Celestica Announces Fourth Quarter 2023 Financial Results

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Celestica Inc., a leader in design, manufacturing, hardware platform and supply chain solutions for the world's most innovative companies, announced financial results for the quarter ended December 31, 2023 (Q4 2023).

“We are pleased with our solid fourth quarter results, delivering non-IFRS operating margin* of 6.0%, and non-IFRS adjusted EPS* of $0.76. We had a strong finish to 2023 and achieved 10% revenue growth for the full year compared to 2022, while our non-IFRS adjusted EPS* of $2.43 and non-IFRS operating margin* of 5.6% were each the highest in our company’s history” said Rob Mionis, President and CEO, Celestica. “The strong momentum we had in 2023 is continuing into 2024 and we remain confident in our long term strategy”.

Q4 2023 Highlights

Key measures:

• Revenue: $2.14 billion, increased 5% compared to $2.04 billion for the fourth quarter of 2022 (Q4 2022).
• Non-IFRS operating margin*: 6.0%, compared to 5.3% for Q4 2022.
• ATS segment revenue decreased 2% compared to Q4 2022; ATS segment margin was 4.7% compared to 4.4% for Q4 2022.
• CCS segment revenue increased 10% compared to Q4 2022; CCS segment margin was 6.7% compared to 5.9% for Q4 2022.
• Adjusted earnings per share (EPS) (non-IFRS)*: $0.76, compared to $0.56 for Q4 2022.
• Adjusted return on invested capital (adjusted ROIC) (non-IFRS)*: 23.3%, compared to 20.7% for Q4 2022.
• Adjusted free cash flow (non-IFRS)*: $83.8 million, compared to $42.6 million for Q4 2022.

Most directly comparable IFRS financial measures to non-IFRS measures above:

• Earnings from operations as a percentage of revenue: 5.5% compared to 4.0% for Q4 2022.
• EPS: $0.70 compared to $0.35 for Q4 2022.
• Return on invested capital (IFRS ROIC): 21.6% compared to 15.7% for Q4 2022.
• Cash provided by operations: $138.8 million compared to $101.3 million for Q4 2022.

Repurchased 0.4 million subordinate voting shares (SVS) for cancellation for $10.0 million.

For Q1 2024, we expect a negative $0.26 to $0.32 per share (pre-tax) aggregate impact on net earnings on an IFRS basis for employee stock-based compensation (SBC) expense, amortization of intangible assets (excluding computer software), and restructuring charges.

For Q1 2024, we also expect a non-IFRS adjusted effective tax rate* of approximately 20% (which does not account for foreign exchange impacts or unanticipated tax settlements), assuming that our income will be subject to Pillar Two global minimum tax, as legislation that has been introduced in Canada may become applicable before the end of Q1 2024 with retroactive impact to January 1, 2024‡. If this legislation is not substantively enacted in Q1 2024, we expect that our non-IFRS adjusted effective tax rate* for the quarter would be approximately 15%.

2024 Annual Outlook Update‡

We are updating the 2024 annual non-IFRS adjusted free cash flow* outlook provided in our November 29, 2023 press release from $175 million, or more, to $200 million, or more; other 2024 annual outlook items provided therein remain unchanged.