move up the stack in the degree of sophistication that we offer to our customers, as that helps them reduce their installation costs, we end up sharing a portion of that value we create with them. Total Passive Optical Syndrome.

Speaker Change #111: Okay got it and then just.

Speaker Change #112: As a follow up.

Speaker Change #113: Kind of another way to ask the last question I think.

Speaker Change #114: As enterprise becomes a bigger piece of the.

Speaker Change #115: Optical portfolio can you just frame how the how those two pieces of the business compare margin wise.

Speaker Change #115: Enterprise.

Speaker Change #115: Versus carrier.

Speaker Change #116: Enterprise tends to be higher margin.

Speaker Change #116: And carrier.

Speaker Change #116: Primarily.

Speaker Change #116: It uses more of those customized connectivity systems.

Speaker Change #116: And so that is as you move up the stack in the degree of sophistication that we offered to our customers.

Speaker Change #116: Is that helps them reduce their installation cost.

Speaker Change #116: End up sharing a portion of that value we create with those.

James Cannon: We create with those total passive optical systems that we do. Those will have a higher degree of adoption and enterprise as a share of revenue than they do in carrier as a share of the total revenue. Thank you.

Speaker Change #116: Total passive optical systems that we do those we will have a higher degree of adoption and enterprise as a share of revenue then.

Speaker Change #116: They do in.

Speaker Change #116: Carrier has a share of the total revenue.

Speaker Change #117: Thank you.

Unknown Executive: Great.

Unknown Executive: Next question. Thank you.

Speaker Change #118: Great next question.

Edward A. Schlesinger: Higher Degree of Adoption and Enterprise as a share of revenue than they do in the United States. Carrier has a share of, Got it. Thank you. All right, next question. Thank you. Our next question will come from Meta Marshall from Morgan Stanley. Your line is open.

Meeta Marshall: Our next question will come from Meeta Marshall from Morgan Stanley. Your line is open. Great. Thanks. Appreciate the commentary on carrier that you guys are getting towards a better inventory position or that orders are getting more aligned with deployments.

Speaker Change #120: Thank you. Our next question will come from meta Marshall from Morgan Stanley. Your line is open.

Meta A. Marshall: Great, thanks. I appreciate the commentary on Carrier that you guys are getting towards a better inventory position or that orders are getting more aligned with deployments, but just any latest updates? In terms of when you expect carriers to kind of be through with their inventory or orders to be aligned with the, And then maybe a second question. Just in terms of the price increases on the display side or those negotiations, is that something you expect to kind of have? Completed by Q3.

Meta A. Marshall: Great. Thanks.

Meta A. Marshall: Appreciate the commentary on carrier or that you guys are getting towards.

Meta A. Marshall: Better inventory position or that orders are getting more aligned with deployments, but just any latest update.

Meeta Marshall: But just any latest update in terms of when you expect carriers to kind of be through their inventory or orders to be aligning with deployments.

Meta A. Marshall: When do you expect carriers to kind of be through through their inventory or orders.

Speaker Change #121: Orders to be aligning with deployment and then maybe a second question.

Wendell Weeks: And then maybe a second question just in terms of the price increases on the display side, or those negotiations, is that something you expect to kind of have completed by Q3. And just as we think about that going forward, you know, as you're going through those negotiations, is there any hope of kind of moving that to more USD-based pricing or just do you expect that to be more dynamic with currency going forward. Thanks. So, as we complete those currency-based pricing negotiations, we will update you on one of the reasons. You see a scheduling, an investor session in September.

Speaker Change #122: Just in terms of.

Speaker Change #123: The price increases on the display side are those negotiations is that something that you expect to kind of have.

Meta A. Marshall: And just as we think about that going forward, you know, as you're going through those negotiations, is there any hope of kind of moving that to more USD-based pricing? Or just do you expect that to be more dynamic with currency? As we complete those currency-based pricing negotiations, we will update you. One of the reasons.

Speaker Change #123: Our completed by Q3, and just as we think about that going forward.

Speaker Change #123: Through those negotiations is there.

Speaker Change #124: Any hope of kind of moving that to more USD based pricing or just do you expect that to be more dynamic with currency going forward. Thanks.

Speaker Change #123: Okay.

Speaker Change #123: So.

Speaker Change #125: As we complete those currency based pricing negotiations, we will update you one of the reasons you see a scheduling a investor session in September would be to update you on our progress on those dialogues.

Wendell P. Weeks: Asiya is scheduling an investor session in September to update you on our progress on those dialogues with our customers. I think you should be expecting us to provide you an update. As for moving to the U.S. dollar, we're engaged with our customers as part of this whole dialogue. That exact question... find the right way to share the appropriate amount of the Relative Value of the Current.

Wendell Weeks: It would be to update you on our progress on those dialogues with our customers in this flight. So I think you should be expecting us to provide you an update at that date. As for moving to U.S. Dollar Base, we're engaged with our customers as part of this whole dialogue. That exact question, as we seek to find the right way to share appropriately the relative value of the currency moves relative. So, of course, the debate is our customers would like an exchange rate closer to our current spot rate, and we would like one closer to the past 30-year average.

Speaker Change #125: With our customers and display so I think you should be expecting us to provide you an update at that date.

Speaker Change #125: As for moving to U S dollar base.

Speaker Change #125: We are engaged with our customers as part of this whole dialogue that exact question.

Speaker Change #125: As.

Speaker Change #125: Huh.

Speaker Change #126: We seek to find the right way.

To share appropriately.

Speaker Change #126: Our relative value.

Speaker Change #126: <unk>.

Speaker Change #126: The currency moves relative.

Wendell P. Weeks: [inaudible] Uh, of course, the debate is. Our customers would like an exchange rate closer to our current spot rate, and we would like one closer to the past 30 year average. And this is what God created negotiations for, and we're in the midst of working our way through all that. And we look forward to having a, We'll have a more detailed discussion with you when we get together, and Meta on Carrier. I think it's customer by customer; the inventory situations are different. We're not quite there yet on people completely buying at their deployment rates, but I think we'll make progress on that as we go into the third quarter.

Speaker Change #126: Suck.

Speaker Change #126: Of course, the debate is.

Speaker Change #126: Our customers.

Speaker Change #127: We would like and exchange rate closer to our current spot rate and we would like one closer to the past 30 year average.

Wendell Weeks: And this is what God created negotiations for, and we're in the midst of work and our way through all that.

Speaker Change #128: And this is what God created negotiations for and we're in the midst of working our way through all that.

Wendell Weeks: And we look forward to having a more detailed discussion with you when we get to Canada in September. And me too on carrier. I think it's, you know, it's customer by customer; the inventory situations are different. We're not quite there yet on people being completely, you know, buying out their deployment rates. I think we'll make progress on that as we go into the third quarter. We'll keep you updated, but I don't know that will necessarily be through all of it. In total, I think you should think about both questions together. Carriers, since it's so, as Ed points out, you know, depends on particular carrier strategies.

Speaker Change #128: And we look forward.

Speaker Change #128: To having.

Speaker Change #128: A more detailed discussion with you when we get together in September.

Speaker Change #129: Yes meta on carrier.

Speaker Change #130: I think it is.

Speaker Change #131: Customer by customer the inventory situations are different.

Not quite there yet on people being completely.

Speaker Change #130: They're buying out their deployment rates I think we'll make progress on that as we go into the third quarter.

Edward A. Schlesinger: We'll keep you updated, but I don't know that we'll necessarily be through all of it. Portal, I think, about both questions. The carrier, since it's so, as Ed points out, it depends on particular carrier strategies. We should wait for them to talk more fully about it, but we'll update on where we are versus the deployment rate, and we do expect that to close, to continue to close relatives, and for display. What our aim is, is that.

Speaker Change #130: We will keep you updated but I don't know that will necessarily be through all of it.

Speaker Change #130: Intermodal.

Speaker Change #130: I think as you think about both questions together.

Speaker Change #130: Carriers since it's so as Ed points out it depends on particular carrier strategies.

Wendell Weeks: We should wait for them to talk more fully about it, but we'll update on where we are versus deployment rate, and we do expect that to continue to close relatively quickly.

Speaker Change #130: We should wait for them to talk more fully about it but we'll update.

Speaker Change #130: On where we are versus deployment right and we do expect that to close to.

To continue to close relatively quickly.

Edward Schlesinger: And for display, what our aim is, is to make this just be really simple for investors. And we're just going to end up delivering the profitability that you're used to out of display, sort of no matter where the currency is coming out. Because we're going to price appropriately to reward our shareholders for the investment and risk that they put in place to develop this terrific business. Great.

Speaker Change #132: And for display.

Speaker Change #132: Our aim is is that.

Edward A. Schlesinger: To make this just be really Warren Best, and we're just going to end up delivering the profitability that you're used to out of display, no matter where the currency is, because we're going to price appropriately to reward our shareholders for the investment and risk that they have put in place to develop this program. Okay, next question. Thank you. Our next question will come from Tim Long from Barclays. Your line is open.

Speaker Change #132: Is to make this just be really simple.

Speaker Change #132: For investors and we're just going to end up delivering the profitability.

Speaker Change #132: That you are used to display.

Speaker Change #132: Sort of no matter, where the currency is coming out.

Speaker Change #132: Because we're going to price appropriately.

Speaker Change #132: To reward our shareholders for the investment and risk.

Speaker Change #132: They are put in place to develop this terrific business.

Unknown Executive: Thank you.

Unknown Executive: Okay, next question.

Speaker Change #133: Great. Thank you.

Speaker Change #134: Okay next question.

Tim Long: Thank you.

Tim Long: Our next question will come from Tim Long from Barclays. Your line is open. Thank you. I was hoping I could get a two-parter on optical first part, but it's cover current Jenny I business. You're talking about just curious. I think a lot of the hyperscalers have. There's some different types of architectures. They're using, you know, AOC, EOC. So, some electrical, some optical.

Speaker Change #137: Thank you.

Speaker Change #136: Our next question will come from Tim long from Barclays. Your line is open.

Timothy Patrick Long: Thank you. I was hoping I could get a two-parter on optical. First part, for this current Gen AI business you're talking about, just curious, I think a lot of the hyperscalers have some different types of architectures they're using, AOC, EOC, so some electrical, some optical.

Timothy Patrick Long: Thank you.

Timothy Patrick Long: Was hoping I could get a two parter on optical first part.

Timothy Patrick Long: For this current Gen AI business Youre talking about just curious I think a lot of the hyperscale or just have.

Speaker Change #138: There's some different.

Speaker Change #139: Types of architectures theyre using Aoc EOC, so some electrical some optical.

Wendell Weeks: What you're selling now in this portfolio is that across any single hyperscaler deployment, or would have fit better into certain architectures. And then number two, if you could just touch on, you know, the other, you know, more traditional enterprise. Like inferencing type market when you expect that to develop to develop and what type of uptick in optical component or, you know, fiber. Content would you expect to see when we get to that more traditional enterprise deployments. Thank you.

Wendell P. Weeks: What you're selling now in this portfolio, is that across any single hyperscaler deployment, or would it fit better into certain architectures? And then, number two, if you could just touch on the other more traditional enterprise market, like inferencing type market, when do you expect that to develop, and what type of uptick in optical component or fiber? What content would you expect to see when we get to that more traditional enterprise deployment? Thank you. To the first part.

Speaker Change #140: What's your selling now in this portfolio is that is that across any single hyperscale or deployment or would it fit better into certain architectures and then number two if you could just touch on the other more traditional enterprise.

Speaker Change #141: Inferencing type market when do you expect that to develop to develop and what type of uptick in optical.

Speaker Change #142: Our fiber.

Speaker Change #142: Yeah.

Speaker Change #142: Content would you expect to see when we get to that.

Speaker Change #143: More traditional enterprise deployments. Thank you.

Wendell Weeks: to take your questions in order. To the first part, the revenue that you see us reporting today is basically the fiber optic connection between the switches. There's a work exactly like this, but the way people talk about top-of-the-rack switches that then connect to other switch layers, which enable us to connect every GPU to every other GPU. There is work as you are reflecting on what will happen then within the server racks, whether those will end up becoming optical connections as well. Historically, they have been copper, and then once the rate distance rises above sort of a hundred gigabit per meter second, you end up going to optical.

Speaker Change #144: To the.

Speaker Change #145: Take your questions in order to the first part.

Wendell P. Weeks: The revenue that you see us reporting today is basically the fiber optic connection between the switches, which works exactly like this but in the way people talk about sort of a top of the rack switch and then connect to other switch layers which enable us to connect every GP. There is work, as you are reflecting on.

Speaker Change #145: The revenue that you see us reporting today.

Speaker Change #146: Is basically the fiber optic connections.

Speaker Change #146: Between the switches.

Speaker Change #146: Okay.

Speaker Change #147: Does it work exactly like this but the way people talk about sort of top of the rack switches.

Speaker Change #147: And then connect.

Speaker Change #147: On the other switch layers, which enable us to connect every GPU to every other GPU.

Speaker Change #147: There is work as you.

Speaker Change #147: Reflecting on.

Wendell P. Weeks: What will happen then within the server? whether those will end up becoming optics. Connection, as well. Historically, they have been copper, and then once the bitrate distance rises above sort of 100 gigabits per meter second, you end up going to opt for that.

Speaker Change #147: Sure.

Speaker Change #148: What will happen that with in the server racks, whether those will end up becoming optical connections as well historically they have been copper.

Speaker Change #148: And then once the.

Speaker Change #149: A bit rate distance rises above sort of 100 gigabit per meter second you end up going to optical so as distance.

Wendell P. Weeks: So as distance climbs, optical, that same dynamic because of density and complexity is now starting to work its way. We're beginning that long-term material science and slow work, right, on what happens within the server rack. And that tends to get at the architectures you're speaking about more fully, to part two of your question. What happens with There's a bunch of different opinions on how inference architectures will work, and it has to be largely driven by what that particular player's market position is and different arguments around DataGravity.

Wendell Weeks: So as distance climbs, optical tends to become the technology that is the dominant use of the tech. That same dynamic, because of density and complexity, is now starting to work its way; we're beginning that long-term material science and slow work on what happens within the server rack, and that tends to get at the architectures you're speaking about more fully.

Speaker Change #149: Distance climbs.

Speaker Change #150: Nickel tends to become.

Speaker Change #150: The technology.

Speaker Change #150: That.

Speaker Change #150: As the dominant use of the tech.

Speaker Change #150: That same dynamic because of density.

Speaker Change #150: And.

Speaker Change #151: Complexity is now starting to work its way, we're beginning that long term material sciences slower pace on what happens within the server rack and that tends to get at the architectures you're speaking about more.

Wendell Weeks: To the part two of your question is what happens with inference. There's a bunch of different opinions on how inference architectures will work. It tends to be largely driven by what that particular player's market position is and different arguments around data gravity. So I would say it's too early for us to have a point of view on which architectures will become the predominant ones for inference timness. As our understanding evolves and we develop a more converts view of how that evolve will be happy to share with you. Does that address your questions, Tim? Yes, that's great.

Speaker Change #150: Fully.

Speaker Change #150: Hi.

Speaker Change #150: To the.

Speaker Change #152: Part two of your question is what happens with influence.

Speaker Change #153: There is a bunch of different opinions on how inference architectures will work.

Speaker Change #154: <unk> tends to be largely driven by what that particular players market position is.

Speaker Change #154: And different arguments around data gravity right.

Wendell P. Weeks: So, I would say it's too early for us to have a point of view on which architectures will become the predominant ones. As our understanding evolves and we develop a, I love how that evolved, and I would be happy to share. Does that address your question? Yes, that's great. Thank you. Great, I think we can take one more question. Thank you. And our last question will come from George Notter from Jeffreys, LLC. Your line is open. Hi guys. Thanks a lot for squeezing me in.

Speaker Change #154: So.

Speaker Change #155: I would say, it's too early for us to have a point of view.

Speaker Change #155: On which architectures will become the predominant ones for influenced Tim is as our understanding evolves and we developed.

Speaker Change #156: A more.

Speaker Change #156: Converged view of how that evolve we'll be happy to share with you.

Speaker Change #156: Does that address your questions Tim Yeah, that's great. Thank you.

Unknown Executive: Thank you.

Unknown Executive: Great, I think we can take one more question. Thank you.

Speaker Change #157: Great I think we can take one more question.

George Notter: And our last question will come from George Nauder from Jeffries LLC. Your line is open. Hi guys, thanks a lot for squeezing me in.

Timothy Patrick Long: Thank you.

Timothy Patrick Long: And our last question will come from George Notter from Jefferies. LLC. Your line is open.

George Charles Notter: Hi, guys. Thanks, a lot for squeezing me in.

George Charles Notter: I guess I wanted to just go back to the question of your competitive differentiation in the optical business. For starters, I'm just curious about how much of this Gen AI solution is customized from Corning. I'm curious about how many customers you're doing customization work for. And then also, I know there are other suppliers making smaller diameter fiber cables. I know there's a bunch of work folks are doing on connectors, higher density racks. I guess I'm just hoping to drill down into what's precisely unique to Corning versus some of those other guys.

George Notter: I guess I wanted to just go back to the question of your competitive differentiation in the optical business. I guess for starters, I'm just curious about how much of this GNI solution is customized from Corning. Curious about how many customers you're doing customization work for. And then also, I know there are other suppliers making smaller diameter fiber cables. I know there's a bunch of work folks are doing on connectors, higher density racks. I guess I'm just hoping to drill down into what's precisely unique to Corning versus some of those other guys. Thanks. Great. So, as you know, George, what we do is news.

George Charles Notter: I guess I wanted to just go back to the question of your competitive differentiation in the optical business.

George Charles Notter: I guess for starters I'm, just curious about how much of this gen. AI solution is customized from Corning I'm curious about how many customers you're doing customization work for.

Speaker Change #159: And then also I know there are other suppliers, making.

Smaller diameter fiber cables I know, there's a bunch of work folks are doing on connectors.

Speaker Change #159: Higher density racks I guess.

Speaker Change #159: Just hoping to drill down into whats precisely unique to Corning.

Speaker Change #159: Versus some of those other guys. Thanks.

Wendell P. Weeks: Thanks. Great. So, as you know, George, what we do is participate in all the levels of that value stream. And we will take our new-to-the-world fiber and provide it to other cablers. We'll also design proprietary cables that incorporate our fiber to compete at that level. And then, of course, through our connectors, through U.S. Connect, we will provide those to other players, take our competitive advantages at the component level, but at the same time, we'll then put them together in unique ways at the total system.

Speaker Change #159: Great.

Speaker Change #159: So as you know George what we do is we.

Wendell Weeks: We participate in all the levels of that value stream. And we will take our new to the world fiber and provide it to other cables. We'll also design proprietary cables that incorporate our fiber to compete at that level. And then we, of course, to our connectors through US Connect. We will provide those to other players and take our competitive advantages at the component level. But at the same time, we'll then put them together in unique ways at the total system level. So we deliberately provide to other players, because that is best for our overall customers, our different componentry for them to put together in their own novel ways.

George Charles Notter: We participate in all the levels of debt.

George Charles Notter: Value stream and we will.

Speaker Change #160: Take our new to the world fiber and provide it to other cable is we'll also designed proprietary cables that incorporate our fiber to compete at that level and then we of course to our connectors to use connect we will provide those to other players.

Speaker Change #160: Take our competitive advantages at the component level, but at the same time will then put them together in unique ways at the total system level. So we deliberately provide two other players because that is best for our overall customers are different componentry for them to put together and their own novel.

Wendell P. Weeks: So we deliberately provide to other players because that is best for our overall customer, and different components for them to put together in their own novel way. Now, what makes our fiber so unique? is when most people just shrink the diameter of the fiber. Actually, the optical performance decreases. Spot Size Gets Smaller, Ben Resis. Robs, right?

Wendell Weeks: Now what makes our fiber so unique is when most people just shrink the diameter of the fiber, actually the optical performance decreases. The spot size gets smaller, right? The bend resistance drops, right? The attenuation can get a little bit less. What makes our inventions so cool is that we ended up reducing the diameter of the fiber while improving versus standard fiber. All of the optical performance, because we redesigned the actual profile and the way we make the fiber in a proprietary way. And we managed to deliver all of this without any significant increase in our cost.

Speaker Change #160: Ways.

Speaker Change #161: Now what makes our fiber so unique is when most people just shrink the diameter of the fiber.

Speaker Change #161: Actually the optical performance decreases.

Ben: The spot size gets smaller right Ben resistance drops right tenure.

Wendell P. Weeks: can get a little bit less. We ended up reducing the diameter of the fiber while improving, versus standard fiber, all of the optical performance because we redesigned the actual profile and the way we make the fiber in a proprietary way. And we managed to deliver all of this without any significant increase in our costs. Competitors try to do something at the fiber level, but they end up having to increase that performance. So that is sort of the core of our advantage of fiber.

Speaker Change #163: <unk> can get a little bit less what makes our inventions. So cool is that.

We ended up reducing the diameter of the fiber while improving versus standard fiber.

Speaker Change #163: All of the optical performance, because we redesigned the actual profile and the way we make the fiber.

Speaker Change #163: Proprietary way.

Speaker Change #163: We managed to deliver all of this without any significant increase in our cost when competitors try to do something at the fiber level. They end up having to increase their cost to meet that performance. So that is sort of the core of our advantage of fiber and then we just saw.

Wendell Weeks: When competitors tried to do something at the fiber level, they end up having to increase their cost to meet that performance. So that is sort of the core of our advantage of fiber. And then we just start multiplying it with our expertise at each level.

Speaker Change #164: Start multiplying it.

Speaker Change #164: With our expertise at each level as.

Wendell Weeks: As far as what share of our revenue going forward will be more customized versus at the componentry level. Our desire would be to have the majority of our revenues be driven by delivery of those customized solutions and the value that we add there on reduced installation time. At the same time, we're in the business of delighting our customers. And if what they would like us to do is to provide some of the component building blocks at the appropriate price, of course, to our competitors, we will be happy to do that. Thank you very much. Thank you, George.

Wendell P. Weeks: And then we just start multiplying it, with our expertise at each level. As far as what share of our revenue going forward will be more customized versus at the componentry level. Our desire would be to have the majority of our revenues be driven by the delivery of those customized Solutions and the value that we add there. We're in the business of delighting our customers. And if what they would like us to do is to provide some of the component building blocks, at an appropriate price, of course, to our competitors.

Speaker Change #164: As far as what share of our revenue going forward will be more customized versus at the component tree level.

Speaker Change #164: Our desire would be to have the majority of our revenues be driven by delivery of those customized solutions and the value that we add there on reduce installation time at the same time, we are in the business of delighting our.

Speaker Change #165: <unk> AD if what they would like us to do is to provide some of the component building blocks.

Speaker Change #164: At the appropriate price of course to our competitors, we will be happy to do that.

Speaker Change #164: Great. Thank you very much thank.

Wendell P. Weeks: We will be happy. Great, thank you very much. Thank you, George. And thanks, everybody, for joining us today. Before we close, I wanted to let you know that we're going to attend two conferences in the third quarter, the JPMorgan Hardware and Semi Management Access Forum on August 14 and Citi's 2024 Global TMT Conference on September 5. We also plan to host a visit to our facilities in September. Finally, we'll be scheduling management visits to investor offices.

Unknown Executive: And thanks, everybody, for joining us today.

Speaker Change #166: Thank you George and thanks, everybody for joining us today before we close I wanted to let you know that we're going to attend two conferences in the third quarter Jpmorgan hardware and semi management access Forum on August 14, and cities 2024 Global TMT Conference on September five we also plan to host a visit to our facilities in.

Unknown Executive: Before we close, I wanted to let you know that we're going to attend two conferences in the third quarter: the JP Morgan Hardware and Semi-Management Access Forum on August 14th and the City's 2024 Global TMT Conference on September 5th. We also plan to host a visit to our facilities in September. Finally, we'll be scheduling management visits to investor offices in Celeb. There will be a replay of today's call on our website starting later this morning. So once again, thanks for joining us.

Speaker Change #166: Finally, we will be scheduling management visits to investor offices in select.

Speaker Change #167: There'll be a replay of today's call on our website. Starting later this morning. So once again, thanks for joining US operator that concludes our call. Please disconnect all lines.

Ann H. S. Nicholson: There will be a replay of today's call on our website starting later today. So once again, thanks for joining us. Operator, that concludes our call. Please disconnect everyone. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day. [inaudible]

Unknown Executive: Operator, that concludes our call. Please disconnect lines. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change #168: Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

Unknown Executive: Everyone, have a wonderful day.

Speaker Change #167: Okay.

Speaker Change #167: [music].

Speaker Change #167: Okay.

Speaker Change #167: Okay.

Speaker Change #167: Yes.

Speaker Change #167: [music].

Speaker Change #167: Okay.

Speaker Change #167: [music].