Celestica Inc. Q1 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Celestica Q1 2026 Earnings Summary

Key Financial Highlights (Q1 2026 vs Q1 2025)

  • Revenue: $4.05 billion, +53% YoY, above guidance midpoint driven by CCS segment strength.
  • Non-GAAP operating margin: 8.0%, +90 bps YoY (new record high).
  • Adjusted EPS: $2.16, +80% or +$0.96 YoY, exceeded high end of guidance.
  • Adjusted gross margin: 11.3%, +30 bps YoY due to mix and productivity.
  • Adjusted ROIC: ~50%, +18+ percentage points YoY.
  • Free cash flow: $138 million; inventory $2.67 billion (+$885 million YoY); cash cycle days 55 (-14 days YoY).
  • Net debt: $341 million; gross debt/EBITDA leverage 0.6x (-0.5x YoY).

Segment Performance (Q1 2026 vs Q1 2025)

  • ATS segment: Revenue $806 million (flat YoY, better than low single-digit decline guidance); margin 6.0% (+100 bps YoY) from mix and portfolio optimization. 20% of total revenue.
  • CCS segment: Revenue $3.24 billion (+76% YoY); margin 8.6% (+60 bps YoY) from mix and volume leverage. 80% of total revenue.
  • Communications end market: +69% YoY (stronger than low-60s% outlook) from 800G switch ramps.
  • Enterprise end market: +101% YoY (slightly below 100+% outlook) from AI/ML compute program ramp, partially gated by components.
  • HPS business: $1.7 billion (+63% YoY), 42% of total revenue.

Q2 2026 Guidance (vs Q2 2025)

  • Revenue: $4.15–4.45 billion (+49% at midpoint).
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Operator: Hello, everyone. Thank you for joining us, and welcome to the Celestica Q1 2026 Financial Results and Conference Call. [Operator Instructions] I will now hand the conference over to Matthew Pallotta, Head of Investor Relations. Matthew, please go ahead. Matthew Pallotta: Good morning, and thank you for joining us on Celestica's Q1 2026 Financial Results Conference Call. On the call today, we have Rob Mionis, President and Chief Executive Officer; and Mandeep Chawla, Chief Financial Officer. Please note that during the course of this call, we will make forward-looking statements, including statements relating to the future performance of Celestica, our business outlook, guidance for the second quarter of 2026, our 2026 annual outlook and anticipated trends in our industry and their anticipated impact on our business. These are based on management's current expectations, forecasts and assumptions as of April 27. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expected stations and their potential impact as well as the Investor Relations section on our website. We undertake no obligation to update these forward-looking statements unless expressly required to do so by law. In addition, during this call, we will refer to various non-GAAP financial measures. We have included in our earnings release found in the Investor Relations section of our website. a discussion of those non-GAAP fin
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