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CELESTICA INC

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Business Summary

Celestica operates in the contract design and manufacturing industry, competing with a variety of providers from electronics manufacturing services (EMS) companies to original design manufacturers (ODMs). The EMS companies that Celestica competes with typically manage global manufacturing and logistics networks capable of delivering customized solutions, while ODMs offer a similar range of services and also typically support the design and development of products they manufacture for their customers. Celestica is increasingly engaged as an ODM by its customers, and this business is primarily within its Hardware Platform Solutions (HPS) offering. The company's customers, which include cloud-based and other service providers (including hyperscalers), OEMs and enterprise customers in a wide range of industries, outsource these services to address challenges related to cost, asset utilization, quality, time-to-market, demand volatility, customer support, and rapidly changing technologies. In particular, hyperscalers have utilized Celestica's services to increase deployments of customized advanced hardware and systems-level solutions in order to expand and optimize their data center infrastructure.

Celestica's competitors in the EMS industry include Benchmark Electronics, Inc., Flex Ltd., Hon Hai Precision Industry Co., Ltd., Jabil Inc., Plexus Corp., and Sanmina Corporation, as well as smaller EMS companies that often have a regional, product, service or industry-specific focus. Its ODM competitors include Quanta Computer Inc., Wiwynn Corporation, and Accton Technology Corp. In some markets, particularly in data center switching, Celestica also faces competition from OEMs including Arista Networks, Inc. and Cisco Systems, Inc. The company believes its competitive advantage is its track record in advanced manufacturing capabilities, design and engineering, quality, delivery, managing complexity and responsiveness enabling cost-effective solutions and speed-to-market, as well as value-added services. In the aggregate, Celestica's top 10 customers represented 79% of total revenue for 2025 , 73% for 2024 and 64% for 2023 . In 2025, three customers (all in its CCS segment) individually represented 10% or more of total revenue (32% , 14% and 12% ).

Celestica generates revenue by offering a comprehensive range of products and services that cover the entire technology product lifecycle, including hardware design and development, new product introduction, engineering services, supply chain management and logistics, electronics manufacturing and assembly, complex mechanical assembly, precision machining, systems integration, testing, product licensing, software enablement solutions, and services including asset management and disposition (ITAM/ITAD) services. The company engages with customers in its capacity as an ODM and EMS provider, as well as offering various software solutions and services. Within its CCS segment, its HPS business, which is broadly characterized as ODM in nature, typically has a higher margin profile than its traditional EMS businesses, as Celestica is solely or jointly involved in the design of the solution, though it also requires specific investments including in research and development (R&D).

Celestica serves across two operating and reportable segments: Connectivity and Cloud Solutions (CCS) and Advanced Technology Solutions (ATS). The CCS segment consists of the Communications and Enterprise end markets, with the Enterprise end market comprised of servers and storage businesses. Products in the CCS segment consist predominantly of data communications and information processing infrastructure products and systems primarily used in hyperscale data centers, including networking switches, optical systems, data center racks, servers and storage products. CCS segment revenue for 2025 increased 42% to $9.19 billion compared to $6.49 billion in 2024. HPS revenue for 2025 increased 81% compared to 2024, and HPS revenue accounted for 41% of total revenue in 2025 (2024 — 29% ; 2023 — 21% ). The ATS segment consists of the ATS end market, comprised of Aerospace and Defense (A&D), Industrial, HealthTech, and Capital Equipment businesses. ATS segment revenue for 2025 increased 1% to $3.20 billion compared to $3.16 billion for 2024. ATS segment margin increased to 5.3% for 2025 compared to 4.6% in 2024.

In April 2024, Celestica completed the acquisition of NCS Global Services LLC for a purchase price of $39.6 million , including acquired cash of $3.5 million . During 2025, the company paid a total of $150.7 million (including transaction fees and excluding share buyback taxes) to repurchase 1.3 million Common Shares for cancellation at a weighted average price of $111.27 per share. From the commencement of the 2025 NCIB through February 19, 2026, Celestica paid a total of $55.7 million (including transaction fees and excluding share buyback taxes) to repurchase 0.2 million Common Shares at a weighted average price of $271.76 per share for cancellation. In each of December 2025 and March 2025, Celestica re-struck its TRS Agreement with a Strike Price of $288.87 per share and $91.58 per share, respectively, and received $246.6 million and $98.6 million from the counterparty.

Revenue for 2025 was $12,390.9 million , an increase of 28% compared to 2024 revenue of $9,646.0 million . Gross profit increased by 45% or $460.4 million to $1,494.1 million in 2025 compared to 2024, and gross margin increased to 12.1% in 2025 from 10.7% in 2024. Net earnings for 2025 were $832.5 million , an increase of 95% compared to $428.0 million in 2024. Diluted earnings per share for 2025 were $7.16 compared to $3.61 in 2024. Cash provided by operating activities for 2025 was $659.5 million compared to $473.9 million in 2024.

Business Outlook

Celestica currently anticipates continued growth in its CCS segment in 2026. In its Communications end market, the company expects strong demand from hyperscalers throughout 2026, as it continues to ramp multiple networking switching programs. In its Enterprise end market, Celestica expects volume growth in 2026 in its AI/ML compute programs with its hyperscaler customers. The company currently anticipates its CCS growth trajectory to be sustained into 2027. Celestica currently expects ATS segment revenue to remain relatively flat or slightly increase in 2026 compared to 2025. For 2026, the company expects growth in its Industrial and HealthTech businesses, supported primarily by new program ramps, partially offset by lower volumes in its Capital Equipment business in the near term and the impact of the discontinuation of the margin dilutive program in its A&D business.

Celestica's strategy includes increasing penetration in its end markets and offerings, with particular emphasis on expanding its HPS business, high-value EMS programs (including with hyperscaler customers) and its ATS segment. The company intends to continue to focus on pursuing revenue growth in attractive markets aligned with its broader portfolio strategy, including in its HPS business, and driving sustainable, profitable revenue growth. Celestica also aims to grow its aggregate ATS segment revenue at an average rate above that of the underlying markets over the long term. The company plans to supplement its organic growth with targeted and strategic acquisitions, investments and partnerships intended to expand capabilities, and to optimize its portfolio to drive more consistent returns and profitability.

Celestica's goal is to compound non-GAAP adjusted EPS consistently and sustainably over the long-term and to continue to focus on improvements to its non-GAAP adjusted operating margin. The company's mix of programs and operating leverage across several of its businesses had a favorable impact on its gross margin in recent years. In addition, its ongoing cost reductions initiatives, which are intended to further streamline its business, increase operational efficiencies and improve its productivity, have had a favorable impact on its profitability.

Celestica anticipates its 2026 capital expenditures to be approximately $1 billion (about 6% of currently anticipated revenue ), a significant increase over its historical capital expenditure range of 1.5% to 2.0% of annual revenue , to support expected growth in customer demand, particularly from its hyperscaler customers. The company's intended 2026 capital spending includes investments in its manufacturing capacities and capabilities in the U.S., Thailand, Mexico and Japan, as well as additions of new HPS design centers in the U.S. and Taiwan. Celestica has recently undertaken investments geared towards capacity and capability expansions at its Thailand, Malaysia and U.S. facilities in support of its growth in AI/ML and HPS programs.

Celestica is focused on maintaining a strong balance sheet, generating non-GAAP free cash flow and balancing its debt and capital levels, while maintaining optimal financial flexibility. In terms of capital allocation, its goal is to invest in capital expenditures and R&D to support its organic growth over the long term, return capital to shareholders primarily through share repurchases on an opportunistic basis, and pursue potential targeted and strategic acquisitions, investments and partnerships as part of a disciplined capital allocation framework. The company has increased its R&D investment in its global design services and capabilities to develop differentiated HPS product solutions for its customers, and anticipates a further increase in R&D investments.

The long-term trajectory of AI adoption and related data center deployment is uncertain and may be affected by a variety of factors outside Celestica's control, including rapid changes in technology and customer AI roadmaps, evolving regulatory developments (including export controls and other AI-related measures) that increase customers' costs or restrict their AI activities, constraints on specialized components and data center capacity, and the availability, timing, reliability and price of critical utilities. Adverse developments in any of these areas could cause cloud-based and other service provider customers, including hyperscalers and OEM customers, to delay, reduce or cancel programs, which could adversely impact demand for Celestica's products and services. AI-driven, high-density deployments require predictable access to power and adequate water and cooling capacity, and data center developers and operators may experience constraints arising from generation, transmission and distribution capacity, longer lead times for grid interconnections and utility upgrades, siting and permitting limitations, evolving policy requirements, and increased utility or compliance costs.

Governmental actions related to international trade agreements have increased and could further increase the cost to Celestica's U.S. customers who use its non-U.S. manufacturing sites and components, and vice versa, which may materially and adversely impact demand for its services. Changes in policies by the U.S. or other governments could negatively affect Celestica's operating results due to changes in duties, tariffs, or taxes, or limitations on currency or fund transfers, as well as government-imposed restrictions on producing certain products in, or shipping them to, specific countries. Celestica's Capital Equipment business and its CCS segment have been in prior periods and may continue to be negatively impacted by U.S. technology/data export controls, including controls on cross-border technology/data access, with respect to China and other countries.

Risk Factors

Celestica is dependent on a limited number of customers for a substantial portion of its revenue, with its top 10 customers representing 79% of total revenue in 2025 and three customers in its CCS segment individually representing 32% , 14% , and 12% of total revenue. A decline in revenue from or the loss of any significant customer could have a material adverse effect on operating results. The company faces risks related to increased capital expenditures to expand capacity to support anticipated growth in customer demand, with 2026 capital expenditures anticipated to be approximately $1 billion (about 6% of currently anticipated revenue ), a significant increase over its historical range of 1.5% to 2.0% of annual revenue ; if demand or utilization differ from expectations, added capacity may be underutilized and returns may be lower than expected. Celestica is subject to the risk of increasing income and other taxes, tax audits, and the challenges of successfully defending its tax positions, with the aggregate tax benefit arising from all of its tax incentives for 2025 being approximately $51 million ($0.44 per diluted share ), and the company is under examination by tax authorities in Romania and Thailand with potential liabilities of approximately $7 million and $13 million respectively. The company also faces risks related to the uncertain global economic and political environment, including the impact of U.S. policies or legislation on trade and tariffs, which could materially and adversely impact demand for its services.

Management Priorities

Management's message emphasizes Celestica's position as a technology leader with deep expertise in design, engineering, manufacturing, supply chain, and platform solutions, enabling critical data center infrastructure for AI, cloud and hybrid cloud, and advancing technologies in high-growth markets. The tone is forward-looking and focused on growth, with management stating that it currently anticipates continued growth in the CCS segment in 2026, expects strong demand from hyperscalers throughout 2026 in the Communications end market, and expects volume growth in 2026 in AI/ML compute programs with hyperscaler customers in the Enterprise end market. Management also anticipates the CCS growth trajectory to be sustained into 2027. The strategic priorities emphasized for the period ahead include evolving the revenue portfolio by pursuing growth in attractive markets like the HPS business, driving sustainable profitable growth, and supplementing organic growth with targeted acquisitions; focusing on margins and non-GAAP adjusted EPS with a goal to compound non-GAAP adjusted EPS consistently and sustainably over the long-term; and maintaining a balanced approach to capital allocation by investing in capital expenditures and R&D to support organic growth, returning capital to shareholders through share repurchases, and pursuing strategic acquisitions.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Customer Concentration and Relationship Management
  2. [2] Item 1, Business — Customer Concentration and Relationship Management
  3. [3] Item 1, Business — Customer Concentration and Relationship Management
  4. [4] Item 1, Business — Customer Concentration and Relationship Management
  5. [5] Item 1, Business — Customer Concentration and Relationship Management
  6. [6] Item 1, Business — Customer Concentration and Relationship Management
  7. [7] Item 7, MD&A — Recent Developments
  8. [8] Item 7, MD&A — Recent Developments
  9. [9] Item 7, MD&A — Recent Developments
  10. [10] Item 1, Business — Business Overview
  11. [11] Item 1, Business — Business Overview
  12. [12] Item 1, Business — Business Overview
  13. [13] Item 7, MD&A — Recent Developments
  14. [14] Item 7, MD&A — Recent Developments
  15. [15] Item 7, MD&A — Recent Developments
  16. [16] Item 7, MD&A — Recent Developments
  17. [17] Item 7, MD&A — Cash used in and provided by investing activities
  18. [18] Item 7, MD&A — Cash used in and provided by investing activities
  19. [19] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  20. [20] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  21. [21] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  22. [22] Item 7, MD&A — Recent Developments
  23. [23] Item 7, MD&A — Recent Developments
  24. [24] Item 7, MD&A — Recent Developments
  25. [25] Item 7, MD&A — Liquidity — Cash requirements — TRS
  26. [26] Item 7, MD&A — Liquidity — Cash requirements — TRS
  27. [27] Item 7, MD&A — Cash used in and provided by financing activities — Proceeds from partial TRS settlement and re-strike transactions
  28. [28] Item 7, MD&A — Cash used in and provided by financing activities — Proceeds from partial TRS settlement and re-strike transactions
  29. [29] Item 7, MD&A — Operating Results — Revenue
  30. [30] Item 7, MD&A — Operating Results — Revenue
  31. [31] Item 7, MD&A — Operating Results — Revenue
  32. [32] Item 7, MD&A — Operating Results — Gross profit
  33. [33] Item 7, MD&A — Operating Results — Gross profit
  34. [34] Item 7, MD&A — Operating Results — Gross profit
  35. [35] Item 7, MD&A — Operating Results — Gross profit
  36. [36] Item 7, MD&A — Operating Results — Gross profit
  37. [37] Item 7, MD&A — Operating Results — Net earnings
  38. [38] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  39. [39] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  40. [40] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  41. [41] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  42. [42] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  43. [43] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  44. [44] Item 7, MD&A — Operating Goals and Priorities
  45. [45] Item 7, MD&A — Operating Goals and Priorities
  46. [46] Item 7, MD&A — Operating Goals and Priorities
  47. [47] Item 1A, Risk Factors — We are dependent on a limited number of customers and end markets
  48. [48] Item 1A, Risk Factors — We are dependent on a limited number of customers and end markets
  49. [49] Item 1A, Risk Factors — We are dependent on a limited number of customers and end markets
  50. [50] Item 1A, Risk Factors — We are dependent on a limited number of customers and end markets
  51. [51] Item 1A, Risk Factors — Increased capital expenditures to expand capacity
  52. [52] Item 1A, Risk Factors — Increased capital expenditures to expand capacity
  53. [53] Item 1A, Risk Factors — Increased capital expenditures to expand capacity
  54. [54] Item 7, MD&A — Operating Results — Income taxes and tax contingencies
  55. [55] Item 7, MD&A — Operating Results — Income taxes and tax contingencies
  56. [56] Item 7, MD&A — Operating Results — Income taxes and tax contingencies
  57. [57] Item 7, MD&A — Operating Results — Income taxes and tax contingencies
  58. [58] Item 8, Note — Consolidated Statements of Operations
  59. [59] Item 8, Note — Consolidated Statements of Operations
  60. [60] Item 8, Note — Consolidated Statements of Operations
  61. [61] Item 8, Note — Consolidated Statements of Operations
  62. [62] Item 8, Note — Consolidated Statements of Operations
  63. [63] Item 8, Note — Consolidated Statements of Operations
  64. [64] Item 8, Note — Consolidated Statements of Operations
  65. [65] Item 8, Note — Consolidated Statements of Operations
  66. [66] Item 8, Note — Consolidated Statements of Operations
  67. [67] Item 7, MD&A — Operating Results — Gross profit
  68. [68] Item 7, MD&A — Operating Results — Gross profit
  69. [69] Item 7, MD&A — Operating Results — Gross profit
  70. [70] Item 7, MD&A — Operating Results — Gross profit
  71. [71] Item 8, Note — Consolidated Statements of Operations
  72. [72] Item 8, Note — Consolidated Statements of Operations
  73. [73] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  74. [74] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  75. [75] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  76. [76] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  77. [77] Item 7, MD&A — Liquidity and Capital Resources — Non-GAAP free cash flow
  78. [78] Item 7, MD&A — Liquidity and Capital Resources — Non-GAAP free cash flow
  79. [79] Item 7, MD&A — Operating Results — Restructuring and other charges, net of recoveries
  80. [80] Item 7, MD&A — Operating Results — Restructuring and other charges, net of recoveries
  81. [81] Item 7, MD&A — Operating Results — Restructuring and other charges, net of recoveries
  82. [82] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  83. [83] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  84. [84] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  85. [85] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  86. [86] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  87. [87] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  88. [88] Item 7, MD&A — Summary of Key Operating Results and Financial Information
  89. [89] Item 7, MD&A — Summary of Key Operating Results and Financial Information

Analysis on 6/8/2026