10-KPeriod: FY2012

CELESTICA INC Annual Report, Year Ended Dec 31, 2012

Filed March 15, 2013For Securities:CLS

Summary

Celestica Inc. reported $6.51 billion in revenue for 2012, a decrease from $7.21 billion in 2011, primarily driven by the wind-down of its manufacturing services for Research In Motion (RIM), which accounted for 12% of 2012 revenue. Excluding RIM, revenue saw a 1% decrease year-over-year. The company's diversified end market showed growth, increasing 27% due to new program wins and acquisitions, contributing significantly to revenue. Net earnings for 2012 were $117.7 million, down from $195.1 million in 2011, impacted by lower volumes and increased restructuring and impairment charges. However, Celestica demonstrated strong free cash flow of $211.4 million and maintained a robust balance sheet with $550.5 million in cash and cash equivalents at year-end. The company continues to focus on expanding its higher-value services, such as design and engineering, and growing its diversified end market.

Key Highlights

  • 1Revenue declined 10% to $6.51 billion in 2012, mainly due to the wind-down of business with RIM, a major customer.
  • 2Excluding RIM, revenue decreased by only 1% year-over-year, indicating resilience in other business areas.
  • 3The diversified end market grew by 27%, driven by new wins and acquisitions, highlighting successful strategic expansion.
  • 4Net earnings decreased to $117.7 million in 2012 from $195.1 million in 2011, impacted by restructuring and impairment charges.
  • 5Free cash flow remained strong at $211.4 million, exceeding company targets.
  • 6The company repurchased over $280 million in shares in 2012 through a substantial issuer bid and normal course issuer bid, demonstrating commitment to returning value to shareholders.
  • 7Significant risk factors include dependence on a limited number of customers and the competitive nature of the EMS industry.

Frequently Asked Questions

The primary driver for the revenue decrease was the wind-down of manufacturing services for Research In Motion (RIM), a significant customer. While this led to a 10% overall revenue decline, excluding RIM, the revenue impact was much smaller at a 1% decrease.

The diversified end market showed strong growth of 27% due to new program wins and acquisitions. Conversely, the consumer segment (heavily impacted by RIM) declined significantly, while communications and servers experienced modest decreases. The storage segment remained flat.

Celestica maintained a strong financial position with $550.5 million in cash and cash equivalents and generated robust free cash flow of $211.4 million. The company also actively managed its capital by repurchasing over $280 million in shares during 2012, indicating confidence and a commitment to shareholder returns.

Celestica highlighted several key risks, including a significant dependence on a limited number of customers, intense competition and aggressive pricing dynamics within the EMS industry, and operating within an uncertain global economic environment. Other risks include managing operational disruptions, component availability, and foreign currency volatility.