Welcome to the Corning Inc. Quarter 1 2023 Earnings Call. [Operator Instructions]. It is my pleasure to introduce to you, Ann Nicholson, Vice President of Investor Relations..

Thank you, and good morning, everybody. Welcome to Corning's First Quarter 2023 Earnings Call. With me today are Wendell Weeks, Chairman and Chief Executive Officer; Ed Schlesinger, Executive Vice President and Chief Financial Officer; and Jeff Evenson, Executive Vice President and Chief Strategy Officer.

I'd like to remind you that today's remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks, uncertainties and other factors that could cause actual results to differ materially. These factors are detailed in the company's financial reports.

You should also note that we'll be discussing our consolidated results using core performance measures, unless we specifically indicate our comments relate to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business.

For the first quarter, the primary differences between GAAP and core EPS stemmed from restructuring charges and from non-cash mark-to-market adjustments associated with the company's currency hedging contracts and Japanese-yen-denominated debt. In total, these increased core earnings in Q1 by $97 million.

As a reminder, the 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.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. We encourage you to follow along. They're also available on our website for downloading. And now I'll turn the call over to Wendell..

Thank you, Ann, and good morning, everyone.

Last quarter, we told you that markets constituting about 1/2 of our sales were experiencing recession-level demand; that our first quarter sales would decline by greater-than-normal seasonality due to the pandemic-related disruptions in China; that we would raise prices again to offset additional inflation; and also begin to restore our productivity ratios to pre-pandemic levels; and as a result, our margins would increase 1 to 2 percentage points sequentially, despite lower sales.

And that is exactly how the first quarter played out. First quarter sales were $3.4 billion, and EPS was $0.41. Our actions to raise prices and restore productivity ratios began delivering notable results. Despite a 7% sequential sales decline, gross margin expanded 160 basis points sequentially to 35.2%.

And operating margin expanded 150 basis points from the prior quarter to 15.5%. Although conditions remain weak in multiple markets, we expect our results to improve in the second quarter. We remain focused on profitability and cash flow, and we will continue to align our cost structure to demand.

Now I wanted to provide some context on the dynamics we're experienced in our key markets. And then I'll discuss how we're continuing to build our long-term growth opportunities across our businesses. So let's dive in. In Display Technologies, sales declined 3% sequentially as both volume and glass price declined slightly.

In March, panel maker utilization increased, and we expect our volume in the second quarter to increase significantly from the first quarter. As conditions continue to improve, we're optimistic the panel maker utilization is beginning to move beyond correction levels and will return to more normal levels in the coming quarters.

In Optical Communications, sales declined 6% sequentially. Our pricing actions partially offset a greater-than-normal seasonal volume decline in connectivity solutions, which is associated with the pacing of several large customer projects. Our pricing and productivity actions resulted in net income improving 22% sequentially despite the lower sales.

Government commitments to connect the unconnected are contributing to robust cable and fiber demand, and we continue to advance our leadership. Last month, we officially opened an optical cable manufacturing campus in North Carolina to help provide U.S.

network operators with the cable they need to bring high-speed optical connectivity to underserved communities, particularly in rural America. Commerce Secretary, Gina Raimondo said, "It is past time that every American be connected with affordable Internet no matter where they live. We could not do it without the folks at Corning.

We wouldn't have the fiber, the innovation or the cable." Finally, in Environmental Technologies, we saw increased adoption of gasoline particulate filters in the quarter, which helped drive a 9% sequential improvement in sales despite the languishing car market. Net income grew 19% in the segment based on our productivity actions and growing sales.

To sum up the short term, we're seeing improvement in some of our markets, but a series of challenges continues to ripple across the global economy. Nevertheless, we expect to grow sequentially in the second quarter and to improve our key financial metrics.

For the back half of the year, I'd be disappointed if we didn't grow from second quarter levels. Longer term, we will continue to innovate and capture growth opportunities as they materialize. We're energized about Corning's future. And I'd like to review some of the reasons why. It all starts with our focused and cohesive portfolio.

We maintain clear leadership in three core technologies, and four proprietary manufacturing and engineering platforms that are viable to solving a broad range of significant challenges in shaping through industries. We apply new combinations of our assets and capabilities to advance important secular trends in tandem with our customers.

And by reapplying and repurposing our insights and assets across multiple opportunities in markets, we increase our profitability. In Optical Communications, we've been leading in the industry for more than 50 years.

This business is the most fully evolved example of Corning's focused portfolio using all 3 of our core technologies and 4 of our manufacturing and engineering platforms. And we will continue to apply these capabilities to help build a more connected world over the next 50 years.

In Display, by leveraging all 3 of our core technologies and evolving our fusion platform, we have achieved large scale and broad capabilities that have advanced our leadership position. As our customers evolve, we're helping them create a world with richer and more lifelike and ubiquitous displays.

In Mobile Consumer Electronics, we invented the cover glass category and redefined it by integrating glass with ceramics and by combining fusion with vapor deposition. We continue to advance the state-of-the-art with our leading cover materials, which have been deployed on more than 8 billion devices to date.

And we've recently entered new product categories that provide opportunities for more of our content. For example, the camera lens covers on devices like the Samsung Galaxy S22 and S23 series. These advancements are excellent examples of our More Corning approach.

We're also innovating in emerging technologies like augmented reality and bendable devices, which we expect to contribute to long-term growth. In Automotive, we're helping build a world where vehicles are increasingly green and where software and displays are enabling new in-vehicle experiences.

Our inventions are enabling industry leaders to meet stringent upcoming EU7 emissions regulations and achieve near 0 emissions levels. And we're collaborating with LG Electronics, a global technology and vehicle component solutions innovator, to advance in-car connectivity.

Overall, we're helping to solve more and more of our customers' challenges in design, connectivity and autonomy. And at CES, we continue to generate strong industry excitement about how our technical glass and optics capabilities can expand the boundaries of what's possible.

Finally, in Life Sciences, we're using Corning's core glass and optical physics technologies along with our expertise in vapor deposition, precision forming and extrusion, to help support the discovery and delivery of new medicines, including biological treatments, that are personalized, effective and safe.

So as you can see, our investments and distinctive capabilities have placed us at the center of secular trends touching many facets of basic life. And we believe we will continue to develop category defining products to transform industries and enhance lives.

I'm also excited by our growth opportunities in the renewable energy industry, where I believe we can make significant additional contributions to a sustainable U.S.-based solar supply chain. We're proud to make the world just a little bit better wherever we can, and that extends to all of our stakeholders, especially in these uncertain times.

We recently released our DE&I and sustainability reports, which capture the great progress we've made and underscore our commitment to helping move the world forward. So as I wrap up my remarks, here's what I'd like to leave you with today.

Moving forward throughout 2023, we'll continue to focus on operating each of our businesses well and adjusting to meet the needs of the moment, including aligning our cost structure to the demand environment. At the same time, we're advancing growth initiatives and capabilities that will drive long-term success.

We remain well positioned to continue capturing some very rich set of long-term opportunities that we've built across our Market-Access Platforms. I look forward to updating you on our progress. Now I'll turn the call over to Ed, so he can get into the details of our financial priorities, along with our results and outlook.

Ed?.

first is dividends, which we've raised for 13 years in a row; second is share buybacks. We bought back about 5% of our outstanding shares in 2021, and we'll continue to be opportunistic. Preserving the financial strength of the company is always a top priority. We maintain a strong balance sheet that provides appropriate durability and flexibility.

And I'm proud to say Corning maintains one of the longest debt tenors in the S&P 500. Our average maturity is about 25 years with no significant debt coming due in any given year. In sum, the actions we are taking position us to come out of this period of uncertainty, financially strong and well positioned for a return to growth.

Now I'd like to wrap up with a few key takeaways. In the second quarter, we expect sales, profitability and cash generation to improve, driven by our profit improvement actions, cost controls and continued recovery in Display Technologies.

We're executing a highly disciplined approach to our investment decisions while maintaining a strong balance sheet. We're particularly focused on aligning our cost structure to the demand environment while maintaining the flexibility to address changing market conditions and capture upside as it occurs.

Our long-term growth drivers all remain intact, and we're well positioned to continue capturing growth tied to key secular trends such as those playing out in the optical communications and solar markets. And with that, I'll turn it back over to Ann for Q&A..

Thanks, Ed. Hey, operator, we are ready for our first question..

[Operator Instructions]. Our first question comes from the line of Matt Niknam with Deutsche Bank..

Congrats on the quarter. Just 2 if I could on optical. If you can just talk about the latest you're hearing from your customers and maybe speak a little bit more in terms of expectations of what's embedded for the second quarter.

And then secondly, on optical, I'm just trying to figure out in terms of where you're seeing some of the pause or more near-term softness.

Is it broadly distributed? Or is it maybe more in the sort of subscale or smaller carriers, which may be facing tougher maybe financial conditions, which are impacting some of the longer-term investment plans?.

cloud, AI/ML, 5G broadband connectivity. So we're sort of facing this interesting economy, which is all the long-term drivers remain in place and they're all speaking about very robust deployment plans. At the same time, we're just not seeing it in our order book, nor are we seeing it in earth being moved in these large civil works projects.

So we're taking these words with a little grain of salt. And we're just not reflecting in our forecast and our guide any real robust recovery yet until we see it. And it's not -- we're seeing this in large players, not just small folks. Some, I think, are seeking to conserve financial resources as they deal with their own uncertainty.

But at the same time, haven't given up on their launch of strategic plans. It doesn't mean that we won't see a strong bounce back to the run rate that you'd expect to match with their words on deployment plans in the back half. We could see it. We're just not going to guide it until we have it in our hands.

Does that make sense, Matt?.

That's great. Yes. Very much appreciated. And I'll hand it over just others can get in the Q&A..

Our next question comes from the line of Shannon Cross with Credit Suisse..

Wendell, can you talk a bit more on the display rebound that you're seeing, particularly what you saw in March? And how you expect that to trend through the year? What key points are you tracking to make sure that we are seeing a bit of a rebound there?.

So as you heard in Ed's comments, what's good is that we originally started to see the recovery in quarter four. The pandemic shock sits in and sets in, in China, sort of we go backwards and that we expected that we would work our way through it and then start to see the recovery start again in quarter one. And that's what we saw in March.

So we saw utilization start to climb. We're seeing it continue to climb through this month.

So as we're -- what we watch our -- what's actually happening with panel maker utilization, how are we seeing the dynamics play out between set makers and panel makers, it's looking to us like we're going to move beyond the recovery time, the correction time in this market and recovery is underway, and we'd expect to see that build in the coming quarters.

That's the way it looks to us. That's the way it feels to us. That's what the data is telling us. But it's still early, right? So we're not coming out hard core and saying, yes, we're back to normal. We're not there yet. But we're seeing the trends all move in the right direction, Shannon..

Our next question comes from the line of Steven Fox with Fox Advisors, LLC..

A bit of a difficult question since it involves not guiding to the second half. But Wendell, you mentioned in your opening remarks that you thought you could grow in the second half.

Where would you say that -- based on what you're seeing today, that there's opportunities for typical seasonality, where maybe we should capture expectations for seasonal improvements because the company is typically very back-end loaded in terms of their earnings growth half-over-half and The Street is looking for about 25% quarter-over-quarter improvement in earnings in Q3?.

Steve, this is Ed. I'll take that one. So maybe I'll start with the second quarter, and then I'll go to the second half. So as we think about the second quarter, in our guide, we're thinking about a significant improvement in Display. I think that's the primary driver. We're not expecting significant sales growth in other businesses.

We specifically called out Optical, Life Sciences and Specialty Materials. When you think about the second half, I think the first thing I'd start with is in Specialty Materials, we typically see customer product launches happen in the second half into business where usually our second half is higher than our first half.

I think that's a dynamic that could play out. And in our thoughts about the most likely case being the second half greater than the first half or greater than the second quarter, that's a place that I would expect to see growth.

I think additionally, Wendell described the Optical Communications situation very well, and we could certainly grow from first to second quarter levels in Optical Communications. Life Sciences, you could see a small increase. And then depending on how Display could play out, you could see growth there as well..

Our next question comes from the line of Wamsi Mohan with Bank of America..

Just a follow-up on Steve's question. Wendell, when you said you would be disappointed if you did not see growth in second half from second quarter levels, historically, you have, on average, seen second half up 7% over first half. So it would be fairly dramatic for you to see not sequential growth.

Would you say 2023, though, is shaping up in line with that kind of an expectation of second versus first half? Or is it more like recessionary years where maybe the dynamic track worse? And if I could, I know you mentioned sequential, very strong sequential volume growth in 2Q in Display.

Could you comment on how that looks on a year-on-year basis as well and where inventory levels are in Display?.

Let's take the second one. On the first one, Wamsi, it's an excellent question. So here's the way the dynamics were playing out within even our own company is our operating groups, our operating leaders sound very much like you.

And they sound very much like our customers, all sort of pointing towards what you'd see normally and the behavior you would expect in our industries.

And what's happening is that's running in the tension with us sort of in the center of the company who are looking at this and saying, I think this is a pretty unusual time we find ourselves in and it's unclear to us that following the historical cycles, or following what our customers are telling us is going to necessarily lead us to the right answer in the short term.

So you're on top of the tension, which is why sort of we're wording it the way we are, which is we do expect growth. How much growth is under much debate within us, but it's not, I think, what we know, Wamsi, that's making us have that debate; it's the things that we don't know.

And that's sort of the way it's playing out and sort of each passing month brings us a little more clarity. So that's where we are, Wamsi.

Does that answer make sense to you?.

Yes. Yes, it does, Wendell. Maybe just to step back for a second, if I could.

Like do you feel that the macro environment, relative to 90 days ago, for your end markets is getting better or worse?.

I think that the integration of the macro environment into our customers' business plans, continues at different rates in different industries. So I'd say by and large, people are speaking less robustly than they were 90 days ago. Has it changed our point of view much? Well, at the center, probably not so much. In our operating units, probably more.

I think the more -- the really interesting question is -- isn't so much when does sort of realization of what the broad economic outlook sets in, in all the different inventories, it's when does the reverse happen? Like when do we start to see those more robust signals that show us we're really moving beyond it. And I just haven't seen those yet.

That's what I'm looking for. And as soon as we see them, we'll tell you, Wamsi..

Yes. And, Wamsi, you had asked about Display second quarter, what we've incorporated in our second quarter guide versus the prior year. So just a couple of thoughts. One, remember last year, the way Display played out is the first half was really strong.

We started to see panel makers drop their utilization at the end of the second quarter, right? So Q3 and Q4, they ran at much lower rates.

Q1 and Q2, they ran at much higher rates, right? And if you think about the way we typically do our guide, we always have a range of outcomes, right? So if I think about the second quarter this year for display, we think will run -- so now I'm going to go back to sequential for a second.

We think panel makers will run sequentially higher in the second quarter than they did in the first quarter. And so it's possible they get to the same place as they did last year. That's certainly in the range of outcomes. I don't know that that's necessarily the most likely outcome..

Our next question comes from the line of Joshua Spector with UBS..

This is James Cannon on for Josh. I just wanted to touch on some of the dynamics with Display pricing. As you talked about some supportive dynamics, but if I think about what played out in the first quarter, it seemed like you had demand trending sort of in line with weak January, improving in March.

And I was just wondering if you'd give some color on what happened with pricing that you had guided to being flat and came in down? And how that plays into what we should expect for the second quarter?.

Yes. I think, James, price was slightly down in the quarter, and I think the way we think about favorable pricing in any given quarter can be slightly up, it could be flat, it could be slightly down. So I think it's generally in line with the way we were thinking about it..

Our next question comes from the line of Asiya Merchant with Citi..

I was just going to talk looking into your free cash flow guidance. I know you guys have kind of talked about CapEx being slightly lower than '22 levels at $1.6 billion and strong sequential improvement in free cash flow.

Should we expect free cash flow -- given that earnings should improve from here on, can we expect free cash flow to be higher than what you guys had in '22? Is that reasonable just given CapEx coming lower and hopefully operating on the earnings level as well doing better than '22?.

Yes. Asiya, I'm going to build a little bit on the way Wendell described the way we're thinking about sales and what could happen in the second quarter and the second half, right? I think there's certainly in a high-end case, yes, cash flow should follow our growth through the year.

And if we grow at the higher end of the second quarter, and we continue to grow from there, yes, there's certainly a case to be made that, that would happen. I think we're taking a little bit more moderate view of what might happen.

So again, capital slightly down and free cash flow improving as sales improves, and just our normal cycling of cash flow, it's stronger in the second quarter and in the second half..

Correct. I think you guided last time to seeing significant working capital improvement that should buoy free cash flow generation year. So I guess I was just kind of circling back to those comments.

And then any update on stock repurchases? Are you expecting to resume that at a level that was maybe consistent with if we dial it back a couple of years?.

No update on stock repurchases. We'll just continue to remain opportunistic there. And maybe I'll make one other comment on your cash flow statement. As I think about inventory, we talked about a lot of the dynamics that have driven it up through 2022 with respect to a very challenging supply chain environment and inflation.

And our goal is to continue to drive it down. And I think in Q1, it stayed relatively flat, down a little bit. But remember, sales were really low. So we actually feel really good about that..

Our next question comes from the line of Samik Chatterjee with JPMorgan..

Ed, if I can just follow up on your comment about growth in Specialty Materials in the second half. When I go back and look at it historically, it's been a wide range of as low as 5%, I think, last year to as high as 45%.

So just trying to sort of get a better color there in terms of what should we think about in terms of content growth with some of your customers into the second half? What's that magnitude? And what's also sort of from a macro perspective? Are you expecting to sort of from the first half versus second half variance there, just to be able to rightsize sort of what that magnitude looks like? And, Wendell, one for you, in terms of have you been able to digest Biden's recent plans about pushing electric vehicle adoption to 50% by 2030? How does that impact overall sort of growth outlook for Environmental?.

Hi, Samik. Yes, I think you're certainly hitting on one of the areas that gives us a range of outcomes in the way we're thinking about the back half that is in specialty. Obviously, smartphone and PC IT demand remains relatively weak. I think it's possible that it's above the low end of the range.

You articulated the sequential growth first -- second half over first half, but I don't know that I would say it's going to be at the high end of that range. We're not planning on growth levels at that -- growth at those levels..

Wendell, any thoughts on the electrification plans of Biden from the current comment?.

Yes. And if -- by that, I assume you mean sort of the recent administration announcement from the EPA on what -- along with some of the industrial policy that goes with it, but at that EPA regulation that they've just released for comment.

And in that, the piece of it that we're most excited about is that they've now adopted the way to measure and the approach that the Europeans have, Chinese have, which will mean gas particulate filters will be required on all ICE vehicles in the U.S. So that adds tremendously to our content at 2 to 3x to our content level for U.S. vehicles and U.S.

markets, not a small market. So what this enables us to do is sort of keep our overall content that's in our environmental piece of our business, our emissions control piece of our business, sort of more Corning plays out as the number of ICE vehicles shrink. So we are quite excited by that.

Our core long-term answer to BEV is that's where we have focused on the bulk of our glass and optics and autonomy efforts.

At this point in time, really our highest value-add vehicles on electric vehicles that has the most content on it, despite not using our emissions control because that tends to be where we're the most successful on both our interiors and our exteriors and now our autonomy products.

Did I get to your question?.

Yes. No, that's interesting..

Our next question comes from the line of Meta Marshall with Morgan Stanley..

Maybe a question on the gross margin improvement that you saw in Q1 over Q4, clearly on down volumes.

Just how much more fuel is there some of these activities to improve gross margin throughout the year, maybe kind of with or without volume improvement? I guess I'm just trying to see how some of the pricing actions or efficiency actions kind of fully reflected in what we see in Q1? Or just how much of that can carry throughout the year and improve margins even if we don't see kind of meaningful improvements in volumes?.

Hi, Meta. Yes. So first, thanks for the question. And maybe I'll just sort of reiterate how we described our margin improvement and what sort of played out in Q1. And then I'll get to sort of what happens from here. So yes, we increased price. That's definitely a big driver of why margins went up.

We're also looking to improve our productivity ratios back to the Wave brand prior to the pandemic. We've made progress there that takes cost out, and we're certainly taking fixed cost out as well. So those drove our margins up sequentially on lower sales, which is very unnatural.

I think there is definitely an opportunity for us to continue to do that. We do expect sales to go up in the second quarter, but we do expect profitability to go up as well from there. So I think there's more room to run from where we are now. And we're going to continue to work on it. It's clearly a priority for us..

Great.

And just does the opening of the North Carolina facility kind of impact optical profitability in the near term? Or can you guys still get efficiencies? Or does that plant even add more efficiencies that can help margins there?.

As always, as we fire these plants up, get a little bit of a drag as we fill them, but we've been able, because of the way -- because we prioritize protecting our people and our customers pre-pandemic, we ran at very high staffing levels and pretty high inventory levels.

So we've been able, with our improvements in those things, to more than offset sort of the drag we've seen from opening up some of our new capacity. But very astute question. Yes, we do always get a drag before we get these things all the way filled up and all of our technology deployment. Very good [indiscernible] of getting productivity moving..

Our next question comes from the line of George Notter with Jefferies..

I had a question about the optical business. You were talking about fiber connectivity impacts. I think you talked about customer pacing of projects as being the issue there. But as I look around the industry, it does seem like there's been some inventory correction out there.

I know lead times for fiber connectivity products at one point were quite long and now they're, to a significant degree, a lot shorter. Is the issue there really customer pacing? Or is it more about excess inventory and you're going through an inventory correction? Any thoughts would be great..

George, what an outstanding question and what an interesting debate, right? So you've seen the amount of inventory is how much they put in the ground determines how fast they burn through their inventory and of course, supply chain folks really across the globe.

since they couldn't get everything they needed for sure, over ordered and did all sorts of things, right? And as supply chain times start, that is certainly part of it. George, there's no question. And I could even -- if I was less cynical, right, I could even explain most of the change as being that.

But then I look on the other side, and I'm looking at the pace of the actual ground getting moved via actual data centers getting built, right? And in that, there's a little bit of a disconnect there for me too in that if I took my customer statements of their deployment goals and integrated that with inventory, then I'd say, yes, we have a very strong bounce back starting to feel it pretty soon.

But we're still going to take a little bit more of a conservative view. So I don't know if any of that was helpful, George. You made an excellent point. You could be absolutely right.

We're just going to play out a little bit more conservatively and not plan on sort of a big jump up in the back half, driven by the fact that inventory came in line with deployments..

Got it. And just as a follow-up on that.

When you think about that fiber connectivity business, is more of the issue then around data center build? Or is it more about fiber-to-the-prem type builds or other types of optical networks? What would you kind of pin it on?.

It's probably more fiber to the plan prem, okay? Though hyperscale's definitely slower, right? But it's more fiber to the prem as it's those great big civil works builds that just aren't moving fast enough yet for us to feel comfortable to call it a strong recovery in that business.

Now that being said, that can happen quick, right? That can happen quickly because they haven't come off their stated goals yet, but we're just not seeing it yet, George..

Our next question comes from the line of Tim Long with Barclays..

Just wanted to go back to Display for 2, if I could. First, Ed, could you talk a little bit about, obviously, a good recovery coming in the second quarter. I know you guys, you said, took a lot of tanks offline and did some retrofitting.

So can you talk about kind of how much margin lift we're going to see not just from the volume, but from some of the changes? And then just, Wendell, I mean I just want to go back to kind of visibility in this business. Obviously, there was some head takes last quarter on utilization going up and then going down.

So what level of visibility do you have into those utilization? I'm assuming you see well into this month, but how far out can you go with that?.

Thanks, Tim. So just to start with your first question. You're right. I think one of the key dynamics that we talk about all the time is glass supply-demand balance being key for pricing. So yes, we do manage our tank fleet in that respect. We will continue to do that and make sure that we manage our supply through that process.

That does impact profitability. That helps us going forward. I think a lot will have to do with how high the volume is in the quarter and how sort of all the dynamics play out..

And I think our visibility will help us improve as we get to the end of this month, beginning of next. We have pretty good visibility, but our negotiations really are still going on given the pretty sharp upward inflection we're seeing in customers' volume requests.

So that dynamic is still sort of playing out, but should get pretty clear over the next week or two..

I think we'll take one last question..

Our last question is from the line of Martin Yang with Oppenheimer..

There's a reference on the call on new formulations for Gorilla Glass.

Can you maybe comment on that? Is it in line with the annual upgrade cycle we have observed in the past? Or is that something a bit more significant similar to Ceramic Shield?.

Martin, could you repeat the question? I lost you a little bit in the middle of that..

Sure. So the question's about the reference to Gorilla Glass this year. You -- there's a comment on new formulation for Gorilla Glass.

So is that new formulation a similar upgrade in the past on an annual cycle? Or is that new formulation something a little bit more significant similar to the Ceramic Shield product?.

I got it now. So it's not a jump up to glass ceramic.

It's a pretty significant improvement at the glass level, and we're seeing really wide adoption but you're not seeing that fundamental very big jump in our value-add per device that you see from switching to a fundamentally new material set with very different manufacturing dynamics as well as drop dynamics.

So pretty significant improvement, but in the same glass material set doesn't have as much of a pop in terms of how much our sales revenue is profound as something like the Ceramic Shield..

Thanks, Wendell. Thanks, Martin. I just want to thank everybody for joining us today. Before we close, inform you that we will host our 2023 Annual Meeting of Shareholders on April 27. On May 23, we're going to attend the JPMorgan 51st Annual Global Technology and Communications Conference.

May 31 and June 1, we will be attending the Bernstein 39th Annual Strategic Decisions Conference. And on June 22, we'll be attending the Fox Advisors Virtual Transportation Technology Conference. Finally, a web replay of today's call will be available on our site starting later this morning. Thanks for joining us.

Operator, you may disconnect all lines..

This concludes today's conference call. Thank you for participating. You may now disconnect..