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

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Did Celestica beat or miss consensus estimates last quarter?

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

- **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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