Celestica Inc. (NYSE, TSX: CLS), a leader in design, manufacturing,
hardware platform and supply chain solutions for the world's most
innovative companies, will hold a previously-announced virtual
investor meeting today at 1:00pm ET. During the meeting,
Celestica’s management will provide an overview of the business
outlook and growth opportunities in the company’s Advanced
Technology Solutions (ATS) and Connectivity & Cloud Solutions
(CCS) segments, and details on its near-term financial outlook and
long-term financial targets.
Celestica’s management will reaffirm its 2023
annual financial outlook of:
- Revenue of $7.9 billion
- Non-IFRS operating margin* of
5.5%
- Non-IFRS adjusted earnings per
share* of $2.36
- Non-IFRS adjusted free cash flow*
of $150 million
Management will also discuss additional
financial estimates, outlook and targets, including the
following:
- 2024 annual outlook consisting of:
- Revenue of at least $8.5
billion
- Non-IFRS operating margin* of
between 5.5% and 6.0%
- Non-IFRS adjusted earnings per
share* of $2.70 or more
- Non-IFRS adjusted free cash flow*
of $175 million or more
- Revenue and non-IFRS adjusted
earnings per share* targets† for 2025 and 2026
consisting of:
- Revenue target of between $8.9
billion and $9.3 billion for 2025†
- Non-IFRS adjusted earnings per
share* target of between $2.97 and $3.10 for
2025†
- Non-IFRS adjusted free cash flow*
target for 2025† of $200 million or more
- Revenue target of between $9.5
billion and $10.0 billion for 2026†
- Non-IFRS adjusted earnings per
share* target of between $3.27 and $3.55 for
2026†
* Non-International Financial Reporting
Standards (IFRS) financial measures (including ratios based on
non-IFRS financial measures) do not have any standardized meanings
prescribed by IFRS and therefore may not be comparable to similar
financial measures presented by other public companies that report
under IFRS or U.S. generally accepted accounting principles. We do
not provide reconciliations for forward-looking non-IFRS financial
measures, as we are unable to provide a meaningful or accurate
calculation or estimation of reconciling items and the information
is not available without unreasonable effort. See “Non-IFRS
Financial Measures” below for further detail, as well as the
definitions and uses of the non-IFRS financial measures included
herein.
† Targets for 2025 and 2026 constitute our
objectives and goals, and are not intended to be projections or
forecasts of future performance. Our future performance is subject
to risks, uncertainties and other factors that could cause actual
outcomes and results to differ materially from such objectives and
goals.
Participants are invited to join the live
webcast at the following link.
For those unable to participate, a recorded
webcast will be available approximately two hours after completion
of the call for 12 months. To access the recorded webcast visit
www.celestica.com.
About Celestica
Celestica enables the world's best brands.
Through our recognized customer-centric approach, we partner with
leading companies in Aerospace and Defense, Communications,
Enterprise, HealthTech, Industrial, and Capital Equipment to
deliver solutions for their most complex challenges. As a leader in
design, manufacturing, hardware platform and supply chain
solutions, Celestica brings global expertise and insight at every
stage of product development - from the drawing board to full-scale
production and after-market services. With talented teams across
North America, Europe and Asia, we imagine, develop and deliver a
better future with our customers.
Cautionary Note Regarding Forward-looking
Statements
This press release contains forward looking
statements, including without limitation, financial outlook and
targets. Such forward-looking statements may, without limitation,
be preceded by, followed by, or include words such as “believes,”
“expects,” “anticipates,” “estimates,” “intends,” “plans,”
“continues,” “project,” “outlook,” “target,” “goal,” “objective,”
“potential,” “possible,” “contemplate,” “seek,” or similar
expressions, or may employ such future or conditional verbs as
“may,” “might,” “will,” “could,” “should,” or “would,” or may
otherwise be indicated as forward-looking statements by grammatical
construction, phrasing or context. For those statements, we claim
the protection of the safe harbor for forward-looking statements
contained in the U.S. Private Securities Litigation Reform Act of
1995 and for forward-looking information under applicable Canadian
securities laws. Although we have incorporated the anticipated
impact of demand softness in our Capital Equipment business into
the outlook and targets included in this press release to the best
of our ability, its adverse impact (in terms of duration and
severity) cannot be estimated with certainty, and may be materially
in excess of our expectations.
Forward-looking statements are provided to
assist readers in understanding management’s current expectations
and plans relating to the future. Readers are cautioned that such
information may not be appropriate for other purposes.
Forward-looking statements are not guarantees of future performance
and are subject to risks that could cause actual results to differ
materially from those expressed or implied in such forward-looking
statements, including, among others, risks related to: customer and
segment concentration; challenges of replacing revenue from
completed, lost or non-renewed programs or customer disengagements;
managing our business during uncertain market, political and
economic conditions, including among others, global inflation
and/or recession, and geopolitical and other risks associated with
our international operations, including military actions,
protectionism and reactive countermeasures, economic or other
sanctions or trade barriers, including in relation to the
Russia/Ukraine conflict and/or the Hamas/Israel conflict; managing
changes in customer demand; our customers' ability to compete and
succeed using our products and services; delays in the delivery and
availability of components, services and/or materials, as well as
their costs and quality; our inventory levels and practices; the
cyclical and volatile nature of our semiconductor business; changes
in our mix of customers and/or the types of products or services we
provide, including negative impacts of higher concentrations of
lower margin programs; price, margin pressures, and other
competitive factors and adverse market conditions affecting, and
the highly competitive nature of, the electronics manufacturing
services (EMS) and original design manufacturer (ODM) industries in
general and our segments in particular (including the risk that
anticipated market conditions do not materialize); challenges
associated with new customers or programs, or the provision of new
services; interest rate fluctuations; rising commodity, materials
and component costs, as well as rising labor costs and changing
labor conditions; changes in U.S. policies or legislation; customer
relationships with emerging companies; recruiting or retaining
skilled talent; our ability to adequately protect intellectual
property and confidential information; the variability of revenue
and operating results; unanticipated disruptions to our cash flows;
deterioration in financial markets or the macro-economic
environment, including as a result of global inflation and/or
recession; maintaining sufficient financial resources to fund
currently anticipated financial actions and obligations and to
pursue desirable business opportunities; the expansion or
consolidation of our operations; the inability to maintain adequate
utilization of our workforce; integrating and achieving the
anticipated benefits from acquisitions and "operate-in-place"
arrangements; execution and/or quality issues (including our
ability to successfully resolve these challenges); non-performance
by counterparties; negative impacts on our business resulting from
any significant uses of cash, securities issuances, and/or
additional increases in third-party indebtedness (including as a
result of an inability to sell desired amounts under our
uncommitted accounts receivable sales program or supplier financing
programs); disruptions to our operations, or those of our
customers, component suppliers and/or logistics partners, including
as a result of events outside of our control (including those
described in “External factors that may impact our business” in our
most recent Management’s Discussion and Analysis of Financial
Condition and Results of Options (MD&A)); defects or
deficiencies in our products, services or designs; volatility in
the commercial aerospace industry; compliance with customer-driven
policies and standards, and third-party certification requirements;
negative impacts on our business resulting from our third-party
indebtedness; the scope, duration and impact of materials
constraints; coronavirus disease 2019 (COVID-19) mutations or
resurgences; declines in U.S. and other government budgets, changes
in government spending or budgetary priorities, or delays in
contract awards; a U.S. government shutdown; changes to our
operating model; foreign currency volatility; our global operations
and supply chain; competitive bid selection processes; our
dependence on industries affected by rapid technological change;
rapidly evolving and changing technologies, and changes in our
customers' business or outsourcing strategies; increasing taxes
(including as a result of global tax reform), tax audits, and
challenges of defending our tax positions; obtaining, renewing or
meeting the conditions of tax incentives and credits; the
management of our information technology systems, and the fact that
while we have not been materially impacted by computer viruses,
malware, ransomware, hacking incidents or outages, we have been
(and may in the future be) the target of such events; the impact of
our restructuring actions and/or productivity initiatives,
including a failure to achieve anticipated benefits therefrom; the
incurrence of future restructuring charges, impairment charges,
other unrecovered write-downs of assets (including inventory) or
operating losses; the inability to prevent or detect all errors or
fraud; compliance with applicable laws and regulations; our pension
and other benefit plan obligations; changes in accounting
judgments, estimates and assumptions; our ability to maintain
compliance with applicable credit facility covenants; our total
return swap agreement; our ability to refinance our indebtedness
from time to time; our credit rating; our eligibility for foreign
private issuer status; activist shareholders; current or future
litigation, governmental actions, and/or changes in legislation or
accounting standards; volatility in our subordinate voting share
(SVS) price; a lack of acceptance by the Toronto Stock Exchange of
a new normal course issuer bid (NCIB); the impermissibility of SVS
repurchases, or a determination not to repurchase SVS, under any
NCIB; potential unenforceability of judgments; negative publicity;
the impact of climate change; our ability to achieve our
environmental, social and governance (ESG) targets and goals,
including with respect to climate change and greenhouse gas
emissions reduction; and our potential vulnerability to take-over
or tender offer. The foregoing and other material risks and
uncertainties are discussed in our public filings at
www.sedarplus.com and www.sec.gov, including in our most recent
MD&A, our 2022 Annual Report on Form 20-F filed with, and
subsequent reports on Form 6-K furnished to, the U.S. Securities
and Exchange Commission, and as applicable, the Canadian Securities
Administrators.
The forward-looking statements contained herein,
including our 2024 outlook and our 2025 and 2026 targets, are based
on various assumptions, many of which involve factors that are
beyond our control. Our material assumptions include: no
significant or long-lasting decline in the global economy, or
economic activity in Celestica’s end markets, due to a major
recession or otherwise during the period to which the outlook or
targets relate; that the anticipated long-term secular trends
underlying the growth assumptions on which our long-term financial
targets are based are sustained, that growth in our diversified
markets, including from increased manufacturing outsourcing,
underlying the ATS segment growth assumptions on which our
long-term financial targets are based, materialize as anticipated;
continued growth in the advancement and commercialization of
artificial intelligence (AI) technologies and cloud computing,
supporting sustained high levels of capital expenditure investments
by leading Hyperscaler customers in Celestica’s CCS segment; the
relative stability of general economic and market conditions; no
unforeseen disruptions due to geopolitical factors (including war)
causing significant negative impacts to economic activity, global
or regional supply chains or normal business operations; normal
customer retention rates; no material change in expected new
program wins, no unexpected transfers, losses or disengagements; no
unforeseen changes in our mix of customers and/or the types of
products or services we provide; no unforeseen adverse changes in
the pace of technological advancements, the regulatory environment,
customer outsourcing, program transfers, and the global economic
environment; no undue negative impact on our customers' ability to
compete and succeed using our products and services from unforeseen
developments in the broader economy, or in those customers’
industries; continued growth in our end markets; no significant
unforeseen negative impacts to our operations (including from
mutations or resurgences of COVID-19); no unforeseen materials
price increases, margin pressures, or other competitive factors
affecting the EMS or ODM industries in general or our segments in
particular, as well as those related to the following: the scope
and duration of materials constraints (i.e., that they do not
materially worsen), and their impact on our sites, customers and
suppliers; our ability to fully recover our tangible losses caused
by the recent fire at our Batam facility in Indonesia through
insurance claims; fluctuation of production schedules from our
customers in terms of volume and mix of products or services; the
timing and execution of, and investments associated with, ramping
new business; our ability to retain programs and customers; the
stability of currency exchange rates; supplier performance and
quality, pricing and terms; compliance by third parties with their
contractual obligations; the costs and availability of components,
materials, services, equipment, labor, energy and transportation;
that our customers will retain liability for product/component
tariffs and countermeasures; global tax legislation changes; our
ability to keep pace with rapidly changing technological
developments; the timing, execution and effect of restructuring
actions; the successful resolution of quality issues that arise
from time to time; the components of our leverage ratio (as defined
in our credit facility); our ability to successfully diversify our
customer base and develop new capabilities; the availability of
capital resources for, and the permissibility under our credit
facility of, repurchases of outstanding SVS under NCIBs, acceptance
of a new NCIB, and compliance with applicable laws and regulations
pertaining to NCIBs; compliance with applicable credit facility
covenants; anticipated demand levels across our businesses; the
impact of anticipated market conditions on our businesses; that
global inflation and/or recession will not have a material impact
on our revenues or expenses; and our maintenance of sufficient
financial resources to fund currently anticipated financial actions
and obligations and to pursue desirable business opportunities.
Although management believes its assumptions to be reasonable under
the current circumstances, they may prove to be inaccurate, which
could cause actual results to differ materially (and adversely)
from those that would have been achieved had such assumptions been
accurate. Forward-looking statements speak only as of the date on
which they are made, and we disclaim any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by applicable law.
All forward-looking statements attributable to
us are expressly qualified by these cautionary statements.
Non-IFRS Financial Measures
This press release refers to the following
non-IFRS financial measures (including ratios): non-IFRS operating
margin; non-IFRS adjusted earnings per share; and non-IFRS adjusted
free cash flow. These non-IFRS financial measures do not have any
standardized meaning prescribed by IFRS and may not be comparable
to similar measures presented by other public companies that report
under IFRS, or who report under U.S. GAAP and use non-GAAP
financial measures to describe similar operating metrics. Non-IFRS
financial measures are not measures of performance under IFRS and
should not be considered in isolation or as a substitute for any
IFRS financial measure.
Management uses these non-IFRS financial
measures to assess operating performance and the effective use and
allocation of resources; to provide more meaningful
period-to-period comparisons of operating results; to enhance
investors’ understanding of the core operating results of
Celestica’s business; and to set management incentive targets. We
believe investors use both IFRS and non-IFRS financial measures to
assess management's past, current and future decisions associated
with our priorities and our allocation of capital, as well as to
analyze how our business operates in, or responds to, swings in
economic cycles or to other events that impact our core
operations.
We do not provide reconciliations for
forward-looking non-IFRS financial measures, as we are unable to
provide a meaningful or accurate calculation or estimation of
reconciling items and the information is not available without
unreasonable effort. This is due to the inherent difficulty of
forecasting the timing or amount of various events that have not
yet occurred, are out of our control and/or cannot be reasonably
predicted, and that would impact the most directly comparable
forward-looking IFRS financial measure. For these same reasons, we
are unable to address the probable significance of the unavailable
information. Forward-looking non-IFRS financial measures may vary
materially from the corresponding IFRS financial measures.
Definitions of Non-IFRS Financial Measures:
Non-IFRS operating margin is defined as non-IFRS
operating earnings as a percentage of revenue. Non-IFRS operating
earnings is defined as earnings from operations before Other
Charges (Recoveries) (defined below), employee (SBC) expense, TRS
FVAs (fair value adjustments related to our total return swap
agreement), and amortization of intangible assets (excluding
computer software).
Non-IFRS adjusted earnings per share is
determined by dividing non-IFRS adjusted net earnings by the number
of diluted weighted average shares outstanding. Non-IFRS adjusted
net earnings is defined as net earnings before: employee SBC
expense; TRS FVAs, amortization of intangible assets (excluding
computer software); Other Charges (Recoveries) (defined below); the
income tax effect of the foregoing adjustments; and any non-core
tax impacts (tax adjustments related to acquisitions, and certain
other tax costs or recoveries related to restructuring actions or
restructured sites).
Non-IFRS adjusted free cash flow is defined as
cash provided by (used in) operations after the purchase of
property, plant and equipment (net of proceeds from the sale of
certain surplus equipment and property), lease payments, and
Finance Costs (defined below) paid (excluding any debt issuance
costs paid and when applicable, waiver fees related to our credit
facility paid). We do not consider debt issuance costs paid or such
waiver fees (when applicable) to be part of our ongoing financing
expenses. As a result, these costs are excluded from total Finance
Costs paid in our determination of non-IFRS adjusted free cash
flow. Note, however, that non-IFRS adjusted free cash flow does not
represent residual cash flow available to Celestica for
discretionary expenditures. Finance Costs consist of interest
expense and fees related to our credit facility (including debt
issuance and related amortization costs), our interest rate swap
agreements, our total return swap agreement, our accounts
receivable sales program, customer supplier financing programs, and
interest expense on our lease obligations, net of interest income
earned.
Other Charges (Recoveries) consist of (when
applicable): restructuring charges (recoveries); impairment charges
(recoveries); acquisition-related consulting, transaction and
integration costs, and charges or releases related to the
subsequent re-measurement of indemnification assets or the release
of indemnification or other liabilities recorded in connection with
acquisitions; legal settlements (recoveries); transition costs
(costs related to manufacturing line transfers, real property sales
unrelated to restructuring actions, and in the third quarter of
2023, a lease charge related to excess rental expenses under a
lease executed in connection with our 2019 Toronto real property
sale, as described in our third quarter of 2023 earnings press
release and MD&A); specified credit facility-related charges;
post-employment benefit plan losses; during the second quarter of
2022, offsetting charges (recoveries) recorded in connection with
write-downs of inventory, equipment and a building in connection
with a fire at our Batam, Indonesia facility; and commencing in the
second quarter of 2023, Secondary Offering Costs and Accounting
Costs. Secondary Offering Costs are costs associated with Onex
Corporation’s conversion and sale of our shares, and Accounting
Costs consist of related costs pertaining to certain accounting
considerations.
Contacts:
Celestica Global Communications
(416) 448-2200
media@celestica.com
Celestica Investor Relations
(416) 448-2211
clsir@celestica.com
Celestica (NYSE:CLS)
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