Celestica Inc. CLS recorded strong second-quarter 2025 results with adjusted earnings and revenues beating the respective Zacks Consensus Estimate.
The Toronto-based electronics manufacturing service provider reported healthy year-over-year revenues backed by robust expansion in the Connectivity & Cloud Solutions (CCS) segment. Management’s emphasis on innovation, product diversification and AI advancements is a key growth driver. Solid growth in free cash flow is a tailwind.
Net Income
Quarterly net earnings were $211 million or $1.82 per share, up from $95 million or 80 cents per share in the year-ago quarter. The more than two-fold growth in GAAP earnings was primarily attributable to top-line improvement.
Non-GAAP net earnings improved to $161.2 million or $1.39 per share from $108 million or 90 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 15 cents.
Celestica, Inc. Price, Consensus and EPS Surprise
Celestica, Inc. price-consensus-eps-surprise-chart | Celestica, Inc. Quote
Revenues
Quarterly revenues were $2.89 billion, up 21% year over year, led by healthy demand in the CCS segment. The top line exceeded management’s guidance of $2.575 billion-$2.725 billion and beat the Zacks Consensus Estimate by $223 million.
Quarterly Segment Results
CCS: Total revenues in this segment improved 28% year over year to $2.07 billion, primarily driven by strong demand in the Communications end market. The segment accounted for 71.6% of the company’s total revenues in the second quarter.
Revenues in the Enterprise end market declined 37% year over year to $433 million in the second quarter. The Communications end market reported 75% revenue growth to $1.64 billion, with solid growth in the hardware platform solutions portfolio backed by hyperscaler customer demand for networking products, including 400G switches and 800G switches. The segment’s operating income increased to $171 million (up 50%) with a margin of 8.3% (up 130 bps), driven by greater operating leverage and improved mix.
Advanced Technology Solutions (ATS): The segment’s revenues were $819 million (up 7%), accounting for 28.4% of total revenues in the second quarter. The segment’s operating income increased 24% year over year to $44 million with a margin of 5.3% (up 70 bps).
Cash Flow & Liquidity
In the reported quarter, Celestica generated an operating cash flow of $152.4 million compared with $99.6 million in the year-ago quarter, bringing the respective tallies for the first six months of 2025 and 2024 to $282.7 million and $207.7 million. Free cash flow was $119.9 million in the second quarter compared with $65.6 million in the prior-year quarter.
As of June 30, 2025, the company had $313.8 million in cash and cash equivalents with a long-term debt of $848.6 million.
Guidance Up
For the third quarter of 2025, Celestica expects revenues in the range of $2.875 billion to $3.125 billion. Non-GAAP earnings per share are expected to be in the range of $1.37-$1.53. Management expects the non-GAAP operating margin to be 7.4%.
With strong quarterly results, Celestica currently anticipates 2025 revenues to be approximately $11.55 billion, up from the previous projection of $10.85 billion. Non-GAAP operating margin is expected to be 7.4%, up from the prior outlook of 7.2%. Non-GAAP adjusted earnings are expected to be $5.50 per share, up from the previous view of $5.00. Non-GAAP free cash flow is expected to be $400 million, up from $350 million expected earlier.
Zacks Rank & Stock to Consider
Celestica currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Upcoming Releases
Arista Networks Inc. ANET is scheduled to release second-quarter 2025 earnings on Aug. 5. The Zacks Consensus Estimate for earnings is pegged at 65 cents per share, suggesting a growth of 25% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 14.8%. Arista delivered an average earnings surprise of 11.8% in the last four reported quarters.
Akamai Technologies, Inc. AKAM is slated to release second-quarter 2025 earnings on Aug. 7. The Zacks Consensus Estimate for earnings is pegged at $1.55 per share, indicating a 1.9% decline from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 8%. Akamai delivered an average earnings surprise of 4.8% in the last four reported quarters.
Pinterest, Inc. PINS is set to release second-quarter 2025 earnings on Aug. 7. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, implying a growth of 17.2% from the year-ago reported figure.
Pinterest has a long-term earnings growth expectation of 33.3%. Pinterest delivered an average earnings surprise of 0.5% in the last four reported quarters.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
