Celestica Announces Fourth Quarter 2020 Financial Results

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Celestica Inc., a leader in design, manufacturing and supply chain solutions for the world's most innovative companies, has announced financial results for the quarter ended December 31, 2020 (Q4 2020)†. “Celestica delivered a solid fourth quarter to end the year, with revenue within our guidance range and non-IFRS operating margin* and non-IFRS adjusted EPS* above the mid-point of our guidance ranges. We ended the year with 80% non-IFRS adjusted EPS* growth compared to 2019,” said Rob Mionis, President and CEO, Celestica.

“We believe that our strong performance in 2020 against the backdrop of a global pandemic is a testament to our team’s ability to maintain business continuity and meet our commitments to our customers. The work we have done over the past few years aimed at building a more diversified business helped us manage this unprecedented year. As we enter 2021, we remain focused on executing for our customers and driving consistent, profitable growth for our shareholders.”

Q4 2020 Highlights:

• Revenue: $1.4 billion, decreased 7% compared to $1.5 billion for the fourth quarter of 2019 (Q4 2019).
• Operating margin (non-IFRS)*: 3.6%, compared to 2.9% for Q4 2019.
• ATS segment revenue: decreased 12% compared to Q4 2019, and represented 37% of total revenue, compared to 39% of total revenue for Q4 2019; ATS segment margin was 3.9%, compared to 3.0% for Q4 2019.
• CCS segment revenue: decreased 4% compared to Q4 2019, and represented 63% of total revenue, compared to 61% of total revenue for Q4 2019; CCS segment margin was 3.4%, compared to 2.9% for Q4 2019.
• IFRS earnings per share (EPS): $0.16, compared to a $0.05 loss per share for Q4 2019.
• Adjusted EPS (non-IFRS)*: $0.26, compared to $0.18 for Q4 2019.
• Adjusted return on invested capital (non-IFRS)*: 12.4%, compared to 10.6% for Q4 2019.
• Free cash flow (non-IFRS)*: $18.5 million, compared to $43.8 million for Q4 2019.
• Global network operating at normal workforce levels.
• Undrawn $450 million revolver.**
• $464 million in cash/cash equivalents.
• Launched a new normal course issuer bid (NCIB) in November 2020.

Full Year Results

IFRS EPS of $0.47 for FY 2020 included a $0.20 per share negative impact attributable to restructuring charges and a $0.29 per share negative impact attributable to approximately $37 million in estimated COVID-19 Costs, offset in part by a $0.29 per share positive impact attributable to COVID Recoveries (approximately $34 million of COVID Subsidies and $3 million in Customer Recoveries), and a $0.07 per share positive impact to reflect aggregate Stock-based Compensation Reversals. See Schedule 1 for the exclusions used to determine non-IFRS adjusted EPS for FY 2020. IFRS EPS for FY 2020 also included $18.3 million of tax expenses relating to current and future withholding taxes associated with repatriations of undistributed earnings from certain of our Chinese and Thai subsidiaries that occurred in FY 2020 or are anticipated to occur in the foreseeable future, which was largely offset by an aggregate of $17.5 million in favorable tax impacts (described in note 11 to the Q4 2020 Interim Financial Statements).

IFRS EPS of $0.53 for FY 2019 included an aggregate $0.38 per share net benefit attributable to other charges (recoveries), resulting from a $0.75 per share gain on the sale of our Toronto real property in the first quarter of 2019, offset in part by restructuring charges ($0.29 per share negative impact) and Transition Costs ($0.05 per share negative impact), as well as the impact of the Post-employment Benefit Plan Losses and Waiver Fees described above ($0.03 and $0.02 per share negative impact, respectively). See Schedule 1 for the definition of Transition Costs and the exclusions used to determine non-IFRS adjusted EPS for FY 2019. See note 10 to our Q4 2020 Interim Financial Statements for quantification of the components of other charges (recoveries) for FY 2019.

<sup>† Celestica has two operating and reportable segments - Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). Our ATS segment consists of our ATS end market, and is comprised of our Aerospace and Defense (A&D), Industrial, Energy, HealthTech and Capital Equipment (semiconductor, display, and power & signal distribution equipment) businesses. Our CCS segment consists of our Communications and Enterprise (servers and storage) end markets. Also see Segment Updates below. Segment performance is evaluated based on segment revenue, segment income and segment margin (segment income as a percentage of segment revenue). See note 25 to our 2019 audited consolidated financial statements for further detail.
* Non-IFRS (International Financial Reporting Standards) measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other public companies that use IFRS or U.S. generally accepted accounting principles (GAAP). See “Non-IFRS Supplementary Information” below for information on our rationale for the use of non-IFRS measures, and Schedule 1 for, among other items, non-IFRS measures included in this press release, as well as their definitions, uses, and a reconciliation of historical non-IFRS measures to the most directly comparable IFRS measures.
** excluding ordinary course letters of credit.</sup>