Celestica Inc.

- The company has a very strong and growing demand pipeline with new program wins bolstering the networking demand into 2027 and 2028. - Long-term visibility and unprecedented demand are supported by long lead times and NCNR (non-cancelable, non-returnable) contractual terms with customers. - There is a significant order book from major customers in capital equipment, signaling a strong cycle in ATS segment. - Multiple 1.6T switch programs are ramping in late 2026 and early 2027, with mass production for large digital native rack scale and CPO Ethernet switch programs starting in 2027. - Strong order commitments underpin capacity expansions in Southeast Asia (Thailand) and Texas, aligned with customer growth. - Elevated capital expenditure of approximately $1.5 billion projected for 2027 to support new wins and capacity. - Inventory increased to support CCS segment growth; cash balance and revolver capacity provide strong liquidity to support order fulfillment.

- The company currently has no outstanding draw on its revolver as of the end of the quarter. - The credit facility was amended recently, increasing the revolver by $1 billion to $1.75 billion. - Terms were improved, including better covenants, interest rates, and extended maturities to 2031. - With the upsized revolver and cash balance, the company has over $2 billion in available liquidity. - The company states this liquidity is sufficient to meet current operating needs. - Management is disciplined on capital allocation and free cash flow focused but has no hesitation to invest or raise funds if required to support growth. - No specific plans for immediate debt or equity fundraising were indicated, but capacity to raise funds exists if needed as the outlook for 2027 solidifies.

- Capital expenditures (CapEx) for 2026 are planned at approximately $1 billion. - CapEx is expected to increase in 2027, with a rough placeholder estimate of $1.5 billion. - Majority of capacity investments are focused on Southeast Asia (Thailand) and the United States (Texas). - New capacity coming online in 2026 and 2027, with additional evaluations underway for supporting growth in 2028 and 2029. - CapEx decisions are tied to strong business cases with strong ROI and paybacks from new program wins. - Investment supports significant growth across networking, compute, and digital native programs. - Investments include increased R&D spend, with about 1,350 design engineers focused on next-generation programs. - Strategic long-term agreements and NCNR (non-cancelable, non-returnable) orders help secure supply chain and material commitments.

- Revenue outlook for 2026 raised from $17B to $19B, representing 53% growth. - Expected to grow revenue by over $6.5B in 2026 and significantly more in 2027. - CCS segment anticipated to see approximately 70% revenue growth in 2026. - Communications end market driven by ramping 800G and 1.6T Ethernet switch programs. - Enterprise end market to grow about 130%, led by AI ML compute programs and new storage ramps. - Strong momentum expected to continue in 2027 with mass production of digital native rack scale and higher hyperscaler program demand. - ATS segment revenue outlook increased to mid- to high single-digit growth, supported by capital equipment, HealthTech, and Industrial businesses. - CapEx planned to increase to approximately $1.5 billion in 2027 to support growth. - Multiple new program awards including networking and compute expansions expected to drive future volume increases.

- 2026 Outlook: - Revenue raised from $17 billion to $19 billion, a 53% increase. - Adjusted EPS outlook increased from $8.75 to $10.15, representing 68% growth. - Adjusted operating margin outlook improved to 8.1% (from 7.8%). - Free cash flow guidance maintained at $500 million despite increased capital investment. - 2027 Outlook: - Expect significantly more than $6.5 billion revenue growth year-over-year. - Strong growth driven by communications, enterprise, AI/ML compute, and new program ramps. - Operating leverage opportunities expected to continue, supporting EPS growth. - Management focused on long-term sustainable EPS growth with disciplined capital allocation. - Q1 2026 Performance: - Adjusted operating margin reached a new high of 8.0%. - Adjusted EPS beat guidance, increasing 80% year-over-year. - Positive margin trends expected to continue with strong demand and improved mix.