Celestica (CLS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 23% year-over-year to $2.39 billion, exceeding guidance due to strong CCS segment demand, while ATS segment revenue declined 11%.

• Non-IFRS adjusted EPS rose 65% year-over-year to $0.91, surpassing guidance; IFRS EPS was $0.83, up $0.37 year-over-year.

• Non-IFRS operating margin improved to 6.3%, up 80 basis points year-over-year; IFRS operating margin was 5.7%.

• Strong free cash flow generation with $63 million in Q2 and $129 million year-to-date.

• Full-year 2024 outlook raised: revenue now expected at $9.45 billion (+19%) and adjusted EPS at $3.62 (+49%).

Financial highlights

• Non-IFRS adjusted gross margin was 10.6%, up 90 basis points year-over-year; IFRS gross margin improved to 10.7%.

• Adjusted ROIC for Q2 was 26.7%, up 6.7 percentage points year-over-year; IFRS ROIC was 23.9%.

• IFRS net earnings for Q2 were $99.6 million ($0.83 per share), up from $55.5 million ($0.46 per share) last year.

• Inventory reduced to $1.85 billion, down $493 million year-over-year.

• Cash balance at quarter-end was $434 million; total liquidity including revolver is $1.2 billion.

Outlook and guidance

• Q3 2024 revenue expected between $2.325–$2.475 billion, midpoint implies 17% year-over-year growth.

• Q3 adjusted EPS guidance of $0.86–$0.96, midpoint up 40% year-over-year.

• Full-year 2024 non-IFRS operating margin expected at 6.3%, up 70 basis points from 2023.

• Adjusted free cash flow for 2024 expected at $250 million.

• Q3 2024 end market outlook: ATS down low single digits year-over-year, Communications up low thirties percent, Enterprise up mid-thirties percent.