Celestica(US:CLS)2024-10-23 20:17Financial Performance - The company reported adjusted gross profit and adjusted gross margin, which are key non-IFRS financial measures, to provide a clearer view of operational performance[30]. - IFRS revenue for the three months ended September 30, 2023, was $2,043.3 million, representing a 10.1% increase compared to the previous year[46]. - Non-IFRS adjusted net earnings for the nine months ended September 30, 2023, were $202.0 million, up from $334.8 million in 2024[46]. - IFRS net earnings for the three months ended September 30, 2023, were $80.2 million, a 3.9% increase year-over-year[46]. - Non-IFRS operating earnings for the three months ended September 30, 2023, were $115.7 million, reflecting a 5.7% margin[46]. - The company reported a diluted EPS of $0.67 for the three months ended September 30, 2023, compared to $0.77 in the previous year[46]. - Net earnings for Q3 2024 increased to $91.7 million, up from $80.2 million in Q3 2023, representing a growth of 18.6%[65]. - For the nine months ended September 30, 2024, net earnings reached $293.0 million, compared to $160.4 million for the same period in 2023, marking an increase of 82.5%[65]. - Total comprehensive income for the period was $69.0 million for Q3 2023, compared to $61.0 million in Q3 2022, indicating a positive trend in overall financial health[59]. Non-IFRS Measures - Adjusted net earnings and adjusted EPS are calculated by excluding non-core tax impacts and other specific charges, allowing for better performance comparison[44]. - The company aims to provide improved insight into tax effects of core operations through adjusted tax expense and effective tax rate measures[31]. - Non-IFRS financial measures are not standardized and may not be comparable to similar measures from other companies[32]. - The company believes that excluding employee SBC expense allows for better comparison of core operating results with competitors[35]. - Management believes that the use of non-IFRS measures provides a more consistent evaluation of operational results over time[31]. - The company emphasizes that non-IFRS measures should not be considered in isolation from IFRS measures[32]. Costs and Expenses - For YTD 2024, the company incurred $5.2 million in refinancing charges related to the amendment and restatement of its credit facility[43]. - The company recorded a $3.9 million charge in Q3 2023 as transition costs related to the Purchaser Lease[40]. - Transition costs include direct relocation and duplicate costs incurred during manufacturing line transfers, impacting financial results[40]. - Research and development expenses for Q3 2023 were $16.9 million, up from $15.0 million in Q3 2022, indicating a focus on innovation[58]. - Selling, general and administrative expenses for Q3 2023 were $56.9 million, compared to $50.0 million in Q3 2022, showing a 13.8% increase[58]. - The company reported finance costs of $18.6 million for Q3 2023, a decrease from $20.0 million in Q3 2022, reflecting improved cost management[58]. - Total finance costs decreased to $11.0 million in Q3 2024 from $18.3 million in Q3 2023, a reduction of 40.3%[65]. - Income tax expense for Q3 2024 was $33.7 million, compared to $18.9 million in Q3 2023, representing an increase of 78.5%[65]. Assets and Liabilities - Total assets as of September 30, 2024, are $5,926.8 million, compared to $5,890.7 million as of December 31, 2023[56]. - Current liabilities decreased to $3,036.8 million as of September 30, 2024, from $3,219.5 million as of December 31, 2023[56]. - Total liabilities as of September 30, 2024, are $4,107.1 million, down from $4,122.2 million as of December 31, 2023[56]. - Cash and cash equivalents increased to $398.5 million as of September 30, 2024, from $370.4 million as of December 31, 2023[56]. - Goodwill increased to $341.0 million as of September 30, 2024, from $321.7 million as of December 31, 2023[56]. - Total equity as of September 30, 2024, is $1,819.7 million, up from $1,768.5 million as of December 31, 2023[56]. Revenue Segmentation - ATS segment revenue for Q3 2024 was $859.4 million, representing 42% of total revenue, while CCS segment revenue was $1,183.9 million, accounting for 58%[75]. - Total revenue for Q3 2024 was $2,043.3 million, compared to $2,499.5 million in Q3 2023, indicating a decrease of approximately 18.3%[75]. - The company reported a total segment income of $115.7 million for Q3 2024, with a segment margin of 5.7%[76]. Acquisitions and Investments - The acquisition of NCS Global Services LLC was completed for a purchase price of $39.6 million, with a potential earn-out of up to $20 million based on future performance[78]. - The acquisition of NCS Global Services LLC was completed, impacting cash flows negatively by $36.1 million in the nine months ended September 30, 2024[65]. - Acquisition costs recorded in Q3 2024 were $0.4 million related to potential acquisitions, and $2.5 million year-to-date (YTD) 2024 related to the acquisition of NCS[120]. Shareholder Actions - The company launched a new Normal Course Issuer Bid (NCIB) on December 12, 2023, allowing the repurchase of up to approximately 11.8 million Common Shares until December 13, 2024[104]. - In Q3 2024, the aggregate cost of Common Shares repurchased for cancellation was $100.0 million, with 2.2 million shares repurchased[107]. - The weighted average price per share for repurchases in Q3 2024 was $44.44, compared to $11.80 in Q3 2023[107]. - The company recorded an accrual of $6.5 million for the maximum number of permitted Common Share repurchases under an SBC ASPP as of September 30, 2023[103]. Tax Matters - YTD 2024 net income tax expense was $68.1 million, including an $18.8 million withholding tax expense due to Pillar Two legislation and a $2.0 million repatriation expense[123]. - Q3 2024 net income tax expense was $33.7 million, which included a $2.6 million withholding tax expense and a $2.0 million repatriation expense[123]. - The Romanian tax authorities issued a final assessment of approximately 31 million Romanian leu (about $7 million) for additional income and value-added taxes for the years 2014 to 2018[139]. - The company has paid the full amount assessed by the Romanian tax authorities to advance its case to the appeals phase, believing its tax return positions comply with applicable laws[139]. - The company intends to vigorously defend its tax positions through appeals or judicial processes[139]. Risk Management - The company believes its credit risk from counterparty non-performance remains relatively low, with no material adjustments made to the allowance for doubtful accounts during Q3 2024 or YTD 2024[136]. - Liquidity risk is managed through maintaining cash on hand and access to various financing arrangements, with sufficient cash flow from operating activities to meet anticipated financial obligations[137]. - The majority of financial liabilities are due within 90 days, indicating a short-term liquidity management strategy[137]. - There is a risk of owing significant amounts in taxes or reimbursements if government assertions are upheld, although the company believes it has adequately accrued for probable adverse rulings[140].