周二，天弘科技(CLS.US)大涨超18%，续创历史新高，报205.78美元。消息面上，天弘科技周一报告了 第二季度调整后的每股收益为1.39美元，高于去年同期的0.90美元，FactSet调查的分析师预期为1.25美 元。营业收入为28.9亿美元，高于去年同期的23.9亿美元，FactSet调查的分析师预计为26.9亿美元。 该公司预计2025年调整后的每股收益为5.50美元，高于此前非GAAP指引的5美元，营业收入为115.5亿 美元，高于此前展望的108.5亿美元。FactSet调查的分析师预计分别为5.11美元和110.5亿美元。 ...

Core Insights - Celestica Inc. reported strong second-quarter 2025 results with adjusted earnings and revenues exceeding Zacks Consensus Estimates [1][8] - The growth was primarily driven by the Connectivity & Cloud Solutions (CCS) segment, supported by management's focus on innovation and AI advancements [1][8] - The company raised its full-year 2025 revenue, earnings, and free cash flow outlook based on solid Q2 performance [8][10] Financial Performance - Quarterly net income reached $211 million or $1.82 per share, a significant increase from $95 million or 80 cents per share in the same quarter last year [2] - Non-GAAP net earnings improved to $161.2 million or $1.39 per share, up from $108 million or 90 cents per share year-over-year, beating the Zacks Consensus Estimate by 15 cents [2] - Revenues for the quarter were $2.89 billion, reflecting a 21% year-over-year increase, surpassing management's guidance and Zacks Consensus Estimate by $223 million [3][8] Segment Performance - The CCS segment's revenues grew 28% year-over-year to $2.07 billion, driven by strong demand in the Communications end market, accounting for 71.6% of total revenues [4][5] - The Communications end market saw a 75% revenue increase to $1.64 billion, supported by demand for networking products [5] - The Advanced Technology Solutions (ATS) segment reported revenues of $819 million, a 7% increase, contributing 28.4% to total revenues [6] Cash Flow & Liquidity - Operating cash flow for the quarter was $152.4 million, up from $99.6 million in the prior year, with free cash flow at $119.9 million compared to $65.6 million last year [7] - As of June 30, 2025, the company had $313.8 million in cash and cash equivalents and long-term debt of $848.6 million [7] Guidance - For Q3 2025, Celestica expects revenues between $2.875 billion and $3.125 billion, with non-GAAP earnings per share projected in the range of $1.37 to $1.53 [9] - The full-year 2025 revenue forecast has been raised to approximately $11.55 billion, with non-GAAP adjusted earnings expected to be $5.50 per share [10]

When I shared my previous Celestica (NYSE: CLS ) writeup , there was significant hype around the stock, with the RSI soaring above 80. Additionally, the share price had climbed above Wall Street's consensus target levels. As a result, I decided to stop Coming from an IT background, I have dived into the U.S. stock market seven years ago by managing portfolio of my family. Starting managing real money has been challenging for the first time, but long hours of mastering fundamental analysis of public companie ...

Financial Data and Key Metrics Changes - The company achieved revenues of $2.89 billion in Q2 2025, up 21% year-over-year, exceeding the high end of guidance [6][8] - Adjusted EPS for the quarter was $1.39, an increase of $0.49 or 54% compared to the previous year [8] - Adjusted operating margin reached 7.4%, marking the highest performance in company history, up 110 basis points [6][8] - Adjusted gross margin was 11.7%, also up 110 basis points, driven by higher volumes and improving mix [8][9] - Adjusted ROIC was 35.5%, compared to 26.6% a year ago, reflecting higher operating profit and strong working capital management [9] Business Line Data and Key Metrics Changes - The ATS segment reported revenue of $819 million, up 7% year-over-year, driven by strong demand in capital equipment and industrial businesses [9][10] - The CCS segment revenue was CAD 2.07 billion, up 28%, primarily due to strong growth in the communications end market [10][11] - Communications end market revenues increased by 75%, significantly exceeding guidance, while enterprise end market revenues decreased by 37% [10][11] - CCS segment margin improved to 8.3%, up 130 basis points, driven by a higher mix of HPS revenues [12] Market Data and Key Metrics Changes - The company noted minimal impact from tariffs due to exemptions on electronics goods and data center hardware [7] - The cash balance at the end of Q2 was CAD 314 million, with total liquidity of approximately CAD 1 billion [15] - Free cash flow for Q2 was $120 million, up $54 million from the prior year [14] Company Strategy and Development Direction - The company raised its 2025 revenue outlook from $10.85 billion to $11.55 billion, reflecting a year-over-year growth of 20% [19] - Non-GAAP adjusted EPS outlook for 2025 was increased from $5 to $5.5 per share, representing a 42% growth [19] - The CCS segment is expected to grow nearly 30% for the full year, driven by strong demand for networking products [20] - The ATS segment is anticipated to remain flat compared to 2024, with continued strength in the industrial business [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current macro environment, supported by a globally diversified manufacturing network [24] - The company expects to continue strong momentum into 2026, backed by long-term secular tailwinds [24] - Management highlighted the importance of managing complexity and maintaining operational execution to sustain positive momentum [25] Other Important Information - The company repurchased approximately 600,000 shares for cancellation at a cost of $40 million during the quarter [16] - Capital expenditures for Q2 were CAD 33 million, approximately 1.1% of revenue, with expectations for an increase in the second half of the year [13][15] Q&A Session Summary Question: Can you speak to the breadth of customers and platforms for 800 gig switch ports? - Management indicated that every 400G customer has transitioned to an 800G customer, showing strong market share growth in 800G [28][30] Question: What is the manufacturing capacity at your Monterey and Richardson campuses? - Management confirmed sufficient capacity to support growth, with the ability to handle an additional $3 billion to $4 billion in revenue [34][35] Question: Can you walk through the implications for Q4 based on Q3 guidance? - Management noted that while Q4 may see an 18% growth, the demand outlook remains strong despite uncertainties [41][42] Question: What are the trends in server market share? - Management reported gaining share in the AI server market due to strong execution and technology transitions [88] Question: What is the status of the 1.6 terabyte program? - Management confirmed ongoing wins in the 1.6 terabyte space, with continued discussions opening new opportunities [92][94] Question: How is the company positioned for service offerings? - Management stated that services are a focus area, with plans to expand the services footprint to meet customer demand [96][97]

Financial Data and Key Metrics Changes - The company achieved revenues of $2,890,000,000 in Q2 2025, representing a 21% increase year-over-year and exceeding the high end of guidance [6][8] - Adjusted EPS for the quarter was $1.39, an increase of $0.49 or 54% compared to the previous year [8] - Adjusted operating margin reached 7.4%, marking the highest performance in company history, up 110 basis points year-over-year [6][8] - Adjusted gross margin was 11.7%, up 110 basis points driven by higher volumes and improving mix [8][9] - Adjusted ROIC was 35.5%, compared to 26.6% a year ago, reflecting higher operating profit and strong working capital management [9] Business Line Data and Key Metrics Changes - The ATS segment reported revenues of $819,000,000, up 7% year-over-year, driven by strong demand in capital equipment and industrial businesses [9][10] - The CCS segment generated CAD2.07 billion in revenue, up 28%, primarily due to strong growth in the communications end market [10] - Communications end market revenues increased by 75%, significantly above guidance, driven by demand for HPS networking products [10][11] - The enterprise end market saw a 37% decline in revenue, which was better than the anticipated low 40s percentage decline [10][11] - HPS revenues reached CAD1.2 billion, up 82%, accounting for 43% of total company revenue [11] Market Data and Key Metrics Changes - The company noted minimal impact from tariffs due to exemptions on electronics goods and data center hardware [7] - The cash cycle days during Q2 were CAD66, with a cash balance of CAD314 million at the end of the quarter [12][14] - Free cash flow for Q2 was $120,000,000, an increase of $54,000,000 compared to the prior year [13][14] Company Strategy and Development Direction - The company raised its 2025 annual revenue outlook from $10,850,000,000 to $11,550,000, reflecting a year-over-year growth of 20% [19] - The adjusted EPS outlook for 2025 was increased from $5 to $5.5 per share, representing a year-over-year growth of 42% [19] - The CCS segment is expected to grow nearly 30% for the full year, driven by strong demand for networking products [20] - The ATS segment is anticipated to remain flat compared to 2024, with growth in industrial business offset by lower volumes in A and D business [21] - The company is focused on expanding its service offerings and enhancing its capabilities in response to customer demand [100][102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current macro environment, supported by a globally diversified manufacturing network [23][24] - The demand outlook remains strong, with expectations for continued growth in both communications and enterprise segments [57] - The company is prepared to support growth north of 20% per year, with sufficient capacity to meet demand [70] Other Important Information - The company repurchased approximately 600,000 shares for cancellation at a cost of $40,000,000 during the quarter [15] - The gross debt to non-GAAP trailing 12-month adjusted EBITDA leverage ratio improved to 0.9 turns [14] Q&A Session Summary Question: Can you speak to the breadth of customers and platforms for 800 gig switch ports? - Management indicated that every 400G customer has transitioned to 800G, with significant market share gains in the 800G segment [28][30] Question: What is the manufacturing capacity at your campuses to handle growing demand? - The company confirmed sufficient capacity to support an additional $3 billion to $4 billion in revenue, with ongoing investments in key locations [34] Question: Can you discuss the implications of Q3 guidance and full-year guidance for Q4? - Management noted that while Q4 may see growth at 18%, the overall demand outlook remains strong, with higher confidence in customer forecasts [40] Question: What is the status of the 1.6T timing and its impact on future growth? - The company is ramping new programs and expects significant revenue contributions from these initiatives in 2026 and beyond [42][92] Question: How is pricing factoring into discussions with customers? - Pricing is a consideration, but the primary focus is on supply certainty and technology leadership [76] Question: What is the outlook for cash cycle improvements as CCS grows? - Management expressed confidence in cash generation and inventory management, anticipating ongoing improvements in cash cycle days [53] Question: Can you elaborate on the new program pipeline and opportunities with existing and new hyperscalers? - The company is focused on increasing share with existing hyperscalers and exploring new opportunities with digital natives [75]

Second Quarter 2025 Financial Results July 29, 2025 1 Cautionary Note Regarding Forward-Looking Statements Forward-looking statements are not guarantees of future performance and are subject to risks that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including, among others, risks related to: customer and segment concentration; reduction in customer revenue; erosion in customer market competitiveness; changing revenue mix and margins; unc ...

Core Insights - Celestica Inc. has experienced significant stock growth, rising 80% year-to-date and more than tripling in value over the past year, driven by increased demand for AI-powered networking equipment and cloud infrastructure [2][3] - The company's Connectivity & Cloud Solutions (CCS) division reported Q1 2025 revenue of $1.84 billion, a 28% increase year-over-year, highlighting the strong performance of AI-related offerings [2][3] Financial Performance - Celestica's revenues have grown at an average annual rate of 19.3% over the past three years, significantly outpacing the S&P 500's growth of 5.3% [4] - In the last year, Celestica's revenues increased by 21% to reach $10 billion, while the S&P 500 only managed a modest growth of 4.4% [4] - The company's net income margin was 4.1%, compared to 11.9% for the S&P 500, but it achieved a record adjusted operating margin of 7.1% in the latest quarter, up from 5.9% in Q1 2024 [5] Valuation Metrics - Celestica's price-to-sales (P/S) ratio is 2.0, lower than the S&P 500's 3.1, but its price-to-earnings (P/E) ratio of 47.8 is significantly higher than the benchmark's 22.8 [4] - The high valuation may restrict upside potential in the near to mid-term, as the stock appears relatively expensive at around $170 [3][7] Financial Health - The company has a low debt-to-equity ratio of 4.8%, well below the S&P 500 average of 22.6%, indicating strong financial health [6] - Celestica maintains a moderate cash reserve that constitutes 5.2% of its total assets [6] Market Sensitivity - Historically, Celestica's stock has shown sensitivity to market downturns, with a 69% drop during the Covid-19 market crash compared to a 33.9% decline in the S&P 500 [6] - In 2022, the stock fell 35.6% amid inflation-related shocks, exceeding the S&P's 25.4% decline [6] Industry Trends - Major technology firms are expected to invest heavily in AI infrastructure, with Amazon projected to spend up to $105 billion in 2025, which should bolster demand for Celestica's services [3]

Core Insights - Celestica reported Q2 2025 earnings with GAAP revenue of $2.89 billion, surpassing analyst expectations of $2.68 billion, and adjusted EPS (non-GAAP) of $1.39, exceeding the $1.24 estimate, reflecting year-over-year growth of 21% in revenue and 54% in adjusted EPS [1][5][2] Financial Performance - Revenue for Q2 2025 was $2.89 billion, a 21% increase from $2.39 billion in Q2 2024 [2] - Adjusted EPS (non-GAAP) reached $1.39, up from $0.90 in the same quarter last year, marking a 54% increase [2] - Operating margin (GAAP) improved to 9.4%, up from 5.6% year-over-year, while adjusted operating margin (non-GAAP) was 7.4%, compared to 6.3% in Q2 2024 [2] - Free cash flow (non-GAAP) was $119.9 million, an 82.8% increase from $65.6 million in Q2 2024 [2][8] Segment Performance - The Connectivity & Cloud Solutions (CCS) segment generated $2.07 billion in revenue, a 28% increase, with Hardware Platform Solutions (HPS) revenue reaching approximately $1.2 billion, up 82% year-over-year [6] - Advanced Technology Solutions (ATS) reported revenue of $820 million, a 7% increase, with segment margin improving to 5.3% from 4.6% in Q2 2024 [7] Strategic Focus - Celestica is focusing on high-value programs, including data center hardware and next-generation networking equipment, emphasizing technological innovation and strong supply chain management [4][3] - The company is diversifying its customer base to mitigate risks associated with customer concentration, where the top ten customers accounted for 73% of revenue in 2024 [11] Future Outlook - Full-year 2025 guidance was raised to revenue of $11.55 billion and adjusted EPS (non-GAAP) of $5.50, with an expected adjusted operating margin of 7.4% [13] - For Q3 2025, projected revenue ranges from $2.875 to $3.125 billion, with adjusted EPS (non-GAAP) between $1.37 and $1.53 [13]

Group 1: Earnings Performance - Celestica reported quarterly earnings of $1.39 per share, exceeding the Zacks Consensus Estimate of $1.24 per share, and up from $0.91 per share a year ago, representing an earnings surprise of +12.10% [1] - The company posted revenues of $2.89 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 8.34%, compared to year-ago revenues of $2.39 billion [2] - Over the last four quarters, Celestica has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Celestica shares have increased approximately 84.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 8.6% [3] - The current consensus EPS estimate for the coming quarter is $1.29 on revenues of $2.76 billion, and for the current fiscal year, it is $5.07 on revenues of $10.94 billion [7] - The estimate revisions trend for Celestica was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Group 3: Industry Context - The Electronics - Manufacturing Services industry, to which Celestica belongs, is currently in the top 7% of over 250 Zacks industries, suggesting a strong industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20Financial%20Information) This section provides Celestica Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for Q2 and 1H 2025 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Celestica Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive income, changes in equity, and cash flows, along with detailed notes on accounting policies, segment reporting, acquisitions, and financial instruments [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) Presents Celestica's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :------------------------------- | | **Assets** | | | | Total current assets | 4,771.0 | 4,512.2 | | Total assets | 6,241.1 | 5,988.2 | | **Liabilities & Equity** | | | | Total current liabilities | 3,320.8 | 3,021.4 | | Total liabilities | 4,483.2 | 4,092.2 | | Total equity | 1,757.9 | 1,896.0 | | Total liabilities and equity | 6,241.1 | 5,988.2 | - Total assets increased by **$252.9 million** from December 31, 2024, to June 30, 2025, primarily driven by increases in accounts receivable and inventories[10](index=10&type=chunk) - Total equity decreased by **$138.1 million** from December 31, 2024, to June 30, 2025[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Details Celestica's revenue, gross profit, earnings from operations, and net earnings for Q2 and 1H 2025 and 2024 | Metric | Three months ended June 30, 2025 (Millions USD) | Three months ended June 30, 2024 (Millions USD) | Six months ended June 30, 2025 (Millions USD) | Six months ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenue | 2,893.4 | 2,391.9 | 5,542.0 | 4,600.8 | | Gross profit | 371.0 | 253.8 | 644.9 | 475.9 | | Earnings from operations | 272.5 | 132.9 | 401.3 | 258.7 | | Net earnings | 211.0 | 95.0 | 297.2 | 186.8 | | Basic EPS | 1.83 | 0.80 | 2.57 | 1.57 | | Diluted EPS | 1.82 | 0.80 | 2.55 | 1.57 | - Revenue increased **21% for Q2 2025 YoY** and **20% for 1H 2025 YoY**[12](index=12&type=chunk) - Net earnings more than doubled in Q2 2025 YoY, increasing by **122%**, and grew by **59% for 1H 2025 YoY**[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Outlines Celestica's net earnings and other comprehensive income components for Q2 and 1H 2025 and 2024 | Metric | Three months ended June 30, 2025 (Millions USD) | Three months ended June 30, 2024 (Millions USD) | Six months ended June 30, 2025 (Millions USD) | Six months ended June 30, 2024 (Millions USD) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net earnings | 211.0 | 95.0 | 297.2 | 186.8 | | Total other comprehensive income (loss), net of tax | 14.8 | (7.9) | 16.7 | (11.7) | | Total comprehensive income | 225.8 | 87.1 | 313.9 | 175.1 | - Total comprehensive income significantly increased, from **$87.1 million in Q2 2024 to $225.8 million in Q2 2025**, driven by higher net earnings and positive other comprehensive income[14](index=14&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Shows changes in Celestica's equity, including capital stock, treasury stock, and accumulated deficit, from January 1 to June 30, 2025 | Metric | Balance – January 1, 2025 (Millions USD) | Balance – June 30, 2025 (Millions USD) | | :-------------------------------- | :--------------------------------------- | :------------------------------------- | | Capital stock | 1,632.8 | 1,621.5 | | Treasury stock | (92.9) | (202.2) | | Additional paid-in capital | 797.5 | 466.1 | | Accumulated deficit | (423.8) | (126.6) | | Accumulated other comprehensive income (loss) | (17.6) | (0.9) | | Total equity | 1,896.0 | 1,757.9 | - Total equity decreased from **$1,896.0 million at January 1, 2025, to $1,757.9 million at June 30, 2025**, primarily due to significant share repurchases for cancellation (**$116.9 million**) and for SBC plans (**$221.6 million**), partially offset by net earnings (**$297.2 million**)[16](index=16&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Details Celestica's cash flows from operating, investing, and financing activities for Q2 and 1H 2025 and 2024 | Metric | Three months ended June 30, 2025 (Millions USD) | Three months ended June 30, 2024 (Millions USD) | Six months ended June 30, 2025 (Millions USD) | Six months ended June 30, 2024 (Millions USD) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by operating activities | 152.4 | 99.6 | 282.7 | 207.7 | | Net cash used in investing activities | (35.0) | (70.1) | (71.7) | (110.5) | | Net cash provided by (used in) financing activities | (106.6) | 96.4 | (320.5) | (33.6) | | Net increase (decrease) in cash and cash equivalents | 10.8 | 125.9 | (109.5) | 63.6 | | Cash and cash equivalents, end of period | 313.8 | 434.0 | 313.8 | 434.0 | - Net cash provided by operating activities increased by **$52.8 million in Q2 2025 YoY** and **$75.0 million in 1H 2025 YoY**[25](index=25&type=chunk) - Net cash used in financing activities significantly increased to **$320.5 million in 1H 2025**, compared to **$33.6 million in 1H 2024**, primarily due to higher share repurchases and SBC cash settlements[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of Celestica's accounting policies, segment reporting, acquisitions, and financial instruments [1. REPORTING ENTITY](index=9&type=section&id=1.%20REPORTING%20ENTITY) Describes Celestica Inc.'s incorporation, stock listings, and its two reportable business segments - Celestica Inc. is incorporated in Ontario, Canada, with common shares listed on the TSX and NYSE[26](index=26&type=chunk) - The company operates in two reportable segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS)[26](index=26&type=chunk) [2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=2.%20BASIS%20OF%20PREPARATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines the accounting principles used for interim financial statements and the impact of management's judgments and estimates - Interim financial statements are prepared in accordance with GAAP for interim reporting, condensing or omitting certain annual disclosures[27](index=27&type=chunk) - Management makes significant judgments, estimates, and assumptions, which are reviewed ongoingly, and actual results may differ materially[29](index=29&type=chunk)[30](index=30&type=chunk) - The company is evaluating the impact of recently issued accounting pronouncements, including ASU 2024-03 on expense disaggregation, effective for annual periods after December 15, 2026[37](index=37&type=chunk)[38](index=38&type=chunk) [3. SEGMENT AND CUSTOMER REPORTING](index=10&type=section&id=3.%20SEGMENT%20AND%20CUSTOMER%20REPORTING) Presents revenue and segment margin data for Celestica's Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS) segments | Segment | Q2 2025 Revenue (Millions USD) | Q2 2024 Revenue (Millions USD) | 1H 2025 Revenue (Millions USD) | 1H 2024 Revenue (Millions USD) | | :---------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | ATS | 819.1 | 767.7 | 1,626.3 | 1,535.6 | | CCS Communications | 1,641.2 | 935.2 | 3,068.9 | 1,699.4 | | CCS Enterprise | 433.1 | 689.0 | 846.8 | 1,365.8 | | Total CCS | 2,074.3 | 1,624.2 | 3,915.7 | 3,065.2 | | Total Revenue | 2,893.4 | 2,391.9 | 5,542.0 | 4,600.8 | | Segment | Q2 2025 Segment Margin | Q2 2024 Segment Margin | 1H 2025 Segment Margin | 1H 2024 Segment Margin | | :---------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | ATS | 5.3 % | 4.6 % | 5.2 % | 4.4 % | | CCS | 8.3 % | 7.0 % | 8.1 % | 7.0 % | - Two customers (both in CCS) accounted for **31% and 13% of total revenue in Q2 2025**, highlighting customer concentration[44](index=44&type=chunk) [4. ACQUISITION](index=12&type=section&id=4.%20ACQUISITION) Details the acquisition of NCS Global Services LLC, including purchase price, funding, and goodwill allocation - On April 26, 2024, Celestica acquired NCS Global Services LLC, an IT infrastructure and asset management business, for **$39.6 million**, funded by its credit facility[47](index=47&type=chunk) - The acquisition included a potential earn-out of up to **$20 million**, valued at **$6.6 million** at acquisition date, and resulted in **$19.4 million of non-tax deductible goodwill** allocated to the CCS segment[47](index=47&type=chunk)[49](index=49&type=chunk) [5. ACCOUNTS RECEIVABLE (A/R), NET](index=12&type=section&id=5.%20ACCOUNTS%20RECEIVABLE%20%28A%2FR%29%2C%20NET) Provides a breakdown of accounts receivable, net, allowance for credit losses, and contract assets | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------- | :----------------------------- | :------------------------------- | | Accounts receivable, net | 2,287.8 | 2,069.0 | | Allowance for credit losses | 22.8 | 10.1 | | Contract assets | 293.4 | 237.9 | - The allowance for credit losses increased from **$10.1 million at December 31, 2024, to $22.8 million at June 30, 2025**[50](index=50&type=chunk) [6. INVENTORIES](index=13&type=section&id=6.%20INVENTORIES) Details inventory components, write-downs, and customer cash deposits for inventory risk | Component | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :---------------- | :----------------------------- | :------------------------------- | | Raw materials | 1,492.5 | 1,521.1 | | Work in progress | 132.7 | 106.6 | | Finished goods | 292.9 | 132.9 | | Total Inventories | 1,918.1 | 1,760.6 | - Inventory write-downs recorded in cost of sales increased significantly to **$12.8 million in Q2 2025** (from $1.3 million in Q2 2024) and **$29.3 million in 1H 2025** (from $18.2 million in 1H 2024)[54](index=54&type=chunk) - Cash deposits from customers for inventory risk decreased from **$511.6 million at December 31, 2024, to $396.6 million at June 30, 2025**[55](index=55&type=chunk) [7. LEASES](index=13&type=section&id=7.%20LEASES) Presents lease expense components and right-of-use assets and lease obligations | Lease Expense Component | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Finance lease expense (amortization) | 2.0 | 1.9 | 4.1 | 3.7 | | Finance lease expense (interest) | 0.8 | 0.9 | 1.6 | 1.8 | | Operating lease expense | 10.3 | 10.0 | 20.6 | 19.7 | | Short-term and variable lease expense | 0.7 | 0.5 | 1.1 | 0.9 | | Total Lease Expense | 13.8 | 13.3 | 27.4 | 26.1 | | ROU Assets / Lease Obligations | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total ROU assets | 174.9 | 180.8 | | Total lease obligations | 196.6 | 196.8 | [8. CREDIT FACILITIES](index=14&type=section&id=8.%20CREDIT%20FACILITIES) Describes the company's credit facility, including Term A and B Loans, Revolving Credit Facility, and compliance with covenants - The company's Credit Facility, amended in June 2024, includes a **$250.0 million Term A Loan**, a **$500.0 million Term B Loan**, and a **$750.0 million Revolving Credit Facility**[58](index=58&type=chunk) | Borrowings | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Revolver | 90.0 | — | | Term A Loan | 237.5 | 243.7 | | Term B Loan | 495.0 | 497.5 | | Total Credit Facility Borrowings | 822.5 | 741.2 | | Finance lease obligations | 58.5 | 61.7 | | Total Credit Facility and finance lease obligations | 875.2 | 796.7 | - Celestica was in compliance with all restrictive and financial covenants under the Credit Facility as of June 30, 2025[62](index=62&type=chunk) [9. CAPITAL STOCK](index=16&type=section&id=9.%20CAPITAL%20STOCK) Details common shares outstanding, repurchase activities, and the 2025 Long Term Incentive Plan | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------------------------------- | :----------------------- | :--------------------------- | | Common Shares outstanding | 115.0 | 116.1 | | Common Shares repurchased for cancellation (1H) | 1.2 | 0.7 (1H 2024) | | Cost of repurchases for cancellation (1H) | $115.0 | $26.5 (1H 2024) | | Common Shares repurchased for SBC plans (1H) | 1.7 | 2.8 (1H 2024) | | Cost of repurchases for SBC plans (1H) | $221.6 | $101.6 (1H 2024) | - The 2024 NCIB allows for repurchase of up to approximately **8.6 million shares**, with **7.1 million remaining available** at June 30, 2025[68](index=68&type=chunk) - The 2025 Long Term Incentive Plan (2025 LTIP) was approved, allowing for grants of up to **6.9 million Common Shares** for equity awards[70](index=70&type=chunk) [10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX](index=20&type=section&id=10.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20%28LOSS%29%2C%20NET%20OF%20TAX) Breaks down components of accumulated other comprehensive income (loss), including foreign currency translation and derivative gains/losses | Component | June 30, 2025 (Millions USD) | June 30, 2024 (Millions USD) | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Foreign currency translation account | (30.5) | (33.5) | | Unrealized net gain (loss) on currency forward cash flow hedges | 12.1 | (9.9) | | Unrealized net gain (loss) on interest rate swap cash flow hedges | (2.3) | 4.6 | | Pension and non-pension post-employment benefit account | 19.8 | 26.9 | | Accumulated other comprehensive loss (AOCI), net of tax | (0.9) | (11.9) | - AOCI improved from a loss of **$11.9 million in June 2024 to a loss of $0.9 million in June 2025**, primarily due to a shift from unrealized losses to gains on currency forward derivative hedges[75](index=75&type=chunk) [11. RESTRUCTURING AND OTHER CHARGES, NET OF RECOVERIES](index=20&type=section&id=11.%20RESTRUCTURING%20AND%20OTHER%20CHARGES%2C%20NET%20OF%20RECOVERIES) Summarizes restructuring charges, transition costs, acquisition costs, and other charges for the reported periods | Charge Type | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Restructuring charges | 12.8 | 5.6 | 15.0 | 10.7 | | Transition Costs | 1.1 | 4.8 | 1.1 | 4.8 | | Acquisition costs | 0.3 | 1.1 | 0.9 | 2.1 | | Other charges (recoveries) | 0.3 | — | 1.4 | (1.3) | | Total | 14.5 | 11.5 | 18.4 | 16.3 | - Restructuring charges in Q2 2025 more than doubled YoY, primarily due to employee terminations to adjust the cost base[76](index=76&type=chunk)[77](index=77&type=chunk) - Transition Costs in Q2 2025 and 1H 2025 were **$0.4 million**, related to subleasing the Purchaser Lease, a significant decrease from **$4.8 million** in prior year periods[80](index=80&type=chunk) [12. MISCELLANEOUS EXPENSE](index=21&type=section&id=12.%20MISCELLANEOUS%20EXPENSE) Details components of miscellaneous expense, primarily related to derivative losses and net periodic benefit costs | Component | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net periodic benefit cost (non-service) | 0.4 | 0.3 | 0.5 | 0.6 | | Loss recognized on derivatives (interest rate swaps) | 1.3 | 2.5 | 2.6 | 5.2 | | Loss recognized on derivatives (foreign exchange forwards) | — | 1.6 | — | 5.2 | | Total Miscellaneous Expense | 1.7 | 4.4 | 3.1 | 11.0 | - Miscellaneous expense decreased significantly in Q2 2025 and 1H 2025 compared to prior year periods, primarily due to lower losses recognized on derivative instruments[82](index=82&type=chunk) [13. PENSION AND NON-PENSION POST-EMPLOYMENT BENEFIT PLANS](index=21&type=section&id=13.%20PENSION%20AND%20NON-PENSION%20POST-EMPLOYMENT%20BENEFIT%20PLANS) Outlines the components of net periodic benefit cost for pension and non-pension post-employment benefit plans | Component of Net Periodic Benefit Cost | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :--------------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Service cost | 1.3 | 2.0 | 2.6 | 4.0 | | Interest cost | 3.4 | 3.1 | 6.6 | 6.2 | | Expected return on plan assets | (2.5) | (2.3) | (5.0) | (4.6) | | Amortization of net gain | (0.5) | (0.5) | (1.1) | (1.0) | | Total Net Periodic Benefit Cost | 1.7 | 2.3 | 3.1 | 4.6 | - The non-service cost components of net periodic benefit cost are included in miscellaneous expense, while service costs are recorded in cost of sales and SG&A[83](index=83&type=chunk) [14. INCOME TAXES](index=21&type=section&id=14.%20INCOME%20TAXES) Discusses income tax expense, the impact of global minimum tax, and tax uncertainties in various jurisdictions | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net income tax expense | 46.3 | 18.5 | 73.8 | 31.9 | | GMT impact | 7.1 | 12.2 | 13.9 | 16.2 | | DTA Recognition (U.S.) | — | (7.5) | — | (7.5) | | Tax uncertainties (Asian subsidiaries) | 3.0 (expense) | — | 3.0 (expense) | (5.6) (reversal) | - Income tax expense increased significantly in Q2 2025 and 1H 2025, partly due to Pillar Two global minimum tax legislation (GMT) and tax uncertainties in Asian subsidiaries[87](index=87&type=chunk) - The company benefits from tax incentives in Thailand and Laos, with some exemptions expiring by 2028-2029, which could increase future tax expense[177](index=177&type=chunk) [15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT](index=23&type=section&id=15.%20FINANCIAL%20INSTRUMENTS%20AND%20RISK%20MANAGEMENT) Explains Celestica's use of financial instruments to manage currency, equity price, and interest rate risks - Celestica uses foreign currency forward contracts and swaps to hedge currency risk from operational costs and future cash flows[90](index=90&type=chunk) - A Total Return Swap (TRS) Agreement is used to manage cash flow and equity price risk related to SBC plans, with a re-struck price of **$91.58 per share** on March 14, 2025, resulting in a **$98.6 million cash receipt**[91](index=91&type=chunk)[92](index=92&type=chunk) - Interest rate swaps are in place to hedge against variable interest rates on Term Loans, covering **$370.0 million notional amount** at June 30, 2025, leaving **$452.5 million of borrowings unhedged**[95](index=95&type=chunk)[96](index=96&type=chunk) [16. EARNINGS PER SHARE](index=27&type=section&id=16.%20EARNINGS%20PER%20SHARE) Presents basic and diluted weighted average shares and earnings per share for the reported periods | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | 1H 2025 (Millions) | 1H 2024 (Millions) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Basic weighted average shares | 115.1 | 118.8 | 115.5 | 118.9 | | Diluted weighted average shares | 115.9 | 119.4 | 116.4 | 119.3 | - Basic EPS increased from **$0.80 in Q2 2024 to $1.83 in Q2 2025**, and diluted EPS increased from **$0.80 to $1.82**, reflecting higher net earnings and a lower weighted-average share count[12](index=12&type=chunk) [17. CONTINGENCIES](index=27&type=section&id=17.%20CONTINGENCIES) Addresses ongoing litigation, investigations, and tax proceedings, including management's assessment of their financial impact - The company is subject to litigation, investigations, and tax proceedings, including a **$7 million Romanian tax assessment (2014-2018)** and a **$12 million Thailand VAT assessment (2019)**[106](index=106&type=chunk)[107](index=107&type=chunk) - Management believes adequate provisions have been recorded, and the ultimate resolution of pending matters will not have a material adverse impact on financial performance, though outcomes are not assured[105](index=105&type=chunk)[108](index=108&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Celestica's financial condition and results of operations for Q2 2025 and 1H 2025, highlighting strong revenue and earnings growth driven by the CCS segment, particularly HPS networking business. It also discusses critical accounting estimates, liquidity, capital resources, and non-GAAP financial measures [Overview](index=29&type=section&id=Overview) Provides a general introduction to Celestica's business, segments, and external factors impacting its operations - Celestica provides supply chain solutions globally across two segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS)[114](index=114&type=chunk) - External factors like geopolitical tensions, trade conflicts, tariffs, and supply chain disruptions continue to pose risks[117](index=117&type=chunk) - The company is investing in capacity and capability expansions in Thailand, Malaysia, and Richardson, U.S., to support growth in AI/machine learning (ML) programs[119](index=119&type=chunk)[122](index=122&type=chunk) [Recent Developments](index=31&type=section&id=Recent%20Developments) Highlights key financial and operational developments, including segment revenue growth and share repurchase activities - ATS segment revenue increased **7% in Q2 2025 YoY**, driven by Capital Equipment and Industrial businesses, with margin improving to **5.3%**[124](index=124&type=chunk) - CCS segment revenue increased **28% in Q2 2025 YoY**, with Communications up **75%** due to HPS networking, while Enterprise decreased **37%** due to an AI/ML compute program transition. CCS margin rose to **8.3%**[125](index=125&type=chunk)[126](index=126&type=chunk) - The company repurchased **0.6 million Common Shares for $40.0 million in Q2 2025** under its NCIB, with **7.1 million shares remaining available**[127](index=127&type=chunk) [Summary of Q2 2025 and Year-to-Date Period](index=32&type=section&id=Summary%20of%20Q2%202025%20and%20Year-to-Date%20Period) Presents a concise overview of Celestica's financial performance and key operational metrics for Q2 and 1H 2025 | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Revenue | 2,893.4 | 2,391.9 | 5,542.0 | 4,600.8 | | Gross profit | 371.0 | 253.8 | 644.9 | 475.9 | | Net earnings | 211.0 | 95.0 | 297.2 | 186.8 | | Diluted EPS | 1.82 | 0.80 | 2.55 | 1.57 | | Metric | Q2 2025 | Q2 2024 | 1H 2025 | 1H 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | ATS revenue (% of total) | 28% | 32% | 29% | 33% | | CCS revenue (% of total) | 72% | 68% | 71% | 67% | | ATS segment margin | 5.3% | 4.6% | 5.2% | 4.4% | | CCS segment margin | 8.3% | 7.0% | 8.1% | 7.0% | | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | | :---------------- | :------ | :------ | :------ | :------ | :------ | :------ | | Days in A/R | 70 | 72 | 73 | 71 | 71 | 75 | | Days in inventory | 67 | 68 | 73 | 75 | 81 | 93 | | Days in A/P | (54) | (51) | (55) | (56) | (59) | (62) | | Cash cycle days | 66 | 69 | 69 | 66 | 64 | 68 | | Inventory turns | 5.4x | 5.4x | 5.0x | 4.9x | 4.5x | 3.9x | [Critical Accounting Estimates](index=34&type=section&id=Critical%20Accounting%20Estimates) Discusses management's significant judgments and estimation uncertainties in preparing financial statements - Management's critical accounting estimates involve significant judgment and estimation uncertainty, including revenue recognition timing, impairment assessments, fair value measurements, and purchase price allocations for acquisitions[137](index=137&type=chunk)[141](index=141&type=chunk) - No significant revisions to critical accounting estimates or assumptions were made in Q2 2025, and no material impairments or adjustments were identified[140](index=140&type=chunk)[142](index=142&type=chunk) [Operating Results](index=34&type=section&id=Operating%20Results) Analyzes Celestica's financial performance across various income statement components and segments [Revenue](index=35&type=section&id=Revenue) Details revenue performance by segment and end market, highlighting growth drivers and customer concentration | Segment | Q2 2025 Revenue (Millions USD) | Q2 2024 Revenue (Millions USD) | 1H 2025 Revenue (Millions USD) | 1H 2024 Revenue (Millions USD) | | :---------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | ATS | 819.1 | 767.7 | 1,626.3 | 1,535.6 | | CCS Communications | 1,641.2 | 935.2 | 3,068.9 | 1,699.4 | | CCS Enterprise | 433.1 | 689.0 | 846.8 | 1,365.8 | | Total Revenue | 2,893.4 | 2,391.9 | 5,542.0 | 4,600.8 | - ATS segment revenue increased **7% in Q2 2025** and **6% in 1H 2025**, driven by Capital Equipment and Industrial businesses[146](index=146&type=chunk) - CCS segment revenue increased **28% in Q2 2025 and 1H 2025**. Communications end market revenue surged **75% in Q2 2025 and 81% in 1H 2025** due to HPS networking[147](index=147&type=chunk) - Enterprise end market revenue decreased **37% in Q2 2025 and 38% in 1H 2025** due to an anticipated technology transition in an AI/ML compute program[147](index=147&type=chunk) - Top 10 customers represented **78% of total revenue in Q2 2025 and 1H 2025**, with two CCS customers individually accounting for **31% and 13% in Q2 2025**[148](index=148&type=chunk) [Gross profit](index=35&type=section&id=Gross%20profit) Examines gross profit and margin trends, including the impact of revenue growth and fair value adjustments | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :---------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Gross profit | 371.0 | 253.8 | 644.9 | 475.9 | | Gross margin | 12.8 % | 10.6 % | 11.6 % | 10.3 % | - Gross profit increased **46% in Q2 2025** and **36% in 1H 2025**, driven by strong revenue growth. Gross margin improved due to higher volumes and a more favorable mix[150](index=150&type=chunk) - Gross profit and margin in Q2 2025 and 1H 2025 benefited from **$33.5 million and $13.2 million**, respectively, of higher favorable fair value adjustments related to the total return swap agreement (TRS FVAs)[151](index=151&type=chunk) [SG&A](index=36&type=section&id=SG%26A) Analyzes selling, general, and administrative expenses, including the effects of fair value adjustments and foreign exchange | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :---------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | SG&A | 38.9 | 79.3 | 151.4 | 144.1 | | SG&A (% of revenue) | 1.3 % | 3.3 % | 2.7 % | 3.1 % | - SG&A decreased by **$40.4 million in Q2 2025 YoY**, primarily due to **$48.2 million favorable TRS FVA changes**, partially offset by higher foreign exchange losses[153](index=153&type=chunk) - SG&A increased by **$7.3 million in 1H 2025 YoY**, driven by higher expected credit losses, compensation, and foreign exchange losses, partially offset by **$17.9 million favorable TRS FVA changes**[154](index=154&type=chunk) [Segment income and margin](index=36&type=section&id=Segment%20income%20and%20margin) Presents segment income and margin for ATS and CCS, highlighting profitability drivers | Segment | Q2 2025 Income (Millions USD) | Q2 2025 Margin | Q2 2024 Income (Millions USD) | Q2 2024 Margin | | :---------------- | :---------------------------- | :------------- | :---------------------------- | :------------- | | ATS | 43.5 | 5.3 % | 35.1 | 4.6 % | | CCS | 171.2 | 8.3 % | 114.5 | 7.0 % | | Total | 214.7 | | 149.6 | | - ATS segment income increased **24% in Q2 2025** and **26% in 1H 2025**, with margin improving to **5.3% and 5.2%** respectively, driven by improved profitability in the A&D business[156](index=156&type=chunk) - CCS segment income increased **50% in Q2 2025** and **49% in 1H 2025**, with margin improving to **8.3% and 8.1%** respectively, driven by a higher mix of HPS revenue and strong productivity[157](index=157&type=chunk) [SBC expense and TRS FVAs](index=36&type=section&id=SBC%20expense%20and%20TRS%20FVAs) Discusses share-based compensation expense and the impact of Total Return Swap fair value adjustments on earnings | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Total employee SBC expense | 15.2 | 11.9 | 41.2 | 34.6 | | Total TRS FVAs: gains | (97.4) | (15.7) | (78.3) | (47.2) | | Combined effect | (82.2) | (3.8) | (37.1) | (12.6) | | Director SBC expense in SG&A | 0.5 | 0.6 | 1.1 | 1.2 | - Employee SBC expense increased in Q2 2025 and 1H 2025. TRS FVAs showed significant gains, leading to a combined positive impact on earnings, primarily due to fluctuations in the Common Share price[161](index=161&type=chunk) [Restructuring and other charges, net of recoveries](index=37&type=section&id=Restructuring%20and%20other%20charges%2C%20net%20of%20recoveries) Details charges related to restructuring, transition costs, acquisition costs, and other items | Charge Type | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Restructuring charges | 12.8 | 5.6 | 15.0 | 10.7 | | Transition Costs | 1.1 | 4.8 | 1.1 | 4.8 | | Acquisition costs | 0.3 | 1.1 | 0.9 | 2.1 | | Other charges (recoveries) | 0.3 | — | 1.4 | (1.3) | | Total | 14.5 | 11.5 | 18.4 | 16.3 | - Restructuring charges increased in Q2 2025 and 1H 2025, mainly from employee terminations. Transition Costs decreased significantly due to sublease agreements for the Purchaser Lease[164](index=164&type=chunk)[166](index=166&type=chunk) - Other charges in 2025 relate to the transition as a U.S. domestic filer, while 2024 included legal recoveries[167](index=167&type=chunk) [Finance Costs](index=38&type=section&id=Finance%20Costs) Analyzes finance costs, primarily interest expense under the credit facility | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Finance Costs | 13.5 | 15.0 | 27.2 | 29.0 | | Interest expense under credit facility | 11.2 | 12.1 | 24.3 | 24.0 | - Finance Costs decreased in Q2 2025 and 1H 2025, primarily due to lower interest expense under the credit facility and the absence of debt issuance costs incurred in 2024[168](index=168&type=chunk) [Miscellaneous Expense (Income)](index=38&type=section&id=Miscellaneous%20Expense%20%28Income%29) Discusses miscellaneous expense, mainly driven by derivative losses and foreign currency fluctuations | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Miscellaneous Expense | 1.7 | 4.4 | 3.1 | 11.0 | - Miscellaneous Expense decreased in Q2 2025 and 1H 2025, mainly due to lower losses from foreign currency forward exchange contracts and interest rate swaps[170](index=170&type=chunk) [Income taxes](index=38&type=section&id=Income%20taxes) Examines income tax expense, the impact of global minimum tax, and tax incentives | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net income tax expense | 46.3 | 18.5 | 73.8 | 31.9 | | GMT impact | 7.1 | 12.2 | 13.9 | 16.2 | | DTA Recognition (U.S.) | — | (7.5) | — | (7.5) | | Tax uncertainties (Asian subsidiaries) | 3.0 (expense) | — | 3.0 (expense) | (5.6) (reversal) | - Income tax expense increased due to higher earnings before tax, GMT legislation, and tax uncertainties in Asian subsidiaries, partially offset by DTA recognition in 2024[171](index=171&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk) - The company faces potential increases in tax expense from expiring tax incentives in Thailand and Laos, and ongoing tax audits in various jurisdictions[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) [Net earnings](index=39&type=section&id=Net%20earnings) Summarizes the drivers of net earnings growth for the reported periods | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :---------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net earnings | 211.0 | 95.0 | 297.2 | 186.8 | - Net earnings increased by **$116.0 million in Q2 2025** and **$110.4 million in 1H 2025**, primarily driven by higher gross profit and lower SG&A, partially offset by increased income tax and R&D expenses[182](index=182&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses Celestica's ability to meet its financial obligations and fund operations through cash, credit, and other resources [Liquidity](index=40&type=section&id=Liquidity) Reviews cash and cash equivalents, credit facility borrowings, and cash flow activities | Metric | June 30, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | 313.8 | 423.3 | | Borrowings under credit facility | 822.5 | 741.2 | | Cash Flow Activity | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net cash provided by operating activities | 152.4 | 99.6 | 282.7 | 207.7 | | Net cash used in investing activities | (35.0) | (70.1) | (71.7) | (110.5) | | Net cash provided by (used in) financing activities | (106.6) | 96.4 | (320.5) | (33.6) | - Net cash from operating activities increased in 1H 2025 due to higher net earnings, despite working capital requirements driven by increases in A/R and inventory[185](index=185&type=chunk) [Non-GAAP free cash flow](index=40&type=section&id=Non-GAAP%20free%20cash%20flow) Presents and reconciles non-GAAP free cash flow, highlighting its components and trends | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | GAAP cash provided by operations | 152.4 | 99.6 | 282.7 | 207.7 | | Purchase of property, plant and equipment, net of sales proceeds | (32.5) | (34.0) | (69.2) | (74.4) | | Non-GAAP free cash flow | 119.9 | 65.6 | 213.5 | 133.3 | - Non-GAAP free cash flow increased by **$80.2 million in 1H 2025** compared to 1H 2024, primarily due to higher cash generated from operations[188](index=188&type=chunk) [Cash used in investing activities](index=41&type=section&id=Cash%20used%20in%20investing%20activities) Details cash outflows for investing activities, primarily capital expenditures and acquisitions | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net cash used in investing activities | (35.0) | (70.1) | (71.7) | (110.5) | | Capital expenditures | (32.5) | (36.9) | (69.2) | (77.3) | - Capital expenditures in 1H 2025 were **$69.2 million**, primarily for enhancing manufacturing capabilities and supporting new customer programs, mostly within the CCS segment[189](index=189&type=chunk) - The NCS acquisition in April 2024 contributed to investing activities in the prior year[190](index=190&type=chunk) [Cash provided by and used in financing activities](index=41&type=section&id=Cash%20provided%20by%20and%20used%20in%20financing%20activities) Summarizes cash flows from financing activities, including share repurchases and TRS settlements | Financing Activity | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | 1H 2025 (Millions USD) | 1H 2024 (Millions USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net cash provided by (used in) financing activities | (106.6) | 96.4 | (320.5) | (33.6) | | Repurchase of capital stock for cancellation | (40.0) | (10.0) | (117.7) | (26.5) | | Purchase of treasury stock for SBC plans | — | — | (221.6) | (101.6) | | Proceeds from TRS settlement | — | — | 98.6 | 32.3 | | SBC cash settlement | — | — | (156.0) | (69.0) | - Net cash used in financing activities significantly increased in 1H 2025 due to higher share repurchases for cancellation (**$117.7 million**) and for SBC plans (**$221.6 million**), and increased SBC cash settlements (**$156.0 million**)[25](index=25&type=chunk) - The company received **$98.6 million from a TRS re-strike transaction in 1H 2025** and **$32.3 million from a partial TRS settlement in 1H 2024**[196](index=196&type=chunk) [Cash requirements](index=42&type=section&id=Cash%20requirements) Discusses anticipated cash needs for working capital, capital spending, and debt repayments - Working capital requirements fluctuate due to business factors like new programs, inventory levels, and payment timing, managed through cash on hand, the Revolver, A/R sales, and SFPs[198](index=198&type=chunk) - Current and projected liquidity sources are expected to be sufficient for anticipated needs for the next twelve months and beyond, including working capital, capital spending, and debt repayments[199](index=199&type=chunk) [Financing Arrangements](index=43&type=section&id=Financing%20Arrangements) Describes the company's credit facility, interest expense, and compliance with covenants - Annual interest expense and fees under the Credit Facility are approximately **$48 million**, expected to be funded by cash on hand[201](index=201&type=chunk) - Outstanding indebtedness and mandatory prepayment provisions may limit future acquisitions, capital flexibility, and increase vulnerability to economic conditions[203](index=203&type=chunk) - The company expects to remain in compliance with Credit Facility covenants, which include restrictive and financial covenants[204](index=204&type=chunk) [TRS](index=43&type=section&id=TRS) Explains the Total Return Swap Agreement's role in managing equity price risk and its financial impact - The TRS Agreement manages cash flow and equity price risk for SBC plans. A re-strike on March 14, 2025, at **$91.58 per share**, resulted in a **$98.6 million cash receipt**[206](index=206&type=chunk)[207](index=207&type=chunk) - Future payments under the TRS Agreement are uncertain due to variable interest payments and Common Share price fluctuations, but are expected to be funded from cash on hand[208](index=208&type=chunk) [Repatriations](index=44&type=section&id=Repatriations) Details expected cash repatriations from foreign subsidiaries and associated withholding taxes - The company expects to repatriate approximately **$115 million of cash** from foreign subsidiaries, incurring about **$14 million in anticipated withholding taxes**[209](index=209&type=chunk) [Capital Expenditures](index=44&type=section&id=Capital%20Expenditures) Provides estimates for capital spending and funding sources for 2025 - Capital spending for 2025 is estimated at **1.5% to 2.0% of revenue**, funded by cash on hand and financing arrangements[210](index=210&type=chunk) [Common Share Repurchases and SBC settlements](index=44&type=section&id=Common%20Share%20Repurchases%20and%20SBC%20settlements) Discusses the funding mechanisms for common share repurchases and share-based compensation settlements - Common Share repurchases and SBC cash settlements are funded by cash on hand, Revolver borrowings, or a combination[210](index=210&type=chunk) [Lease Obligations](index=44&type=section&id=Lease%20Obligations) Summarizes total finance and operating lease obligations and their funding - Total finance and operating lease obligations were **$196.6 million at June 30, 2025**, expected to be funded by cash on hand and financing arrangements[211](index=211&type=chunk) [Litigation and contingencies (including indemnities)](index=44&type=section&id=Litigation%20and%20contingencies%20%28including%20indemnities%29) Addresses legal and tax proceedings, and routine indemnifications, and their potential financial impact - The company is involved in litigation and tax proceedings, including Romanian and Thailand tax matters, with management believing adequate provisions are in place[211](index=211&type=chunk) - Routine indemnifications are provided, with maximum potential liability not reasonably estimable, but historically not resulting in significant payments[212](index=212&type=chunk) [Capital Resources](index=44&type=section&id=Capital%20Resources) Outlines available capital resources, including cash, credit facilities, and accounts receivable sales programs - Capital resources include cash from operations, the Revolver (**$648.9 million available at June 30, 2025**), uncommitted bank overdraft facilities (**$198.5 million available**), and A/R sales programs[213](index=213&type=chunk)[216](index=216&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - The Credit Facility has an accordion feature allowing for increased Term Loans and/or Revolver commitments by **$200.0 million** plus additional amounts based on leverage ratio[217](index=217&type=chunk) - Interest rate risk on **$452.5 million of Credit Facility borrowings** was unhedged at June 30, 2025[220](index=220&type=chunk) [Outstanding Share Data](index=47&type=section&id=Outstanding%20Share%20Data) Provides a snapshot of outstanding common shares, stock options, RSUs, PSUs, and DSUs as of July 23, 2025 | Metric | As of July 23, 2025 | | :-------------------------------- | :------------------ | | Common Shares outstanding | 115,032,686 | | Outstanding stock options | 38,629 | | Outstanding RSUs | 1,418,747 | | Outstanding PSUs (100% target vesting) | 2,187,431 | | Outstanding DSUs | 441,529 | [Unaudited Quarterly Financial Highlights](index=47&type=section&id=Unaudited%20Quarterly%20Financial%20Highlights) Compares actual Q2 2025 financial results against guidance, highlighting key performance metrics | Metric | Q2 2025 Actual | Q2 2025 Guidance | | :-------------------------------- | :------------- | :--------------- | | Revenue (in billions) | $2.89 | $2.575 to $2.725 | | GAAP earnings from operations as a % of revenue | 9.4% | N/A | | GAAP EPS | $1.82 | N/A | | Adjusted operating margin (non-GAAP) | 7.4% | 7.2% (mid-point) | | Adjusted EPS (non-GAAP) | $1.39 | $1.17 to $1.27 | - Q2 2025 revenue exceeded guidance due to higher customer demand, especially in Communications[229](index=229&type=chunk) - Non-GAAP adjusted operating margin and adjusted EPS surpassed guidance, driven by stronger operating leverage in both segments[228](index=228&type=chunk) - GAAP EPS for Q2 2025 included a **$0.33 per share charge** for SBC, amortization, and restructuring, and a **$0.84 per share positive impact** from TRS FVAs[230](index=230&type=chunk) [Non-GAAP Financial Measures](index=48&type=section&id=Non-GAAP%20Financial%20Measures) Explains the use of non-GAAP financial measures and provides a reconciliation to GAAP results - Management uses non-GAAP measures to assess operating performance, provide normalized comparisons, and enhance understanding of core operations, excluding items like employee SBC expense, TRS FVAs, and restructuring charges[231](index=231&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk)[237](index=237&type=chunk) | Non-GAAP Metric | Q2 2025 | Q2 2024 | 1H 2025 | 1H 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Adjusted gross profit (% of revenue) | 11.7 % | 10.6 % | 11.4 % | 10.2 % | | Adjusted SG&A (% of revenue) | 3.0 % | 3.4 % | 3.1 % | 3.3 % | | Adjusted operating earnings (EBIAT) (% of revenue) | 7.4 % | 6.3 % | 7.3 % | 6.1 % | | Adjusted net earnings (% of revenue) | 5.6 % | 4.5 % | 5.4 % | 4.5 % | | Adjusted EPS | $1.39 | $0.90 | $2.59 | $1.73 | | Free cash flow | $119.9 | $65.6 | $213.5 | $133.3 | | Adjusted ROIC % | 35.5 % | 26.6 % | 33.3 % | 25.1 % | | Adjusted effective tax rate | 20 % | 20 % | 20 % | 18 % | [Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20Regarding%20Market%20Risk) This section details Celestica's exposure to market risks, including currency, equity price, and interest rate risks, and how these are managed through financial instruments like foreign currency forward contracts, total return swaps, and interest rate swaps - **Currency Risk**: Managed through foreign currency forward contracts and swaps, with a net unrealized gain of **$13.7 million** at June 30, 2025 (vs. **$18.5 million net unrealized loss** at Dec 31, 2024)[251](index=251&type=chunk) - **Equity Price Risk**: Managed by a Total Return Swap (TRS) Agreement, which had an unrealized gain of **$79.1 million** at June 30, 2025. A one-dollar decrease in Common Share price would decrease TRS value by **$1.3 million**[252](index=252&type=chunk) - **Interest Rate Risk**: Partially hedged on Term Loans using interest rate swaps, which had a net unrealized gain of **$0.2 million** at June 30, 2025. A one-percentage point increase in interest rates would increase annual interest expense by **$4.5 million (hedged)** or **$8.2 million (unhedged)**[253](index=253&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, under the supervision of the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they are effective. No material changes in internal control over financial reporting were identified during Q2 2025 - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[255](index=255&type=chunk) - No material changes in internal control over financial reporting occurred during Q2 2025[257](index=257&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=Part%20II.%20Other%20Information) This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the legal proceedings detailed in Note 17 of the Q2 2025 Interim Financial Statements and the 'Operating Results — Income Taxes' section of Item 2, which include ongoing Romanian income and value-added tax matters and a Thailand value-added tax matter - Legal proceedings include ongoing Romanian income and value-added tax matters and a Thailand value-added tax matter, as detailed in Note 17 and Item 2[259](index=259&type=chunk) [Item 1A. Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) This section updates previously disclosed risk factors, emphasizing potential material adverse effects from U.S. policies, legislation, and export controls, particularly concerning China, and the risks associated with business or operations transfers - U.S. policies, legislation, and export controls (especially regarding China) could materially impact business, results, and financial condition due to tariffs and restrictions[261](index=261&type=chunk) - Uncertainty regarding the scope and duration of trade actions and their impact on demand and operations remains material[262](index=262&type=chunk) - Transfers of business or operations may increase costs and disrupt customer service due to facility downtime, underutilization, and relocation expenses[263](index=263&type=chunk)[265](index=265&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities. It details the company's repurchase activity for equity securities during Q2 2025, specifically 0.6 million Common Shares for cancellation under the 2024 NCIB in April 2025 - No unregistered sales of equity securities occurred[266](index=266&type=chunk) | Period | Total Number of Common Shares Purchased (in millions) | Average Price Paid per Common Share | | :---------------- | :------------------------------------ | :---------------------------------- | | April 1 — 30, 2025 | 0.6 | $70.48 | | May 1 — 31, 2025 | — | $— | | June 1 — 30, 2025 | — | $— | | Total | 0.6 | $70.48 | - As of April 30, 2025, **7.1 million Common Shares remained available** for repurchase under the 2024 NCIB[267](index=267&type=chunk) [Item 3. Defaults Upon Senior Securities](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - No defaults upon senior securities occurred[268](index=268&type=chunk) [Item 5. Other Information](index=57&type=section&id=Item%205.%20Other%20Information) This section confirms that none of the company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during Q2 2025[269](index=269&type=chunk) [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including organizational documents, executive compensation plans, and certifications - The report includes various exhibits such as organizational documents, executive compensation plans (e.g., 2025 Executive Compensation Deferral Plan, 2025 Long Term Incentive Plan), and certifications (e.g., Section 302 and 906 certifications)[272](index=272&type=chunk) [SIGNATURES](index=60&type=section&id=Signatures) Confirms the official signing of the report by the President and CEO, and Chief Financial Officer - The report is signed by Robert A. Mionis, President and Chief Executive Officer, and Mandeep Chawla, Chief Financial Officer, on July 28, 2025[277](index=277&type=chunk)