Celestica (CLS) Q4 FY25 earnings call: guidance and Q&A

Q1 revenue is +51% but full year is +37% (and EPS +71% vs +45%), implying slower H2 growth and some operating-leverage loss — is there a specific cause or is this conservatism?

Management called 2026 a high-confidence view and said customer forecasts are already higher than the $17B guide, with visibility now extending beyond the typical Q4 outlook. Near quarters are dialed in; beyond two quarters they take a pragmatic view, focusing on securing supply and factoring in macro uncertainty, and expect to work toward a higher number as the year progresses.

“Our customer forecasts right now for 2026 are higher than the $17 billion that we are guiding”

asked by Ruplu Bhattacharya (Bank of America) · answered by Mandeep Chawla

Does the $1B capex drive 2027 revenue itself or 2028–2029 demand, and does the CCS 2027 growth outlook include the digital-native customer?

Capex is tied to booked business enabling additional capacity for 2027 and 2028; 2026 already has capacity to grow beyond the high-confidence outlook. Management quantified CCS growth of ~$4.5B in 2026 (up ~$1B vs prior view) and close to $7B in 2027 off a higher base. The digital-native program is progressing as expected, still a meaningful 2027 contributor, ramping into 2027.

“we're now seeing CCS grow close to $7 billion in 2027 and that's off of a higher base”

asked by Samik Chatterjee (JPMorgan) · answered by Mandeep Chawla

With enterprise becoming a larger part of CCS, will CCS margins compress through 2026 and into 2027, or are there offsets?

Management does not expect a large mix headwind despite networking being more profitable than enterprise, citing strong operating leverage and disciplined cost management. The 30 bps margin-expansion outlook for 2026 is described as the floor. Rob added that 400G resilience, strong 800G, and 1.6T ramping in H2 running concurrently support both leverage and mix.

“that's the floor of our expectation. We would be looking to do better than that hopefully.”

asked by Thanos Moschopoulos (BMO Capital Markets) · answered by Mandeep Chawla

Has capital intensity changed — does $1B capex support 2–2.5% of revenue over time, implying a $40B–$50B revenue path?

Management declined to confirm the revenue math but explained the majority of capex is growth capex, with maintenance capex steady at ~$70M–$80M. Investments are made at a project level tied to specific already-won programs expected to generate material revenue in 2027–2028; capex is expected to moderate back toward maintenance levels once the growth build completes.

“We spent probably $70 million to $80 million on maintenance and that's not going to change very much.”

asked by Michael Ng (Goldman Sachs) · answered by Mandeep Chawla

How does Celestica's positioning work on the largest customer's AI/ML compute programs versus other suppliers, given supply-chain confusion?

Management said its partnership with Google 'has never been stronger or more integrated,' with no indication of new entrants, and emphasized these are complex products to manufacture at scale. As a preferred partner it has a joint commitment for current and future TPU generations, and the capacity expansion supports Google plus other hyperscalers and digital-native customers.

“you can't believe everything you read. What I can emphatically say is that our partnership with Google has never been stronger or more integrated.”

asked by Steven Fox (Fox Advisors) · answered by Robert Mionis

How much price increase for key components is baked into guidance, and is silicon inflation a source of margin compression?

Inflation and pricing are factored into guidance. Networking is turnkey (includes silicon) where inflation is passed through to customers; compute typically excludes silicon. No margin compression currently, though it could arise if silicon becomes a much larger share of the bill of materials. A little revenue growth comes from rising ASPs, but the vast majority is unit-driven.

“there is inflation happening at the silicon side, which we're able to pass on to our customers. And so are we seeing margin compression? No, not right now.”

asked by John Shao (TD Cowen) · answered by Mandeep Chawla

What is the range of outcomes and gating factors for 1.6T programs to begin ramping in H2 2026?

Celestica has 10 active 1.6T programs in the pipeline; 5 begin ramping in H2 2026 into 2027, with the balance in development ramping later in 2027 into 2028. The gating factor is completing the development cycle as planned; things and silicon are on track. Mandeep added that 400G holds, 800G keeps growing, and 1.6T arrives late-year, with next-gen tech not cannibalizing prior generations.

“We have 10 active 1.6T programs in the pipeline right now. And 5 of them will start ramping in the back half of the year and certainly into 2027.”

asked by Thomas Ingham (CIBC) · answered by Robert Mionis

Is 'preferred manufacturing partner' (vs sole source) a new disclosure, and if hyperscalers adopt more TPUs, does that volume flow through Celestica?

Management said it is not a new disclosure — Celestica is not sole/single source on TPU programs (hyperscalers keep a second source for BCP) but is a primary source, with share awarded on performance. Increased external adoption of Google's TPU is expected to flow through Google's supply chain, where Celestica as preferred partner expects to support that growth.

“we are a primary source for them on TPU programs and continue to do so. With Google and with all of our hyperscalers, share is largely awarded on performance.”

asked by Atif Malik (Citi) · answered by Robert Mionis