Source: Motley Fool transcript (published 04/28/2026); call date Tuesday, April 28, 2026. Participants: Wendell Weeks (Chairman/CEO), Edward Schlesinger (EVP/CFO), Chris (IR).
Wendell Weeks, CEO: Thank you, Chris, and good morning, everyone. Today, we announced excellent first quarter 2026 results. Year-over-year sales grew 18% to $4.35 billion. EPS grew 30% to $0.70. Operating margin expanded 220 basis points to 20.2%. Gross margin expanded 120 basis points to 39.1%, and ROIC expanded 190 basis points to 13.5%. These excellent results were led by Optical Communications and Solar. This quarter's performance serves as yet another proof point of Springboard's powerful trajectory.
As you remember, on our last earnings call in January, we upgraded our internal Springboard plan to add $11 billion in incremental annualized sales by the end of 2028 from our Q4 2023 starting point. Now, based on increasing demand for our innovations, we plan to upgrade again and extend our plan through 2030 at our investor event in New York City on May 6.
I'll begin with Solar. In Q1, we grew solar sales 80% year-over-year. We now participate in the solar industry through 3 major manufacturing operations: polysilicon, wafers and modules. We built the largest solar ingot and wafer facility in the United States in just 18 months, with committed customers for our wafer output. Our ramp is running behind our ambitious plans — our wafer facility will undergo an extended maintenance shutdown, and we will transition to a permanent power system and repair and upgrade production equipment. To cover this transition, we have built into our second quarter guidance $30 million of additional expense versus the first quarter. We also acquired and ramped a module manufacturing facility in Arizona, which is now up and running and should cross over our corporate operating margin target of 20% in the second quarter. We will be increasing our sales plan for the solar market access platform as part of the Springboard upgrade on May 6.
Turning to Optical Communications. We saw robust demand across the business with year-over-year sales growth of 36%. In our Enterprise business, early in the quarter we announced our multiyear, up to $6 billion agreement with Meta to support their apps, technologies and AI ambitions using our newest innovations in optical fiber, cable and connectivity solutions. We have now concluded two more large long-term agreements with hyperscale customers, each similar in size and duration to the Meta agreement. These deals share the risk and rewards of the required expansions with our strategic customers — the model is quite similar to our extremely successful Gen 10.5 agreements with our display customers. Our partnership with Lumen Technologies in the carrier space is another good example. Lumen and fiber-to-the-home contributed to carriers' growth in the quarter; the typical run rate for homes passed by our large carrier customers has increased about 50% since the beginning of Springboard. Overall, based on strong progress in Optical, we will be upgrading our sales plan for the business through 2030 at the investor event next week.
Edward Schlesinger, CFO: Our strong first quarter results show continued excellent performance on our Springboard plan. We delivered our eighth consecutive quarter of year-over-year sales growth while continuing to enhance the financial profile of the company. Year-over-year in Q1 sales grew 18% to $4.35 billion and EPS increased 30% to $0.70 per share, both coming in at the high point of our guidance. Operating margin expanded 220 basis points to 20.2%. ROIC grew 190 basis points to 13.5%, and we delivered robust free cash flow of $188 million.
Comparing our Q4 2023 Springboard starting point to Q1 2026, we grew sales 33%, improved operating margin by 390 basis points, grew EPS 79% and expanded ROIC 470 basis points. Today, we announced changes to our segment reporting effective Q1 2026. First, we will now report the results of our Solar business in its own segment (previously within Hemlock and Emerging Growth Businesses). Second, we are combining Display and Specialty Materials into a new segment called Glass Innovations. Our Automotive and Optical Communications segments remain unchanged, and all other results will be grouped as Life Sciences and Emerging Growth Businesses.
In Optical Communications, sales were $1.8 billion, up 36% year-over-year, driven by robust demand for Gen AI products. Net income was $387 million, up 93% year-over-year. Sales in both enterprise and carrier rose 36% year-over-year. In Enterprise, building off the multiyear, up to $6 billion agreement with Meta, we entered into large long-term agreements with two additional hyperscale customers. In Glass Innovations, first quarter sales were $1.4 billion, up 1% year-over-year; net income was $324 million and net income margin was 22.8%. Display glass volume was down slightly sequentially, better than our expectations of down mid-single digits. Demand for premium Gorilla Glass products remains resilient despite rising memory costs. We expect memory prices to significantly impact the market in 2026, but we expect to outperform the market. We recently launched Corning Gorilla Glass Ceramic 3.
In Automotive, Q1 sales were $437 million, down 1% year-over-year. The global automotive vehicle market was down 3%. Net income was $70 million, up 3% year-over-year. In Solar, sales were $370 million, up 80% year-over-year. Net income was $7 million, down $20 million year-over-year. Our Q1 actuals included about a $0.04 EPS impact as we continue to bring up solar wafer capacity to meet committed demand. Sales in Life Sciences and emerging growth businesses were flat year-over-year.
On operating expenses: in the quarter, OpEx was $823 million, including higher variable compensation expense, including stock-based compensation — the primary driver was the significant increase in our stock price in the quarter. On our outlook: even with the extended solar wafer shutdown, we expect Q2 '26 to be one of the strongest quarters in a string of very strong quarters. For the full year, we expect to generate significantly more free cash flow year-over-year while continuing to invest strongly in our growth vectors aided by customer financial support. We have one of the longest debt tenors in the S&P 500 — our current average debt maturity is about 20 years — and we expect to continue our strong track record of returning excess cash to shareholders, with share buybacks being the primary vehicle.
Operator: [Q&A — selected]
John Roberts (Mizuho): On the new hyperscaler agreements, are there material glass fiber draw capacity expansions associated with that? And when fully ramped on solar, what's the split between semiconductor wafers and modules?
Wendell Weeks: These agreements taken in total are driving so much growth that you're going to see expansion across all of our major optical operations, including expanding our fiber operations. What we seek to do with these arrangements is to make sure we're appropriately sharing the risk of the required expansions with our customers.
Edward Schlesinger: On solar, we're running at about $0.5 billion semiconductor business that will continue to grow, and the remainder of the segment will come in the solar space.
Wamsi Mohan (Bank of America): How tight is the supply-demand balance in optical, and how do you think about pricing for fiber and cable?
Wendell Weeks: We are seeing a very robust demand for our innovation sets, and the growth rate is accelerating so robustly that we're entering into these very long-term agreements. The pricing environment is clearly favorable for those who have capacity, but our approach to increasing profitability comes primarily from how we uniquely innovate and how we uniquely manufacture our products rather than focusing on price increases of commodity-based products. We're introducing new innovations that reduce our customers' total installed cost, and we share that value creation, which increases our profitability much more rapidly and sustainably over time.
Wamsi Mohan: Could optical eclipse display in terms of margins?
Wendell Weeks: The simple answer is yes, and what will be critical will be the rate of adoption and the value of the innovations we create and the size of the competitive moats we can build.
Edward Schlesinger: Optical is a little less capital intensive than display. Your return on invested capital is high, and I think we will see that drive a lot of profit dollars and cash.
Josh Spector (UBS): On margins — sequentially your incremental margins were north of 50% in optical. Any new margin target coming at the May 6 event?
Edward Schlesinger: A large driver of what we'll see in Optical is the impact of moving to our new innovations, which moves us up in margin over time. It's a little different than comparing apples-to-apples on price. We're certainly getting operating leverage. We'll cover the financial profile at next week's event.
Asiya Merchant (Citi): Can you raise prices within these long-term agreements? And when should the solar drag be completed?
Wendell Weeks / Edward Schlesinger: On solar, polysilicon is in great shape, modules are on track to cross 20% in Q2, and wafers are the most complex — the drag plus the extended shutdown is close to $0.07 of EPS in the Q2 guide. On the long-term agreements: what we mainly seek is improving visibility — first on the total demand, second on the products themselves (which continue to change and innovate), and third on how we share the risk of our investments so we can assure investors a super strong return.
Samik Chatterjee (JPMorgan): Do the hyperscaler agreements imply take-or-pay, capital commitment?
Wendell Weeks: Yes, all of the above. You'll see a blend that best meets our customers' utility preference curves — funding, guaranteed revenue, price, accelerating share agreements, all aimed at appropriately sharing the risk. On scale-up vs scale-out: as you get out longer term, we're engaged with customers about how demand changes as more links fall to fiber optics, which will tend to increase commitment levels over time.
Meta Marshall (Morgan Stanley): Best carrier quarter in years — are you gaining share in fiber-to-the-home?
Wendell Weeks: The ascendancy of fiber-to-the-home is primarily what's driving the numbers. We will always secure a hunk of our capacity to serve the underserved, but the big carriers have been very public about their decisions.
George Notter (Wolfe, on behalf): Any split between carrier and enterprise growth, and will LTAs be a mechanism in the Photonics platform?
Edward Schlesinger: Both carrier and enterprise grew 36% year-over-year in Q1. Carrier had a great quarter — fiber-to-the-home and data center interconnect. We'll address the new Photonics map in detail next week.
Wendell Weeks: What has changed is that technical progress and deep customer dialogues have increased the probability of the scale-up piece of the network making a difference in the near term. We'll share those technical drivers next week.
Martin Yang (Oppenheimer): CapEx wasn't raised despite the two new agreements — were they already incorporated?
Edward Schlesinger: We could be a little above that number this year. We will definitely be investing across all of our product sets in optical, and we have tools to share that investment with our customers. Investment continues into next year.
Wendell Weeks: When we shared the CapEx figure, we had in mind we would be able to reach these agreements. Because the demand is coming at us rapidly, we would have had to have been in progress on those expansions already.
Operator: And that will conclude our question-and-answer session. Corning will host an investor event at the NYSE on May 6 to share the upgraded Springboard plan through 2030.