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Celestica Q1 Earnings Beat Estimates on Solid Revenue Growth
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Celestica Inc. (CLS - Free Report) recorded solid first-quarter 2025 results with adjusted earnings and and revenues beating the respective Zacks Consensus Estimate.
The Toronto-based electronics manufacturing service provider reported revenue growth year over year, backed by strong growth in the Connectivity & Cloud Solutions (CCS) segment. Management’s strong emphasis on innovation, product diversification and AI advancements is a key growth driver. Strong growth in adjusted free cash flow is a tailwind.
Net Income
Quarterly net earnings were $86.2 million or 74 cents per share, down from $91.8 million or 77 cents per share in the year-ago quarter. Despite top-line growth, GAAP earnings declined due to higher operating costs and income tax expenses.
Non-GAAP net earnings improved to $140.1 million or $1.20 per share from $98.8 million or 83 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Quarterly revenues were $2.65 billion, up 20% from $2.21 billion in the year-ago quarter. The healthy demand in the CCS segment cushioned the top line. The top line beat the Zacks Consensus Estimate by $95 million.
Quarterly Segment Results
CCS: Total revenues in this segment improved 28% year over year to $1.84 billion, primarily driven by strong demand in the communication end market. The segment accounted for 69.5% of the company’s total revenues in the first quarter.
Revenues in the Enterprise end market declined 39% year over year to $414 million in the first quarter. The Communications end market reported revenue growth of 87%, with solid growth in the hardware platform solutions portfolio backed by hyperscaler customer demand for networking products, including 400G switches and 800G switches. The segment’s operating income increased to $147 million with a margin of 8%, driven by greater operating leverage and improved mix.
Advanced Technology Solutions (ATS): This segment’s revenues were $807 million, accounting for 30.5% of total revenues in the first quarter. The segment’s operating income increased to $41 million with a margin of 5%.
Cash Flow & Liquidity
In the first quarter, Celestica generated an operating cash flow of $130.3 million compared with $108.1 million in the year-ago quarter. Free cash flow was $93.6 million in the first quarter compared with $67.7 million in the prior-year period.
As of March 31, 2024, the company had $303 million in cash and cash equivalents with a long-term debt of $915 million.
Guidance Up
For the second quarter of 2025, Celestica expects revenues in the range of $2.575 to $2.725 billion. Non-GAAP earnings per share are expected to be in the range of $1.17-$1.27. Management expects the non-GAAP operating margin to be 7.2%. Non-GAAP adjusted effective tax rate is forecasted to be approximately 20%.
For 2025, the company anticipates revenues of $10.85 billion, up from the previous projection of $10.7 billion. Non-GAAP operating margin is expected to be 7.2%, up from the previous outlook of 6.9%. Non-GAAP adjusted earnings are expected to be $5 per share, up from the previous outlook of $4.75 per share. Non-GAAP free cash flow is expected to be $350 million.
Qorvo, Inc. (QRVO - Free Report) is scheduled to release fiscal fourth-quarter 2025 earnings on April 29. The Zacks Consensus Estimate for earnings is pegged at 5 cents per share, indicating a decline of 27.34% from the year-ago figure.
Pinterest, Inc. (PINS - Free Report) is scheduled to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, indicating an improvement of 25% from the year-ago figure.
Bandwidth Inc. (BAND - Free Report) is scheduled to release first-quarter 2025 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at 29 cents per share, indicating an improvement of 7.41% from the year-ago figure.
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Celestica Q1 Earnings Beat Estimates on Solid Revenue Growth
Celestica Inc. (CLS - Free Report) recorded solid first-quarter 2025 results with adjusted earnings and and revenues beating the respective Zacks Consensus Estimate.
The Toronto-based electronics manufacturing service provider reported revenue growth year over year, backed by strong growth in the Connectivity & Cloud Solutions (CCS) segment. Management’s strong emphasis on innovation, product diversification and AI advancements is a key growth driver. Strong growth in adjusted free cash flow is a tailwind.
Net Income
Quarterly net earnings were $86.2 million or 74 cents per share, down from $91.8 million or 77 cents per share in the year-ago quarter. Despite top-line growth, GAAP earnings declined due to higher operating costs and income tax expenses.
Non-GAAP net earnings improved to $140.1 million or $1.20 per share from $98.8 million or 83 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Celestica, Inc. Price, Consensus and EPS Surprise
Celestica, Inc. price-consensus-eps-surprise-chart | Celestica, Inc. Quote
Revenue
Quarterly revenues were $2.65 billion, up 20% from $2.21 billion in the year-ago quarter. The healthy demand in the CCS segment cushioned the top line. The top line beat the Zacks Consensus Estimate by $95 million.
Quarterly Segment Results
CCS: Total revenues in this segment improved 28% year over year to $1.84 billion, primarily driven by strong demand in the communication end market. The segment accounted for 69.5% of the company’s total revenues in the first quarter.
Revenues in the Enterprise end market declined 39% year over year to $414 million in the first quarter. The Communications end market reported revenue growth of 87%, with solid growth in the hardware platform solutions portfolio backed by hyperscaler customer demand for networking products, including 400G switches and 800G switches. The segment’s operating income increased to $147 million with a margin of 8%, driven by greater operating leverage and improved mix.
Advanced Technology Solutions (ATS): This segment’s revenues were $807 million, accounting for 30.5% of total revenues in the first quarter. The segment’s operating income increased to $41 million with a margin of 5%.
Cash Flow & Liquidity
In the first quarter, Celestica generated an operating cash flow of $130.3 million compared with $108.1 million in the year-ago quarter. Free cash flow was $93.6 million in the first quarter compared with $67.7 million in the prior-year period.
As of March 31, 2024, the company had $303 million in cash and cash equivalents with a long-term debt of $915 million.
Guidance Up
For the second quarter of 2025, Celestica expects revenues in the range of $2.575 to $2.725 billion. Non-GAAP earnings per share are expected to be in the range of $1.17-$1.27. Management expects the non-GAAP operating margin to be 7.2%. Non-GAAP adjusted effective tax rate is forecasted to be approximately 20%.
For 2025, the company anticipates revenues of $10.85 billion, up from the previous projection of $10.7 billion. Non-GAAP operating margin is expected to be 7.2%, up from the previous outlook of 6.9%. Non-GAAP adjusted earnings are expected to be $5 per share, up from the previous outlook of $4.75 per share. Non-GAAP free cash flow is expected to be $350 million.
CLS’ Zacks Rank
Celestica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Qorvo, Inc. (QRVO - Free Report) is scheduled to release fiscal fourth-quarter 2025 earnings on April 29. The Zacks Consensus Estimate for earnings is pegged at 5 cents per share, indicating a decline of 27.34% from the year-ago figure.
Pinterest, Inc. (PINS - Free Report) is scheduled to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, indicating an improvement of 25% from the year-ago figure.
Bandwidth Inc. (BAND - Free Report) is scheduled to release first-quarter 2025 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at 29 cents per share, indicating an improvement of 7.41% from the year-ago figure.