Celestica ((TSE:CLS)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The recent earnings call for Celestica showcased a robust performance in the second quarter of 2025, highlighted by record revenues and earnings per share (EPS). The positive sentiment was driven by strong demand in the Communications and Cloud Solutions (CCS) segment and improvements in operating margins. Despite some challenges in the enterprise end market and a projected moderation in the capital equipment business, the company’s overall guidance and outlook were raised, indicating a promising trajectory ahead.
Record Quarterly Revenue
Celestica reported an impressive $2.89 billion in revenues for Q2 2025, marking a 21% increase year-over-year. This figure not only surpassed the previous year’s performance but also exceeded the high end of the company’s guidance, underscoring the company’s strong market position.
Strong Adjusted EPS Growth
The company reported an adjusted EPS of $1.39 for the second quarter, representing a significant 54% increase year-over-year. This figure also exceeded the high end of the guidance, reflecting the company’s operational efficiency and strategic growth initiatives.
Highest Ever Adjusted Operating Margin
Celestica achieved a record-high adjusted operating margin of 7.4% in Q2 2025. This milestone highlights the company’s ability to optimize its operations and improve profitability, setting a new benchmark in its financial performance.
CCS Segment Growth
The CCS segment experienced a remarkable 28% revenue growth, driven by strong demand in the communications end market. This growth was particularly fueled by hyperscaler customers, showcasing the segment’s pivotal role in Celestica’s overall success.
Increased Annual Outlook
Reflecting its strong performance, Celestica raised its 2025 annual revenue outlook from $10.85 billion to $11.55 billion. The adjusted EPS outlook was also increased to $5.50 per share, indicating a 20% and 42% growth, respectively. These revisions demonstrate the company’s confidence in its future growth prospects.
Strong Free Cash Flow
Celestica generated $120 million in free cash flow during Q2 2025 and subsequently increased its annual free cash flow outlook from $350 million to $400 million. This robust cash flow performance underscores the company’s financial health and its ability to reinvest in growth opportunities.
Enterprise End Market Decline
The enterprise end market saw a 37% decline in revenue year-over-year, attributed to an anticipated technology transition with a hyperscaler customer. This decline highlights some of the challenges Celestica faces in adapting to technological shifts in the market.
Capital Equipment Demand Moderation
Despite strong growth in the first half of 2025, Celestica anticipates a moderation in demand for its capital equipment business in the second half of the year. This expected slowdown reflects broader market trends and potential adjustments in customer demand.
ATS Segment Revenue Flat
The annual outlook for the Advanced Technology Solutions (ATS) segment remains approximately flat compared to 2024. Some areas within this segment are facing lower volumes due to program decisions, indicating a need for strategic adjustments.
Forward-Looking Guidance
Looking ahead, Celestica provided guidance for Q3 2025, projecting revenues between $2.875 billion and $3.125 billion, with an adjusted EPS between $1.37 and $1.53. For the fiscal year 2025, the company raised its revenue outlook to $11.55 billion and its non-GAAP adjusted EPS forecast to $5.50 per share. The company anticipates an adjusted operating margin of 7.4% and free cash flow of $400 million, driven by strong demand across its Communications and Enterprise segments.
In conclusion, Celestica’s Q2 2025 earnings call reflected a strong performance with record revenues and EPS, driven by robust demand in the CCS segment. Despite some challenges in the enterprise end market and expected moderation in capital equipment demand, the company’s raised guidance and positive outlook suggest a promising future. Investors and stakeholders can remain optimistic about Celestica’s trajectory as it continues to navigate market dynamics and capitalize on growth opportunities.