Celestica (CLS) Q4 2023 earnings summary

Executive summary

• FY2023 delivered record non-IFRS adjusted EPS of $2.43 and operating margin of 5.6%; revenue reached $7.961B, up from $7.250B in FY2022.

• Q4 revenue rose 5% YoY to $2.141B; non-IFRS operating margin was 6.0% and diluted adjusted EPS was $0.76.

Financial highlights

• Q4 adjusted net earnings were $90.3M and adjusted diluted EPS was $0.76; IFRS net earnings were $84.2M and diluted EPS was $0.70.

• Q4 adjusted gross margin was 10.4%, up 1.0 percentage point YoY; adjusted SG&A was $76.7M, down $8.2M YoY.

• FY2023 IFRS net earnings were $244.6M and diluted EPS was $2.03; non-IFRS adjusted free cash flow was $194M, up $100M YoY.

• Q4 non-IFRS adjusted free cash flow was $84M; IFRS cash provided by operations was $139M and capital expenditures were $33M.

Outlook and guidance

• Q1 2024 revenue guidance is $2.025B–$2.175B, non-IFRS operating margin 6.0%, adjusted diluted EPS $0.67–$0.77, and adjusted SG&A $62M–$64M.

• Q1 end-market outlook: ATS revenue down low single digits YoY; Communications up low single digits; Enterprise up high sixties.

• FY2024 outlook: revenue of at least $8.50B, non-IFRS operating margin 5.5%–6.0%, adjusted EPS of at least $2.70, and adjusted free cash flow of at least $200M, raised from $175M.

• Guidance assumes accelerated Pillar Two implementation and tax efficiencies; Capital Equipment demand softness could have a more adverse impact than expected.