Celestica Q3 Earnings Surpass Estimates, Revenues Increase Y/Y

Celestica Inc. CLS recorded solid third-quarter results with  adjusted earnings and  revenues beating the respective Zacks Consensus Estimate. The Toronto-based electronics manufacturing service provider reported revenue growth year over year, backed by stronger-than-expected growth in the CCS segment.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Management’s strong emphasis on innovation, product diversification, and AI advancements are key growth drivers. Strong growth in adjusted free cash flow is a tailwind. Net IncomeQuarterly net earnings were $91.7 million or 77 cents per share, up from $80.2 million or 67 cents per share in the year-ago quarter owing to top-line expansion.Non-IFRS net earnings improved to $123.8 million or $1.04 per share from $78.2 million or 65 cents per share in the year-ago quarter.  Adjusted earnings beat the Zacks Consensus Estimate by 10 cents.Celestica, Inc. Price, Consensus and EPS Surprise Celestica, Inc. price-consensus-eps-surprise-chart | Celestica, Inc. QuoteRevenueQuarterly revenues were $2.5 billion, up 22% from $2.04 billion in the year-ago quarter. Healthy demand in the CCS segment cushioned the top line. Revenues beat the Zacks Consensus Estimate of $2.41 billion.Quarterly Segment ResultsConnectivity & Cloud Solutions (CCS): Total revenues from this segment improved to $1.68 billion from $1.18 billion. The 42% increase was primarily driven by strong demand in the enterprise and communications end markets. It accounted for 67% of the company’s total revenues in the third quarter.Revenues in the enterprise end market increased 38% year over year due to stronger-than-expected demand owing to program dynamics in the storage business. The Communications end market reported a revenue growth of 45%. Solid growth in the HPS portfolio backed by hyperscaler customer demand for networking products, including 400G switches and 800G switches, propelled net sales growth in the communications end market.The segment’s operating income increased to $128.7 from $73.6 million for respective margins of 7.6% and 6.2%, driven by greater operating leverage and improved mix.Advanced Technology Solutions (ATS): This segment’s revenues were down 5% to $814.1 million due to lower demand in the industrial end market, partially offset by solid growth in the Aerospace and Defense and Capital Equipment businesses. It accounted for 33% of total revenues in the third quarter. The segment’s operating income decreased from $42.1 million to $39 million with a margin of 4.8% due to lower operating leverage in the industrial end market, partially offset by improvement in capital equipment and A&D.Cash Flow & LiquidityIn the third quarter, Celestica generated a cash flow of $144.8 million compared with $88.4 million in the year-ago quarter. Adjusted free cash flow was $74.5 million compared with $34.1 million in the prior-year period.As of Sept. 30, 2024, the company had $398.5 million in cash and cash equivalents.Guidance UpFor the fourth quarter of 2024, Celestica expects revenues in the range of $2.425-$2.575 billion. Non-IFRS earnings per share are expected to be in the range of 99 cents-$1.09. Management expects non-IFRS operating margin to be 6.7%, reflecting an increase of 70 basis points compared to the same period last year. For 2024, the company anticipates revenues of $9.60 billion, up from the previous projection of $9.45 billion. Non-IFRS operating margin is expected to be 6.5%, representing a 90-basis point improvement. Non-IFRS adjusted earnings are expected to be $3.85 per share, up from previous outlook of $3.62. Adjusted free cash flow is expected to be $275 million, up from previous outlook of $250 million.For 2025, management expects revenues to be $10.4 billion. Non-IFRS operating margin is expected to be 6.7%. Management anticipates non-IFRS adjusted earnings of $4.42 per share. Non-IFRS adjusted free cash flow is anticipated to be $325 million.CLS’ Zacks RankCelestica currently sports a Zacks Rank #1 (Strong Buy). You can see the the complete list of today’s Zacks #1 Rank stocks here.Upcoming ReleasesCorning Incorporated GLW is scheduled to release third-quarter 2024 earnings on Oct. 29. The Zacks Consensus Estimate for earnings is pegged at 52 cents per share, suggesting growth of 15.6% from the year-ago reported figure. Corning has a long-term earnings growth expectation of 14%. It delivered an average earnings surprise of 2.17% in the last reported quarter.Silicon Motion Technology Corporation SIMO is scheduled to release third-quarter 2024 earnings on Oct. 31. The Zacks Consensus Estimate for earnings is pegged at 85 cents per share, suggesting growth of 35% from the year-ago reported figure. Light and Wonder LNW is scheduled to release third-quarter 2024 earnings on Nov. 12. The Zacks Consensus Estimate for earnings is pegged at $1.11 per share, suggesting growth of 37% from the year-ago reported figure.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Corning Incorporated (GLW): Free Stock Analysis Report Celestica, Inc. (CLS): Free Stock Analysis Report Silicon Motion Technology Corporation (SIMO): Free Stock Analysis Report Light & Wonder, Inc. 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