Executive Summary

Q4 2024 revenue was $2.55B (+19% YoY) and adjusted EPS hit a record $1.11, both above guidance; GAAP EPS was $1.29 and adjusted operating margin reached 6.8% .
CCS drove outperformance (revenue +30% YoY; segment margin 7.9%), with HPS revenue of $0.8B (+65% YoY) on strong 400G and accelerating 800G networking demand; ATS was flat with margin at 4.6% .
Management raised FY2025 outlook: revenue to $10.7B (from $10.4B), adjusted EPS to $4.75 (from $4.42), adjusted operating margin to 6.9% (from 6.7%), and FCF to $350M (from $325M) on strengthening CCS demand and new AI program wins (two 1.6T switching programs and a full-rack AI system award) .
Near-term setup: Q1 2025 guidance calls for $2.475–$2.625B revenue, adjusted EPS $1.06–$1.16, and ~6.8% non-GAAP operating margin; enterprise revenue expected to trough in H1 due to a technology transition, with acceleration in H2 .

What Went Well and What Went Wrong

What Went Well

Record non-GAAP adjusted EPS ($1.11) and strong margin performance, driven by robust CCS demand and favorable HPS mix; “non-GAAP adjusted EPS* of $1.11 was our highest quarterly EPS ever” (CEO) .
HPS networking momentum: 400G strength and accelerating 800G ramps, with HPS revenue rising 65% to $807M and CCS margin expanding to 7.9% (CFO) .
Strategic AI wins underpin multiyear runway: second 1.6T liquid-cooled networking rack win with an existing hyperscaler and a full-rack AI system award with a leading digital native, ramping in 2026 (CEO) .

What Went Wrong

Enterprise end market down ~10% YoY in Q4 (anticipated) due to a technology transition in a sole‑source AI/ML compute program; Q1 2025 guides to a mid‑40% revenue decrease in enterprise before H2 recovery (CFO) .
Adjusted SG&A for Q4 slightly above guidance due to higher-than-anticipated variable spend (press release commentary) .
Customer concentration remains elevated: two customers comprised 24% and 12% of Q4 revenue; while diversified across programs, concentration is a monitored risk (CFO) .

Financial Results

Core metrics and margins (quarterly)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Billions)	$2.39	$2.50	$2.55
GAAP/IFRS EPS ($USD)	$0.83	$0.77	$1.29
Adjusted EPS ($USD)	$0.91	$1.04	$1.11
Non-GAAP Operating Margin %	6.3%	6.7%	6.8%
Adjusted Gross Margin %	10.6%	10.7%	11.0%

Segment breakdown (Q4 2024, YoY context)

Segment	Q4 2024 Value	YoY vs Q4 2023
CCS Revenue ($USD Billions)	$1.74	+30%
CCS Segment Margin %	7.9%	6.8% (prior)
HPS Revenue ($USD Billions)	$0.80	+65%
ATS Revenue ($USD Billions)	$0.81	Flat
ATS Segment Margin %	4.6%	4.7% (prior)

KPIs and operating metrics

KPI	Q2 2024	Q3 2024	Q4 2024
Free Cash Flow ($USD Millions, non-GAAP)	$63	$75	$95.8
Inventory ($USD Billions)	$1.85	$1.83	$1.76
Cash & Equivalents ($USD Millions)	$434	$399	$423.3
Net Debt ($USD Millions)	—	—	$318
Gross Debt / TTM Adjusted EBITDA (turns)	—	1.0	1.0
Cash Cycle Days (days)	64	66	69
CapEx ($USD Millions)	$37	$46	$48
Customers ≥10% of revenue	—	—	2 customers (24%, 12%)

Non-GAAP/GAAP distinctions: Q4 GAAP gross margin was 11.7%; adjusted gross margin was 11.0% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY 2025	$10.4	$10.7	Raised
Adjusted EPS ($USD)	FY 2025	$4.42	$4.75	Raised
Adjusted Operating Margin %	FY 2025	6.7%	6.9%	Raised
Free Cash Flow ($USD Millions)	FY 2025	$325	$350	Raised
Adjusted Effective Tax Rate % (non-GAAP)	FY 2025	~19%	~19%	Maintained
Revenue ($USD Billions)	Q1 2025	—	$2.475–$2.625	New
Adjusted EPS ($USD)	Q1 2025	—	$1.06–$1.16	New
Non-GAAP Operating Margin %	Q1 2025	—	~6.8% (midpoint)	New
Adjusted Effective Tax Rate % (non-GAAP)	Q1 2025	—	~20%	New

Notes: Q1 2025 guidance excludes a negative $0.29–$0.35 per share pre-tax for SBC, intangible amortization, and restructuring charges; assumes ~20% adjusted tax rate .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
AI/technology initiatives	Strong HPS networking demand; 800G ramps beginning; early 1.6T visibility	Leadership in 400G; 800G wins secured; initial 1.6T switching win (ramp mid‑2026)	Second 1.6T hyperscaler win; full rack AI system award with digital native; 400G and 800G to coexist; 800G up materially in 2025	Strengthening
Supply chain/inventory	Inventory down $106M seq; deposits returned; lead times stabilizing	Inventory $1.83B (–$434M YoY); deposits down; cash cycle 66 days	Inventory $1.76B; deposits down; cash cycle 69 days	Improving
Tariffs/macro/onshoring	Capacity expansions in Malaysia/Thailand; ample North America capacity	Diversified footprint; hyperscaler program ramps despite macro	Customers in wait‑and‑see on tariffs; ample U.S. capacity and secured power; Thailand expansion continues	Resilient
Product performance (Networking)	400G strength; 800G ramping; ASP uplift in higher speeds	Market-leading 400G installed base; 800G accelerates	HPS networking revenue +65%; 400G strong; 800G accelerating; CCS margin 7.9%	Accretive mix
Enterprise/compute transition	Strong AI/ML compute; sole-source transitions anticipated	Enterprise strength in Q3; noted upcoming transition	Enterprise down ~10% YoY; Q1 2025 mid‑40s % decline expected; H2 acceleration on next-gen program ramps	Near-term headwind
R&D execution	CapEx steady; ongoing HPS R&D	~$80M R&D in 2024; expanding ODM portfolio	~900 design engineers; R&D spend ~$75M in 2024; up to $100M in 2025; IP leveraged in full rack systems	Increasing investment
Accounting/regulatory	IFRS reporting; GAAP transition upcoming	GAAP transition expected with no material differences	GAAP reported; adjusted tax rate 19%; TRS FVAs disclosed; transitional hedge adjustments excluded from non-GAAP	Completed transition

Management Commentary

“Fourth quarter revenue of $2.55 billion was up 19% year-over-year, while non-GAAP adjusted EPS* of $1.11 was our highest quarterly EPS ever.” — Rob Mionis, CEO .
“HPS revenue increased by 65%, reaching $807 million… driven by hyperscaler customer demand for our 400G networking switches as well as ramping programs for 800G switches.” — Mandeep Chawla, CFO .
“We have been awarded our second 1.6T switching program with another large hyperscaler… and secured a full rack AI-optimized system solution with a leading Digital Native Company.” — Rob Mionis, CEO .
“We now anticipate revenue of $10.7 billion… adjusted EPS of $4.75… and free cash flow of $350 million [for 2025].” — Rob Mionis, CEO .

Q&A Highlights

Networking speeds: Management expects 400G and 800G to coexist for “a long period,” with 800G ramping materially in 2025 while 400G remains strong (CEO) .
Differentiation vs ODMs: Winning with liquid cooling, power management, design IP, and multi-geo manufacturing; full rack orchestration cited as key advantage (CEO) .
Hyperscaler relationships: The 1.6T networking rack award is an extension with an existing customer; multi-node solutions in U.S. and Southeast Asia (CEO) .
Enterprise trough and recovery: Q1 enterprise down mid-40% due to transition; H2 acceleration expected as next-gen compute program ramps (CFO) .
Capital allocation and capacity: Liquidity ~$1.2B; leverage 1.0x; CapEx 1.5–2.0% of revenue with targeted expansions (CFO) .

Estimates Context

S&P Global consensus data for Q4 2024 and Q1 2025 could not be retrieved at time of analysis due to SPGI request limits; therefore, quantitative consensus comparisons are unavailable [SPGI error returned by GetEstimates].
Directionally, Q4 results exceeded company guidance (adjusted EPS above high end; revenue near top end), and FY2025 company outlook was raised, suggesting potential upward estimate revisions for CCS-driven revenue and EPS .

Key Takeaways for Investors

Celestica’s CCS/HPS momentum is the core driver: 400G remains strong while 800G ramps and 1.6T programs position 2026 for additional upside; margins benefit from accretive HPS mix and scale .
Raised FY2025 outlook (revenue $10.7B, adjusted EPS $4.75, margin 6.9%, FCF $350M) is a positive catalyst; track quarterly cadence as visibility into Q4 2025 solidifies .
Near-term risk: enterprise end market faces a technology transition with Q1 2025 trough; management expects H2 acceleration as next-gen program ramps and new wins (e.g., Grok) contribute .
Operating discipline intact: inventory reductions, cash cycle management, and consistent FCF generation underpin buybacks and growth investments with leverage at ~1.0x .
Customer concentration (two at 24%/12% of Q4 revenue) remains a watchpoint, partially mitigated by diversification across programs and growing engagement with digital natives and multiple hyperscalers .
Strategic capability edge (liquid cooling at scale, full rack orchestration, custom ASIC compute, ODM leadership in Ethernet) supports a multiyear AI hardware cycle and share gains vs peers .
Monitor tariff/onshoring developments; Celestica’s multi-region capacity and secured U.S. power provide flexibility to respond to shifting customer localization needs .

CELESTICA INC (CLS)·Q4 2024 Earnings Summary