Celestica Beats Q1 Earnings Despite Pandemic Impact, Issues Positive Q2 Guidance

  • Celestica Inc CLS reported a first-quarter FY21 revenue decline of 6% year-on-year to $1.23 billion, narrowly beating the consensus of $1.22 billion. 
  • Revenue from non-Cisco businesses rose 7%, while ATS segment revenue declined 3%. The pandemic-related impact on commercial aerospace, Industrial businesses, and materials constraints led to the decline primarily offset by revenue growth in HealthTech and Capital Equipment businesses, driven by new program ramps and market share gains.
  • ATS segment margin rose 130 basis points to 4% from favorable mix, new program ramps in HealthTech business, and improved productivity.
  • CCS segment revenue declined 9%. Disengagement from programs with Cisco Systems Inc CSCO, program-specific demand softness from certain storage customers in the Enterprise end market led to the decline partially offset by strong demand from service provider customers, including Hardware Platform Solutions (HPS) business. CCS segment margin rose 10 basis points to 3.1% from a favorable mix.
  • Lifecycle Solutions portfolio revenue rose 7% Y/Y.
  • The operating margin expanded 60 basis points Y/Y to 3.5%.
  • Adjusted EPS rose 37.5% to $0.22, beating the consensus estimate of $0.20.
  • The company held $463.8 million in cash and equivalents. It generated $48.8 million in operating cash flow.
  • The company repurchased and canceled 0.6 million subordinate voting shares for $5.3 million. It repaid $30 million of outstanding term loan borrowings.
  • Guidance: Celestica estimates a revenue between $1.325 billion and $1.425 billion for Q2, versus the consensus estimate of $1.37 billion. Adjusted EPS expectations lie between $0.21 and $0.27, against the analyst estimate of $0.22.
  • Price action: CLS shares closed higher by 0.35% at $8.49 on Wednesday.
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