Celestica Inc.
Celestica is historically an Electronics Manufacturing Services (EMS) company, essentially providing contract manufacturing. Increasingly Celestica has been working with some customers to deploy their engineering capabilities into what they call Hardware Platform Solutions (HPS, previously known as Joint Design and Manufacturing (JDM) which comes with higher margins due to providing additional value from engineering and increasing complexity. As their business has evolved, the company is best thought of as a trusted Original Design Manufacturer (ODM) partner. In 1Q17, CLS established new segments: Advanced Technology Solutions (ATS) which includes former Diversified (encompassing aerospace, defense, industrial, smart energy, healthcare, and semiconductor) and Consumer segments. Connectivity and Cloud Solutions (CCS) is their former Communications and Enterprise segments. After disengaging from Cisco in 2020, many investors expected disruptions but the company delivered great results driven by their years of investment in HPS (formerly JDM). In FY25 HPS was 40.7% of Revs vs 20% in FY21 and its customer concentration is very high with its largest customer, understood to be Google, ranging from 20-36% of quarterly revenue and 1 to 2 other customers who account for more than 10% of revenue.
Despite the numerous markets Celestica serves, it is increasingly at the heart of data centers. The Company is the leading provider of 200G+ data center switches with 41% share as per their 2025 Investor Day deck. They also design and build modular power infrastructure for data centers in an integrated approach from grid interface, advanced power and cooling, racks, storage, switching, and networking.
Ests: 1Q26 2Q26 FY26 FY27
Revs 4.05b 4.17 17.4b 24.5b
EPS 2.09 2.14 9.04 13.06
P=C$576.75, US$422.21, D/C=14%, NWC>debt by 6.89/share, TTM EPS: 7.02, P/E= 60X, FY26 P/E=42X on guide
1Q26 2.16 vs 1.20 +80%, (est 2.09 up from 1.83)
April 27, 2026, P=C$576.75, US$422.21, TTM EPS: 7.02, P/E= 60X, FY26 P/E=42X on guide
Revs +52.8% to 4.05bn (est 4.05), OM 8% vs 7.1%, ROIC 49.8% vs 31.5%
CCS +76% to 2.34bnn OM 8.6% vs 8%, HPS +63% to 1.7bn
ATS -0.1% to 806m, OM 6% vs 5%
In CCS Comms +69% to 2.4bn, Enterprise +100% to 830m
3 10% customers at 35%, 15%, and 15%
2Q Outlook: Revs +43-53.8% to 4.15-4.45bn (est 4.17), EPS +54-68% to 2.14-2.34 (est 2.14)
Factors ATS +MSD, In CCS Comms +50% on 400G and 800G, Enterprise +130% on AI ML compute
FY26 Outlook: Raised Revs to +53% to 19bn (est 17.4bn), EPS +68% to 10.15 (est 9.04) puts 1H at 4.50, implies 2H at 5.65 vs 3.47 which seems conservative given “accelerating demand 2H” but prudent given 2H ramps and capacity additions.
Mgmt. cites new program wins and improved visibility, also factors component availability (conservative)
“We expect to grow revenue by more than $6.5 billion in 2026.. and we now expect to grow revenue significantly more than this in 2027” implying FY27 meaningfully higher than 25.5bn vs est 24.5bn, rough capex target of 1.5bn in FY27 on top of 1bn in FY26
Won CPO switch program with a hyperscaler customer, to begin ramping in 2H 2027
“with the extent of lead times, we are getting unprecedented visibility from our customers” meaning bookings for FY28
4Q25 1.89 vs 1.11 +70% (est 1.78 up from 1.52), FY25 EPS +56% to 6.07
Jan 28, 2026, P=C$467.12, US$345.23, TTM EPS: 6.07, P/E= 57X.
Revs +43.6% to 3.65bn (est 3.49), GM 11.3% vs 11%, OM 7.7% vs 6.8%, OpInc +63%
ATS -1% to 0.8bn, OM 5.3% vs 4.6%, CCS +64% to 2.86bn, OM 8.4% vs 7.9%, incremental CCS OM 9.3%, HPS +72% to 1.4bn, CCS ex HPS +56.5% to 1.46bn
3 10% customers at 36%, 15% and 12%
Increasing planned capex this year to $1bn to support growth with largest customer (Google), based on booked business, fully funded by OCF, FCF guidance unchanged at 500m
Announced a 3rd hyperscaler customer for 1.6T switching to start ramping in 2027 (went 400G to 800G with this customer)
1Q26 Guidance: Revs +45-57% to 3.85-4.15bn (est 3.4), OM 7.8% vs 6.6%, EPS +63-79% to 1.95-2.15 (est 1.85), factors LSD decrease for ATS, low 60% increase in Comms, >110% in Enterprise
FY26 Guidance: Revs +37% to 17bn (up from 16bn), adj EPS +44% to 8.75 (up from 8.20), mgmt. cited improved visibility for rest of FY26. If 1Q hits 2.15, implies rest of year +38% to 6.6 vs 4.78 and est 6.73, still looks very conservative.
10 1.6T programs, 5 programs to begin ramping in latter part of the year, rest in development for ramps in 27/28, not necessarily cannibalizing previous generation.
1st analyst question about guidance implying slowdown after 1Q, mgmt. affirmed that demand forecasts from customers are higher than their guide, just being conservative for back half of the year, seeing accelerating CCS growth
1.6T pricing/margins “similar” as previous generations but as more move to HPS which embeds some of their engineering and enhances pricing
3Q25 1.58 vs 1.04, est 1.49 up from 1.29
Oct 27, 2025, P= C$423.31, US$301.82, TTM EPS=5.30, P/E=57X, FY26 P/E=37X
Revs +28% to 3.19bn (est 3.04), GM 11.7% vs 10.7%, OM 7.6% vs 6.7%
ATS -4% to 0.78bn, OM 5.5% vs 4.9%
CCS +43% to 2.41bn, OM 8.3% vs 7.6%, HPS +79% to 1.4bn, CCS incremental OM 9.7%
In CCS Enterprise -24% to 470.1m, Comms +82% to 1.9bn
3 customers >10% at 30%, 15%, and 14%
4Q Outlook: Revs +31% to 50% to 3.325-3.575bn (est 3.1), OM 7.6% vs 6.8%, EPS +49% to +63% to 1.65-1.81 (est 1.52), ATS -LSD, in CCS Comms + high 60s, Enterprise +low 20s
Raised FY25 Outlook to Revs +26.5% to 12.2bn, EPS +52% to 5.90
Following comments also incorporated from concurrent Investor Day
Initial FY26 Outlook: Revs +31% to 16bn, OM 7.8% vs 7.4%, EPS +39% to 8.20 (est 7.23), factors 1.6T ramp in 2H (DS6001 switch has direct chip cooling)
Digital Native Customer portfolio expected to ramp meaningfully in 2027, expect XPUs in 2H26 for testing then ramp
Puts custom AI ASIC TAM in 2029 at 104bn, 6X 2025 18bn, “an increasing number of the largest data center players in the market continue to pursue development of custom ASIC platforms, and we are seeing this trend within our own customer base”
Mgmt has visibility into CCS +40% in 2026 and again in 2027, likely puts EPS $13-18 in the ballpark (with 18 requiring even higher margins), FY27 est is 9.24 and FY28 is 12.27,
Their 200G+ switch market share at 41%, ANET at 15%, Accton at 11%, other ODMs at 11%, and rest of market at 22%
2Q25 1.39 vs 0.91 +53%, est 1.23 up from 1.15
Jul 28, 2025, P=C$238.07, US$173.37, TTM EPS=4.79, P/E=36X
Revs +21% to 2.89bn (est 2.67), GM 11.7% vs 10.6%, OM 7.4% vs 6.3%
ATS +7% to 0.82bn, OM 5.3% vs 4.6%, CCS +28% to 2.07bn, OM 8.3% vs 7.0%, HPS +82% to 1.2bn, CCS incremental OM 12.2%
In CCS Enterprise -37% to 433m (expected transition), Comms +76% to 1.6bn
2 customers >10% at 31% and 13% vs 2 customers at 32% and 12%, YTD 3 customers at 30%, 13% and 10%, the 3rd customer was just below 10% (rounds to 10%) and increased q/q.
800G ramped to match 400G in 2Q, all top 3 customers have 800G programs with CLS.
FY25 Outlook: Raised Revs +20% to 11.55bn (est 10.98), adj EPS+42% to 5.50 (est 5.06), FCF +40% to 400m (prev 350m), factors ATS flat, CCS +30%
3Q25 Outlook: Revs +15% to +25% to 2.875-3.125bn (est 2.76bn), OM 7.4%, EPS +22% to +57% to 1.37-1.53 (est 1.29), factors ATS down LSD, Comms up low 60s, Enterprise down mid-20s but starting to strengthen as a hyperscaler program is expected to ramp in 3Q.
Guidance implies 4Q Revs 2.88-3.1bn (est 2.87bn) and EPS 1.40-1.50 (est 1.34) but likely signals management conservatism rather than implying flat from 3Q (management confirmed that on the call saying their order book is higher).
Mgmt will provide FY26 outlook in October, current customer forecasts into 1H26 don’t indicate slowdown.
There’s been speculation the digital native customer might bail to another platform, mgmt. comments sound like program is on track. Also higher-margin services not yet material but will be more material when this customer kicks in.
Outstanding results and I think outlook and commentary suggest that next year estimates are way too low, I previously though FY26 EPS could hit $7 but with 3Q outlook likely >$1.50, putting a run-rate >6, I think $8 in FY26 is doable with continued growth. That would put the stock at 25X forward earnings which is much cheaper than many names delivering inferior results.
An important aspect to the story is gaining share and mgmt. noted their share in 800G is ”that much larger” than 400G “based on early wins”. Celestica offers customers more bang for the buck than many OEMs with very high margins, has a LOT of share to take.
1Q25 1.20 vs .83 +45%, est 1.11 up from 1.00
Apr 24, 2025, P=C$127.36, US$92.01, TTM EPS=4.30, P/E=21X, FY25 P/E=19X
Revs +20% to 2.65bn (est 2.56), GM 11% vs 9.9%, OM 7.1% vs 5.9%
ATS +5% to 810m, OM 5% vs 4.2%, CCS +28% to 1.84bn, OM 8% vs 6.8%, HPS +99% to 1bn
In CCS Enterprise -39% to 413.7m (expected transition), Comms +86.8% to 1.43bn
Strong growth in capital equipment, returning growth in industrial
3 customers >10% (28%, 13%, and 10%) vs 1 at 34%
“Substantially all tariffs paid by Celestica are expected to be recovered from our customers”
FCF 94m vs 68m, YTD repurchased $115m (75m in 1Q, 40m in 2Q so far).
FY25 Outlook raised Revs 10.85bn (prev 10.7), OM 7.2% (prev 6.9%), EPS 5.00 (prev 4.75)
2Q Outlook: Revs 2.575-2.725bn (est 2.61), EPS 1.17-1.27 (est 1.15), 2Q outlook factors ATS flat, Comms up high 50s, Enterprise down low forties.
Mgmt continues to expect Enterprise reacceleration in 2H, implying conservative outlook
Encouraged by new wins, new win for optical transceivers for an optical OEM, multiple new awards for 1.6 including a major OEM customer, reiterated “gain share’ with hyperscalers
Re macro/policy environment, not seeing changes in CCS, also not seeing changes to planned ramps after 2025. Haven’t seen changes in demand in ATS but factored in some additional risk in their FY outlook based on customer uncertainty
4Q24 1.11 vs .77 +44%, est 1.06 up from .95, FY24 EPS 3.88 +58%
Jan 29, 2025, P=C$144.99, US$100.49, TTM EPS: 3.88, P/E= 26X
Revs +18.9% to 2.55bn, GM 11% vs 10.4%, OM 6.8% vs 6%
ATS +0.3% to 805.8m, OM 4.6% vs 2.7%, CCS +30% to 1.74bn, OM 7.9% vs 6.7%
Won 2nd and 3rd 1.6T programs, HPS +65% to 807m
Top customers 24% and 12% vs 29% and n/a, FY24 same customers 28% and 11%
Raised FY25 Outlook to +11% to 10.7bn (prev 10.4bn), adj EPS +22% to 4.75, (prev 4.42),
1Q25 Outlook: Revs +12-19% to 2.475-2.625bn (est 2.44), EPS +28-40% to 1.06-1.16 (est 1.00)
1Q Outlook factors ATS flat, Comms up low 80s, Enterprise down mid forties
FY Outlook factors stabilizing Indu with 2H recovery, Enterprise reaccelerating 2H, A&D new program ramps but non-renewal of dilutive program drives lower Revs, Comms strong growth with 800G ramps and continued demand for 400G, Capital Equipment solid demand.
Custom chips optimized for targeted applications rather than general purpose LLMs.
400G to have a long tail as price points come down
New HPS win with a leading digital native co went through rigorous evaluation process, begins late 2026, at scale could achieve size of largest hyperscaler customer today.
Mgmt described CCS business transitioning into OEM territory.
3Q24 1.04 vs .65 +60%, est .93 up from .82
Oct 23, 2024, P= C$79.47, US$57.48, TTM EPS=3.58, P/E=16X, FY25 P/E=13X
Revs +22.3% to 2.5bn (est 2.41), GM 10.7% vs 9.8%, OM 6.7% vs 5.7%,
ATS -5% to 814.1m (+6% q/q), OM 4.8% vs 4.9%, CCS +42.4% to 1.685bn, OM 7.6% vs 6.2%
2 customers >10%, 25% and 12% vs 1 at 23%
OCF 144.8m vs 88.4m, FCF 74.5m vs 34.1m, repurchased 2.2m shares for 100m ($45/sh)
New strategic relationship with Groq to start ramping in early 2025, new program win with a major hyperscaler for 1.6 Terabyte switching to start ramping in 2026
In CCS Enterprise +38%, Comms +45%, HPS +54% to 761m,
Outlook: 4Q Revs +13-20% 2.425-2.575bn (est 2.45), EPS .99-1.09 (est .95), expect Enterprise down LDD on program transition which ramps in 2H25, partly offset by storage. FY24 Revs 9.6bn, EPS 3.85,
FY25 Outlook Revs 10.4bn (est 10.4), +8% vs FY24 Guide, EPS +15% to 4.42 (est 4.07), CCS +LDD (comms >20%, Enterprise down on transitions), ATS +LSD (no-margin program transition in A&D to a higher margin one) These are non-IFRS figures, converting to US GAAP next year, mgmt. doesn’t expect material difference.
2Q24 .91 vs .55 est .81 up from .71
Jul 24, 2024, P=C$73.75, US$53.39, TTM EPS: 3.23, P/E= 16.5X
Revs +23.3% to 2.39bn, GM 10.6% vs 9.7%, OM 6.3% vs 5.5%
ATS -11% to 767.7m, OM 4.6% vs 4.8%, CCS +51% to 1.62bn, OM 7.2% vs 6%
2 customers >10%, 32% and 12% vs 1 at 18% last year.
ATS ex weak Industrial (inventory correction) was +12% driven by strength in A&D and Capital equipment
In CCS, Enterprise +37% driven by AI/ML, Comms +64% driven by accelerating HPS networking from hyperscalers to support their AI/ML investments, HPS +94% to 686m
3Q Outlook: Revs +14-21% to 2.325-2.475bn (est 2.29bn), OM 6.3%, EPS .86-.96 (est .82)
FY24 Outlook Raised: Revs +19% to 9.45bn, OM 6.3%, EPS +49% to 3.62 (FY25 estimate) which implies 2H Revs +15.9% and EPS +32% to 1.86 and 4Q Revs +11-18% and +17-30% to EPS .89-.99
In 3Q Expect ATS -LSD, Comms +low 30%, Enterprise +mid 30%
FY outlook now reflects ATS -MSD vs prior expectation of flat, still expect 2H>1H, expect Indu to gradually improve in 2H, seeing encouraging recovery signs for capital equipment, expect hyperscaler customers will be >4.6bn in Revs in FY24. Mgmt anticipating AI/ML transition (plateau then decline in back half then ramp in 2025) to be more than offset by strength in networking 400G and 800G switch programs. Seeing more distributed regional data centers due to power constraints (higher networking demand)
Mgmt anticipates next gen AI/ML programs to carry higher margins due to higher CLS value add. Not seeing a slowdown, “if anything we’re seeing an acceleration on our new wins”
1Q24 .86 vs .47, est .75 up from .65
Apr 25, 2024, P=C$60.42, US$44.10, TTM EPS=2.83, P/E=16X
Revs +20% to 2.21bn (est 2.18), OM 6.2% vs 5.2%,
1 customer >10% at 34% vs 2 customers at 15% and 11%
ATS -3% to 767.9m, OM 4.7% vs 4.4%, CCS +38% to 1.44bn, OM 7% vs 5.8%
ATS Indu soft as expected, Capital Equipment flat, A&D and HealthTech grew
CCS Enterprise +72%, and Comms +17%, HPS +40% to 519m
2Q24 Outlook: Revs +20% to 2.175-2.325bn (est 2.14), OM 6.1%, EPS .75-.85 vs .55 (est .71)
FY24 Outlook Raised: Revs +14% to 9.1bn, OM 6.1% vs 5.6%, EPS +35.8% to 3.30 (est 2.93, FY25 est was 3.26), implies 2H Revs +9%, EPS +13% to 1.59 (est 1.50)
Expect ATS approx. flat in FY24 with growth in 2H, seeing stability in capital equipment
4Q visibility a bit murky, mgmt. stated “demand exceeds supply and as material availability becomes available that might give us an opportunity to increase our output”, CLS is “heavily tilted towards custom silicon versus merchant silicon”
4Q23 .76 vs .56 +35%, FY23 EPS +28% to 2.43
Jan 29, 2024, P=C$43.63, US$32.56
Rev +5% to 2.14bn, OM 6% vs 5.3%, FCF 83.8m vs 42.6m (93% of NI vs 62%)
ATS -2% to 803m, OM 4.7% vs 4.4%, CCS +10% to 1.34bn, OM 6.7% vs 5.9%,
FY23 FCF 193.9m vs 93.8m, 66% of NI vs 40%
ATS experienced demand softness in industrial and capital equipment which more than offset >20% growth in Aerospace & Defense, Enterprise +46% (vs mgmt. expectation high 20s) driven by demand for AI applications from hyperscaler customers. Comms -10% (vs expectation mid-teens decline) on inventory digestion. HPS -1% to 484m
OM exceeded expectations from strength in CCS driven by growth in hyperscaler
1 customer >10% of revs, 29% of total in 4Q, 22% in FY23 vs 11% in FY22, a global hyperscaler they’ve been working with for >10 years, across 25 programs HPS and non-HPS, majority single-sourced, continue to win new programs.
Hyperscalers were +32% in FY23 to almost 2.9bn or almost 36% of total, (serve all the top 5 hyperscalers), ex-hyperscalers Revs flat. Top customer +189%, ex top customer -12%
1Q24 Outlook: Revs +14% to 2.025-2.175bn, OM 6% vs 5.2%, EPS +53% to .67-.77, ATS down LSD for similar reasons as 4Q , Comms +LSD, Enterprise +high 60s,
FY24 Outlook Reiterated (likely update in April): Revs 8.5bn or more (vs 7.96bn), OM 5.5-6% (vs 5.6%), EPS 2.70 or more, CapEx 1.75-2.25% of Revs, more weighted in 1H (vs 1.5% in FY23), FCF 200m or more (vs 194m in FY23), mgmt. confident hyperscaler upgrade cycle is >5 years
3Q23 .65 vs .52, est .60
Oct 25, 2023, P=$C 34.95, $US 25.31, TTM EPS=2.22, P/E=11X
Revs +6% to 2.04bn, OM 5.7% vs 5.1%
ATS +12%, OM 4.9% vs 5%
CCS +2%, OM 6.2% vs 5.2%
4Q Outlook: Revs 2-2.15bn (est 2.1), adj EPS .65-.71 (est .65)
FY23 Outlook raised Revs 7.9bn, adj EPS 2.36
Reiterated FY24 Outlook for adj EPS growth 10% or more
2Q23 .55 vs .44, 48 est up from .45
Jul 26, 2023, $C 21.75, P=$US 16.46, TTM EPS=2.09, P/E=8X
Revs +13% to 1.94 (est 1.8), OM 5.5% vs 4.8%
ATS +24%, OM 4.8% vs 4.5%
CCS +5%, OM 6% vs 5%
OCF 130.2 vs 86.9
3Q Outlook: Revs 1.9-2.05bn (est 1.95), adj EPS .56-.62 (est .51)
FY23 Outlook: Revs at least 7.85bn, adj EPS 2.25
FY24 Outlook: rev growth across both businesses supported by strong secular tailwinds and new program wins, adj EPS growth of 10% or more
1Q23 .47 vs .39 est .45
Apr 26, 2023, P=$US 11.76, TTM EPS=1.98, P/E=6X
Revs +17% to 1.84bn, OM 5.2% vs 4.4%
ATS +14%, OM 4.4% vs 5%
CCS +20%, OM 5.8% vs 3.9%
2Q Outlook Revs 1.75-1.9bn, EPS .44-.50
FY23 Outlook: Revs at least 7.6bn (prev at least 7.5bn), EPS 2.00-2.05 (prev 1.95-2.05)
1Q20 .16 vs .12 +33%, est .10 down from .12
Apr 29, 2020, P $C 7.23, $US 5.15, TTM EPS: 0.58, P/E= 9X
Revs -8% to 1.32bn (low end of range), OM 2.9% vs 2.4%, OpInc +8.5%
Top 10 customers 66% vs 62%, 1 customer >10%, CSCO 13% vs 12%
ATS -5.4% to 547m, OM 2.7% vs 2.6% (opinc -2.6%)
CCS -9.7% to 771.6m, OM 3% vs 2.3% (opinc +17% to 23.4m)
In ATS, semi cap equipment improved q/q, +28% y/y and was profitable but mgmt. believes some previously anticipated demand will be deferred due to COVID19, A&D negatively impacted (operated at break-even) by materials shortages due to COVID19 and halt of Boeing 737 Max, modest demand reductions in industrial while healthcare increased
CCS experienced demand softness from some comms customers, Enterprise disengagements, partly offset by growth in JDM (+40% y/y), FY19 JDM was 500m, strong growth in data centre
FCF 53.8m vs 31.7, repaid 60.9m of debt
Operating at ~85% capacity utilization, capital equipment ~60-70%
No guidance but think 2Q20 looks similar to 1Q20 assuming no change in conditions
Results not impacted by CSCO disengagement which should be complete by year end, mgmt. pleased with bookings progress/inquiries to backfill Thailand facility once disengagement effected, disengagement costs to be lower than expected but taking additional restructuring actions to adjust to shifting demand so 2020 costs will >30m they originally planned but not estimating an amount.
4Q19 .18 vs .29 -38%, FY19 EPS .54 vs 1.07
TTM EPS=.54
Revs -14% to 1.49bn, OM 2.9% vs 3.5%
ATS +3%, 39% of Revs vs 33%, OM 3% vs 3.7%
CCS -22%, 61% of Revs vs 67%, OM 2.9% vs 3.3%
FCF 43.8m vs -30.4m
Capital Equipment improved q/q
1Q20 Guidance: Revs 1.325-1.425bn, OM 2.9% at midpoint, adj EPS .13-.19
3Q19 .13 vs .26
Oct 24, 2019, P $C 8.99, $US 6.88, TTM EPS 0.69, P/E=10X
Revs-11% to 1.52bn, OM 2.8% vs
ATS flat, OM 2.8% vs 4.6%
CCS -17%. OM 2.8% vs 2.7%
Semi equipment business operated at a loss in mid-single digit range, expect 4Q loss low-single digit range,
Have come to an agreement with CSCO to a phased exit starting in 2020, mgmt. estimates CSCO will be ~750m in FY19, resulting in annualized revenue loss to CCS from 500m to 1.25bn, FY20 impact expected to be 400-600m. Expect negligible impact to adjusted EPS due to cost reductions and redeploy assets in growth areas. Expect disengagements to be complete by end of FY20 (remainder of rev loss in FY21).
Guidance: 4QRevs 1.425-1.525bn, EPS .12-.18, FY19 Revs -11-12%, further decline in FY20 with increase in OM and EPS.
2Q19, .12 vs .29, -59%, est .12 down from .22
July 24, 2010, P $C 9.34, $US 7.10, TTM EPS=0.82, P/E=9X, FY20 P/E=7X
Revs -15% to 1.45bn, GM 7% vs 6.4%, OM 2.5% vs 3.1%,
ATS +2% to 563m, OM 2.8% vs 5.1%, CCS -23% to 882m, OM 2.4% vs 2.2%
In ATS, capital equipment had loss of high single-digit million dollars, worse than mgmt. expected, seeing some delays in next-generation display programs. Ex Capital Equipment, ATS revs up low double digit with OM within 5-6% target.
Communications -21% y/y and weaker than mgmt. expected, expect to persist for remainder of year. Enterprise slightly better than mgmt. expected, -26% y/y due to disengagements, roughly flat ex disengagements.
Top 10 customers 65% of revs vs 71%, 2 10% customers.
3Q19 Guidance: Revs 1.4-1.5bn (-15% at midpoint), OM 2.5%, EPS .09-.15 (est .17)
FY19 Outlook reduced, now expect FY19 Revs down low teens % vs high single digits previously expected.
Expect 3Q capital equipment business flat q/q (2Q was down ~50% y/y), similar size of loss in 3Q but expect improved results in the future (but don’t see demand improving in 2019). Could see some improvement in “profitability” in 4Q.
Mgmt taking action to lower breakeven point in capital equipment business (closing 4 facilities, moving to lower-cost regions).
Have won a number of new programs in semiconductor business, ramping in 2020
1Q19 .12 vs .24, -50%, est .16 down from .27
Apr 25, 2019, P $C 11.61, $US 8.61, TTM EPS=0.99, P/E=9X, FY19 P/E=9X
Revs -4% to 1.43bn, GM 6.6% vs 6.6%, OM 2.4% vs 3%
ATS +9% to 578.2m, OM 2.6% vs 5.2%, CCS -12% to 854.9m, OM 2.3% vs 1.7%
Top 10 customers 62% vs 71%, 2 customers >10%
In ATS, semi cap equipment delivered loss within mgmt. expectations (and appears to be stabilizing), in Display some program ramps now expected in 2020 instead of 2H19, weakness in semi cap expected to reverse in 2019, health tech experienced ramp costs
CCS declines from planned disengagements in Enterprise in addition to “late quarter” demand softness in Communications as customers work down inventory in addition to lower demand around some next generation program transitions. Mgmt also discussed disruption that end customers are seeing as new business models emerge, they feel they can capture some of that emerging competition but timing likely is a factor.
2Q Guidance: Revs 1.45-1.5bn (est 1.6bn), EPS .09-.15 (est .22), OM at midpoint 2.4%
Expect ATS up low single digits as most segments posting strong growth offset by weakness in semi cap equipment. Communications expected to be down high teens and Enterprise down low 30% range due to disengagements.
Mgmt cited strong bookings in semi cap equipment over past 18 months giving them encouragement for improved results once this period of softness ends.
Solid operating cash flow, received $113m from sale of Toronto property
Results and guidance continue to be bad, mgmt. said continued softness in CCS could present further risk to their FY outlook. Guidance demonstrates risk to current earnings although these are not likely representative of normalized earnings, CLS exhibiting more cyclicality in addition to the disengagements than serious execution issues. ATS now 40% of revs, up from 33% last year, improved execution should result in higher overall margins for the company over time.
4Q18 .29 vs .27, +7.4%, incl fx tax, est .31, FY18 EPS 1.11 vs 1.19
Jan 31, 2019, P $C=13.06, $US=9.93, TTM EPS=1.11
Revs +10% to 1.73 (est 1.73), GM7.2% vs 6.7% OM 3.5% vs 3.2%
ATS +11% to 33%, OM 3.7% vs 5.2%, CCS +10% to 67%, OM 3.3% vs 2.2%,
ATS margin impacted by slower semiconductor capital equipment demand, focusing on efficiency and improved margins
Mgmt focusing better inventory management as constrained environment “modestly improves”, completing efficiency initiatives to drive margin expansion, and revenue diversification
1Q19 Guidance: Revs 1.45-1.55bn (vs 1.50, est 1.55), OM 2.6% at midpoint, EPS .12-.18, est .27
EPS guidance is very weak (back to levels 6 years ago), partly due to op losses in semi-cap equipment (single digit million dollar loss, 9m would be .06/sh) continue to lever the balance sheet but expected growth in revenues and earnings is not materializing, OM target 3.75-4.5% by 1H2020
3Q18 .29 vs .31 ex (.03) fx tax, est .30 up from .28
October 24, 2018, P $C=14.46, $US=11.06, TTM EPS=1.09, P/E=10X, FY19 P/E=8X but FY19 estimates are likely high
Revs +12% to 1.71, adj GM 6.6% vs 6.9%, OM 3.3% vs 3.6%
ATS +17% to 33%, OM 4.6% vs 5.1%, CCS +9% to 67%, OM 2.7% vs 3.0%
Top 10 customers 71%, 2 customers >10%
Repurchased 1.9m shares for $23.3m (12.26/sh), intend to launch a new share repurchase plan for up to 10% of public float
CCS performed better than expected, offset weakness in ATS due to semiconductor capital equipment
Strategic review in CCS will shed ~500m over next 12-18m and should improve margins, likely see overall revenue decline in FY19 by single digits (current estimates are +3%)
Guidance: 4Q Revs 1.7-1.8bn (est 1.7), EPS .27-.33 (est .32) with tax rate 17-19%, Impakt acquisition to have minimal contribution due to expected late closing.
Improved OM target range is due to CCS review and improved performance, acquisitions and organic growth in ATS, cost reduction initiative.
Expect to receive full proceeds from sale of Toronto property by 1Q19, $C ~122m
Stock reacting negatively to almost 5-year lows, results and guidance are not THAT bad and while the transition is slow and uneven, the stock remains inexpensive and the company is incrementally strengthening its business.
Mid Quarter Update
Announced agreement to acquire Impakt for $329m. Impakt provides manufacturing solutions for leading OEMs in semiconductor OLED display industries
Provides CLS significant new capabilities in large format, complex, manufacturing solutions for multiple industries
Mgmt expects it to be accretive to OM, expects closing in 4Q18
Reiterated 3Q outlook, increased OM target for next 12-18 months from 3.5-4% to 3.75-4.5%
Continued incremental execution on their strategy to use their balance sheet to acquire higher-value strategic acquisitions delivering revenue growth and margin expansion.
2Q18 .29 vs .32, -9.4%, est .28
July 31, 2018 P=C$15.38 U.S.$11.81, TTM EPS=1.11, P/E=1X, FY19 P/E=9X
Revs +9% to 1.7bn, GM 6.4% vs 7.3%, OM 3.1% vs 3.7%
ATS +16% to 33% of revs (+11% ex Atrenne), OM 5.1% vs 4.7%, CCS +6% to 67% of revs, OM 2.2% vs 3.3%
Implementing comprehensive review of CCS business, could result in shedding unprofitable programs, continue to invest in JDM business to strengthen CCS
Top 10 customers were 71% of revs, unchanged y/y. 1 customer >10%
3Q Guidance: Revs 1.65-1.175 bn (est 1.56bn), EPS .26-.32 (vs .31, est .28), OM 3.3% at midpoint, goal to have OM at 3.5% or higher in 4Q18
Decent results, net cash sopped up by acquisition of Atrenne, current environment continues to boost non-cash working capital, improved profitability and more efficient working capital should start to boost cash balance unless they continue with acquisitions.
Decent results considering continued margin headwinds, margins are improving q/q and we should start to see y/y improvement in 4Q. Valuation still looks reasonable especially considering bloated non-cash working capital which should be worked down over time but not immediately.
1Q18 .24 vs .29, est .24 down from .28
Revs +1% to 1.5bn, OM 3% vs 3.6%, CFO -5.4m vs 35.6m on increased inventories to buffer component constraints
ATS +8% to 36% of revs, OM 5.2% vs 4.7%, CCS -2% to 64% of revs, OM 1.7% vs 3% (ATS 62% of total segment OpInc)
2 customers >10% of revs, Top 10 were 71% of revs vs 70%, Component constraints continue, Acquisition of Atrenne completed in early April, Repurchased 3.3m shares at average of $10.63/sh
Relocation to new mfng site and temporary corp HQ by end of 1Q19
2Q Guidance: Revs 1.575-1.675bn (+1-7%, est 1.56bn), EPS .25-.31, est .28, OM at midpoint 3.2%, still softening y/y but q/q improvement will soon result in y/y improvement. ATS to be up mid-teens y/y, high-teens including Atrenne offsetting decline in CCS, making progress to 3.5% OM in 2H19.
Mgmt expects Atrenne will contribute 80m to Revs annually, CCS margins to show steady improvement throughout 2018 despite continued very tight component supply driven by “significant deployment of digital technology in automotive industry and growth of IoT” as demand for materials while supply capacity has not kept pace – explains their increase in inventory which mgmt. indicated they don’t expect to get worse.
Decent results, ATS taking a driver seat on OpInc is encouraging, valuation gap continues to be encouraging especially considering FLEX’s recent correction.
4Q17 .27 vs .34, est .30, FY17 1.19 vs 1.18
Revs -4% to 1.55bn, OM 3.3% vs 3.8%, FCF 18.8m vs 69.3m
ATS +6% (+10% ex solar exit) to 33% of revs, Comm -12% to 40% of revs, Enterprise -4% to 27% of revs, weakness in Comm following strong results last year.
Restructuring charge of 13.2m, expects 50-75m, payback in <1 year, not nearly as much as feared as when they announced the restructuring and some analysts expected them to use all their cash (net 312.5m), repurchased 1.9m shares for 19.9m, NCIB to purchase up to 10% of float.
Announced agreement to acquire Atrenne for $139m, manufacturer of ruggedized products for aerospace, expected to close in 2Q18, annualized revs~80m, strong margins.
1Q18 Guidance: Revs 1.425-1.525bn, (vs 1.47), OM~3%, adj EPS .20-.26 (est .28), expect OM ~3.5% in 2H18, expect materials constraints to continue into 2H.
3Q17 .31 vs .33, est .32
Revs -2% to 1.53bn, OM 3.6% vs 3.8%
Comm +2%, ATS -4% (+2% ex solar exit), Enterprise -5%, JDM business still growing at double digits (less than 10% of revs). Had some program ramd delays which are now resolved.
Intending to launch share buyback up to 10.5m shares
Experiencing some component constraints (impacted 3Q revs and 4Q guidance) explaining some inventory increase.
Initiating company-wide restructuring, costs to be “significant” to be more discussed next qtr.
4Q Guidance: Revs 1.5-1.6bn (vs 1.62, est 1.63), OM 3.6% at midpoint, EPS .27-.33 (est .34)
CLS trading down towards lows of 2014 (in $U.S.) while some peers are trading at highs and significantly higher valuations for results that do not appear to be significantly different enough to justify the valuation gap, now trading at 6X TTM EPS ex cash, not reflecting its potential for growth (organic and acquisition with their idle cash, for example CapEx running higher than in the past and focused on growth areas with higher margins, pleased with M&A pipeline) and margin expansion, trading just 12% above BV of equity and the company continues to generate >10% ROE.
2Q 17.32 vs .29 incl (.02) f/x tax due to weakening Malaysian ringgit and Chinese renminbi
Revs +4.9% to 1.56bn, OM 3.7% vs 3.8%
2 10% customers, top 10 71% of revs
Comm +14%, ATS -3% but +3% ex solar exit, weaker than expected due to softness in industrial, Enterprise +1%
3Q Guidance: Revs 1.5-1.6bn (vs 1.55, est 1.59), OM 3.7% (being impacted by higher than normal costs for new program ramps), EPS .28-.34 (vs .33, est .34)
Mgmt still focused on strategically growing the company, stock has been weak and is reacting negatively to soft 3Q guidance but it’s important to keep in mind they are lapping tough comps from last year (3Q16 was up 10%). Solid quarter from a cash flow perspective.
1Q 17 .29 vs .24 not .26 due to 10% tax rate vs 17%, est was .28
Revs +8.6% to 1.47bn, above midpoint of guidance range of 1.4-1.5bn, 6th consecutive quarter of rev growth.
2 10% customers top 10 70% of revs, FCF 13.5m vs -34.8m, ROIC 19.8%
ATS flat y/y (+14% ex solar exit), 34% of revs, CCS +20%, 42% of revs, Enterprise 6%, 24% of revs
2Q Guidance: Revs 1.5-1.6bn (vs 1.49bn, est 1.53), OM 3.7%, EPS .29-.35 (est .32)
Solid quarter and guidance, stock was initially -5.5% but mostly recovered, strange reaction. Toronto real estate transaction now expected to close towards middle of 2018 (extended by 12 months, have already received CAD$15m of total CAD$137m, would receive $53.5m on closing, $68.5m 2 years after closing)