What were the key takeaways from Celestica's earnings call?

What were the key takeaways from Celestica’s earnings call?

What does Celestica do and what are its main business segments?

What is Celestica's gross profit margin?

What is the revenue and EPS growth rate for Celestica year over year?

Did Celestica beat or miss consensus estimates last quarter?

What guidance did Celestica's management provide for the next earnings period?

What is Celestica's latest dividend and current dividend yield?

- **Record Revenue Growth**: Q3 revenue up 28% YoY to $3.19B, driven by 43% CCS growth. Full-year 2025 revenue guidance raised to $12.2B (+26% YoY).
- **Profitability Expansion**: Adjusted EPS of $1.58 (+54% YoY), with non-GAAP operating margin at 7.6%, highest in company history. 2026 EPS guidance of $8.20 (+39% YoY).
- **Hyperscaler Dominance**: 76% of revenue from CCS, with 800G switches leading. 1.6T programs and digital native AI systems set to drive 2026-2027 growth.
- **Strategic Investments**: R&D spend to double in 2026, supporting 1.6T, scale-up Ethernet, and liquid cooling. Texas/Thailand expansions to meet hyperscaler demand.
- **Margin Resilience**: ATS segment margin improved to 5.5% in Q3, with focus on high-margin industrial and health tech programs.

**【CEO Summary Section】**
- **Revenue Growth and Margin Expansion**: Q3 revenue of $3.19 billion (+28% YoY), driven by 43% growth in the Connectivity & Cloud Solutions (CCS) segment. Adjusted EPS of $1.58, up 54% YoY. Non-GAAP operating margin reached 7.6%, the highest in company history.
- **Segment Performance**: CCS revenue ($2.41B) accounted for 76% of total, with hyperscalers leading demand. Advanced Technology Solutions (ATS) revenue ($781M) declined 4% YoY but improved segment margin to 5.5%.
- **2025 Outlook**: Full-year revenue guidance raised to $12.2B (+26% YoY), with adjusted EPS of $5.90 (+52% YoY). Free cash flow outlook increased to $425M.

**【CFO Financial Commentary】**
- **Q3 Financial Highlights**: Adjusted gross margin 11.7% (+100bps YoY). Free cash flow of $89M, year-to-date $302M. Capital expenditures ($37M) remain disciplined at 1.2% of revenue.
- **Q4 Guidance**: Revenue $3.325B-$3.575B (+36% YoY midpoint). Adjusted EPS $1.65-$1.81 (+56% YoY midpoint). Non-GAAP operating margin expected to remain at 7.6%.
- **Long-Term Vision**: 2026 revenue projected at $16B (+31% YoY), with adjusted EPS of $8.20 (+39% YoY). Focus on AI-driven data center infrastructure and hyperscaler partnerships.

**【Segment Highlights】**
- **CCS Growth**: 800G switch programs dominate, with 1.6T ramps expected in 2026. Digital native customer wins include a rack-scale AI system for 2027. HPS revenue mix drives margin expansion.
- **ATS Restructuring**: Reshaping A&D portfolio improves margins to 5.5% in Q3. Industrial and health tech businesses show strong growth, offsetting softness in semiconductor capital equipment.
- **Capacity Expansion**: Texas and Thailand expansions support hyperscaler demand. Texas site to add thousands of AI racks; Thailand to scale production for 2027-2028 ramps.

**【Q&A Highlights】**
- **R&D and CapEx**: R&D spend to increase 50%+ in 2026, targeting 1.6T, scale-up Ethernet, and liquid cooling. CapEx 2%-2.5% of revenue in 2026, focused on growth programs.
- **Customer Commitments**: 12-15 months of visibility on demand. Digital native customer AI system expected to generate >$1B in 2027. Hyperscaler storage wins highlight diversification.
- **Market Share**: 41% share of 800G+ switch ports, leading competitors. 1.6T program wins with multiple customers, positioning for 2026-2027 ramps.


Celestica Inc (CLS) Q3 2025 Earnings Call Transcript

- **Q2 Beat with Record Margin**: $2.89B revenue and $1.39 EPS, 7.4% operating margin.
- **CCS Growth Driven by 800G**: 28% segment growth, 800G volumes matching 400G in Q2.
- **Raised Guidance to $11.55B**: 20% revenue growth, 42% EPS growth.
- **Sufficient Capacity for Expansion**: $3-4B+ additional revenue potential.
- **Enterprise Recovery in H2**: Next-gen AI/ML program ramping.

**【CEO Opening Remarks】**
- Q2 revenue of $2.89B and adjusted EPS of $1.39 exceeded guidance, with a record 7.4% adjusted operating margin.
- CCS segment grew 28% driven by hyperscale customers expanding data centers for AI applications.
- ATS segment revenue up 7%, with margins improving to 5.3% due to capital equipment and industrial demand.
- Tariffs had minimal impact due to pauses and exemptions on electronics goods.

**【CFO Financial Commentary】**
- Revenue up 21% YoY, with adjusted gross margin improving 110bps to 11.7%.
- CCS segment revenue $2.07B (+28%), driven by 82% growth in HPS networking and 75% in communications end market.
- Free cash flow of $120M, $314M cash balance, and $1B total liquidity.
- Share buybacks of $40M in Q2, with $115M year-to-date.

**【CEO Updated Outlook】**
- Full-year revenue raised to $11.55B (+20%) and EPS to $5.50 (+42%).
- CCS expected to grow nearly 30%, with 800G programs accelerating.
- Enterprise end market to recover in H2 with next-gen AI/ML program ramp.
- ATS flat YoY due to A&D program exit, but industrial business growth offsetting.

**【Q&A Highlights】**
- 800G volumes matched 400G in Q2, with all top 3 hyperscalers ramping programs.
- Manufacturing capacity sufficient in Thailand, Mexico, and US, supporting $3-4B+ revenue growth.
- Q4 growth rate of 18% reflects cautious outlook, but demand visibility higher.
- 1.6T programs starting in H2 2026, with samples received in June.
- Services expansion via NCS Global acquisition, with incremental investments in maintenance and service capabilities.

Celestica Inc. (CLS) Q2 2025 Earnings Call Transcript

- **Q1 2025 Strong Performance**: $2.65B revenue (+20% YoY), $1.20 EPS (+45% YoY), CCS segment dominates with 28% growth.
- **Margin Expansion**: Operating margin hits 7.1% (highest ever), gross margin up 110bps.
- **Hyperscale Momentum**: 800G programs ramping, 1.6T switches set to scale in 2026; HPS revenue at $1B.
- **Tariff Resilience**: Customers absorbing tariffs; no material impact on Celestica's margins.
- **2025 Outlook Raised**: $10.85B revenue, $5.00 EPS, CCS growth upgraded to high-teens.
- **Key Risks**: Macro uncertainty, tariff policy changes, supply chain constraints.

**【CEO Opening Remarks】**
- Q1 2025 revenue: $2.65 billion (20% YoY growth), driven by hyperscale demand in CCS segment.
- Adjusted EPS: $1.20 (45% YoY increase), exceeding high-end of guidance.
- Key highlights: 
  - CCS segment revenue up 28% YoY, led by 99% growth in HPS networking switches.
  - ATS segment revenue up 5% YoY, supported by capital equipment growth.
- Tariff response: U.S. exemptions for data center hardware provide near-term clarity; global manufacturing footprint (U.S., Mexico) offers flexibility.

**【CFO Financial Breakdown】**
- **Gross Margin**: 11.0% (110bps YoY improvement), driven by higher volumes and mix shift.
- **Operating Margin**: 7.1% (120bps YoY improvement), highest in company history.
- **Segment Performance**: 
  - CCS: $1.84 billion (70% of total revenue), 800G programs ramping; HPS revenue at $1 billion (39% of total).
  - ATS: $807 million (30% of total), capital equipment up 5% YoY.
- **Liquidity**: $900 million (cash + revolver), supporting $350 million free cash flow target.

**【Q&A Key Takeaways】**
- **Tariff Impact**: Customers absorbing tariffs via pass-through; no material impact on Celestica's margins.
- **Hyperscale Visibility**: Customers reaffirm 2025 CapEx plans; 1.6T switch programs ramping in 2H26.
- **ATS Strategy**: Exiting low-margin A&D program to focus on higher-margin opportunities.
- **Capacity Flexibility**: U.S. and Mexico facilities can scale to $3 billion+ in revenue with existing capacity.
- **New Wins**: Optical transceiver program in Thailand; 1.6T switch wins with major OEMs.

**【Updated 2025 Outlook】**
- **Revenue**: $10.85 billion (12% YoY growth vs. prior $10.7 billion).
- **Adjusted EPS**: $5.00 (vs. prior $4.75), driven by operating leverage and mix improvement.
- **Segment Growth**: 
  - CCS: High-teens YoY growth (vs. prior mid-teens).
  - ATS: Flat YoY, with capital equipment outperforming industrial recovery.
- **Risks**: Macro uncertainty, tariff policy changes, supply chain constraints.


Celestica Inc. (CLS) Q1 2025 Earnings Call Transcript

- **Record Q4 Growth**: $2.55B revenue (+19% YoY), $1.11 EPS (+58% YoY). Full-year revenue up 21% to $9.65B.
- **CCS Segment Dominance**: 68% of Q4 revenue, driven by 65% HPS growth and new 1.6T switching wins.
- **2025 Outlook Raised**: $10.7B revenue (+11%), $4.75 EPS (+22%). Free cash flow target $350M.
- **Networking Momentum**: 800G growth 300-400% in 2025, 1.6T programs ramping in 2026. 400G to coexist with higher speeds.
- **AI Compute Expansion**: Custom ASIC wins for hyperscalers, with 2026+ ramps supporting multi-year growth.
- **Financial Strength**: 6.8% operating margin, $306M free cash flow in 2024. 1.0x debt/EBITDA ratio.


**【CEO Summary Section】**
- Q4 2024 revenue reached $2.55 billion (19% YoY growth), with adjusted EPS of $1.11 (58% YoY growth). Full-year revenue was $9.65 billion (+21%), driven by 30% growth in the Communications Solutions (CCS) segment.
- CCS segment revenue hit $1.74 billion (68% of total), fueled by 65% growth in Hyperscale Networking Systems (HPS) business. Key wins include a second 1.6T switching program and a fully integrated rack solution with a digital-native AI leader.
- 2025 outlook raised to $10.7 billion in revenue (+11%) and $4.75 adjusted EPS (+22%), with free cash flow guidance of $350 million. Margins expected to expand to 6.9%.

**【CFO Financial Commentary】**
- Q4 2024: Adjusted gross margin 11.0% (up 50bps), operating margin 6.8% (up 80bps). Free cash flow of $96 million (+10% YoY). Full-year free cash flow $306 million (+18%).
- Q1 2025 guidance: Revenue $2.475-$2.625 billion (+15% midpoint), adjusted EPS $1.06-$1.16 (+34% midpoint). Operating margin expected to remain stable at 6.8%.
- Balance sheet: $423 million cash, $1.2 billion total liquidity. Debt/EBITDA ratio 1.0x (down 0.1x YoY).

**【Key Q&A Highlights】**
- **Customer Concentration**: 24% and 12% of Q4 revenue from top two customers, but diversification efforts (e.g., digital-native wins) reduce risk. 
- **Networking Growth**: 400G and 800G coexist; 800G revenue to grow 300-400% in 2025. 1.6T programs ramping in 2026 will drive long-term networking demand.
- **AI Compute Strategy**: Focus on custom ASICs for hyperscalers; new wins in 2026+ suggest multi-year AI infrastructure growth.
- **CapEx Efficiency**: 1.7% of revenue in 2024, targeting 1.5-2% in 2025. Thailand expansion supports Southeast Asia growth.
- **Tariffs & Onshoring**: U.S. capacity ready if needed, but customers in wait-and-see mode. Texas facility revenue to double again in 2025.


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