Financial Data and Key Metrics Changes - In Q4 2025, revenue reached $3.65 billion, a 44% increase year-over-year, exceeding guidance [8][9] - Adjusted EPS for the quarter was $1.89, up 70% from the previous year [9] - Full-year revenue for 2025 was $12.4 billion, representing a 28% growth, while adjusted EPS was $6.05, a 56% increase [5][6] - Adjusted operating margin for Q4 was 7.7%, marking the strongest performance in company history [5][9] - Adjusted ROIC was 43%, up 14 percentage points compared to the prior year [10] Business Segment Data and Key Metrics Changes - ATS segment revenue was $795 million, a 1% decline, while CCS segment revenue was $2.86 billion, up 64% [10] - Communications end market revenue increased by 79%, driven by demand for 800G networking switches [11] - Enterprise end market revenue grew by 33%, supported by AI/ML compute programs [11] - ATS segment margin improved to 5.3%, while CCS segment margin was 8.4% [12] Market Data and Key Metrics Changes - The CCS segment accounted for 78% of total company revenue in Q4 [10] - Three customers accounted for 36%, 15%, and 12% of total revenue in Q4 [12] - Inventory balance at the end of Q4 was $2.19 billion, a sequential increase of $141 million [13] Company Strategy and Development Direction - The company plans to increase capital expenditures to approximately $1 billion in 2026 to support growth [14][15] - Investments will focus on expanding capacity in the U.S. and Thailand to meet customer demand [16][17] - The company aims to align its global footprint with customer capacity roadmaps, particularly in data center infrastructure and AI capabilities [15][18] - The outlook for 2026 revenue is raised to $17 billion, with adjusted EPS expected to be $8.75, reflecting strong demand [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the 2026 outlook, citing strong customer demand and a robust pipeline of growth opportunities [23][25] - The company anticipates continued growth in the CCS segment, driven by hyperscaler demand for networking technologies [26][27] - Management acknowledged macro uncertainties but emphasized a strong demand outlook [35][39] Other Important Information - The company generated $156 million in free cash flow in Q4, totaling $458 million for the year [13] - The gross debt to non-GAAP trailing twelve-month Adjusted EBITDA leverage ratio improved to 0.7 turns [19] - The company repurchased approximately 132,000 shares for $36 million during the quarter [20] Q&A Session Summary Question: Clarification on revenue and EPS guidance for fiscal 2026 - Management confirmed confidence in the 2026 outlook, noting customer forecasts exceed guidance [34] Question: Concerns about funding for future AI-related projects - Management stated that the build-out is based on booked business, with minimal risk of programs not materializing [37] Question: CapEx investment and its impact on revenue growth - Management indicated that current investments are based on booked business and will support growth into 2027 [47] Question: Margin trajectory with enterprise growth - Management expects strong operating leverage and does not foresee significant margin compression despite enterprise growth [55] Question: Supply chain and inflation impact on margins - Management is comfortable with the supply chain and does not anticipate significant margin compression from inflation [104]

Core Insights - Celestica Inc. reported strong financial results for Q4 2025, with revenue of $3.65 billion and adjusted EPS of $1.89, both exceeding guidance [3][11][16] - The company raised its annual outlook for 2026, expecting revenue of $17.0 billion and adjusted EPS of $8.75, driven by strong demand for AI-related data center technologies [4][13] - Celestica plans to increase capital investments to $1 billion in 2026 to support anticipated growth, which will be funded organically through operating cash flow [4][24][27] Q4 2025 Highlights - Revenue for Q4 2025 was $3.65 billion, a 44% increase compared to Q4 2024's $2.55 billion [6][11] - Adjusted operating margin for Q4 2025 was 7.7%, up from 6.8% in Q4 2024 [6][11] - The Connectivity & Cloud Solutions (CCS) segment revenue reached $2.86 billion, a 64% increase year-over-year [11][12] 2025 Full Year Results - Total revenue for 2025 was $12.4 billion, a 28% increase from $9.65 billion in 2024 [3][18] - Adjusted EPS for 2025 was $6.05, compared to $3.88 in 2024 [18][19] - Three customers represented over 10% of total revenue, contributing 32%, 14%, and 12% respectively [18] Q1 2026 Guidance - For Q1 2026, Celestica expects revenue between $3.85 billion and $4.15 billion, with an adjusted operating margin of 7.8% at the mid-point [6][8] - The guidance assumes an adjusted effective tax rate of approximately 21% [7][8] Business Updates - Celestica is expanding its manufacturing capacity in the U.S. to support Google's production of TPU systems, with completion expected in 2027 [20][21] - The company is also investing in its manufacturing capacity in Southeast Asia to support Google's TPU platform and networking technologies [21][22] - A new program for the design and manufacturing of a 1.6 terabyte switching platform has been awarded to Celestica by a hyperscaler customer, with production expected to ramp up in 2027 [28]