Investment Thesis - Celestica's stock has increased by 8% since late April, outperforming the broader U.S. market, supported by robust Q2 earnings [4] - The company achieved a 23% year-over-year revenue growth in Q2 2024, reaching $2.39 billion, and adjusted EPS increased from $0.55 to $0.91 [5][6] - Management's guidance indicates strong momentum in AI and data centers, suggesting continued growth and market share gains [4][10] Financial Performance - Q2 2024 highlights include a non-IFRS operating margin of 6.3%, up 80 basis points year-over-year, and adjusted EPS of $0.91, up 36 cents year-over-year [6][11] - The Connectivity & Cloud Segment (CCS) revenue grew by 51% year-over-year, while the Advanced Technology Segment (ATS) revenue decreased by 11% year-over-year [7][10] - The company's free cash flow remains positive, with a 26.7% adjusted return on invested capital (ROIC) in Q2 2024, compared to 20.0% in Q2 2023 [11] Guidance and Outlook - For Q3 2024, revenue is expected to be between $2.325 billion and $2.475 billion, indicating a potential 17.6% year-over-year growth [13][14] - The full-year revenue outlook for 2024 has been raised from $9.1 billion to $9.45 billion, with adjusted EPS guidance increased from $3.30 to $3.62 [15][16] Competitive Positioning - Celestica's revenue growth and profitability improvements are unmatched by its closest peers in the Electronic Manufacturing Services (EMS) industry, indicating a strong competitive edge [17][22] - The company's valuation ratios remain significantly lower than the sector median, suggesting that the stock is undervalued despite a 130% increase over the last twelve months [23][24] Valuation Analysis - A discounted cash flow (DCF) analysis indicates that Celestica's fair value is approximately $18 billion, significantly higher than its current market cap of $5.47 billion, suggesting a potential upside of 229% [29][30] - Even under conservative growth assumptions, the stock remains undervalued by 55% [29]

Core Viewpoint - Investors are seeking growth stocks that can deliver above-average growth and exceptional returns, but identifying such stocks is challenging due to their inherent risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system simplifies the identification of promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Celestica (CLS) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is crucial for investors, with double-digit growth being a strong indicator of a company's potential [4] - Celestica's historical EPS growth rate is 42.7%, with projected EPS growth of 50.2% this year, significantly outperforming the industry average of -3.8% [5] Group 3: Cash Flow Growth - Higher-than-average cash flow growth is essential for growth-oriented companies, enabling them to expand without relying on external funding [6] - Celestica's year-over-year cash flow growth is 19.4%, exceeding the industry average of 12.7% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 19.2%, compared to the industry average of 9.2% [7] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with stock price movements [8] - Celestica has seen a 12.4% increase in current-year earnings estimates over the past month [8] Group 5: Conclusion - Celestica has achieved a Growth Score of A and a Zacks Rank 1 due to its strong earnings estimate revisions and growth metrics, positioning it well for potential outperformance [9][10]

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks. Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis ...

J Studios Intro & Thesis In August 2023, I initiated coverage of Celestica Inc. (NYSE:CLS) stock and then confirmed the "Buy" rating again in November. Since then, the stock has continued to rise, and at some point, its rally made me cautious against the backdrop of valuation ratios that were moving away from historical averages, and I eventually downgraded CLS to "Hold", confirming that rating 3 months ago. Since my last neutral thesis update, the stock's price has decreased by almost 1.7%, while the marke ...

Investment Rating - The report assigns a positive outlook for the company, indicating strong growth potential in the upcoming quarters, particularly in the CCS segment [27][32]. Core Insights - The company achieved a revenue of $2.392 billion in Q2 FY2024, representing a 23% year-over-year increase, driven primarily by the robust performance of the CCS segment [27][32]. - The CCS segment's revenue grew by 51% year-over-year, accounting for 68% of total revenue, while the ATS segment saw a decline of 11% [27][32]. - The company expects Q3 revenue to be between $2.325 billion and $2.475 billion, with adjusted earnings per share projected between $0.86 and $0.96 [42][49]. Summary by Sections Overall Revenue Situation - In Q2 FY2024, the company reported a gross profit of $256.1 million, up 39% year-over-year, and a net profit of $99.6 million, reflecting a 79% increase [27][32]. - The company has been actively repurchasing shares, spending $10 million to buy back approximately 200,000 shares in Q2 [27][32]. Revenue Breakdown - The ATS segment generated $770 million in revenue, down 11% year-over-year, while the CCS segment brought in $1.62 billion, up 51% [27][32]. - The strong growth in the CCS segment was attributed to the demand from large-scale customers for HPS network products, particularly in AI/ML infrastructure [27][32]. Q3 Company Performance Guidance - The company anticipates a revenue range of $2.325 billion to $2.475 billion for Q3, with an expected adjusted operating profit margin of 6.3%, an increase of 60 basis points from the previous year [42][49]. - The adjusted SG&A expenses are projected to be between $73 million and $75 million, with an effective tax rate around 20% [42][49]. Full-Year Outlook - The company raised its full-year revenue forecast to $9.45 billion, with adjusted earnings per share expected to be $3.62, representing a 19% and 49% increase, respectively, compared to 2023 [49][52]. - The company remains optimistic about the overall demand environment, particularly in the CCS segment, driven by strong customer relationships and a diverse product portfolio [53][81].

Celestica Inc. (NYSE:CLS) Q2 2024 Earnings Conference Call July 25, 2024 8:00 AM ET Company Participants Craig Oberg - Vice President, IR & Corporate Development Rob Mionis - President & Chief Executive Officer Mandeep Chawla - Chief Financial Officer Conference Call Participants Thanos Moschopoulos - BMO Capital Markets Matthew Sheerin - Stifel Nicolaus Steven Fox - Fox Advisors Daniel Chan - TD Cowen Paul Treiber - RBC Capital Markets Jesse Pytlak - Cormark Securities Todd Coupland - CIBC Operator Good mo ...

Note Regarding Non-IFRS Financial Measures In addition, this presentation refers to non-International Financial Reporting Standards (IFRS) financial measures (including ratios). Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other public companies that report under IFRS, or who report under U.S. GAAP and use non-GAAP financial measures to describe similar operating metrics. Non-IFRS financial measures are not mea ...

Company Performance - Celestica reported quarterly earnings of $0.91 per share, exceeding the Zacks Consensus Estimate of $0.82 per share, and showing an increase from $0.55 per share a year ago [10] - The company posted revenues of $2.39 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 6.33% and up from $1.94 billion year-over-year [2] - Celestica has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [11] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.80 on revenues of $2.28 billion, and for the current fiscal year, it is $3.33 on revenues of $9.12 billion [14] - The estimate revisions trend for Celestica is favorable, contributing to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [4] Industry Context - The Electronics - Manufacturing Services industry, to which Celestica belongs, is currently ranked in the bottom 22% of over 250 Zacks industries, which may impact stock performance [5] - Despite the industry ranking, Celestica's shares have increased approximately 97.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 16.5% [7]

Exhibit 99.1 FOR IMMEDIATE RELEASE July 24, 2024 (All amounts in U.S. dollars. Per share information based on diluted shares outstanding unless otherwise noted.) CELESTICA ANNOUNCES SECOND QUARTER 2024 FINANCIAL RESULTS Q2 2024 revenue and non-IFRS adjusted EPS* exceed the high end of guidance ranges; 2024 full-year outlook raised TORONTO, Canada - Celestica Inc. (TSX: CLS) (NYSE: CLS), a leader in design, manufacturing, hardware platform and supply chain solutions for the world's most innovative companies, ...

Core Insights - Celestica Inc. reported strong financial performance for Q2 2024, with a year-over-year revenue increase of 23% and a 65% rise in non-IFRS adjusted EPS [2][3] - The company raised its full-year 2024 outlook, anticipating revenue of $9.45 billion and non-IFRS adjusted EPS of $3.62, representing growth of 19% and 49% respectively compared to 2023 [3][9] Q2 2024 Highlights - Revenue for Q2 2024 was $2.392 billion, exceeding guidance of $2.175 to $2.325 billion [13] - Non-IFRS operating margin was 6.3%, up from 6.1% in the previous guidance [13] - Adjusted EPS for Q2 2024 was $0.91, compared to guidance of $0.75 to $0.85 [13] - The ATS segment revenue decreased by 11% year-over-year, while the CCS segment revenue increased by 51% [7] Q3 2024 Guidance - For Q3 2024, Celestica expects revenue between $2.325 billion and $2.475 billion [8] - Non-IFRS operating margin is projected to be 6.3% at the mid-point of revenue guidance [8] - Adjusted EPS is anticipated to range from $0.86 to $0.96 [8] 2024 Annual Outlook Update - The updated 2024 outlook includes revenue of $9.45 billion, an increase from the previous outlook of $9.1 billion [9] - Non-IFRS operating margin is now expected to be 6.3%, up from 6.1% [9] - Non-IFRS adjusted EPS is revised to $3.62, compared to the previous estimate of $3.30 [9] Financial Performance Metrics - Non-IFRS adjusted free cash flow for Q2 2024 was $63.3 million, slightly down from $66.8 million in Q2 2023 [7] - The company achieved a non-IFRS adjusted ROIC of 26.7% for Q2 2024, compared to 20.0% for Q2 2023 [7][58] - IFRS EPS for Q2 2024 was $0.83, which included an aggregate charge of $0.23 per share for various expenses [15]