Celestica (CLS) Q3 & Investor and Analyst Day 2025 earnings summary

Executive summary

• Q3 2025 revenue reached $3.194B, up 28% year-over-year, with GAAP EPS of $2.31, a 208% increase year-over-year, and adjusted EPS of $1.58, up 52% year-over-year, both exceeding guidance.

• Strong CCS segment demand, especially in communications and data center networking, drove growth, with Communications revenue up 82% and HPS revenue up 79% to $1.4B.

• Strategic investments in R&D, design engineering, and global capacity, including expansions in Texas and Thailand, underpin growth and technology leadership in AI data center infrastructure.

• Free cash flow for Q3 was $89M, with YTD free cash flow totaling $302M, and net cash provided by operating activities for YTD 2025 at $408.9M.

• The company is positioned for robust multi-year growth, with raised outlooks for 2025 and 2026 and continued investment in AI/data center solutions.

Financial highlights

• Q3 2025 gross margin was 13.0% (up from 10.4% in Q3 2024), and adjusted gross margin was 11.7%, with earnings from operations at $325M.

• Adjusted ROIC reached 37.5%, up 8.5 pts year-over-year.

• Inventory at quarter-end was $2.05B, up $226M year-over-year; inventory turns improved to 5.6x, and cash cycle days were 65.

• Net debt stood at $728M, with a debt leverage ratio of 0.8x and total liquidity of ~$1.1B as of September 30, 2025.

• SG&A expenses decreased 58% in Q3 2025 to $38.4M, mainly due to favorable TRS fair value adjustments.

Outlook and guidance

• Q4 2025 revenue guidance: $3.325B–$3.575B; adjusted EPS: $1.65–$1.81; adjusted operating margin: 7.6%.

• 2025 annual outlook raised: revenue $12.2B (up from $11.55B), adjusted EPS $5.90 (up from $5.50), free cash flow $425M (up from $400M), and non-GAAP operating margin 7.4%.

• 2026 outlook: revenue $16.0B (+31% YTY), adjusted EPS $8.20 (+39% YTY), free cash flow $500M, and adjusted operating margin 7.8%.

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

• Q4 2025 end market outlook: ATS revenue to decrease low single digits, Communications to increase high sixties percent, Enterprise to increase low twenties percent year-over-year.