Celestica ((TSE:CLS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Celestica’s Recent Earnings Call: A Positive Outlook for 2025
Celestica’s recent earnings call conveyed a strong sentiment of optimism and achievement, as the company reported impressive financial results for the fourth quarter and the full year of 2024. The performance was largely driven by the growth in the CCS segment and noteworthy customer acquisitions. Despite facing challenges in the enterprise market and stagnant ATS segment revenue, the company’s outlook for 2025 remains positive, with projections for increased revenue and earnings per share (EPS).
Strong Q4 2024 Performance
Celestica reported a robust performance in Q4 2024, with revenues reaching $2.55 billion, which was at the high end of their guidance range. The adjusted EPS of $1.11 surpassed expectations, exceeding the high end of the guidance range. Additionally, the company achieved an adjusted operating margin of 6.8%, showcasing effective operational execution.
Record Full-Year 2024 Results
For the full year 2024, Celestica achieved record results with $9.65 billion in revenues and an adjusted EPS of $3.88. This represents a significant growth of 21% and 58%, respectively. Furthermore, Celestica improved its adjusted operating margin by 100 basis points, indicating strong financial health and operational efficiency.
CCS Segment Growth
The CCS segment was a key driver of growth for Celestica, experiencing a remarkable 30% increase year-over-year in Q4 2024. This surge was fueled by high demand from Hyperscaler customers and a 64% increase in communications end market revenue, highlighting the segment’s vitality and strategic importance to Celestica.
Improved Financial Metrics
Celestica reported several improved financial metrics, including an adjusted gross margin of 11.0% for Q4 2024, up 50 basis points. The adjusted return on invested capital (ROIC) saw a significant rise of 550 basis points to 29.1%. The company also generated free cash flow of $306 million for 2024, surpassing its most recent annual outlook.
New Customer Wins
The earnings call highlighted Celestica’s success in securing significant new customer wins. Notably, the company landed a second 1.6T switching program with a major Hyperscaler customer and a new high-performance server (HPS) win with a leading digital native company, underscoring its ability to attract and retain key clients.
Enterprise Market Decline
Celestica faced challenges in the enterprise end market, with a revenue decline of 10%. This was primarily due to an anticipated technology transition in an AI/ML compute program with a Hyperscaler customer. Despite this hurdle, the company remains optimistic about its future prospects.
Flat ATS Segment Revenue
The ATS segment’s revenue remained flat at $806 million, as lower revenues in the industrial business were counterbalanced by gains in capital equipment and aerospace and defense sectors. This balance reflects the segment’s resilience despite industry-specific challenges.
Forward-Looking Guidance
Looking ahead, Celestica provided an optimistic guidance for Q1 2025, projecting revenue between $2.475 billion and $2.625 billion, representing a 15% growth at the midpoint. The adjusted EPS is expected to range from $1.06 to $1.16, reflecting a 34% increase at the midpoint. For the full year 2025, Celestica raised its revenue outlook to $10.7 billion and anticipates an adjusted EPS of $4.75, alongside a non-GAAP operating margin of 6.9%. The company also increased its free cash flow outlook to $350 million, indicating robust earnings conversion and continued investment in growth.
In summary, Celestica’s earnings call painted a picture of a company on a strong growth trajectory, driven by impressive financial performance and strategic customer wins. With a positive outlook for 2025, Celestica appears well-positioned to navigate challenges and capitalize on new opportunities, maintaining its momentum in the competitive market.
