Celestica (CLS) — Earnings Preview and Key Factors to Watch
Key Preview Takeaways
| Factor | Details & What to Watch |
|---|---|
| Guidance Momentum | 2026 revenue guidance raised twice YTD: now $19.0B (+53% YoY), adjusted EPS $10.15 (+68% YoY). |
| Q2 2026 Guidance | Revenue $4.15–$4.45B (+49% YoY at midpoint), adj. EPS $2.14–$2.34 (+61% YoY at midpoint), margin 8.0%. |
| CCS Segment Growth | CCS revenue expected +70% in 2026, with strong 800G/1.6T switch ramps and AI/ML compute programs. |
| ATS Segment Recovery | ATS guided to mid- to high single-digit % growth in 2026, after flat 2025; capital equipment recovery. |
| CapEx & Capacity | 2026 CapEx $1B (unchanged), but 2027 CapEx expected to rise to ~$1.5B to support new program wins. |
| Supply Chain Constraints | Management notes component constraints (custom silicon, memory, PCBs); guidance incorporates these risks. |
| Comparables | Q2 2025 revenue was $2.89B; Q2 2026 consensus is $4.38B (+52% YoY). Tough comp, but growth accelerating. |
| Backlog & Visibility | Record backlog, multi-year capacity alignment with hyperscalers, bookings visibility into 2028. |
| Key Programs | Watch for updates on 1.6T/CPO switch ramps, digital native rack-scale AI system, Helios scale-up switch. |
Recent Results and Guidance Trends
Quarterly Actuals vs. Consensus
| Quarter | Revenue ($M) | Adj. EPS ($) | Adj. Op Margin (%) | YoY Revenue Growth | Notes |
|---|---|---|---|---|---|
| Q1 2026 | 4,047 | 2.16 | 8.0 | +53% | Beat high end of guidance |
| Q4 2025 | 3,655 | 1.89 | 7.7 | +44% | Beat high end of guidance |
| Q3 2025 | 3,194 | 1.58 | 7.6 | +28% | Beat high end of guidance |
| Q2 2025 | 2,893 | 1.39 | 7.4 | +21% | Beat high end of guidance |
| Q1 2025 | 2,649 | 1.20 | 7.1 | +18% |
FY Actuals and Guidance Progression
| Fiscal Year | Revenue ($M) | Adj. EPS ($) | Adj. Op Margin (%) | YoY Revenue Growth | Guidance Progression |
|---|---|---|---|---|---|
| 2026E (Q1) | 19,000 (guidance) | 10.15 (guidance) | 8.1 (guidance) | +53% | Raised from $17B/$8.75 to $19B/$10.15 |
| 2025 | 12,391 | 6.05 | 7.5 | +28% | Raised multiple times during FY25 |
| 2024 | 9,646 | 3.88 | 6.5 |
Guidance Tables
Q2 2026 Guidance
| Metric | Guidance Range | YoY Growth (at Midpoint) | Notes |
|---|---|---|---|
| Revenue ($M) | 4,150 – 4,450 | +49% | Q2 2025 actual: $2,893M |
| Adj. EPS ($) | 2.14 – 2.34 | +61% | Q2 2025 actual: $1.39 |
| Adj. Op Margin (%) | 8.0 (midpoint) | +60 bps | Q2 2025: 7.4% |
| Adj. Effective Tax Rate | ~21% |
FY 2026 Guidance (as of Q1 2026)
| Metric | Guidance (Q1 2026) | Prior Guidance (Q4 2025) | YoY Growth (vs. 2025 Actual) | Notes |
|---|---|---|---|---|
| Revenue ($M) | 19,000 | 17,000 | +53% | Raised twice YTD |
| Adj. EPS ($) | 10.15 | 8.75 | +68% | |
| Adj. Op Margin (%) | 8.1 | 7.8 | +60 bps | |
| Free Cash Flow ($M) | 500 | 500 | +9% | CapEx $1B included |
| Adj. Effective Tax Rate | ~20% | ~21% |
Last Year’s Performance and Comparables
- Q2 2025: Revenue $2.89B (+21% YoY), Adj. EPS $1.39 (+54% YoY), Adj. Op Margin 7.4%
- FY 2025: Revenue $12.39B (+28% YoY), Adj. EPS $6.05 (+56% YoY), Adj. Op Margin 7.5%
- Q2 2026 consensus: $4.38B revenue, $2.09 GAAP EPS (consensus), both imply a very tough YoY comp but management is guiding to even higher growth.
Segment Trends and Key Programs
CCS (Connectivity & Cloud Solutions)
- 2026E revenue growth: ~+70% YoY- Drivers: Ramping 800G and 1.6T switch programs, AI/ML compute, digital native rack-scale system, new CPO switch win.
- Visibility: Multi-year backlog, capacity aligned with hyperscaler roadmaps, bookings visibility into 2028.
- Risks: Component constraints (custom silicon, memory, PCBs), but management says guidance incorporates these.
ATS (Advanced Technology Solutions)
- 2026E revenue growth: Mid- to high single-digit %
- Drivers: Capital equipment recovery, HealthTech and Industrial ramps.
- 2025: Flat YoY, so easier comp in 2026.
Capital Expenditure and Balance Sheet
- 2026 CapEx: $1B (unchanged), focused on Texas, Thailand, and other global expansions.
- 2027 CapEx: Expected to rise to ~$1.5B to support new program wins and continued growth.
- Liquidity: Over $2B available post credit facility upsize; net debt remains low.
What to Watch Next Earnings
- Execution on Q2 2026 Guidance: Delivery on $4.15–$4.45B revenue and $2.14–$2.34 adj. EPS, with 8.0% margin.
- CCS Segment Growth: Confirmation of 70% YoY growth trajectory, updates on 800G/1.6T/CPO switch ramps, digital native system.
- ATS Segment Recovery: Evidence of capital equipment and HealthTech/Industrial ramping as forecast.
- Supply Chain Management: Any impact from ongoing component constraints; ability to secure silicon/memory for key programs.
- CapEx and Capacity Expansion: Progress on $1B 2026 CapEx plan and early signals for 2027 spend.
- Backlog and Visibility: Updates on bookings, multi-year customer commitments, and any changes in demand outlook.
- Margin Trajectory: Ability to sustain or expand operating margins despite mix shifts and input cost inflation.
- Free Cash Flow: Tracking to $500M target while funding record CapEx.
Summary and Conclusions
- Celestica enters Q2 2026 with record momentum: Guidance and consensus both imply >50% YoY revenue growth, with margin expansion and EPS leverage.
- Tough comparables: Q2 2025 was already a record quarter, but management is guiding to even higher growth rates.
- Key drivers: Hyperscaler AI/ML infrastructure buildout, new program wins (notably in networking and compute), and robust backlog visibility.
- Risks: Supply chain constraints are real but incorporated into guidance; management claims strong supplier commitments and customer NCNR contracts.
- Capital allocation: Aggressive CapEx to support growth, but balance sheet and liquidity remain strong.
- Watch for: Execution on guidance, updates on major program ramps, and any changes in supply chain or demand environment.
Celestica is coming off a year of exceptional growth and is guiding to an even stronger 2026, with all eyes on execution, supply chain management, and the sustainability of hyperscaler-driven demand.
