Celestica Inc. Q2 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Celestica Q2 2026 Earnings Summary

Key Highlights: Celestica reported strong Q2 2026 results exceeding guidance, driven by record demand in CCS (particularly AI/ML compute and networking). Revenue reached $4.7 billion (+62% YoY from Q2 2025), adjusted EPS $2.54 (+83% or +$1.15 YoY), and adjusted operating margin 8.2% (new company high, +80 bps YoY). Adjusted gross margin was 11.5% (-20 bps YoY due to CCS mix). Adjusted ROIC hit ~55% (+20 pts YoY). Free cash flow was $147 million in Q2 ($285M YTD). Inventory rose to $3.4 billion (+$0.7B sequential, +$1.5B YoY) to support growth; cash cycle days improved to 47 (-19 days YoY, -8 days sequential). Net debt $204 million; leverage 0.5x (improved 0.1x sequential, 0.4x YoY). No share repurchases in Q2; focus on reinvestment.

Segment Performance (Q2 2026 vs. Q2 2025)

  • CCS Segment: Revenue $3.81 billion (+84% YoY, 81% of total revenue). Communications +62% (above ~50% outlook, driven by 800G switches + 400G demand). Enterprise +167% (above ~130% outlook, led by AI/ML compute ramp + storage). HPS revenue $1.9 billion (+58%, 41% of total). Margin 8.7% (+40 bps YoY from operating leverage).
  • ATS Segment: Revenue $888 million (+8% YoY, above mid-single-digit outlook; 19% of total). Margin 6.3% (+100 bps YoY from leverage + product mix). Growth across all businesses.

Q3 2026 Guidance (vs. Q3 2025)

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Operator : Hello, everyone. Thank you for joining us, and welcome to the Celestica Second Quarter 2026 Financial Results and Conference Call. I will now hand the conference over to Matthew Pallotta, Head of Investor Relations. Please go ahead. Matthew Pallotta : Good morning, and thank you for joining us on Celestica's Q2 2026 Financial Results Conference Call. On the call today, we have Rob Mionis, Chair of the Board 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 third 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 July 27. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and their potential impact on our results cannot be reliably predicted at this time. For identification and discussion of the material assumptions, risks and uncertainties, please refer to our public filings with the SEC and on SEDAR+ 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
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