Celestica Announces 2Q22 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, today announced financial results for the quarter ended June 30, 2022 (Q2 2022).

"We are pleased to deliver another quarter of strong performance in Q2 2022, as our positive momentum continues to build," said Rob Mionis, President and CEO, Celestica.

"Despite continued challenges in the macro environment, our Q2 2022 results met the high end of our revenue guidance range and non-IFRS adjusted earnings per share (EPS)* guidance range. As we look forward to a strong second half to the year, we remain on track to achieve solid double digit revenue and non-IFRS adjusted EPS* growth in 2022."

Q2 2022 Highlights

- Key measures:

• Revenue: $1.72 billion, increased 21% compared to $1.42 billion for the second quarter of 2021 (Q2 2021).
• Non-IFRS operating margin*: 4.8%, compared to 3.9% for Q2 2021.
• ATS segment revenue: increased 24% compared to Q2 2021; ATS segment margin was 4.5%, compared to 4.1% for Q2 2021.
• CCS segment revenue: increased 19% compared to Q2 2021; CCS segment margin was 5.0%, compared to 3.7% for Q2 2021.
• Adjusted EPS (non-IFRS)*: $0.44, compared to $0.30 for Q2 2021.
• Adjusted return on invested capital (non-IFRS)*: 16.2%, compared to 13.7% for Q2 2021.
• Adjusted free cash flow (non-IFRS)*: $43.3 million, compared to $31.2 million for Q2 2021.

- IFRS financial measures (directly comparable to non-IFRS measures above): 

• Earnings from operations as a percentage of revenue: 3.7%, compared to 3.0% for Q2 2021.
• EPS: $0.29, compared to $0.21 per share for Q2 2021.
• Return on invested capital: 9.7%, compared to 8.7% for Q2 2021.
• Cash provided by operations: $86.9 million, compared to $56.5 million for Q2 2021.

- Repurchased and cancelled 1.0 million shares for $9.8 million under our normal course issuer bid.

2022 Outlook

Based on our strong execution in Q2 2022, and current and expected levels of demand, we have raised our 2022 revenue outlook to at least $6.7 billion, and tightened our 2022 non-IFRS adjusted EPS target to between $1.65 and $1.75. We continue to anticipate 2022 non-IFRS operating margin to be between 4% and 5%.

The above financial guidance and outlook assume that the supply chain constraint impact on our revenue and expenses does not materially worsen during the remainder of 2022 as compared to Q2 2022. In addition, although the Q2 2022 financial impact of a recent fire at our facility in Batam, Indonesia (Batam Fire), described in note 14 to our June 30, 2022 unaudited interim condensed consolidated financial statements (Q2 2022 Interim Financial Statements) was minimal, anticipated supply chain delays in procuring replacement Batam inventories are expected to result in unfulfilled revenue in 2022 of less than $100 million (we anticipate such revenues to be shifted to 2023). We expect to fully recover our tangible losses from the Batam Fire through insurance coverage. Although we have incorporated the anticipated impact of supply chain constraints and the Batam Fire into the foregoing financial guidance and outlook to the best of our ability, their adverse impact (in terms of duration and severity) cannot be estimated with certainty, and may be materially in excess of our expectations.