Celestica — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue reached $5.83 billion, an 83% increase compared to $3.19 billion in Q3 2025.
• GAAP earnings from operations as a percentage of revenue was 7.9% in Q3 2026, down from 10.2% in Q3 2025.
• Adjusted operating margin (non-GAAP) was 8.5% in Q3 2026, up from 7.6% in Q3 2025.
• GAAP earnings per share (EPS) were $3.26 in Q3 2026, compared to $2.31 in Q3 2025.
• Adjusted EPS (non-GAAP) was $3.30 in Q3 2026, a 109% increase from $1.58 in Q3 2025.
• Free cash flow (non-GAAP) for the nine months ended September 30, 2026, was $412.5 million, compared to $302.4 million in the same period of 2025.
• GAAP cash provided by operating activities was $389.7 million in Q3 2026, compared to $126.2 million in Q3 2025.
• Net invested capital at period end (September 30, 2026) was $3,220.4 million, up from $2,676.5 million at the end of Q3 2025.
• Adjusted ROIC (non-GAAP) was 64.7% for Q3 2026, compared to 37.5% for Q3 2025.

Guidance and Future Outlook:

• 2026 annual revenue outlook increased to $21.0 billion (previously $20.5 billion), representing 69% growth.
• 2026 annual adjusted EPS (non-GAAP) outlook increased to $11.55 (previously $11.30), representing 91% growth.
• 2026 annual free cash flow (non-GAAP) outlook decreased to $460 million (previously $600 million), driven by targeted working capital investments.
• 2027 annual revenue outlook is $40.0 billion, representing 90% growth.
• 2027 annual adjusted EPS (non-GAAP) outlook is $21.50.
• 2027 annual adjusted operating margin (non-GAAP) outlook is 9.0%.
• 2027 capital expenditures are projected between $1.5 billion and $2.0 billion.
• Q4 2026 revenue guidance is $6.275 billion to $6.575 billion.
• Q4 2026 adjusted EPS (non-GAAP) guidance is $3.37 to $3.57.
• Q4 2026 adjusted operating margin (non-GAAP) is expected to be 8.7% at the mid-point of revenue and adjusted EPS guidance ranges.
• Customer demand forecasts for 2028 are meaningfully higher than the 2027 revenue outlook.

Business Segments and Product Lines:

• Connectivity & Cloud Solutions (CCS) segment revenue was $4.87 billion in Q3 2026, a 102% increase compared to Q3 2025.
• CCS segment margin was 8.9% in Q3 2026, up from 8.3% in Q3 2025.
• Hardware Platform Solutions revenue within CCS was approximately $2.3 billion in Q3 2026, a 70% increase compared to Q3 2025.
• Advanced Technology Solutions (ATS) segment revenue was $0.96 billion in Q3 2026, a 23% increase compared to Q3 2025.
• ATS segment margin was 6.6% in Q3 2026, up from 5.5% in Q3 2025.
• The Communications end market within CCS was renamed "Networking" and the Enterprise end market was renamed "Compute & Storage" in Q3 2026; this change does not impact segment reporting structure.

Market and Competitive Landscape:

• The company is positioned to support leading hyperscalers and frontier AI labs through the ongoing AI infrastructure supercycle.
• The demand environment continues to be very robust, supporting the 2027 revenue outlook.
• Celestica expects to play a role in 800G and 1.6T networking and AI compute programs with data center customers.
• The company anticipates multiple large new programs occurring and progressing as anticipated in line with expected timelines.

Risks and Challenges:

• Risks include changing customer capacity roadmaps, realization of long-term demand outlook, and customer/segment concentration.
• Potential challenges involve operational challenges such as inventory management, supply chain constraints, and component shortages.
• Risks related to energy, power, and water constraints in the data center ecosystem are noted.
• Volatility in energy and commodity prices, as well as program ramps not progressing as anticipated, are identified risks.
• The company faces risks from evolving AI technologies, including lower-cost/open-source AI models, and competition risk.
• Risks include the potential adverse impacts of events outside of control, such as evolving global tariffs, trade negotiations, and geopolitical conflicts.

Management Commentary and Tone:

• Rob Mionis, Chair of the Board and CEO, stated that strong momentum continued in the third quarter with revenue and adjusted EPS up 83% and 109%, respectively.
• Management highlighted that the adjusted operating margin of 8.5% represents another new high for the company, demonstrating strength in operational execution.
• Management expressed pleasure in increasing the 2026 annual outlook due to strong results and a strengthening demand environment.
• Management noted that customer demand forecasts for 2028 are meaningfully higher than the 2027 revenue outlook.

Other Key Points:

• Celestica completed a public offering for aggregate gross proceeds of $3.45 billion.
• The public offering consisted of 11.1 million common shares completed on August 7, 2026.
• The company intends to file a notice of intention with the Toronto Stock Exchange (TSX) to commence a new Normal Course Issuer Bid (NCIB) in Q4 2026.
• If accepted, the new NCIB would permit repurchases of up to 2.5% of the "public float" of issued and outstanding common shares over twelve months.
• The current NCIB expires on November 2, 2026.
• GAAP EPS for Q3 2026 included an aggregate pre-tax charge of $0.26 per share for employee SBC, amortization of intangible assets, and restructuring charges, which was below the anticipated range of $0.27 to $0.33 per share.
• The GAAP effective tax rate for Q3 2026 was 13%, while the adjusted effective tax rate (non-GAAP) was 18%.
• Q3 2026 revenue exceeded the high end of the guidance range due to higher than anticipated customer demand and strong operational execution.
• Adjusted operating margin exceeded the mid-point of guidance ranges, driven by stronger than anticipated operating leverage.