Celestica Inc. CLS recorded solid first-quarter 2025 results with adjusted earnings and and revenues beating the respective Zacks Consensus Estimate. 

The Toronto-based electronics manufacturing service provider reported revenue growth year over year, backed by strong growth in the Connectivity & Cloud Solutions (CCS) segment. Management’s strong emphasis on innovation, product diversification and AI advancements is a key growth driver. Strong growth in adjusted free cash flow is a tailwind. 

Net Income

Quarterly net earnings were $86.2 million or 74 cents per share, down from $91.8 million or 77 cents per share in the year-ago quarter. Despite top-line growth, GAAP earnings declined due to higher operating costs and income tax expenses.

Non-GAAP net earnings improved to $140.1 million or $1.20 per share from $98.8 million or 83 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Revenue

Quarterly revenues were $2.65 billion, up 20% from $2.21 billion in the year-ago quarter. The healthy demand in the CCS segment cushioned the top line. The top line beat the Zacks Consensus Estimate by $95 million.

Quarterly Segment Results

CCS: Total revenues in this segment improved 28% year over year to $1.84 billion, primarily driven by strong demand in the communication end market. The segment accounted for 69.5% of the company’s total revenues in the first quarter.

Revenues in the Enterprise end market declined 39% year over year to $414 million in the first quarter. The Communications end market reported revenue growth of 87%, with solid growth in the hardware platform solutions portfolio backed by hyperscaler customer demand for networking products, including 400G switches and 800G switches. The segment’s operating income increased to $147 million with a margin of 8%, driven by greater operating leverage and improved mix.

Advanced Technology Solutions (ATS): This segment’s revenues were $807 million, accounting for 30.5% of total revenues in the first quarter. The segment’s operating income increased to $41 million with a margin of 5%. 

Cash Flow & Liquidity

In the first quarter, Celestica generated an operating cash flow of $130.3 million compared with $108.1 million in the year-ago quarter. Free cash flow was $93.6 million in the first quarter compared with $67.7 million in the prior-year period.

As of March 31, 2024, the company had $303 million in cash and cash equivalents with a long-term debt of $915 million.

Guidance Up

For the second quarter of 2025, Celestica expects revenues in the range of $2.575 to $2.725 billion. Non-GAAP earnings per share are expected to be in the range of $1.17-$1.27. Management expects the non-GAAP operating margin to be 7.2%. Non-GAAP adjusted effective tax rate is forecasted to be approximately 20%.

For 2025, the company anticipates revenues of $10.85 billion, up from the previous projection of $10.7 billion. Non-GAAP operating margin is expected to be 7.2%, up from the previous outlook of 6.9%. Non-GAAP adjusted earnings are expected to be $5 per share, up from the previous outlook of $4.75 per share. Non-GAAP free cash flow is expected to be $350 million. 

CLS’ Zacks Rank

Celestica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Qorvo, Inc. QRVO is scheduled to release fiscal fourth-quarter 2025 earnings on April 29. The Zacks Consensus Estimate for earnings is pegged at 5 cents per share, indicating a decline of 27.34% from the year-ago figure. 
 
Pinterest, Inc. PINS is scheduled to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at 25 cents per share, indicating an improvement of 25% from the year-ago figure. 

Bandwidth Inc. BAND is scheduled to release first-quarter 2025 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at 29 cents per share, indicating an improvement of 7.41% from the year-ago figure.  

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