10-QPeriod: Q3 FY2025

CELESTICA INC Quarterly Report for Q3 Ended Sep 30, 2025

Filed October 27, 2025For Securities:CLS

Summary

Celestica Inc. (CLS) reported a strong third quarter and year-to-date performance, driven by significant revenue growth and improved profitability, particularly within its Connectivity & Cloud Solutions (CCS) segment. Revenue for the quarter surged by 28% year-over-year, reaching $3.19 billion, with year-to-date revenue up 23% to $8.74 billion. This growth was substantially fueled by demand in data center networking and the ramp-up of switch programs, while the Advanced Technology Solutions (ATS) segment saw a slight revenue dip primarily due to program discontinuation. Net earnings saw a substantial increase, rising 199% to $267.8 million for the quarter and 104% year-to-date to $565.0 million. This improved profitability is attributed to strong revenue performance, operating leverage, a favorable business mix, and effective cost management, including a reduction in SG&A expenses. The company also demonstrated robust operating cash flow generation and free cash flow, indicating effective working capital management and a healthy operational financial position.

Financial Highlights

41 data points
Beta

Revenue

$3.19B

13.0% Gross Margin

Net Income

$267.80M

8.4% Net Margin

EPS (Diluted)

$2.31

Total Assets

$6.61B

Cash & Equivalents

$305.90M

Free Cash Flow

$126.20M

Financial Statements
Beta
Revenue$3.19B
Cost of Revenue$2.78B
Gross Profit$416.10M
R&D Expenses$36.40M
SG&A Expenses$38.40M
Operating Income$325.00M
Net Income$267.80M
EPS (Basic)$2.33
EPS (Diluted)$2.31
Shares Outstanding (Basic)115.00M
Shares Outstanding (Diluted)115.90M

Key Highlights

  • 1Significant revenue growth in Q3 2025, up 28% year-over-year to $3.19 billion, driven by strong performance in the CCS segment.
  • 2Net earnings more than doubled in Q3 2025, reaching $267.8 million, a 199% increase compared to the prior year quarter.
  • 3Gross margin improved significantly to 13.0% in Q3 2025 from 10.4% in Q3 2024, benefiting from operating leverage and a favorable mix.
  • 4CCS segment revenue increased by 43% year-over-year, with a notable surge in the Communications end market due to data center networking demand.
  • 5ATS segment margin improved to 5.5% from 4.9%, aided by the discontinuation of a margin-dilutive program.
  • 6The company generated strong operating cash flow of $126.2 million in Q3 2025 and $408.9 million year-to-date.
  • 7Celestica intends to launch a new Normal Course Issuer Bid (NCIB) in Q4 2025, signaling continued commitment to returning capital to shareholders.

Frequently Asked Questions

The substantial revenue increase in the CCS segment is primarily driven by strong demand in the data center networking market, including the ramp-up of switch programs. The Communications end market, in particular, saw an 82% increase in revenue year-over-year in Q3 2025.

The improvement in gross margin and net earnings is a result of several factors, including strong revenue growth, operating leverage from higher sales volumes, a more favorable business mix with a higher contribution from the CCS segment, and a reduction in SG&A expenses. The fair value adjustments related to the company's Total Return Swap (TRS) agreement also favorably impacted reported earnings.

While the ATS segment revenue saw a 4% decrease in Q3 2025 compared to the prior year, its segment margin improved to 5.5% from 4.9%. This improvement was partly due to the discontinuation of a margin-dilutive program in the Aerospace and Defense business. Management is focused on profitability within this segment.

Celestica maintained a solid cash position with $305.9 million in cash and cash equivalents as of September 30, 2025. The company generated robust operating cash flow of $126.2 million in Q3 2025 and $408.9 million year-to-date. The company believes its current and projected sources of liquidity will be sufficient to fund anticipated needs.