Celestica(CLS)2025-03-03 13:17Financial Performance - Q4 2024 revenue reached $2.55 billion, an increase of $405.2 million or 19% compared to Q4 2023 [512]. - CCS segment revenue increased by $402.3 million (30%) year-over-year, driven by a 64% increase in Communications end market revenue [512]. - HPS revenue for Q4 2024 was $807 million, representing 32% of total revenue and a 65% increase from Q4 2023 [512]. - Gross profit increased by $74.0 million in Q4 2024, with gross margin rising to 11.7% from 10.4% in Q4 2023 [512]. - Net earnings for Q4 2024 were $151.7 million, up from $91.6 million in Q4 2023, primarily due to higher gross profit and lower SG&A expenses [512]. - The company reported an adjusted EPS of $1.29 for Q4 2024, exceeding the high end of the guidance range [516]. - GAAP revenue for Q4 2024 was $2,545.7 million, a 19% increase from $2,140.5 million in Q4 2023 [535]. - Adjusted gross profit for Q4 2024 was $279.8 million, representing an adjusted gross margin of 11.0%, compared to 10.5% in Q4 2023 [535]. - GAAP net earnings for the year ended December 31, 2024, were $428.0 million, up from $244.4 million in 2023, reflecting a 75% increase [535]. - Adjusted net earnings for Q4 2024 were $130.2 million, or 5.1% of revenue, compared to $92.1 million, or 4.3% of revenue in Q4 2023 [535]. - Free cash flow for the year ended December 31, 2024, was $305.9 million, an increase from $203.8 million in 2023 [535]. Risk Management - The fair value of outstanding foreign currency contracts at December 31, 2024, was a net unrealized loss of $18.5 million, compared to a net unrealized gain of $6.5 million at December 31, 2023 [500]. - Unhedged borrowings of $411.2 million at December 31, 2024, expose the company to interest rate risk, with a one-percentage point increase in interest rates potentially increasing annual interest expense by $4.1 million [502]. - The company maintains a portfolio of liquid funds and investments to manage liquidity risk, alongside access to a revolving credit facility and other financial instruments [507]. - The allowance for credit losses was $10.1 million at December 31, 2024, compared to $8.4 million at December 31, 2023 [506]. - The company is subject to various financial risks, including dependence on third parties for materials and the cyclical nature of the semiconductor industry [18]. - The company does not engage in hedging activities for commodity price risk, which may impact future operating results [508]. Operational Insights - Less than 1% of gross accounts receivable were over 90 days past due at December 31, 2024, consistent with the previous year [506]. - Transportation costs are being managed through optimized logistics and supply chain planning amid industry-wide capacity challenges [509]. - The company executed a sublease for a portion of the leased space under the Purchaser Lease, which commenced in June 2024 [527]. - Transition Costs related to relocations and property dispositions were recorded, impacting the comparison of core operating results [527]. Taxation and Financial Metrics - The GAAP effective tax rate for Q4 2024 was 20%, with an adjusted effective tax rate of 19% [516]. - The GAAP tax expense for Q4 2024 was $37.8 million, compared to $23.1 million in Q4 2023, marking a 63.7% increase [539]. - Adjusted tax expense (non-GAAP) for the year ended December 31, 2024, was $109.7 million, up from $75.9 million in 2023, reflecting a 44.5% increase [539]. - Finance costs for Q4 2024 were $11.9 million, a decrease from $15.5 million in Q4 2023, indicating improved cost management [539]. - Miscellaneous income for Q4 2024 was $(1.2) million, a significant improvement from $21.0 million in Q4 2023, highlighting volatility in non-operating income [539]. Future Outlook - The company anticipates continued growth in the advancement and commercialization of artificial intelligence technologies and cloud computing [12]. - The company is focused on diversifying its customer base and developing new capabilities to mitigate risks associated with customer dependence [12]. - The company expects to face challenges related to managing changes in customer demand and potential disruptions to operations from external events [18].