Welcome to the Corning Incorporated Quarter 2 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 second 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 second quarter, the difference between GAAP and core EPS stemmed primarily 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 the second quarter by $19 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. Good morning, everyone. Today, we reported second quarter results to demonstrate strong progress on the priorities we've outlined to improve profitability and cash flow in the current weak end market environment. Sales were $3.5 billion. EPS was $0.45. Gross margin and operating margin increased sequentially to 36.2% and 17.5%, respectively; and free cash flow improved to $310 million. Ed will give you the details on each of these in just a few minutes. Our results reflect solid execution on our plan to deliver financial and operational improvements in response to the significant after effects of the pandemic still rippling across the global economy. Now we've been discussing this plan with you for several quarters. So, let me just briefly recap the primary factors we've been addressing. For one, supply chain disruptions caused higher logistics, freight and input costs. Additionally, inflation led to interest rate hikes than a spike in the U.S. dollar. And consumers shifted spending from goods to services as the pandemic abated. Against this backdrop, demand grew below historic trends in end markets that constitute the vast majority of our sales. Further, as supply chains started to normalize again over the last year, our customers began to drawdown inventory facilitate their transition from just in case, back to their typical just-in-time approach. Consequently, we're seeing a synchronization of lower sales across our portfolio that is highly unusual. Now this is because while our three core technologies and four manufacturing platforms do apply to all of our markets, the demand drivers in the different markets we serve are fundamentally uncorrelated. TV sales don't move with Automotive production. The Life Sciences market isn't correlated with fiber optic deployments and so on. Over the past several quarters, I've noted how all the factors I just outlined have taken…

All right. Thank you, Wendell. Good morning, everyone. As expected, in the second quarter, we improved profitability and cash flow in an overall weak demand environment. Second quarter sales were $3.5 billion, up 3% sequentially. EPS was $0.45, increasing $0.04 from the prior quarter. Gross margin and operating margin increased sequentially by 100 basis points to 36.2% and 200 basis points to 17.5%, respectively, reflecting progress on our pricing and productivity improvement actions. These results demonstrate the progress on and benefits from our comprehensive approach to improve profitability and cash flow, including continued actions to offset inflationary costs, return productivity levels to -- return productivity ratios to historical levels and reduce inventory. Now, let's turn to our segment results. Let me start with Optical Communications. I shared with you back in May that we were not seeing the typical seasonal uptick in our orders. Near-term demand for passive optical network products remains weak. And as the quarter progressed, orders came in at the low-end of our expectations. As a result, sales in the second quarter were $1.66 billion, down 5% sequentially and 19% year-over-year. As I'm sure you're hearing across the industry, carriers and enterprise operators are pushing projects into 2024 due to high inflation and rising interest rates. For now, we are sizing our operational plans based on the orders in our books. Net income was $140 million, down 12% sequentially and 23% year-over-year. The decline on lower volume was moderated by productivity improvements, as I shared in the first quarter. We raised price in this segment to more appropriately share inflationary costs with customers. While the demand for passive optical network products remains weak, longer term, we remain confident that the industry's underlying growth drivers are intact. We're pursuing four significant secular trends: broadband, 5G, the cloud, and…

Thanks Ed. Operator, we're ready for our first question.

Thank you. [Operator Instructions] Our first question comes from the line of Samik Chatterjee with JPMorgan. Your line is now open.

Hi. Thanks for taking my question. I guess maybe if I can get your insights and what you're seeing in the market rate to optical, which you're guiding down sequentially into the third quarter. Have you seen more incremental weakness given we've seen certainly telcos pulled back on spending a bit more? Or as you sort of look think of -- look at your 3Q guidance is being driven by both telcos and enterprise? And just a quick second part there. I mean, any discovery discussions in terms of what this lead cable replacement opportunity or whether it's an opportunity as well for Corning in the long run? Thank you.

Hi, Samik. I appreciate the question. So, I think we're going to go back to what we said a little bit as we shared our perspective on the second quarter. When we were together in May, I talked mostly about us not seeing an inflection in our order rates and that was driving how we saw the second quarter playing out. Normally, we would have a pretty big seasonal uptick in the second quarter relative to the first quarter. As it turned out, our orders were actually even lower than we thought at that time, and therefore, the second quarter came in down from the first quarter and we're guiding the third quarter to be down sequentially again, and that's primarily driven by what we're seeing in our order book. I think that's the best way for us to describe the way we see the optical market playing out versus what might happen in the future. For sure, as you hear and see in the industry, we're seeing it in both the carrier and the enterprise space, customers are pushing projects out into 2024.

Any thoughts on the lead cable replacement opportunity, whether you see that as an opportunity?

Well, I'll do both. I'll add a little to Ed's and then talk briefly about the lead cables. So, I think the way we think -- the right way to think about how we're approaching demand in our optical market is our historic models that we would normally use to predict future revenue streams from what we're experiencing in one quarter to be able to build out a year plan. And our direct customer inputs on their plans for the year haven't have proven to not be as reliable as we like. And so, what you're really seeing in our guide is really a shift in our operating philosophy, which is we're going to plan our operations based on what we see in our order book, and we're going to improve our productivity to historic rates based on that broad load and we're going to increase our prices and carry the appropriate inventory so that our profitability and cash flow is going to increase in a very reliable manner despite the lower sales volume. And so that's all you're really seeing in our guide. We're just carrying our operating philosophy forward to our guide. As to lead cables, make a complicated issue. The good news is, is the glass is entirely inert to the environment and is better, lower cost, all the things that make it the right side of the secular trend would mean that this is why it's an ascendant technology on really every metric you can name. But I have no further insight to offer on the lead cable problem or opportunity.

Yeah. Okay. Thank you. Thanks for taking the questions.

Thank you. Our next question comes from the line of Meta Marshall with Morgan Stanley. Your line is now open.

Great. Thanks. You noted that the pricing negotiations you're already starting to see traction on those. I just wanted to kind of get more detail there. Is this being accompanied by long-term supply agreements? Just how should we think about share in terms of kind of how these pricing increases impact revenue? Just -- I realize they're probably all not done, but any additional commentary there would be helpful. Thanks.

Thanks for the question, Meta. I think you're right on all the dimensions, right? This price increase is a very significant and complicated strategy move that is done in a backdrop, as most of our businesses are on well-established long-term agreements. Yet, we are redoing the value proposition between ourselves and our customers. So, it's complicated. So, the good news is it's progressing well. Our customers understand our need to offset elevated cost. We expect to successfully execute a double-digit price increase in the third quarter and do so in a manner that does not negatively impact our market share. So…

Great.

hat's very significant and compelling. Now this also leaves -- I also understand the challenge in modeling, like specialized strategic move, especially in the backdrop of what's going on in the end markets. So, let me just share for a moment the way we way we think about it. The think about the financials is that what we're seeking to do is to return Display profitability, sort of think NPAT percent of sales, right, how much net income -- was the percent of net income on top of our sales revenue back to the historic levels in mid to high 20s. And we've been operating the past year closer to 20%. Now we expect to hit that level of profitability as we exit the third quarter. So that's the way we tend to think about the financial modeling. Is that helpful Meta?

Yes. That's helpful. I appreciate it. Thank you.

Thank you. Our next question comes from the line of Asiya Merchant with Citi. Your line is now open.

Great. Thank you. Thanks for the incremental color, Wendell and Ed. In terms of returning the business back to sort of pre-pandemic levels, how much confidence that you have that this is something that could possibly maybe happen during 2024? Or is it the first part 2024? Is it the end of 2023? Do you guys have any more visibility into how we should think about as we exit this year into 2023 and into 2024 based on discussions with your customers right now? And if you could provide some color by segment, that would be even more helpful. Thank you.

Can I ask a clarifying question? Are you speaking about Display or the broader company? Just so I can make sure I answer your questions specifically.

We could start with Display because it seems like optical -- there is some weakness and then Specialty if you guys can talk about what you see in the back half, but it was more a broader commentary as well about confidence in getting to kind of pre-pandemic levels of profitability as we exit as we exit 2023 and into 2024.

Okay. Great. So, let me start with Display and then I'll have Ed add some color on the total company. So, in Display, we expect to return to pre-pandemic levels this year as we exit Q3. And then, we would expect that level of profitability, what our plan is, is that we'll continue to carry forward into next year. Is that -- does that address your question on Display?

That’s very clear.

Okay.

Yeah.

Good. Ed, do you want to speak the…

Yeah. Sure. I'll build on Wendell's comments. Thanks Asiya. So, first, I want to sort of start with where we are in Q2. If you think about where our gross margin and operating margin in Q2 are, we've made a significant move up from where we were at the end of the year. Gross margin at 36%, operating margin at about 17.5%. So, 260 basis point improvement from the fourth quarter and 300 basis point improvement I think on operating margin from the fourth quarter. So, as we've sort of talked about, our goal is to continue to marching up march up profitability wise. Now our sales are muted, so they're at a lower level and that obviously impacts overall profitability. Now as we go forward, Display, we shared our view, we expect to continue improving overall profitability for Corning, yes, led by Display, but also across all of our segments. And then when sales return, I think it is possible for us to get back to real pre-pandemic historical levels at some point in the future. So that's kind of the way you think about it. I think of it as a continued march upward Display very specific given where we are, and we've seen this volume recovery and then our pricing and productivity actions will continue to take effect in the third and fourth quarter. Does that help?

Yeah. And then just in terms of share buyback, at what point -- now that preferred shares, the payments that you had for the purchase from Samsung, I mean those have hopefully come to an end now. When would you expect to turn on share repurchase?

When we start piling up more and more cash flow every quarter as we are aiming at. So that's improving in our profitability and cash flow even at this muted sales level, we want to see that first before we think deeply about our capital allocation model. As always, you can expect us to hold our shareholders near and dear in our heart. But the first step is we've got to restore that profitability and cash flow to our pre-pandemic levels even at these muted sales levels.

Great. Thank you.

Thank you. Our next question comes from the line of Mehdi Hosseini with SIG. Your line is now open.

Yes. Thanks for taking my question. Actually, I have one clarification. Wendell, you talked about the pre-pandemic margin profile for Display business. I'm a little bit confused. You exited 2019 with a 24% net income margin for Display. And in the prior year, it was like 26% to 27%. When you reference pre-pandemic, how far back should we go, given the margin difference in 2018 and 2019?

Yeah. He, Mehdi, this is Ed. So, I think the way to think about it is we've been running closer to 20%, and we think of pre-pandemic closer to 30%, right? So, I think it's a big delta that seek to achieve. So not the end of 2019 levels, but more like the back half of 2018, maybe the front half of 2019 and maybe even earlier than that depending on how successful we are.

Okay. Very helpful. And then, you highlighted opportunities with polysilicon. I'm trying to understand how the Hemlock and Other Emerging growth revenue scale without significant or material increase in CapEx. You did 377 in Q2 and 386 at the prior quarter. And then in the latter part of last year, you were doing higher revenue. Should I assume that you can actually do like closer to $500 million without significant CapEx.

Yeah. Hey, Mehdi. So, I'll take that one also. So, a couple of things. Just a reminder, in that segment, you have you have Hemlock, our auto glass business and you have our Corning Pharmaceutical Technologies business, think Valor or Velocity. I think all of those businesses will grow their sales. So, I definitely think the level you're thinking about is very achievable for us. In Hemlock, we're currently working through additional capacity so that we can expand that business. There will be some capital spending, but I don't think you need to think of it as significant at this point.

Okay. Thank you.

I think we're not quite ready yet to discuss sort of the precise way in which we expect to expand our profit streams in Solar. So, what we're trying to do is to provide you some insight as to how much more income we expect in that segment and a rough idea of the timing of that without yet fully disclosing the details of our plan, to be able realize that expanded value footprint.

Sure.

So, we will be more forthcoming as -- this finalizes and it is in our benefit to come out of the more stealthy mode that we are in. But at the same time, it is significant enough. Do we wanted to make sure that we had provided for you a rough idea on how to think about it financially? So, that's what I think you have a good question here. But -- so, we're trying to -- we've given you the answer without all the inputs. Does that make sense?

Absolutely. And the reason I ask is your margin -- net margin profile for this business unit has continued to improve. And I attribute that to poly. So, would it be fair to say that poly is a much better margin profile than other sub-segments within that business unit?

I think that there's a lot going on in that segment. And you are right to think that a significant amount of the growth which we have outlined here and we've given in our sort of longer term what happens in a couple of years, is rolling out of our fundamental capabilities in Solar, because I think you're right to think about it that way. I think concluding much more than that from the statement sort of runs the risk of -- you're not being exactly in line with what our strategic plan is. So, I'd ask for a little bit of patience, and it will be forthcoming in the not too distant future.

Okay. Thanks so much.

Thank you. Our next question comes from the line of Wamsi Mohan with Bank of America. Your line is now open.

Yes. Thank you so much. Good morning. When I look at Display revenue in the quarter was up 6% year-on-year, but profitability is down 9% year-on-year. You're obviously calling for an inflection in Display and expecting significant profit improvement, as you just answered in prior questions. So, I was wondering how much of your cost actions benefit did you already realized in the second quarter? And as you think about margin improvement, how much of that would you say is going to come from pricing actions versus continued benefit from productivity initiatives that you're undertaking. That's the first part of the question. And the second part of it is as you think about the improvement in Display, would you say that this pricing sort of supersedes any of the prior market based pricing agreements that you had with some of your customers? Is this a new paradigm? Or is that like old paradigm still impact? Thank you.

Yeah. I'll take the first part of your question first, Wamsi. So, the main reason we are taking a price action is the point you're making. We are absorbing higher costs. We have elevated costs in this business and we expect the price to offset those costs. And I think about that as being the most significant driver of our profitability improvement as we go forward.

I agree with that. I mean, the right way to think about it, Wamsi, is if you take a look at our quarter 2 results and it's a great example of why we need to increase our prices, right? So, then, there is -- this is a paradigm, new paradigm move. This is a significant enough, Wamsi, that. It's going to take a little time to settle into what this does to the overall dynamic in the industry. So, this type of significant move does represent a new paradigm for us. It is still going to be based on our same fundamental principles that unlike many of the other players of our competitors in this industry, we are the most reliable supplier. We are going to be able to continue to maintain our position in this business and be the technology leader. If you follow the space closely, you'll see significant announcements in the glass industry here actually capacity being taken out of the system because of the profitability challenges in glass. So, the core reason that we are the leader in this business is our reliability, the advantages inherent in our technology to play itself out in both cost advantage and product leadership. And those will still underpin the new paradigm, but it is a new pricing paradigm so.

So, whether if I could just follow up on that. In the past, you guys obviously went through a period where price decline was in the mid-teens and that stabilized down to low single digits given that you guys did something really interesting with locking in market share or volume at some of your largest customers which created an incentive to not take price down. I understand that we're in a recovery phase in the display market at the moment. But if you think over the next two, three years, why should we not think that the competitive response would go back to the historical ways of maybe trying to gain incremental share through pricing?

Well, let me get through this quarter in a reset of double-digit increase in our prices, while we maintain our share and keep in place our long-term agreements, right? And after we get done executing this, I'd love to sit down with you and let's talk it through and maybe bring in some of our Display leaders and we'll talk it through. But right now, what we're focused on is getting this strategic move completed. Does that make sense, Wamsi?

Yeah. It does. I appreciate the response, Wendell. Thank you.

All right.

Thanks Wamsi. Next question?

Thank you. Our next question comes from the line of Shannon Cross with Credit Suisse. Your line is now open.

Thank you very much for taking my questions. I have two. The first, just sort of a follow-up on pricing, but looking at optical. I'm just wondering what the carriers are seeing given weakness in demand in relation to some of the pricing that you were putting in place earlier? Is it holding in? Or is there any softness there? And then, Wendell, can you just give us an update on how you're thinking about the timing and rollout of government stimulus, both some of the broadband as well as benefit on the poly side from the IRA? Thank you.

Our pricing continues to hold an optical. As far as the timing RIA and that is happening, right, we speak. And I think it's a little early, though there's plenty of news and there's been awards out to the states. And you're beginning to see the first of the tech place on B. I think it's a little early for us to be able to call here's when it's happening, are you expect to start to see that in our demand next year?

Do you think it's -- I mean, do you see it delayed, or just progressing along what you had expected?

We started with a pretty cynical view, right, of how long it would take. So, we may not be the right people to ask. But we expected really not to start feeling it until next year, and that really hasn't changed. Once again, it's a -- this is a very large program. It's got a flow from the federal government out to the states, and they have to do awards that our various customers are competing for, right? And then those customers have to put orders in. And so, we've always thought that it wouldn't start to make a big impact until we got into next year. I believe that is still our belief -- I will double check, Shannon, and then Ed will get back to you if I'm wrong, okay?

Yeah. Thank you very much.

Thank you. Our next question comes from the line of Matt Niknam with Deutsche Bank. Your line is now open.

Hey, thanks for taking the question. Just one follow-up on optical, and I have one on cash flow as well. On the optical side, are we at a point now where higher rates and macro dynamics are driving more of a sustained lull in spend relative to the sort of inventory digestion that was being messaged a couple quarters back? And then just on cash flow, so I think you're slightly negative for the first half of the year. Obviously, there's some gross margin tailwind from the display price hikes. So, maybe, Ed, if you can help us frame expectations for the second half of the year and how meaningful the quarterly improvements can be relative to the $300 million you posted this quarter. Thanks.

So, I'll take the first one, maybe Ed you take the second. So, yes, that was really broadly reported throughout all the different people who serve into the telecom space that there was inventory buildup at the various customers. As you'll recall, sort of our feedback for that is, yes, we're seeing that too. But I think it's a more complicated question than just working our way through what sort of just in case inventory build is at our telecom customers and that moved to just in time like normal. It's certainly part of it, but we don't feel at this point in time confident enough in our forecasting models for telecom to say, yeah, we see that consumption of the inventory, it's behind us, and then we're going to start to see that recovery and a return to sort of our normal seasonality and a recovery in the back half. So, we just think it's -- there's more going on here. The fundamental drivers are in place in OpCo [ph], but the exact timing on when it pops back, I think it's difficult to call that. And that's why we're not planning on it and why we're just taking a look at what's in our order book right now and why you heard Ed guide you sequentially down in OpCo despite the fact this would normally be an up quarter, if everything was sort of operating in a normal cycle. So that's the way we tend to think about that part, Matt. Want to turn to cash flow, Ed?

Yes. Sure. Thanks Matt. So, I would say on cash flow, a couple of things. Our goal is to improve our operating cash flow with the actions we're taking. We made a significant move from Q1 to Q2, as you articulated. And I think we have room to continue increase operating cash flow in the back half relative to what we did in the second quarter. And on capital, we've spent a good bit in the first half. We expect our full year to be slightly down from last year. So, I think you should also see a slight decline half-over-half on capital spending. So, I think the combination of improving operating cash flow and slightly less capital spending should mean the back half is stronger than what you saw in the second quarter. So, I definitely think there's room -- a meaningful room for improvement in the back half.

Just anything to note on working cap in the second half of the year at all?

No. I mean, the thing I think that's most notable for us and we've talked about it over the last several quarters is we built a significant amount of inventory during the supply chain disruption period, and our goal is to work that down. I think the good news is we've made a little bit of progress in the first half on lower sales, which is hard to do. So, I think that's good. And we're going to continue to keep chipping away at that. So that should help us as well.

Thank you.

Thank you. Our next question comes from the line of Steven Fox with Fox Advisors, LLC. Your line is now open.

Hey, good morning. Sorry, another question on just the display price increases. So, you're seeing volume increases into the second half of the year. So, can you isolate the margin accretion just from increasing display prices for 2023 and 2024? And how successful were you said original bogey you put out in the press release of 20%. And then just one last housekeeping thing, can you just describe what prices did in Q2? Thanks.

Yes. So, Steve, I just want to make sure I understand. Can you repeat the first part of your question again? I wasn't 100% sure I followed it.

Yeah. So, you're saying display margins are going to go up, but volumes are also going up into the second half of the year. I assume it seems like that's what you're also signaling. So, if we just think about the price increases, what is that impact on the margin improvement?

Got it. Yeah. I think I'm not sure we're necessarily signaling volume increase from the second quarter relative for the back half. Certainly, the first quarter was lower given panel maker utilization levels at really low levels in January. But when I think about the margin, net income margin improvement in the second half relative to say, second quarter, pricing is really the predominant driver that we see taking us there. And remember, it's offsetting costs that we're absorbing in our income statement.

And in terms of how successful pricing was and versus what Q2 pricing was?

Well, what we've said here is that we expect, say, versus Q2 -- I'm sorry, Steve, do that again, how successful pricing is.

Yeah. So, originally…

So, we expect double-digit -- to close on a double-digit price increase.

Right. But originally, you said 20% price increases. So, I'm just trying to gauge whether you got the full 20 part of it, I mean you could have gotten 10.

So, our guide today is our guide today, Steve, it's a double-digit price increase. And when we get to the end of third quarter, I think it will be a little more evident where in double-digit that ended up being.

Okay. And sorry to drag this out, but what was Q2 pricing like -- what was Q2 pricing like?

Relatively consistent with Q1.

Okay. Thank you very much.

Thank you. Our next question comes from the line of Josh Spector with UBS. Your line is now open.

Yeah. Thanks for squeezing in my question here. I was just wondering if you could expand at some of your comments around data centers and AI, and kind of what that means for Corning. And if possible, kind of quantify where things are today. So, you've talked about more efficiency in some products. You talked about more data transfer within AI versus other data centers. So, is there a content opportunity you could scale? And again, what's the base that we should be thinking of that on today? Thanks.

The easiest way to think about this is that we'd expect our hyperscale revenue opportunity fundamentally to more than double for the same number of hyperscale data centers. And that is because of a combination the amount of interconnects required to do the AI/ML compute. It needs more glass within that data center. A lot more of it is happening within the data center, a lot of connections within the data center that are going out just because of the way those large language models are trained and then you do influence beyond with our new set of innovations adding to our content. And so that's the way we tend to think about it. How much more than doubling, remains to be seen on how successful. Our innovations continue to be and what ends up being sort of the final architectures as we work through a variety of different wiring diagrams here to be able deliver this new compute package.

Is there a way to think about your hyperscale revenues, what you're recognizing today?

So, what we'll do is that's in our Enterprise segment, right, let us reflect a little given the size and scale of these changes and think through what is the right way to be helpful you to think about how that embeds in that piece of optical and how sizable is it. That's a good question, Josh. Let us reflect on that, and Ann will get back to you.

Thank you. We'll take one more question. Operator, please?

Thank you. Our last question comes from the line of George Notter with Jefferies. Your line is now open.

Hi, guys. Thanks very much, and thanks for squeezing me in. I guess, I had another question on the optical business. I'm just curious if you guys are enforcing delivery dates with customers or allowing folks to reschedule further out into the future. And then also, I'm just curious if you're seeing any incremental competition in fiber. And I'm thinking more specifically about gray market fiber, people looking at selling excess inventory in the open market that would now compete with you? Any sense for that? Thanks a lot.

Yeah. So, George, I just want to repeat back your question. You're asking if we're seeing customers ask to push their delivery dates out into the future, is that the question?

Correct.

Well, that happens daily. One way or the other. Pull aheads to -- I don't really need it then, I need it now, because they're executing pretty complicated civil works projects. We're not seeing beyond what we've already guided in our sort of order rates, sort of a new risk. The way maybe which you're getting at is that normally, we're working with our customers on what they're going to take like the entire next year, because it's such an important part of what they do, and we have to plan it. And that certainly has been strong variation between what they told us last year, right, and what they're taking this year. So, I think that's more of a play than to look through what is the fundamental heartbeat here rather than shifting delivery dates within any given quarter. It does happen, and it is what is behind sort of our operating shift to just plan based on what we're seeing in our order book as opposed to what our customers are telling us for the year or as what our own stochastic models are telling us. As to gray fiber optic cable, we're not seeing that be any sort of significant play here. It'd be unusual -- are you hearing some because if you're hearing something, I will check back with the optical folks, but it would be the first I've been hearing about that if it's any sort of significant number.

Got it. Great. Okay. Thank you very much. I appreciate it, guys.

Yeah. End of Q&A:

Thanks George, and thank you, everybody for joining us today. Before we close, I want to let you know that we will attend Citi's 2023 Global Technology Conference on September 7, and we'll be hosting management visits to investor offices in select cities. Finally, a web replay of today's call will be available on our site starting later this morning. Once again, thank you all for joining us. And operator, you can disconnect all lines.

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