Celestica (CLS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $2.39 billion, up 23% year-over-year, exceeding guidance, with non-IFRS adjusted EPS of $0.91, up 65% year-over-year, and strong CCS segment growth offsetting ATS declines.

• Non-IFRS operating margin improved to 6.3%, up 80 basis points year-over-year; IFRS operating margin was 5.7%, up 120 basis points.

• Net earnings for Q2 were $100 million ($0.83 per share), up from $56 million ($0.46 per share) last year.

• Strong free cash flow generation with $63 million in Q2 and $129 million year-to-date.

• Full-year 2024 outlook raised: revenue expected at $9.45 billion (+19%) and adjusted EPS at $3.62 (+49%).

Financial highlights

• Q2 adjusted gross margin was 10.6%, up 90 basis points year-over-year.

• Adjusted ROIC for Q2 was 26.7%, up 6.7 percentage points year-over-year.

• Inventory reduced to $1.85 billion, down $493 million year-over-year; inventory turns improved to 4.5x.

• Cash balance at quarter-end was $434 million; total liquidity including revolver is $1.2 billion.

• Capex for Q2 was $37 million (1.5% of revenue), with 2024 CapEx expected at 1.5–2% of revenue.

Outlook and guidance

• Q3 2024 revenue expected between $2.325–$2.475 billion, midpoint implies 17% year-over-year growth.

• Q3 adjusted EPS guidance of $0.86–$0.96, midpoint up 40% year-over-year.

• Full-year 2024 non-IFRS operating margin expected at 6.3%, up 70 basis points from 2023.

• Adjusted free cash flow for 2024 expected at $250 million.

• Q3 2024 end market outlook: ATS down low single digits, Communications up low thirties percent, Enterprise up mid-thirties percent year-over-year.