Record sales and strong EPS exceed…

• Revenue: $2.5 billion, up 22% year over year.

• Adjusted EPS: $1.04, above guidance range.

• Operating margin (Non-IFRS): 6.7%, up 100 basis points.

• Sales in the CCS segment: $1.69 billion, up 42% year over year.

• ATS segment revenue: $814 million, down 5% year over year.

• Adjusted gross margin: 10.7%, up 90 basis points.

• Adjusted ROIC: 28.6%, an improvement of 7.1%.

• Stock: $1.83 billion, down $434 million year-on-year.

• Adjusted free cash flow: $75 million for the quarter, $203 million year-to-date.

• Cash balance: $399 million at the end of the quarter.

• Gross debt: $746 million, net debt of $347 million.

• Share buyback: Repurchased 2.2 million shares for $100 million.

• Fourth quarter sales forecast: $2.425 billion to $2.575 billion.

• Adjusted Fourth Quarter EPS Guidance: $0.99 to $1.09.

• Sales outlook for the full year 2024: $9.6 billion.

• Full-Year 2024 Adjusted EPS Outlook: $3.85.

• Full-Year 2024 Adjusted Free Cash Flow Outlook: 275 million dollars.

Release date: October 23, 2024

For the full transcript of the conference call, please see the full conference call minutes.

• Celestica Inc (NYSE:CLS) posted record quarterly results with revenue of $2.5 billion and adjusted earnings per share of $1.04, beating forecast.

• The Connectivity & Cloud Solutions (CCS) segment reported a 42% year-over-year revenue increase driven by strong demand from hyperscale customers.

• The company reported a non-IFRS operating margin of 6.7%, an improvement of 100 basis points.

• Celestica’s Hardware Platform Solutions (HPS) business is expected to generate revenue of $2.8 billion, representing growth of over 60%.

• The company expects continued strong demand for its network switches, with 800G solutions becoming increasingly important.

• The Advanced Technology Solutions (ATS) segment reported a 5% year-on-year decline in revenue due to weakness in the industrial business.

• Celestica is expected to experience a low double-digit percentage decline in revenue in the enterprise end market due to a technology shift.

• The company faces potential pricing pressure in the server business due to strong North American competitors and ODMs.

• Inventories remain a concern as cash cycle days increase by two days sequentially.

• The ATS segment’s growth is expected to be in the low single digits in 2025, below the company’s long-term target.

Q: Can you explain the potential impact of Cisco’s involvement in Meta’s new data center networks on your market share? A: Stephen Dorwart, SVP of Global Accounts, explained that hyperscalers balance the best solutions for specific applications with product availability. Celestica continues to invest in research and development and work closely with key technology providers to ensure their platforms remain relevant. Despite the introduction of Cisco, Celestica has not seen a significant change in hyperscaler behavior, which is consistent with their strategy and strengths.

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