Celestica (CLS) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue reached $2.893 billion, up 21% year-over-year, with adjusted EPS of $1.39 (up 54%) and GAAP EPS of $1.82 (up 128%), both exceeding guidance, driven by strong demand in CCS and ATS segments, especially from hyperscaler and networking customers.

• Communications segment revenue rose 75% year-over-year, while Enterprise declined 37% but is expected to recover in the second half.

• Free cash flow for Q2 was $120 million, with total liquidity at $1 billion.

• 0.6 million shares were repurchased for $40 million in Q2 2025; $115 million year-to-date under NCIB.

• Notable developments include the acquisition of NCS Global, a new long-term incentive plan, and a re-struck TRS agreement.

Financial highlights

• Q2 2025 gross margin was 12.8%, up from 10.6% year-over-year; adjusted gross margin was 11.7%.

• Adjusted operating margin reached 7.4%, and GAAP operating margin was 9.4%.

• Adjusted ROIC for Q2 was 35.5%, up from 26.6% a year ago.

• Free cash flow for Q2 was $120 million; year-to-date free cash flow was $214 million.

• Inventory turns increased to 5.4x, and cash cycle days were 66.

Outlook and guidance

• Q3 2025 revenue guidance: $2.875–$3.125 billion; adjusted EPS: $1.37–$1.53.

• 2025 annual outlook raised: revenue at $11.55 billion (20% growth), adjusted EPS at $5.50 (42% growth), and free cash flow at $400 million.

• Communications revenue projected to increase in the low sixties percent year-over-year in Q3 2025; Enterprise expected to decrease mid-twenties percent.

• Guidance assumes no material changes to tariffs, trade restrictions, or macroeconomic trends.

• Capital spending for 2025 estimated at 1.5% to 2.0% of revenue.