Celestica, Inc. Q1 FY2025 earnings call

• Strong Q1 2025 performance: Revenues of $2.65 billion and adjusted EPS of $1.20, exceeding guidance ranges. Adjusted operating margin was 7.1%, the highest in company history. • CCS segment: Benefiting from strong demand from hyperscaler customers, particularly for HPS networking switches. • ATS segment: Encouraged by growth in capital equipment and signs of industrial growth recovery. • Macro environment: U.S. administration provided temporary exemptions for key data center IT hardware, with no shift in existing programs yet. • Balance sheet: Cash balance of $303 million, $600 million borrowing capacity under revolver, gross debt $887 million, net debt $584 million. • Share buybacks: Repurchased $115 million of shares year-to-date, intend to continue opportunistically.

ATS segment revenue totaled $807 million, up 5%, accounting for 30% of total company revenue. CCS segment revenue was $1.84 billion, up 28%, making up 70% of total revenue. HPS revenue grew by 99% in the first quarter to just over $1 billion, representing 39% of total company revenue. ATS segment margin for the first quarter was 5.0%, up 80 basis points. CCS segment margin in the quarter was 8.0%, an improvement of 120 basis points.

• Q2 2025 revenue projected: $2.575 billion to $2.725 billion, midpoint growth 11%. Adjusted EPS: $1.17 to $1.27, midpoint increase 36%. • Full-year 2025: Raised revenue outlook to $10.85 billion (from $10.7 billion), adjusted EPS to $5 (from $4.75). Free cash flow outlook remains $350 million. • CCS segment: Anticipates high-teens percentage growth in 2025, ramping multiple 800G programs. • ATS segment: Maintaining flat revenue outlook for 2025, with industrial volumes stabilizing and A&D business showing improved profitability.

• Trade policy uncertainty: Impact on demand and program adjustments, though temporary exemptions provided. • Macro environment dynamics: Uncertainty affecting demand and program timings, requiring vigilance and adaptability.

Q: David Vogt asks about visibility with customers in CCS given trade uncertainty.

A: Rob Mionis and Mandeep Chawla state visibility with hyperscaler customers remains strong, with no change in CapEx plans and continued new program ramps.

Q: Samik Chatterjee inquires about tariffs and adjustments in ATS.

A: Rob Mionis explains minor impact of tariffs on ATS, with some product migration to Mexico facilities but net flat relative to prior reviews.

Q: George Wang asks about 1.6T switch and Tomahawk 6 availability.

A: Rob Mionis and Mandeep Chawla discuss 1.6T program wins, silicon availability as gating factor, with mass production likely in back half of 2026.

Q: Ruben Roy asks about optical transceiver win.

A: Rob Mionis details the 800G optical transceiver win, complex assembly and production ramp in Thailand, providing optical proof points for hyperscaler customers.

Q: Thanos Moschopoulos asks about shifting production to U.S. due to tariffs.

A: Rob Mionis and Mandeep Chawla explain ability to triple revenue in U.S. and Mexico facilities without additional space, with capabilities like liquid cooling unique to certain regions.