Celestica (CLS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $2.5B, up 22% year-over-year, with non-IFRS adjusted EPS rising 60% to $1.04, both above guidance ranges.

• Non-IFRS operating margin improved to 6.7% from 5.7% in Q3 2023; IFRS net earnings were $91.7M, with diluted EPS of $0.77.

• CCS segment drove growth with 42% revenue increase and margin expansion to 7.6%, while ATS segment declined 5% with margin at 4.8%.

• Record quarterly results achieved, supported by hyperscaler demand, new AI/cloud program wins, and share repurchases of 2.2M shares for $100M.

• Full-year 2024 and 2025 outlooks raised, anticipating continued revenue and margin expansion.

Financial highlights

• Non-IFRS adjusted ROIC reached 28.6%, up from 21.5% year-over-year; IFRS ROIC was 23.3%.

• Adjusted free cash flow for Q3 was $74.5M, more than double Q3 2023; YTD 2024 at $203M.

• Cash provided by operations was $144.8M, up from $88.4M in Q3 2023; cash balance at quarter-end was $399M, with $1.1B in total liquidity.

• Gross margin (non-IFRS) for Q3 2024 was 10.7%, up 90 bps year-over-year.

• Gross debt to adjusted EBITDA leverage ratio at 1.0x; net debt was $746M.

Outlook and guidance

• Q4 2024 revenue expected between $2.425B–$2.575B, with non-IFRS adjusted EPS of $0.99–$1.09 and operating margin at 6.7%.

• Full-year 2024 guidance: revenue $9.6B, non-IFRS operating margin 6.5%, adjusted EPS $3.85, adjusted free cash flow $275M.

• 2025 outlook: revenue $10.4B (+8%), non-IFRS operating margin 6.7%, adjusted EPS $4.42 (+15%), adjusted free cash flow $325M.

• Q4 end market outlook: ATS flat, Communications up high-fifties percent, Enterprise down low double-digits year-over-year.