Celestica (CLS) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $2.65 billion, up 20% year-over-year, exceeding guidance, driven by strong CCS and HPS demand.

• Adjusted EPS rose 45% year-over-year to $1.20, above guidance; adjusted operating margin hit a record 7.1%.

• Net earnings were $86.2 million, down 6% from Q1 2024, mainly due to higher SG&A and tax expense.

• Repurchased 0.6 million shares for $75 million during the quarter.

Financial highlights

• Adjusted gross margin was 11.0%, up 110 basis points year-over-year; gross margin improved to 10.3%.

• Adjusted ROIC reached 31.5%, up from 23.8% a year ago.

• Free cash flow for Q1 was $93.6 million, up from $67.7 million in Q1 2024.

• GAAP earnings from operations were $128.8 million (4.9% of revenue), down from 5.7% margin in Q1 2024.

• SG&A expenses rose 74% to $112.5 million, mainly due to unfavorable TRS fair value adjustments and higher compensation.

Outlook and guidance

• FY 2025 revenue outlook raised to $10.85 billion (12% growth); adjusted EPS outlook raised to $5.00.

• Q2 2025 revenue projected at $2.575–$2.725 billion; adjusted EPS $1.17–$1.27; operating margin expected at 7.2%.

• Free cash flow outlook for 2025 remains $350 million.

• Management expects capital spending for 2025 to be 1.5%–2.0% of revenue.

• Communications revenue expected to increase high-fifties percent year-over-year in Q2 2025; Enterprise to decrease low-forties percent.