Executive Summary

Q3 2025 delivered material beats vs both guidance and Street: revenue $3.19B vs $2.875–$3.125B guided and Primary EPS (non-GAAP) $1.58 vs $1.37–$1.53 guided; vs consensus, revenue beat by ~$0.15B and EPS by ~$0.09 (Revenue est $3.04B; EPS est $1.49)* [Values retrieved from S&P Global].
Mix and scale drove record adjusted operating margin of 7.6% (up 80 bps YoY) and adjusted gross margin of 11.7% (up 100 bps YoY), propelled by very strong communications networking demand and HPS ramps (800G) .
Management raised 2025 outlook (revenue to $12.2B from $11.55B; adjusted EPS to $5.90 from $5.50) and introduced 2026 outlook (revenue $16.0B; adjusted EPS $8.20; adjusted operating margin 7.8%)—underpinned by continued AI data center investments and early 1.6T ramps in 2026 .
Capital return/capacity: Company renewed NCIB authority to repurchase up to ~5.0% of public float (through Nov-2026) and plans to expand U.S./Thailand capacity aligned with hyperscaler demand (Texas site expansion; additional U.S. manufacturing site; Thai campus growth) .

What Went Well and What Went Wrong

What Went Well
- CCS outperformance and 800G ramps: CCS revenue up 43% YoY to $2.41B; HPS ~$1.4B up 79% YoY on 800G switch programs; CCS segment margin improved to 8.3% (+70 bps) .
- Record profitability and ROIC: Adjusted operating margin 7.6% (company record) and adjusted ROIC 37.5% (+850 bps YoY) on stronger volume/mix and operating leverage .
- Management tone/visibility: “We achieved very strong results… exceeding the high end of our guidance ranges” (CEO) and raised 2025 outlook; reiterated multi‑year AI data center tailwinds and 2026/2027 ramps .
What Went Wrong
- ATS contraction and cap-equip softness: ATS revenue fell 4% YoY to $0.78B; capital equipment faces market-related softness into at least 1H26, partly offset by A&D portfolio reshaping margin benefits .
- Enterprise decline during transition: Enterprise revenues declined 24% YoY due to a technology transition in an AI/ML compute program (expected to resume growth in Q4 on next-gen ramps) .
- Higher adjusted effective tax rate: Adjusted ETR was 20% vs anticipated ~19% (jurisdictional mix) .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($B)	$2.50	$2.89	$3.19
GAAP EPS (diluted)	$0.75	$1.82	$2.31
Adjusted EPS (non-GAAP)	$1.04	$1.39	$1.58
GAAP Operating Margin %	5.5%	9.4%	10.2%
Adjusted Operating Margin %	6.8%	7.4%	7.6%
Adjusted Gross Margin %	10.7%	11.7%	11.7%
Free Cash Flow ($M, non-GAAP)	$76.8	$119.9	$88.9

Segment performance and mix

Segment Metric	Q2 2025	Q3 2025
CCS Revenue ($B)	$2.07; +28% YoY	$2.41; +43% YoY
CCS Segment Margin %	8.3%	8.3%
ATS Revenue ($B)	$0.82; +7% YoY	$0.78; −4% YoY
ATS Segment Margin %	5.3%	5.5%
HPS Revenue ($B)	~$1.2; +82% YoY	~$1.4; +79% YoY

Selected KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Cash from Operations ($M, GAAP)	$122.8	$152.4	$126.2
CapEx (net) ($M)	$(46.0)	$(32.5)	$(37.3)
Cash & Equivalents ($M)	$398.5	$313.8	$305.9
Total Borrowings (current+LT, $M)	$—	$875.2 (26.6+848.6)	$784.1 (27.4+756.7)
Diluted Shares (M, Wtd Avg)	118.9	115.9	115.9
Adjusted Effective Tax Rate %	21%	20%	20%
Cash Cycle Days	—	—	65

Notes:

Q3 GAAP EPS included a positive $0.98/share (pre-tax) TRS mark-to-market impact; adjusted EPS excludes such items .
Three customers ≥10% each accounted for 30%, 15%, and 14% of Q3 revenue .

Guidance Changes

Metric	Period	Previous Guidance/Outlook	Current Guidance/Outlook	Change
Revenue ($B)	Q4 2025	N/A	$3.325–$3.575	New quarterly guide
Adjusted Operating Margin %	Q4 2025	N/A	7.6% at mid-point	New quarterly guide
Adjusted EPS (non-GAAP)	Q4 2025	N/A	$1.65–$1.81	New quarterly guide
Revenue ($B)	FY 2025	$11.55 (as of Q2)	$12.2	Raised
Adjusted EPS (non-GAAP)	FY 2025	$5.50 (as of Q2)	$5.90	Raised
Adjusted Operating Margin %	FY 2025	7.4% (as of Q2)	7.4%	Maintained
Free Cash Flow (non-GAAP, $M)	FY 2025	$400 (as of Q2)	$425	Raised
Revenue ($B)	FY 2026	—	$16.0	New outlook
Adjusted Operating Margin %	FY 2026	—	7.8%	New outlook
Adjusted EPS (non-GAAP)	FY 2026	—	$8.20	New outlook
Free Cash Flow (non-GAAP, $M)	FY 2026	—	$500	New outlook

Assumptions: No material tariff/trade changes; substantially all tariffs recovered from customers; macro unchanged .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025, Q2 2025)	Current Period (Q3 2025)	Trend
AI networking ramps (800G→1.6T)	Strong CCS demand; raised FY25 outlook in Q1/Q2	800G drove HPS to ~$1.4B; 1.6T programs awarded and ramping late-2026; DS6000/DS6001 (TH6) launched	Improving
AI/ML compute programs	Early POCs and pipeline; FY25 raised on CCS	Next‑gen hyperscaler compute to full volume in 2026; digital native rack‑scale custom AI system mass production planned 2027	Improving
Capacity/CapEx	Investing for growth; raised FY25 guide	U.S. (Texas expansion; planning additional site) and Thailand expansions; CapEx ~1.5% of revenue in 2025; 2.0–2.5% in 2026	Increasing
ATS portfolio reshaping	Ongoing reshaping; ATS growth modest	ATS −4% YoY; capital equipment softness into at least 1H26; margin improvement from mix/pruning	Mixed
Tariffs/Macro	Tariffs recoverable; macro steady in guides	Q4/FY25/FY26 assume no material tariff/macro changes; tariffs recovered from customers	Stable
Customer concentration/visibility	Strengthening CCS demand	12–15 months forecast visibility; multiple 1.6T programs (10 underway); 3 customers ≥10% of revenue	Improving

Management Commentary

“We achieved very strong results in the third quarter… each exceeding the high end of our guidance ranges… strong adjusted operating margin* of 7.6%, another high for the company” — Rob Mionis, CEO .
“Revenue… above the high end of our guidance… non-GAAP operating margin was 7.6%, up 80 bps… highest quarterly non-GAAP operating margin in the company’s history” — CFO .
“We now expect revenue to reach $12.2 billion… adjusted EPS* of $5.90… [and] 2026… revenue of $16.0 billion and… adjusted EPS* of $8.20” — CEO .
“CapEx next year between 2.0% and 2.5% of revenue… tied to customer programs” — CFO .
“We were the first with a fully functioning 800G switch… on track to translate engagements to 1.6T” — CCS leadership .

Q&A Highlights

Digital native AI system scale: Management frames initial year revenue as “at least a few billion dollars” in 2027 (timing gated by silicon availability); capacity plans cover Asia and North America .
Networking cadence/mix: 2025 ending ~50/50 800G vs 400G; 800G accelerates in 2026 with first 1.6T ramp late‑2026; 10 programs underway at 1.6T; liquid cooling key for 800G/1.6T .
Margins/operating leverage: Company targeting continued expansion beyond 2026; CCS mix accretive; selective on rack integration where dilutive; ATS margin rising via portfolio pruning .
Capacity/CapEx discipline: CapEx tied to awarded programs with 12–15 months of firm forecasts; only ~40 bps maintenance; growth-led CapEx focused in Texas and Thailand .
Capital return: New NCIB set to commence Nov 3, 2025 (up to ~5.7M shares; ~5% of float) following expiry of prior program .

Estimates Context

Q3 2025 vs Wall Street (S&P Global):
- Revenue: Actual $3.194B vs $3.039B consensus; beat by ~$155M (~5%)* [Values retrieved from S&P Global].
- Primary EPS (non-GAAP): Actual $1.58 vs $1.49 consensus; beat by ~$0.09* [Values retrieved from S&P Global].
Q4 2025 guidance vs Street (midpoint):
- Revenue: Guide midpoint ~$3.45B vs $3.487B consensus — roughly in line/slight below, but range brackets consensus*$ [Values retrieved from S&P Global].
- Primary EPS (non-GAAP): Guide midpoint ~$1.73 vs $1.76 consensus — roughly in line/slight below*$ [Values retrieved from S&P Global]. Implication: Strong Q3 execution and a raised FY25 guide should drive upward estimate revisions for FY25; Q4 point guide is broadly consistent with consensus, with upside bias if networking demand persists into the top of the range .

Key Takeaways for Investors

The AI networking cycle remains the core engine: 800G volumes and initial 1.6T awards are expanding CCS scale and margins; HPS at ~$1.4B in Q3 underscores durable demand .
Record profitability with operating leverage: Adjusted operating margin hit 7.6% and adjusted gross margin 11.7%; management targets further margin opportunities beyond 2026 .
Upwardly revised FY25 and new FY26 framework position CLS for multi‑year growth (FY25 rev/EPS to $12.2B/$5.90; FY26 to $16.0B/$8.20), anchored in AI data center investments and compute ramps .
Capacity expansions (Texas/Thailand) are customer-backed and should support late‑2026 1.6T ramps and a 2027 digital native AI system launch; CapEx stays disciplined at ~1.5% (2025) and 2.0–2.5% (2026) of revenue .
ATS is being reshaped for higher-quality earnings (margin up to 5.5% in Q3) amid near-term softness in semiconductor capital equipment; management expects improvement as new programs ramp and macro clarity improves .
Capital return remains active via NCIB authorization (~5% of float), offering incremental EPS support alongside strong cash generation (Q3 FCF $88.9M; FY25 FCF outlook $425M) .
Watch catalysts: 1.6T customer ramps, enterprise AI/ML compute inflection in 2026, and any acceleration in digital native timing (silicon availability) — all potential drivers of estimate and multiple expansion .

Appendix: Additional Detail

Q4 2025 guidance (at mid): adjusted operating margin 7.6%; adjusted ETR ~20%; GAAP EPS excludes $0.23–$0.29/share pre-tax for SBC/intangible amortization/restructuring .
Tax mix: Q3 GAAP ETR 14%; adjusted ETR 20% (above ~19% plan due to jurisdiction mix) .
Concentration: Three customers ≥10% of revenue in Q3 (30%, 15%, 14%); supports visibility and operating leverage but is a risk to monitor .

Footnote on estimates: Asterisked consensus values and surprises are from S&P Global Capital IQ; actuals are company-reported.

CELESTICA INC (CLS)·Q3 2025 Earnings Summary