Celestica(CLS) - 2025 Q3 - Quarterly Results

Financial Performance - Q3 2025 revenue reached $3.19 billion, a 28% increase compared to Q3 2024, exceeding guidance[2] - Non-GAAP adjusted EPS for Q3 2025 was $1.58, representing a 52% growth year-over-year, also above guidance[2] - The adjusted operating margin for Q3 2025 was 7.6%, marking a new high for the company[2] - The 2025 annual revenue outlook has been raised to $12.2 billion from the previous $11.55 billion, with adjusted EPS increased to $5.90 from $5.50[3] - The 2026 annual outlook projects revenue of $16.0 billion and adjusted EPS of $8.20, indicating growth of 31% and 39% respectively[3] - GAAP revenue for Q3 2025 reached $3,194.0 million, a 28% increase from $2,499.5 million in Q3 2024[45] - Net earnings for Q3 2025 were $267.8 million, significantly higher than $89.5 million in Q3 2024, marking a 198.8% increase[53] - Basic earnings per share for Q3 2025 were $2.33, compared to $0.76 in Q3 2024, reflecting a growth of 207.9%[53] Segment Performance - Connectivity & Cloud Solutions (CCS) segment revenue was $2.41 billion, a 43% increase compared to Q3 2024, with a segment margin of 8.3%[8] - Advanced Technology Solutions (ATS) segment revenue was $0.78 billion, a 4% decrease compared to Q3 2024, but with an improved segment margin of 5.5%[9] Cash Flow and Investments - Non-GAAP free cash flow for 2025 is projected to be $425 million, up from the previous outlook of $400 million[11] - Free cash flow (non-GAAP) for Q3 2025 was $88.9 million, an increase from $76.8 million in Q3 2024[45] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $408.9 million, compared to $330.5 million in 2024, reflecting a year-over-year increase of 23.6%[55] - The company reported a net cash used in investing activities of $109.0 million for the nine months ended September 30, 2025, down from $161.5 million in 2024, indicating a reduction of 32.5%[55] Operational Metrics - Adjusted gross profit (non-GAAP) for Q3 2025 was $374.4 million, representing 11.7% of revenue, compared to 10.7% in Q3 2024[45] - Adjusted operating earnings (non-GAAP) for the nine months ended September 30, 2025, were $644.7 million, up from $449.0 million in 2024[46] - GAAP ROIC for Q3 2025 was 50.4%, significantly higher than 23.7% in Q3 2024[46] - Adjusted ROIC (non-GAAP) for Q3 2025 was 37.5%, compared to 29.0% in Q3 2024[46] Expenses and Liabilities - Research and development expenses increased to $36.4 million in Q3 2025, up from $18.7 million in Q3 2024, indicating a focus on innovation[53] - The company reported a significant reduction in selling, general and administrative expenses to $38.4 million in Q3 2025 from $91.8 million in Q3 2024, a decrease of 58.1%[53] - Total current liabilities rose to $3,502.3 million as of September 30, 2025, compared to $3,021.4 million at December 31, 2024, an increase of 15.9%[50] Capital and Equity - Total assets increased to $6,606.7 million as of September 30, 2025, up from $5,988.2 million at December 31, 2024, representing a growth of 10.3%[50] - Net invested capital at the end of Q3 2025 was $2,676.5 million, up from $2,414.9 million at December 31, 2024, representing a growth of 10.8%[47] - Total equity increased to $2,028.6 million as of September 30, 2025, compared to $1,896.0 million at December 31, 2024, a rise of 7.0%[50] Tax and Other Adjustments - The GAAP effective tax rate for Q3 2025 was 14%, down from 28% in Q3 2024[46] - Tax effects of non-core items are excluded from GAAP tax expense to calculate adjusted tax expense, as these do not reflect core operating performance[38] Stock and Financing Activities - The company intends to launch a new Normal Course Issuer Bid (NCIB) in Q4 2025 to repurchase up to 5% of its public float[13] - The company reported a net cash used in financing activities of $417.3 million for the nine months ended September 30, 2025, compared to $140.9 million in 2024, indicating a significant increase in cash outflow[55]