Celestica Inc.

What they do

Celestica provides electronics manufacturing services, design, and supply chain solutions. Its Connectivity Cloud Solutions (CCS) segment focuses on servers, storage, and networking equipment for data center and communications customers. Its Advanced Technology Solutions (ATS) segment serves aerospace and defense, industrial, healthtech, and capital equipment markets with higher-complexity, lower-volume products.

Revenue drivers

• Connectivity Cloud Solutions (CCS) — CCS generated 74% of consolidated revenue in 2025, primarily from servers and storage for hyperscale cloud customers. Three CCS customers individually accounted for 32%, 14%, and 12% of total 2025 revenue.
• Advanced Technology Solutions (ATS) — ATS contributed 26% of 2025 consolidated revenue, serving aerospace and defense, industrial, healthtech, and capital equipment end markets with specialized, often higher-margin, manufacturing services.

Recent performance

For Q2 2026, Celestica reported revenue of $4.70 billion, up 62% from $2.89 billion in Q2 2025. GAAP EPS was $3.17, and adjusted EPS (non-GAAP) was $2.54, both exceeding the high end of guidance. Adjusted operating margin (non-GAAP) reached a record 8.2%, up from 7.4% a year ago. In the first six months of 2026, revenue totaled $8.75 billion.

Strategy

Celestica is expanding capital investment and capacity to capture growing demand from hyperscalers for AI-related infrastructure. The company is winning new programs across both CCS and ATS, improving component supply, and targeting higher adjusted operating margins. Management aims to grow free cash flow and expects adjusted EPS to outpace revenue growth in 2027.

Risks

• Customer concentration — Top 10 customers accounted for 79% of total revenue in 2025, with three CCS customers each exceeding 10%, making Celestica highly dependent on their demand and spending cycles.
• Hyperscaler AI investment cycles — Revenue is sensitive to changes in customers' AI investment strategies, including access to specialized components and data center capacity, which could slow or cancel programs.
• Component supply constraints — Delays or reduced availability of key components like accelerators and networking parts could hamper production ramps and customer orders.
• Trade and tariff policy — U.S. tariffs and potential retaliatory measures across jurisdictions where Celestica operates could increase costs and disrupt supply chains.

Outlook

For Q3 2026, management guided revenue of $5.25–$5.55 billion and adjusted EPS of $2.88–$3.08. The full-year 2026 revenue outlook was raised to $20.5 billion (from $19.0 billion), with adjusted EPS of $11.30 (from $10.15) and adjusted operating margin of 8.4%. Management expects 2027 revenue growth to accelerate beyond the 65% growth anticipated in 2026, with adjusted EPS growing faster than revenue.