01—Abstract
Summary
Summary of the 20-F filed March 11, 2024. Cited figures are marked; the original filing is the authoritative source.
Celestica Inc. reported a solid financial performance for the year ended December 31, 2023, demonstrating revenue growth and improved profitability.
The company's strategic focus on expanding its Advanced Technology Solutions (ATS) segment and its Hardware Platform Solutions (HPS) business within the Connectivity & Cloud Solutions (CCS) segment is showing positive results, with significant growth noted in the Industrial and Aerospace & Defense sectors within ATS, and strong demand from hyperscaler customers within CCS. Despite ongoing global economic uncertainties and geopolitical risks, Celestica navigated supply chain constraints effectively, with diminishing adverse impacts in 2023. The company's financial health appears robust, with strong cash flow generation from operations.
Management's commitment to a balanced capital allocation strategy, including investments in growth, potential acquisitions, and returning capital to shareholders, indicates a forward-looking approach. However, investors should remain aware of the significant customer concentration, with the top 10 customers accounting for 64%a of revenue, and the ongoing dependency on the CCS segment's traditional businesses, which face slower growth and pricing pressures.
02—Key points
Key Highlights
- Revenue increased by 10% to $8.0 billion in 2023 compared to 2022, driven by growth in both ATS (11%) and CCS (9%) segments.
- Gross margin improved to 9.8% in 2023 from 8.8% in 2022, reflecting volume leverage, improved mix, and production efficiencies.
- Net earnings increased by 68% to $244.6 million in 2023 compared to 2022.
- Diluted earnings per share (EPS) grew significantly by 72% to $2.03 in 2023.
- The company generated $429.7 million in cash from operating activities in 2023, a substantial increase from $297.9 million in 2022.
- Hyperscaler revenue within the CCS segment grew by 32% and represented 62% of total CCS segment revenue in 2023.
- The company repaid debt, improved its credit facility leverage, and continued share repurchases for cancellation and to satisfy stock-based compensation plan delivery obligations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Celestica Inc kept $0.03.
- Revenue$7.96B100.0%
- Cost of revenue−$7.21B90.5%
- Gross profit$754.1M9.5%
- Operating costs−$415.8M5.2%
- Operating income$338.3M4.2%
- Interest, other & tax−$93.9M1.2%
- Net income$244.4M3.1%
Where FY2023 revenue went
$7.96B- Cost of revenue: $7.21B, 91% of revenue
- Net income: $244.4M, 3.1% of revenue
- R&D: $60.9M, 0.8% of revenue
- SG&A: $303.2M, 3.8% of revenue
- Other operating costs: $51.7M, 0.6% of revenue
- Interest, other & tax: $93.9M, 1.2% of revenue
Kept 3.1% as net incomeNet income $244.4M · 3.1%R&D $60.9M · 0.8%Other operating costs $51.7M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed March 11, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $7.96B$7.25B | +9.8% |
| Cost of Revenue | $7.21B$6.60B | +9.2% |
| Gross Profit | $754.10M$649.70M | +16.1% |
| R&D Expenses | $60.90M$46.30M | +31.5% |
| SG&A Expenses | $303.20M$267.30M | +13.4% |
| Operating Income | $338.30M$289.30M | +16.9% |
| Net Income | $244.40M$180.10M | +35.7% |
| EPS (Basic) | $2.03$1.46 | +39.0% |
| EPS (Diluted) | $2.03$1.46 | +39.0% |
| Shares Outstanding (Basic) | 120.10M123.50M | −2.8% |
| Shares Outstanding (Diluted) | 120.30M123.60M | −2.7% |
05—Questions
Frequently Asked Questions
What was Celestica's revenue and net earnings performance in 2023?
Celestica reported a 10% increase in revenue to $8.0 billion for the year ended December 31, 2023, compared to $7.3 billion in 2022. Net earnings saw a significant rise of 68%, reaching $244.6 million in 2023, up from $145.5 million in 2022.
How did the different business segments perform?
The Advanced Technology Solutions (ATS) segment revenue grew by 11% to $3.3 billion, driven by new programs in Industrial, improved demand in Aerospace & Defense, and growth in HealthTech, partially offset by softness in Capital Equipment. The Connectivity & Cloud Solutions (CCS) segment revenue increased by 9% to $4.6 billion, primarily due to strong demand in the Enterprise end market from hyperscaler customers, which was partially offset by anticipated demand softness in the Communications end market.
What is Celestica's financial health and capital allocation strategy?
Celestica demonstrated strong cash flow from operations ($429.7 million in 2023) and maintained a strong balance sheet. The company's capital allocation strategy focuses on investing in organic growth, pursuing disciplined acquisitions, and returning capital to shareholders, aiming for approximately 50% of non-IFRS adjusted free cash flow to be returned to shareholders over the long term.
What are the key risks highlighted in the filing for investors to consider?
Key risks for investors include significant customer concentration, with the top 10 customers representing 64% of total revenue. The company also faces risks related to managing demand changes, supply chain constraints, geopolitical uncertainty, competitive pricing pressures in the EMS industry, and the potential impact of U.S. policies or legislation on its business.
06—Continue