Q4 2024 Celestica Inc Earnings Call
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Speaker Change: I'd now like to turn the conference over to Craig Oberg, Vice President of corporate development and Investor Relations. Please go ahead.
Yeah.
Speaker Change: Good morning, and thank you for joining us on thoughts because Q4 2024 earnings conference call on the call today, we have Rob <unk>, President and Chief Executive Officer, and <unk> <unk> Chief Financial Officer.
Speaker Change: Listeners should note that as previously communicated all of our financial results, including historical comparisons will now be reported on a U S GAAP basis, having transitioned from reporting under <unk> previously.
Speaker Change: Please note that our guidance for Q4 2024 was issued on an IRS basis and has not been restated due to our assessment that the impact of the transition to U S. GAAP standards did not have a material impact on these figures.
Speaker Change: Please note that during the course of this call we will make forward looking statements relating to the future performance of Celestica, which are based on management's current expectations forecasts and assumptions. While these forward looking statements represent our current judgment actual results could differ materially from a conclusion forecast or projection in the forward looking statements made today.
Speaker Change: <unk>.
Speaker Change: Certain material factors and assumptions are applied in drawing any such statement for identification and discussion of such factors and assumptions as well as risk factors that may impact future performance and results of Celestica. Please refer to our public filings available at SEC, Gov, and SEDAR plus stock CA as well as our Investor Relations.
Speaker Change: <unk> web site.
Speaker Change: We undertake no obligation to update these forward looking statements unless expressly required to do so by law.
Speaker Change: In addition, during this call we will refer to various non-GAAP financial measures, including adjusted operating margin adjusted gross margin adjusted return on invested capital or adjusted ROIC.
Speaker Change: Free cash flow gross debt to trailing 12 month adjusted EBITDA leverage ratio.
Speaker Change: Adjusted earnings per share or adjusted EPS, adjusted SG&A expense and adjusted effective tax rate.
Speaker Change: We have included in our earnings release found on our Investor Relations website, a reconciliation of non-GAAP financial measures to the most comparable GAAP measures.
With respect to our Q1 2025 and 2025 annual outlook. Our earnings release does not include a reconciliation of forward looking non-GAAP measures to the most directly comparable GAAP measures on a forward looking basis as items that we exclude from GAAP to calculate the comparable non-GAAP measure are dependent on future.
Speaker Change: Events that are not able to be reliably predicted by management and are not part of our routine operating activities.
Speaker Change: We are unable to provide such a reconciliation without unreasonable effort due to the uncertainty and inherent difficulty in predicting the occurrence the financial impact and the periods in which the adjustments may be recognized.
Speaker Change: The occurrence timing and amount of any of the items excluded from GAAP to calculate non-GAAP could significantly impact our Q1, 2025 and 2025 GAAP results.
Speaker Change: Unless otherwise specified all references to dollars on this call are to U S dollars all per share information is based on diluted shares outstanding and all references to comparative figures are a year over year comparison.
Rob: Let me now turn the call over to Rob.
Rob: Thank you Craig and good morning, everyone and thank you for joining us on today's call.
Rob: <unk> delivered strong performance in the fourth quarter with revenues of.
Rob: Five 5 billion.
Rob: The high end of our guidance range and adjusted EPS of $1 11.
Rob: Exceeding the high end of our guidance range.
Rob: Our adjusted operating margin of six 8% exceeded the midpoint of the revenue and adjusted EPS guidance ranges.
Rob: This result was driven by robust demand in our Ccs segment, which delivered solid growth of 30% year over year as we continue to see strong demand from our hyperscale customers.
Rob: Ats segment revenues met expectations in the fourth quarter.
Rob: Collecting anticipated market dynamics, while we continue to see a moderation of demand in our industrial markets.
Rob: We're encouraged by the strength in our capital equipment business, which achieved nearly 30% year over year growth.
Rob: Overall 2024 was an outstanding year for Celestica, and which we continue to build on our positive momentum for the full year, we achieved $965 billion in revenues and adjusted EPS of $3 88.
Rob: Representing growth of 21% and 58% respectively.
Along with a 100 basis point improvement in our adjusted operating margin.
Rob: We are pleased with the Companys performance and the significant progress we have achieved over the past several years.
Rob: The growth of our AI platforms, along with the exceptional execution by our entire team continue to be the engines of our strong performance and we are optimistic about continuing this momentum in the years to come.
Rob: Before I provide you with some additional color on the outlook of each of our businesses I.
Rob: I would like to hand, the call over to Mandy who will provide you further details on our financial performance during the fourth quarter and our guidance for the first quarter of 2020 fives Mandy over to you.
Mandy: Thank you, Rob and good morning, everyone.
Mandy: Fourth quarter revenue of $2 55 billion was up 19% and at the high end of our guidance range.
Mandy: Strong performance was fueled by significant demand from Hyperscale customers in our Ccs segment, primarily for networking products within our <unk> business.
Mandy: Adjusted gross margin for the quarter was 11.0% up 50 basis points, driven by higher volumes and favorable mix.
Mandy: Fourth quarter non-GAAP operating margin was six 8% an increase of 80 basis points driven by higher volumes in our Ccs segment and better mix due to higher <unk> revenues.
Mandy: Our fourth quarter adjusted earnings per share was $1 11.
Mandy: Exceeding the high end of our guidance range and an increase of 34.
Mandy: Our adjusted effective tax rate for the quarter was 19%.
Mandy: And finally, our fourth quarter adjusted ROIC was 29, 1% a significant improvement of 550 basis points attributed to higher operating profitability and effective working capital management.
Mandy: Moving onto our segment performance for the quarter.
Mandy: <unk> segment revenue totaled $806 million.
Mandy: Approximately flat and in line with our guidance.
Mandy: The performance this quarter was a result of lower revenues in our industrial business offset by continuing strength in capital equipment and aerospace and defense.
Mandy: Our Ats segment accounted for 32% of total revenue.
Mandy: Our Ccs segment revenue reached $1 74 billion.
Mandy: Up 30% due to very strong growth in our communications end market.
Mandy: Our Ccs segment accounted for 68% of total company revenue in the quarter.
Mandy: Revenue in our enterprise end market was lower by 10% in line with our guidance due to the anticipated technology transition in an AI ml compute program with one of our Hyperscale customers.
Mandy: This was partially offset by favorable demand dynamics and certain storage programs.
Mandy: Revenue in our communications end market saw an increase of 64% exceeding our guidance of a high <unk> percentage increase.
Mandy: This growth was primarily attributed to stronger demand for our HPLC networking products.
Mandy: <unk> revenue increased by 65%, reaching $807 million in the fourth quarter, representing 32% of total company revenue.
Mandy: This exceptional growth was driven by a hyperscale or customer demand for our 400 G networking switches as well as ramping programs for 800 G switches.
Mandy: Now shifting our focus to segment margins.
Mandy: Ats segment margin in the fourth quarter was four 6% down 10 basis points, primarily due to reduced operating leverage in our industrial end market, partly offset by expanding margins in our capital equipment business.
Mandy: Ccs segment margin for the quarter reached seven 9% an improvement of 110 basis points, driven by increased operating leverage and a higher mix of HTS revenues.
Mandy: During the quarter and for the full year, we had two customers that each accounted for over 10% of total revenue.
Mandy: During the fourth quarter, they represented 24% and 12% of sales respectively. While.
Mandy: While for the full year, the same two customers accounted for 28% and 11% respectively.
Mandy: We currently support each of these customers across a number of different programs and continue to win new engagements with them, which are expected to ramp through 2025 and beyond.
Mandy: This diversification provides us comfort with our current levels of customer concentration.
Mandy: Now moving on to working capital.
Mandy: At the end of the fourth quarter, our inventory balance was $1 76 billion.
Mandy: A sequential decrease of $60 million and a year over year decrease of $344 million.
Mandy: We are pleased with the reduction in our overall inventory levels, while still being able to support significant growth in customer demand.
Mandy: Okay.
Mandy: Cash deposits were $512 million at the end of the quarter down $9 million sequentially and down $393 million year over year as we continue to return some deposits to customers as gross inventories declined.
Mandy: Cash cycle days during the fourth quarter were $69.
Mandy: Turning our attention to cash flows.
Mandy: Capital expenditures for the quarter were $48 million or approximately one 9% of revenue compared to one 5% in the fourth quarter of 2023.
Mandy: Net capital expenditures for 2024, or one 7% of revenue in line with our full year outlook.
Mandy: In the fourth quarter, we generated $96 million of free cash flow $10 million higher than our prior year period.
Mandy: For the full year 2024, we generated $306 million of free cash flow above our most recent annual outlook of $275 million.
Basis of $344 million we.
Mandy: We are pleased with our ability to continue to generate consistent and growing free cash flow, while making the necessary investments to support the strong growth in our business.
We are pleased with the reduction in our overall inventory levels, while still being able to support significant growth in customer demand.
Mandy: And moving onto the balance sheet and capital allocation.
Cash deposits were $512 million at the end of the quarter down $9 million sequentially and down $393 million year over year.
Mandy: At the end of the fourth quarter, our cash balance was $423 million.
Mandy: Combined with $750 million of borrowing capacity under our revolver.
As we continue to return some deposits to customers as gross inventories declined.
Mandy: This provides us with approximately $1 $2 billion in total liquidity, which we believe is sufficient to meet our projected business needs.
Cash cycle days during the fourth quarter were $69.
Turning our attention to cash flows.
Mandy: Our gross debt at the end of the fourth quarter was $741 million.
Capital expenditures for the quarter were $48 million or approximately one 9% of revenue compared to one 5% in the fourth quarter of 2023.
Mandy: <unk> and a net debt position of $318 million.
Mandy: Our gross debt to non-GAAP trailing 12 month adjusted EBITDA leverage ratio was 1.0 turns.
Net capital expenditures for 2024, or one 7% of revenue in line with our full year outlook.
Mandy: Zero, one terms, both sequentially and year over year.
In the fourth quarter, we generated $96 million of free cash flow $10 million higher than our prior year period.
Mandy: As of December 31, we were in compliance with all financial covenants under our credit agreement.
For the full year 2024, we generated $306 million of free cash flow above our most recent annual outlook of $275 million.
Mandy: During the fourth quarter, we repurchased approximately 300000 shares for cancellation under our normal course issuer bid for a total of $25 5 million.
We are pleased with our ability to continue to generate consistent and growing free cash flow, while making the necessary investments to support the strong growth in our business.
Mandy: This brings our total share repurchases in 2000 $24 million to $152 million, resulting in a reduction of two 4% of our shares outstanding.
And moving onto the balance sheet and capital allocation.
Mandy: We expect to continue to generate solid free cash flow in 2025, and we will maintain our approach to repurchase shares on an opportunistic basis.
At the end of the fourth quarter, our cash balance was $423 million.
Combined with $750 million of borrowing capacity under our revolver.
Mandy: Now, let's turn to our guidance for the first quarter of 2025.
This provides us with approximately $1 $2 billion in total liquidity, which we believe is sufficient to meet our projected business needs.
Mandy: Revenue is projected to be between $2 $4 75, and $2 625 billion.
Mandy: Representing growth of 15% at the midpoint.
Our gross debt at the end of the fourth quarter was $741 million.
Mandy: Adjusted earnings per share are anticipated to be between $1 <unk>.
Resulting in a net debt position of $318 million.
Mandy: And $1 16 Cigna.
Our gross debt to non-GAAP trailing 12 month adjusted EBITDA leverage ratio was 1.0 turns.
Mandy: Signifying an increase of 28 cents per share or 34% at the midpoint.
Mandy: Assuming the achievement of the midpoint of our revenue and adjusted EPS guidance ranges.
Down 0.1 terms, both sequentially and year over year.
As of December 31, we were in compliance with all financial covenants under our credit agreement.
Mandy: Our non-GAAP operating margin would be six 8% an increase of 90 basis points year over year.
During the fourth quarter, we repurchased approximately 300000 shares for cancellation under our normal course issuer bid for a total of $25 5 million.
Mandy: We expect our adjusted effective tax rate for the first quarter to be approximately 20%.
Mandy: Finally, let's turn to our end market outlook for the first quarter of 2025.
This brings our total share repurchases in 2000 $24 million to $152 million, resulting in a reduction of two 4% of our shares outstanding.
Mandy: In our Ats segment, we anticipate revenue to be approximately flat as demand strengthened our capital equipment and aerospace and defense businesses are being offset by softness in other end markets.
We expect to continue to generate solid free cash flow in 2025, and we will maintain our approach to repurchase shares on an opportunistic basis.
Mandy: In our Ccs segment we.
Mandy: Revenue in our communications end market to grow in the low <unk> percentage range fueled by ongoing demand strength for our networking switches, including accelerating ramps and our 800 G programs.
Now, let's turn to our guidance for the first quarter of 2025.
Revenue is projected to be between $2 $4 75, and $2 625 billion.
Representing growth of 15% at the midpoint.
Mandy: In our enterprise end market, we expect a mid 40 percents as decrease in revenue, resulting from a temporary decline in volumes due to a technology transition in our single source AI ml compute program.
Adjusted earnings per share are anticipated to be between $1 <unk>.
And $1 16 Cigna.
Signifying an increase of 28 cents per share or 34% at the midpoint.
Mandy: With that I'd like to turn the call back over to Rob to discuss our updated annual financial outlook for 2025 and provide some additional color on our businesses.
Assuming the achievement of the midpoint of our revenue and adjusted EPS guidance ranges.
Our non-GAAP operating margin would be six 8% an increase of 90 basis points year over year.
Speaker Change: Thank you mandate.
Speaker Change: We are pleased to raise our full year outlook, reflecting strengthening demand in our Ccs segment. This increased confidence supported by strengthening forecast from our customers through the first three quarters and growing visibility into the fourth quarter. These targets represent our current high confidence view of 2025.
We expect our adjusted effective tax rate for the first quarter to be approximately 20%.
Finally, let's turn to our end market outlook for the first quarter of 2025.
In our Ats segment, we anticipate revenue to be approximately flat as demand strengthened our capital equipment and aerospace and defense businesses are being offset by softness in other end markets.
And we will continue to assess market dynamics and provide updates accordingly as the year progresses.
Speaker Change: We now anticipate revenues of $10 7 billion.
In our Ccs segment, we project revenue in our communications end market to grow in the low <unk> percentage range fueled by ongoing demand strength for our networking switches, including accelerating ramps and our 800 gene programs.
Speaker Change: An increase from our previous outlook of $10 4 billion.
Speaker Change: Reflecting growth of 11%.
Speaker Change: This translates to a non-GAAP adjusted EPS of $4 75.
In our enterprise end market, we expect a mid 40 percentage decrease in revenue, resulting from a temporary decline in volumes due to a technology transition in our single source AI ml compute program.
Speaker Change: Representing 22% growth based on our non-GAAP operating margin outlook of six 9%.
Speaker Change: Finally, we are raising our outlook for free cash flow to $350 million demonstrating strong earnings conversion, while continuing to invest in growth to meet robust customer demand.
With that I'd like to turn the call back over to Rob to discuss our updated annual financial outlook for 2025 and provide some additional color on our businesses.
Speaker Change: Next.
Speaker Change: I would like to provide you some additional color on our businesses for the year.
Thank you mandate.
We are pleased to raise our full year outlook, reflecting strengthening demand in our Ccs segment. This increased confidence is supported by strengthening forecast from our customers through the first three quarters and growing visibility into the fourth quarter. These targets represent our current high confidence view of 2025.
Speaker Change: In our Ccs segment, we are now anticipating mid double digit revenue growth in 2025 <unk>.
Speaker Change: Compared to our outlook of low double digit growth communicated in October.
Speaker Change: In our communications end market, we anticipate strength throughout the year as new 800 G programs with Hyperscale is continue to ramp.
And we will continue to assess market dynamics and provide updates accordingly as the year progresses.
Speaker Change: In our enterprise end market, we continue to expect a softer first half of the year, resulting from the technology transition and an AI ml compute program with a large hyperscale customer.
We now anticipate revenues of $10 7 billion, an increase from our previous outlook of $10 4 billion.
Reflecting growth of 11%.
We anticipate revenues to accelerate in the second half of the year driven by the ramp up of our previously communicated sole sourced next generation AI ml compete program further supported by the ramping of AI ml compute and rack programs with <unk>.
This translates to a non-GAAP adjusted EPS of $4 75.
Representing 22% growth based on our non-GAAP operating margin outlook of six 9%.
Finally, we are raising our outlook for free cash flow to $350 million demonstrating strong earnings conversion, while continuing to invest in growth to meet robust customer demand.
Speaker Change: Moving onto our Ats segment.
Speaker Change: Our 2025 outlook for our Ats segment revenues is approximately flat as growth as being primarily offset by the decision not to renew a dilutive margin program in our A&D business.
Next.
I would like to provide you some additional color on our businesses for the year.
Speaker Change: The outlook for our industrial business is stabilizing following a period of softer demand due to macro factors and customer inventory digestion based on customer forecasts, we expect volumes to recover in the back half of the year.
In our Ccs segment, we are now anticipating mid double digit revenue growth in 2025 <unk>.
Compared to our outlook of low double digit growth communicated in October.
In our communications end market, we anticipate strength throughout the year as new 800 G program.
Speaker Change: And capital equipment.
Speaker Change: Demand environment has continued to improve over the past 90 days and we anticipate continued growth in 2025 on the back of solid demand and new program ramps.
With Hyperscale wins continue to ramp.
In our enterprise end market, we continue to expect a softer first half of the year, resulting from the technology transition and an AI ml compute program with a large hyperscale customer.
Speaker Change: The A&D phase.
Speaker Change: <unk> demand within our portfolio remains healthy supported by new program ramps and new customer wins.
We anticipate revenues to accelerate in the second half of the year driven by the ramp up of our previously communicated sole sourced next generation AI ml compute program further supported by the ramping of AI ml compute and rack programs with rock.
Speaker Change: Before moving on I would like to take a moment to comment on the recent discussions surrounding deep seeks our one large language model, which has raised concerns about the future of AI model development.
Speaker Change: While deep seeks disclosures are still being analyzed we believe this new technology is a neutral to positive impact on <unk> business over the next few years.
Moving onto our Ats segment.
Our 2025 outlook for our Ats segment revenues is approximately flat as growth as being primarily offset by the decision not to renew a dilutive margin program in our A&D business.
Speaker Change: Our AI ml compute business remains well positioned.
Speaker Change: They are compute solutions, primarily leverage custom ASIC designs. These custom chips are optimized for performance and power efficiency and targeted use cases, we are confident that our existing programs and new wins ramping through 2025 and 2026.
The outlook for our industrial business is stabilizing following a period of softer demand due to macro factors and customer inventory digestion based on customer forecasts, we expect volumes to recover in the back half of the year.
Speaker Change: We remain strategically aligned with our customers' needs regardless of advancements in general purpose large language models.
And capital equipment. The demand environment has continued to improve over the past 90 days and we anticipate continued growth in 2025 on the back of solid demand and new program ramps.
Speaker Change: Additionally, networking opportunities are continuing to accelerate we see significant upside for our networking business, which represents the majority of our Hyperscale revenue, we believe that increased AI adoption driven by potentially lower training costs will fuel.
The A&D phase.
<unk> demand within our portfolio remains healthy supported by new program ramps and new customer wins.
Before moving on I would like to take a moment to comment on the recent discussions surrounding deep seeks our one large language model, which has raised concerns about the future of AI model development.
Speaker Change: <unk> for high bandwidth low latency networking infrastructure, which could further strengthen our position as a leading provider of networking solutions.
While deep seats disclosures are still being analyzed we believe this new technology as a neutral to positive impact on <unk> business over the next few years.
Speaker Change: We believe this development rather than hindering investment in high performance hardware actually highlights the potential for even better cost efficiency, which could accelerate AI adoption.
Our AI ml compute business remains well positioned today, our compute solutions, primarily leverage custom ASIC designs. These custom chips are optimized for performance and power efficiency and targeted use cases, we are confident that our existing programs and new wins.
Speaker Change: As we look ahead, we're excited about several positive indicators that reinforce our optimism for sustained long term growth in particular, we see strong signals of continued customer demand tied to AI driven data center investments.
Ramping through 2025 and 2026.
Speaker Change: We continue to engage in discussions with both existing and new customers.
<unk> strategically aligned with our customers' needs regardless of advancements in general purpose large language models.
Speaker Change: Number of programs that we expect will begin to ramp over the next 12 to 18 months and extend through 2026 and beyond.
Additionally, networking opportunities are continuing to accelerate we see significant upside for our networking business, which represents the majority of our Hyperscale revenue, we believe that increased AI adoption driven by potentially lower training costs will fuel.
Speaker Change: Particular, we are excited to announce two major new wins secured in the last quarter.
Speaker Change: First on the networking front, we have been awarded our second one that 60 switching program with another large hyperscale customer, which will begin ramping in 2026.
<unk> for high bandwidth low latency networking infrastructure, which could further strengthen our position as a leading provider of networking solutions.
Speaker Change: Hps Program Award includes supporting our customer with a design and production of the fully AI optimized networking rack, which will leverage our advanced system level cooling technology.
We believe this development rather than hindering investment in high performance hardware actually highlights the potential for even better cost efficiency, which could accelerate AI adoption.
Speaker Change: This program represents an inflection point in liquid cooling applications within data center networking towards an increase in available bandwidth from our reduced footprint.
As we look ahead, we're excited about several positive indicators that reinforce our optimism for sustained long term growth in particular, we see strong signals of continued customer demand tied to AI driven data center investments.
Speaker Change: Next we are also thrilled to announce a significant new hps win with a leading digital native company, who is a pioneer in the commercialization of AI applications.
We continue to engage in discussions with both existing and new customers and a number of programs that we expect will begin to ramp over the next 12 to 18 months and extend through 2026 and beyond.
Speaker Change: We will be collaborating with them to deliver a full rack, which is an optimized AI system solution both around the customers custom ASIC accelerator.
Speaker Change: The program will leverage our proprietary R&D investments and developed expertise in AI ml servers.
Particular, we are excited to announce two major new wins secured in the last quarter.
Speaker Change: In addition, this solution will include our one that 60 switch designs, marking our third next generation program Award and high bandwidth switching as well as rack level of cooling and connectivity.
First on the networking front, we have been awarded our second one that 60 switching program with another large hyperscale customer, which will begin ramping in 2026.
Speaker Change: Production for this program is expected to begin ramping in the latter part of 2026, and we believe that demand from this customer at scale could achieve a level similar to those of our largest hyperscale customers today.
Hps Program Award includes supporting our customer with a design and production of our fully AI optimized networking rack, which will leverage our advanced system level cooling technology.
This program represents an inflection point in liquid cooling applications within data center networking towards an increase in available bandwidth from our reduced footprint.
Speaker Change: These wins will enable us to showcase our full AI system design capabilities and further solidify our position as a leading provider of AI infrastructure solutions.
Next we are also thrilled to announce a significant new HTS win with a leading digital native company, who is a pioneer in the commercialization of AI applications.
Speaker Change: <unk> are also a testament to our more than decade long commitment to building, leading edge capabilities within our HTS platform.
Speaker Change: Our investments in R&D design engineering, and IP, along with our team of nearly 900 skilled engineers enable us to deliver cutting edge comprehensive solutions.
We will be collaborating with them to deliver a full rack, which is an optimized AI system solution both around the customer's custom ASIC accelerator.
The program will leverage our proprietary R&D investments and developed expertise in AI ml servers.
Speaker Change: We are pleased to see very strong and broad based momentum across our Ccs portfolio and we believe that the current strength in demand for data center hardware has a multiyear runway ahead.
In addition, this solution will include our one that 60 switch designs, marking our third next generation program Award and high bandwidth switching as well as rack level of cooling and connectivity.
Speaker Change: Before I conclude I would also like to note that Loretta culmer.
Speaker Change: Current chair of our audit Committee has announced his resignation from the board of directors effective January 31 for personal reasons.
Production for this program is expected to begin ramping in the latter part of 2026, and we believe that demand from this customer at scale could achieve a level similar to those of our largest hyperscale customers today.
Speaker Change: So that has been a highly valued member of our board for the past 15 years.
Speaker Change: We would like to thank her for her efforts during her tenure and wish her the very best in their future endeavors.
These wins will enable us to showcase our full AI system design capabilities and further solidify our position as a leading provider of AI infrastructure solutions.
Speaker Change: <unk> has appointed Lisa Mueller.
The next chair of our audit Committee I would also like to thank our global team for their tireless work and a truly exceptional execution in 2024.
These wins are also a testament to our more than decade long commitment to building, leading edge capabilities within our HTS platform.
Speaker Change: As we closed out yet another incredibly clear.
Speaker Change: And with that.
Speaker Change: I would now like to turn the call over to the operator to begin the Q&A session.
Our investments in R&D design engineering and IP.
Along with our team of nearly 900 skilled engineers enable us to deliver cutting edge comprehensive solutions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one I know touchtone phone.
We are pleased to see very strong and broad based momentum across our Ccs portfolio and we believe that the current strength in demand for data center hardware has a multiyear runway ahead.
Speaker Change: Jens will be taken in the order received should you wish to cancel your request. Please press the star followed by the two thank you.
Speaker Change: Using a speaker phone please lift the handset question Andy.
Speaker Change: Before I conclude I would also like to note that Loretta culmer. The current chair of our audit Committee has announced his resignation from the board of directors effective January 31 for personal reasons.
Speaker Change: Keith.
Speaker Change: Once again that is star one should you wish to ask a question.
Speaker Change: And your first question is from George Wang from Barclays. Your line is now open.
Speaker Change: Well that has been a highly valued member of our board for the past 15 years.
George Wang: Hey, guys. Thanks for taking my question and congrats on the quarter and our guidance just two quick ones firstly.
Speaker Change: And we would like to thank her for her efforts during her tenure and wish her the very best in their future endeavors.
Speaker Change: As we kind of.
Speaker Change: Looking at the energy cycle.
Speaker Change: The board has appointed Luis Mueller.
Speaker Change: All kind of any thoughts on continuously pull through on the GE for this year and similarly in 2015, you have 123.
Luis Mueller: As the next chair of our audit Committee I would also like to thank our global team for their tireless work and a truly exceptional execution in 2024 as.
Speaker Change: <unk> on the $1, a key and any thoughts on whether that's been all cannibalize lower speeds or should that continue to have.
Luis Mueller: As we close out yet another incredibly clear.
Luis Mueller: And with that.
Speaker Change: I would now like to turn the call over to the operator to begin the Q&A session.
Speaker Change: Strong growth across Asia energy. According to this with lower speeds as well just kind of a harvesting balls closer relationships.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one any touchtone phone.
Rob: Hi, Joe This is Rob.
Rob: We see 400 G and <unk> coexisting for quite some time.
Rob: We go into 2025.
Speaker Change: <unk> will be taken in the order received.
Speaker Change: Should you wish to cancel your request. Please press star followed by the two <unk>.
Rob: Honestly wrapping up 803 quite a bit it will be three.
Rob: 3% to 400%.
Speaker Change: We are using a speaker phone please lift the handset question Andy.
Rob: 400, <unk> is also growing.
Speaker Change: Keith.
Rob: As we get into.
Speaker Change: Once again that is star one should you wish to ask a question.
Rob: Our 2025 as well and in the out years again, we see a long tail for.
Speaker Change: And your first question is from George Wang from Barclays. Your line is now open.
Rob: 103.
Rob: This points come down on for energy.
George Wang: Hey, guys. Thanks for taking my question and congrats on the quarter in our guide.
Rob: Cases.
Rob: Type of technology. So again, we see these technologies.
Rob: Longer.
Speaker Change: So firstly as we kind of.
Speaker Change: Okay, Great. Just secondly, if I can squeeze in quickly Rob and Andy but just.
George Wang: Looking at the energy a typo.
George Wang: Kate all kind of any thoughts on continuously pull through on the GE for this year and similarly in 2015, you have 123.
Speaker Change: It's a remarkable you guys got diversified our customer base.
Speaker Change: But that's kind of a tailwind hyperscale or some in the past and that you guys talked about rock when last quarter, but also under the largest scale.
George Wang: Programs on the $1, a key and any thoughts on whether that's been cannibalized lower speeds or should that continue to have strong growth across Asia. According to this with lower speeds as well just kind of how sustainable those are relationships.
Speaker Change: The nature of the company can be potentially as large as your largest customer at a peak run rate of revenue down the road I'm. Just curious maybe you can talk about what differentiation.
Speaker Change: I know you guys had a crown jewel asset in terms of the HTS networking, but in terms of the silver with a liquid cooling and power management.
George Wang: Hi, Joe This is Rob so.
Rob: We see 400, G and 800 GE coexisting for quite some time.
You guys are taking share versus some of the incumbents Aida Asia Odm's can you kind of.
George Wang: We go into 2025.
George Wang: We're obviously ramping up 803 quite a bit it will be up.
Maybe unpack kind of going forward there may be potentially the tariff concern kind of offshoring you guys are kind of well positioned whether from a design perspective, what kind of a multi module HTS celebrate design, but also kind of a boy a power recruiting needs can continue to sustain this differentiation versus some of that.
George Wang: 3% to 400%.
George Wang: 400, <unk> is also growing.
George Wang: As we get into.
George Wang: Our 2025 as well and in the out years again, we see a long tail.
George Wang: For energy as the price points come down on 400 G there'll be different use cases.
Speaker Change: Taiwanese and Chinese Oems.
George Wang: And that type of technology. So again, we see these technologies.
Speaker Change: Yes, thanks, Jonathan.
Speaker Change: Provide you a little bit of a background on.
George Wang: For a long time.
Speaker Change: Okay, Secondly, if I can squeeze in quickly, Rob and Andy but just.
Speaker Change: The digital native win.
Speaker Change: We alluded to in the script. So this is a major design win and then include the design and manufacture.
Speaker Change: It's a remarkable you guys diversified our customer base.
Speaker Change: But that's kind of tailwind hyperscale or some in the past and you guys talked about rock when last quarter, but also under the largest scale digital native companies can be potentially as large as your largest customer at the peak run rate of revenue down the road I'm. Just curious maybe you can talk about your differentiation in everybody know you guys.
Speaker Change: Services for a fully August now.
Speaker Change: This track is optimized for artificial intelligence and this particular customer and they were looking for a strategic partner with extensive expertise and capability in liquid call system design.
Speaker Change: So able to manufacture at scale and that had our name written all over it.
Speaker Change: A rigorous award process and ultimately they decided to select us because we had strong technical knowledge, we had cycles of learning we have intellectual property.
Speaker Change: Crown jewel asset in terms of HTS networking, but in terms of the silver with a liquid cooling and power management.
Speaker Change: You guys are taking share both in some of the incumbents Aida Asia Odm's can you kind of will make.
Speaker Change: We had significant design and manufacturing capabilities and we also had a resilient supply chain capabilities across multiple countries beginning in the USA.
Speaker Change: Maybe unpack plentiful going forward there may be potentially the tariff concern kind of offshoring, you guys are kind of well positioned.
Speaker Change: Whether from a design perspective, what kind of a multi module HTS. So great design, but also kind of a boy a powder coating needs can continue to sustain this differentiation versus some of that Televisa and Chinese Oems.
Speaker Change: This solution that we're providing them includes a $1 16 networking switch and also proprietary compute it.
Speaker Change: Also includes significant services component, which means installation and maintenance and again, we will be supporting this across multiple geographies. So I think.
Jonathan: Yes, thanks, Jonathan.
Speaker Change: Provide you a little bit of a background.
Speaker Change: The fact that we have decade decade plus experience.
Speaker Change: The digital native win.
Speaker Change: We alluded to in the script. So this is a major design win and then include the design and manufacture.
Speaker Change: In this space have allowed us to win against the Oems.
Yeah.
Speaker Change: Okay, Great I'll go back to the queue Congrats again.
Speaker Change: And services for our fully August now.
Speaker Change: Thank you.
Speaker Change: <unk> is optimized for artificial intelligence and this particular customer and they were looking for a strategic partner with extensive expertise and capability in liquid cooled system design and also able to manufacture at scale and that are named written all over it.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Your next question is from Robert Young from Canaccord Genuity. Your line is now open.
Robert Young: Hi, good morning on the the new win for the integrated rack with a custom ASIC I'm just curious if you just talk about.
Speaker Change: Conducted a rigorous award process and ultimately they decided to select us because we had strong technical knowledge. We had cycles of learning we have intellectual property, we had significant design and manufacturing capabilities and we also had a resilient supply chain capabilities across multiple.
Speaker Change: The relationship with Broadcom, who has been very book.
Speaker Change: Bullish on the market around custom ASIC is this.
Speaker Change: Our relationship with Broadcom is that influenced by Broadcom and how is that relationship developing.
Speaker Change: Yes.
Speaker Change: All countries beginning in the USA.
Speaker Change: Hi, Rob. This is Rob are you talking about the Hyperscale win the day.
Speaker Change: This solution that we're providing them includes a $1 16 networking switch and also proprietary compute it.
Speaker Change: And Joe maybe digital native.
Speaker Change: Digital Nathan.
Speaker Change: It also includes significant services component, which means installation and maintenance and again will be supporting this across multiple geographies. So I think.
Speaker Change: Yes, so on the networking side this is using our <unk>.
A long standing relationship.
Speaker Change: Alright are.
Speaker Change: Custom silicon providers.
Speaker Change: The fact that we have decade decade plus experience.
Speaker Change: Can't go into too many specifics there, but it's.
Speaker Change: Silicon provided that we have been using for the majority of our high bandwidth switches.
Speaker Change: In this space have led us to win against the Oems.
Speaker Change: And on the compute side the customer compute side this will be a customer's custom silicon.
Speaker Change: Yeah.
Speaker Change: Okay, Great I'll go back to the queue Congrats again.
Speaker Change: Thank you.
Speaker Change: It will be.
Speaker Change: Thank you.
Speaker Change: Liquid cooling of the Capsulate A&M designing into a fully integrated brac.
Speaker Change: Your next question is from Robert Young from Canaccord Genuity. Your line is now open.
Speaker Change: Okay and then.
Speaker Change: You already talked a little bit about the HTS content in this <unk> solution could you just go into more detail on how deep the.
Speaker Change: Hi, good morning.
Speaker Change: The new win for the integrated rack with a custom ASIC I'm just curious if you just talk about.
Speaker Change: On the left is the ODM and IP contribution to this win is like is it just the switch is in servers and storage.
Speaker Change: The relationship with Broadcom, who has been very book.
Speaker Change: Bullish on the market around custom ASIC is this.
Speaker Change: Our relationship with Broadcom.
Speaker Change: Highlighted cooling maybe you could just go through the contribution that Alaska is expecting to make from its own IP.
Speaker Change: That influenced by Broadcom and how is that relationship developing.
Speaker Change: Yes.
Speaker Change: Hi, Rob. This is Rob are you talking about the Hyperscale win.
Speaker Change: Yes. Thanks, Robert Yeah. This is a very significant design project for us.
Speaker Change: Digital native digital native.
Speaker Change: Actually an entire rack so it includes.
Speaker Change: It didn't go Nathan.
Speaker Change: Yes, so on the networking side this is using.
Speaker Change: As I mentioned before the switching.
Speaker Change: Module and accrued stock.
Speaker Change: A long standing relationship.
Speaker Change: Back planes of crudes the rack itself.
Speaker Change: With our.
Speaker Change: Custom silicon providers.
Speaker Change: Good morning.
Speaker Change: It's not just rack integration, we're doing we're actually doing full rack orchestration.
Speaker Change: Can't go into too many specifics there but.
Speaker Change: And provided that we have been using for the majority of our high bandwidth switches.
Speaker Change: Leveraging.
Speaker Change: The amount of IP that we've developed over the past 10 plus years.
Speaker Change: And on the compute side customer compute side this will be the customers custom silicon.
Speaker Change: And I presume, you'll be able to develop that IP further around this yes.
Speaker Change: It will be.
Speaker Change: Liquid cooling on the calculating in designing into a fully integrated correct.
Speaker Change: I think to that point Rob.
Speaker Change: When we successfully execute this full rack system. This is going to be yet another proof point that will lead to further growth for us.
Okay and then.
Speaker Change: You already talked a little bit about the HBO content and this <unk> solution could you just go into more detail on how deep the.
Speaker Change: This customer.
Speaker Change: All of our customers across the industry.
Speaker Change: Okay and last one for me is just on the guidance for the year.
Speaker Change: On the left is the ODM and IP contribution to this win is like is it just the switch is in servers and storage.
Speaker Change: If you just look at the cadence through the year it looks as though the growth is a little bit weaker in the back half. Despite all of the ramps in the second half and so I'm curious I know you don't give guidance on Q2 at this point, but if you could give us a sense of maybe the cadence of revenue through the year to better model that and then I'll pass the line.
Speaker Change: Highlighted cooling maybe you could just go through the contribution that Alaska is expecting to make from its own IP.
Speaker Change: Yes. Thanks, Robert This is a very significant design project for us.
Speaker Change: Absolutely and anti Iraq. So it includes.
Speaker Change: Yes, hi, Rob good morning.
Speaker Change: Yes, I want to reiterate what we said on the call.
Speaker Change: As I mentioned before the switching.
Speaker Change: This is our high competency, we're pleased to be able to raise the revenue outlook to $10 7 million from 10, four at the 11% growth.
Speaker Change: <unk> module and accrued stock.
Speaker Change: Well back planes of crudes the rack itself.
Speaker Change: And it's not just tracking that ratio, we're doing we're actually doing full rack orchestration.
Speaker Change: And then EPS up 22% growth to 475.
Speaker Change: Notices in the first quarter.
Speaker Change: Leveraging.
Speaker Change: These numbers are higher so we've guided at the midpoint, 15% revenue growth.
Speaker Change: <unk> amount of IP that we've developed over the past 10 plus years.
Speaker Change: The EPS is growing 30.
Speaker Change: And I presume you would be able to develop that IP further around this yes.
Speaker Change: 30%.
Speaker Change: We're taking a view right now on what we know is solid and in front of US Q2 to Q4.
Speaker Change: Think to that point, Rob that when we successfully execute this full rack system. This is going to be yet another proof point that will lead to further growth for us.
Speaker Change: Very good visibility now through the third quarter with our largest customers with frankly, the fourth quarter visibility is not yet fully locked down it's improving.
Speaker Change: This customer and with other similar customers across the industry.
Speaker Change: And we're having very positive discussions.
Speaker Change: Okay and last one for me is just on the guidance for the year.
Speaker Change: But these things will continue to solidify as we go through the coming months.
Speaker Change: If you just look at the cadence through the year it looks as though the growth is a little bit weaker in the back half. Despite all of the ramps in second half and so I'm curious I know you don't give guidance on Q2 at this point, but if you could give us a sense of maybe the cadence of revenue through the year to better model that and then I'll pass the line.
Speaker Change: So this is our main competency.
Speaker Change: We would of course be looking to do.
Speaker Change: Better than that.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question is from Anna <unk> from BMO capital markets. Your line is now open.
Rob: Yes, hi, Rob good morning.
Speaker Change: Yes, I want to reiterate what we said on the call.
Anna: Hi, good morning, and congrats on the new customer wins.
Rob: This is our high competency.
Anna: With respect to enterprise is the.
Rob: We're pleased to be able to raise the revenue outlook to $10 7 million from 10, four at 11% growth.
Anna: Program transition placed a large customer proceeding as expected and just to clarify would you expect Q1 to meet the bottom.
Rob: And EPS up 22% growth to 475, but what you'll notice is that in the first quarter.
Anna: In terms of that transition from a sequential perspective or.
Rob: Numbers are higher so.
Rob: At the midpoint, 15% revenue growth.
Anna: I will be your outlook on that.
Rob: EPS is growing 30.
David: Hey, David.
Rob: 30% and so we're taking a view right now on what we know is solid and in front of US Q2 to Q4.
Anna: Yes.
Anna: Things are going as we expected them to be entered.
Anna: Enterprise is down year over year as the sole source program is moving toward end of life, we will see a little bit of a reduction as we go through the first half of the year.
Rob: We have very good visibility and now through the third quarter with our largest customers with frankly, the fourth quarter visibility is not yet fully locked down it's improving.
Anna: The new program that we have won a while ago is on track for ramping in the third quarter and we would expect a return to year over year growth as we get to the end of 2025.
Rob: And we're having very positive discussions.
Rob: These things will continue to solidify as we go through the coming months.
Anna: So those things.
Rob: So this is our high competence.
Anna: Our largest customers completely on track and then as a reminder.
Rob: We would of course be looking to do.
Rob: Better than that.
Anna: When we announced before with rock that program ramp is already working well and we're seeing sequential improvement in that program. As we go from Q4 to Q1 and that will strengthen as we go through the year and then with this new customer win that Robin just speaking about it it's really nice to see yet another custom server win.
Rob: Thank you.
Rob: Okay.
Speaker Change: Thank you. Your next question is from Anna <unk> from BMO capital markets. Your line is now open.
Anna: Hi, good morning, and congrats on the new customer wins.
Speaker Change: With respect to enterprise is the program transition placed a large customer proceeding as expected and just to clarify would you expect Q1 to meet the bottom end.
Anna: That will be ramping in 2026, so we are continuing to make good progress on the server side.
Speaker Change: And on that note is there any incremental color you can provide in terms of just the strength of the pipeline you are seeing some more additional server and custom opportunities.
In terms of that transition from a sequential perspective or.
Speaker Change: What would be your outlook on that.
David: Hey, David.
Anna: Yes.
Speaker Change: Yes.
Speaker Change: Things are going as we expected them to be.
Anna: Sure.
Anna: There is a very strong pipeline of additional.
Speaker Change: Enterprise is down year over year as the sole source program is moving toward end of life, we will see a little bit of a reduction as we go through the first half of the year.
Anna: Sort of opportunities again.
Speaker Change: Got it.
Anna: Play.
Anna: Terry.
Speaker Change: And Thats, where our focus is and we also tend to play on the HBO side of things. So we're in a high design content I would say the pipeline is quite healthy.
Speaker Change: The new program that we have won a while ago is on track for ramping in the third quarter and we would expect a return to year over year growth as we get to the end of 2025.
Speaker Change: Great I'll leave it there thanks.
Speaker Change: So those things.
Speaker Change: Thank you.
Speaker Change: Our largest customer is completely on track and then as a reminder.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question is from David Cohen from UBS. Your line is now open.
The win that we announced before with rock that program ramp is already working well and we're seeing sequential improvement in that program. As we go from Q4 to Q1 and that will strengthen as we go through the year and then with this new.
Speaker Change: Great. Good morning, guys. Thanks for taking my questions I've got a couple if you will as well so so rob or <unk> on the second one that fixed tariff terabyte program that you won with a large hyperscale customer can we clarify is that an existing customer as they migrate to faster speeds or is that a new customer and along those lines is there an opportunity to expand the relationship.
Speaker Change: New customer win that Robin just been speaking about it it's really nice to see yet another custom server wind.
Speaker Change: That will be ramping in 2026, so we are continuing to make some good progress on the server side.
Speaker Change: From an optimized networking rack to other parts of the network and or add compute and I'll give you. My second question on the general NATO customer.
Speaker Change: And on that note is there any incremental color you can provide in terms of just the strength of the pipeline you are seeing some more additional server and custom <unk> opportunities.
Speaker Change: I heard Rob say, it's across multiple geographies is it fair to say that this customer historically has been sort of an infiniband based customer and this is sort of an initial opportunity to deploy Ethernet technology from celestica across obviously, a more complete solution, but just trying to get a better understanding of kind of how to think about the technological roadmap. Thanks.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: There is a very strong pipeline of additional soft.
Speaker Change: Sort of opportunities again.
Speaker Change: And to play on the proprietary compute side and that's where our focus is.
Speaker Change: And we also tend to play on the HBO side of things.
Speaker Change: Yeah.
Yeah.
Speaker Change: Hi, David Yes, so on the.
Speaker Change: Design content and I would say the pipeline is quite healthy.
Speaker Change: The hyper scaler customer, yes, they are an existing customer we currently support this customer winds up offline.
Speaker Change: Great I'll leave it there thanks.
Speaker Change: Thank you.
Speaker Change: And <unk> switches.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: So this isn't really a natural extension of our relationship and its for their next generation family.
Speaker Change: Our next question is from David.
Speaker Change: From UBS. Your line is now open.
Speaker Change: Thanks.
Speaker Change: Great. Good morning, guys. Thanks for taking my questions I've got a couple if you will as well so so rob or <unk> on the second one that fixed tariff terabyte program that you won with a large hyperscale customer can we clarify is that an existing customer as they migrate to faster speeds or is that a new customer and along those lines is there an opportunity to expand the relationship.
Speaker Change: We'd call networking rack. So again this is now just a switch but the entire rack.
Speaker Change: And we will be the final integrator for the system again, this will be a multi node.
Speaker Change: Our solution for them in terms of both the U S and southeast Asia.
Speaker Change: And on.
Speaker Change: From an optimized networking rack to other parts of the network Andorra had compute and I'll give you. My second question on the digital native customer I think I heard Rob say, it's across multiple geographies is it fair to say that this customer historically has been sort of answered a band based customer and this is sort of an initial opportunity to.
Speaker Change: And you also asked.
Speaker Change: Let me see opportunity to expand our solutions for those customers absolutely.
Speaker Change: Based on what we're doing with the digital native customer and also what we're doing with this type of scalar.
Speaker Change: Say opportunities too.
Speaker Change: Yes go on share of wallet with us.
Speaker Change: To deploy Ethernet technology from Celestica across obviously, a more complete solution, but just trying to get a better understanding of kind of how to think about the technological roadmap.
Speaker Change: As color as well.
Speaker Change: With respect to the digital native customer, yes, they have very.
Speaker Change: Specific and unique needs for that day.
Speaker Change: Yeah.
Speaker Change: The center that they're building.
Speaker Change: Yeah.
Speaker Change: I wouldn't say there.
Speaker Change: Hi, David Yes, so on the <unk>.
Speaker Change: When customers go into Ethernet.
Speaker Change: Hyper scaler customer, yes, they are an existing customer. We currently support this customer winds up 408 hundred gig switches.
Speaker Change: Their own custom.
Speaker Change: Our design from the data center, and we're supporting them with a fully customized frac.
Speaker Change: Great. Thanks, guys congrats.
Speaker Change: So this isn't really a natural extension of our relationship and its for their next generation family.
David Cohen: Thanks, David.
David Cohen: Thank you.
Speaker Change: Liquid cooled networking rack. So again this is now just a switch but the entire frac.
Speaker Change: Next question is from Steven Fox from Oxo Advisors. Your line is now open.
Speaker Change: And we will be the final integrator for this system again, this will be a multi node.
Speaker Change: Hi, I was wondering if I could follow up on some of these questions from maybe a thousand foot level, which is you've had a couple of landmark wins now the last couple of quarters that are diversifying you guys away from you.
Speaker Change: Our solution for them in terms of both the U S and southeast.
John: Hey, John.
Speaker Change: John.
Speaker Change: And you also asked.
Speaker Change: <unk>.
Speaker Change: Cloud guys, you've been selling to and you're doing it with more complex rack integration and orchestration. So like from those two aspects customer diversity and more complexity on Iraq.
Speaker Change: Let me see the opportunity to expand our solutions for those customers absolutely.
Speaker Change: Based on what we're doing with the digital native customer and also what we're doing with this hyper scaler.
Should we think about the business changing over say the next 12 months to 18 months or 24 months.
Speaker Change: Say opportunities too.
Speaker Change: Yes go on share of wallet with refining.
Speaker Change: As color as well.
Speaker Change: Towards those trends, thanks, and then I had a follow up.
Speaker Change: Back to the digital native customer, yes, they have very.
David Cohen: Thanks, David.
Speaker Change: Yes.
Speaker Change: Specific and unique needs for the data center.
Speaker Change: I'll step back in time again, keeping that at a high level.
Speaker Change: Back in the day as I say.
Speaker Change: I wouldn't say there.
Speaker Change: Contract manufacturers terms.
Speaker Change: Customer go into Ethernet.
Speaker Change: I think we're clearly.
Speaker Change: On custom.
Speaker Change: Our design from the data center, and we're supporting them with a fully customized frac.
Speaker Change: CCF puts us in the OEM category with these new wins, we're actually well on our way to be a product company in the OEM.
Speaker Change: Great. Thanks, guys congrats.
David: Thanks, David.
Speaker Change: Section.
Speaker Change: These are just further proof points.
David: Thank you.
Speaker Change: Our next question is from Steven Fox from Oxo Advisors. Your line is now open.
Speaker Change: Since ourselves imodium into OEM land and I think that's where our business is going.
Speaker Change: Hi, I was wondering if I could follow up on some of these questions from maybe a thousand foot level, which is <unk>.
Speaker Change: That's helpful. And then just on the liquid cooling front I'm, a little I just want to make sure I understand.
Speaker Change: <unk> had a couple of landmark wins now the last couple of quarters that are diversifying you guys away from you or.
Speaker Change: These wins are we talking about leveraging your own technology at the board level with coal plates as well as at the rack level.
Speaker Change: The large.
Speaker Change: Cloud guys <unk> been selling to and Youre doing it with more complex rack integration and orchestration. So like from those two aspects customer diversity and more complexity on the Iraq. How is how should we think about the business changing over say the next 12 months to 18 months or 24 months too.
Speaker Change: And how much of that would you be manufacturing yourself as opposed to just design.
Speaker Change: <unk> integration.
Speaker Change: Yes, we're talking about.
Speaker Change: Rack level and also.
Speaker Change: Chip level.
Speaker Change: Australia.
Speaker Change: And we have ecosystem partners manufacturing and we're integrating and applying our process.
Speaker Change: Towards those trends, thanks, and then I had a follow up.
Speaker Change: Thanks, David.
Speaker Change: Yes.
Speaker Change: Step back in time, we are keeping a high level.
Speaker Change: <unk> at scale to make sure that we're able to.
Speaker Change: Back in the day as I say.
Speaker Change: We are a fully integrated system.
Speaker Change: Contract manufacturers terms.
Speaker Change: Okay.
Speaker Change: I think we're clearly.
Speaker Change: One of the things that we have been hearing from our customers.
Speaker Change: And our Ccs business and the ODM category, where these new wins were actually well on our way to be a product company in the OEM.
Speaker Change: The challenge really gets to being able to produce.
Speaker Change: Liquid cooling solutions at scale and we have demonstrated strong capabilities in this area we.
Speaker Change: Infection. So I think these are just further proof points.
Speaker Change: We have a lot of experience in that area and Thats a lot of the knowhow that we are able to bring to the table as well.
Speaker Change: So ourselves and ODM and two OEM land and I think that's where our business is growing.
Speaker Change: Great. Thank you very much.
Speaker Change: Yeah.
Speaker Change: That's helpful. And then just on the liquid cooling front and I'm, a little I just want to make sure I understand on these wins are we talking about leveraging your own technology at the board level with coal plates as well as at the rack level.
Speaker Change: Thanks.
Speaker Change: Your next question is from Reuben Willey from Stifel. Your line is now open.
Reuben Willey: Thank you very much for letting me ask a question.
Reuben Willey: Sandeep I was wondering.
Speaker Change: And how much of that would you be manufacturing yourself as opposed to just design and integration.
Speaker Change: Just kind of following up on some of the questions around the extensive.
Speaker Change: Development cycle, I guess with the new customer are you thinking about Capex, where do you would you have to make any changes to your capacity to support.
Speaker Change: Yes, we're talking about.
Speaker Change: Rack level and also.
Chip level.
Australia.
Speaker Change: Neither of these new programs are both what does it mean for capex levels of sales going forward. Please.
Speaker Change: And we have ecosystem partners that do the manufacturing and we're integrating and applying our process our processes at scale to make sure that we're able to deliver a.
David Cohen: Yes, so first of all welcome Reuben really nice to have you take over from Stifel.
Speaker Change: Yeah to answer your question.
Speaker Change: A fully integrated system.
David Cohen: Very comfortable with.
Speaker Change: Okay.
David Cohen: Capacity that we have we've been growing at strong double digit now three years in a row and we've been able to maintain our capex spend is less than 10% just as a reminder, the majority of the Capex that we spend is on growth Capex, we only have about 40 basis points of maintenance.
What are the one of the things that we have been hearing from our customers is.
Speaker Change: The challenge really gets to being able to produce.
Speaker Change: Liquid cooling solutions at scale and we have demonstrated strong capabilities in this area and we have a lot of experience in that area and Thats a lot of the knowhow that we are able to bring to the table as well.
David Cohen: And that gives us a lot of discretion on where we want to put those dollars.
David Cohen: Have the capacity, we need right now to execute all of the demand that's in front of us.
Speaker Change: Great. Thank you very much.
Speaker Change: Okay.
David Cohen: We'll be targeting some of the growth capex that we have in 2025 to areas like continued to expand in Thailand. We have shown that until at least Asia. We can bring on capacity in our existing campuses in under a year when needed to support our customer demand.
Speaker Change: Thank you.
Speaker Change: Our next question is from Reuben Willey from Stifel. Your line is now open.
Reuben Willey: Thank you very much for letting me ask a question.
Speaker Change: Randy I was wondering.
Speaker Change: Just kind of following up on some of the questions around the extensive.
David Cohen: And so the way to think about Capex in 2025.
David Cohen: What we've been seeing in the previous year is 1.5% to 2% of revenue and.
Speaker Change: Development cycle, I guess with the new customer are you thinking about Capex would you would you have.
David Cohen: I don't really see at this point the need for that can be very different than the other years either.
Speaker Change: Have to make any changes to your capacity to support.
Mindy: Got it thank you Mindy.
Rob: Then Rob.
Speaker Change: Neither of these new programs are both what does it mean for capex levels of sales going forward. Please.
Rob: Thanks for the comments on your early assessment of how to think about deep seek but I guess given that you have given us some thought the comment around networking the networking opportunity longer term, maybe if you could just give us a little more detail about how youre thinking about that it sounds like if we do get to a point where.
Reuben Willey: Yeah. So first of all welcome Reuben really nice to have you take over from that Stifel. Yes.
Speaker Change: To answer your question.
Speaker Change: Very comfortable with the capacity that we have we've been growing at strong double digit now three years in a row and we've been able to maintain our capex spend less than 10% just as a reminder, the majority of the Capex that we spend is on growth Capex, we only have about 40 basis points of maintenance.
Rob: We can get cheaper AI to the edge.
Rob: That could be a good thing is that what you are thinking about what does that mean for the sort of scale up and scale out of the big clusters that.
Speaker Change: Gives us a lot of discretion on where we wanted to put those dollars.
Rob: We're getting used to I guess, just any more detail about how youre thinking about the networking opportunity.
Speaker Change: We have the capacity, we need right now to execute all of the demand that's in front of us.
Rob: If you have any would be great. Thank you.
Rob: Thanks, Robert and again welcome.
Speaker Change: We will be targeting some of the growth Capex that we had in 2025 to areas like continued to expand in Thailand. We have shown that in southeast Asia, we can bring on capacity in our existing campuses in under a year when needed to support our customer demand trends.
Rob: Yes.
Rob: Some of the industry pundits are saying.
Rob: <unk> AI accessibility will drive demand not talk to us as well.
Rob: Networking really remains.
Rob: Crucial it's crucial for scaling all the AI systems for transporting data for training.
Speaker Change: So the way to think about Capex in 2025.
Speaker Change: Similar to what we've been saying in the previous year is 1.5% to 2% of revenue.
Rob: And networking really is agnostic to the pipe.
Rob: Large language models used today.
Speaker Change: I don't really see at this point the need for that to be very different than the other years either.
Rob: If you think about networking.
Speaker Change: Got it thank you Mindy and then Rob.
Rob: It might require real time analytics service deep sequencing is for real time applications like high frequency trading.
Speaker Change: Thanks for the comments on your early assessment of how to think about deep seek but I guess given that you have given us some thought the comment around networking the networking opportunity longer term, maybe if you could just give us a little more detail about how youre thinking about that it sounds like if we do get to a point where.
Rob: Alright, Thomasville control the need for minimal licensee becomes critical and high bandwidth switching offerings a solution for that.
Rob: Think a deep sea trials.
Rob: Distributed computing.
Speaker Change: We can get cheaper AI to the edge.
Speaker Change: That could be a good thing is that what youre thinking about but what does that mean for sort of scale up and scale out of the big clusters that.
Rob: Thank you.
Rob: It's distributed across the cluster of sovereigns again, you'll still need.
Rob: Hi.
Rob: And with the switching so.
Rob: We actually view in terms of our networking business.
Speaker Change: We're getting used to I guess, just any more detail about how youre thinking about the networking opportunity.
Rob: Very positive.
Rob: Development.
Speaker Change: If you have any would be great. Thank you.
Rob: Right.
Speaker Change: Thanks, Robert and again welcome.
Rob: Portfolio.
Speaker Change: Yes.
Rob: That's great detail. Thanks.
Speaker Change: Some of the industry pundits are saying.
Rob: Okay.
Speaker Change: <unk> AI accessibility will drive demand for us as well.
Speaker Change: Thank you once again that is star one should you wish to ask a question and your next question is from Paul Treiber from RBC. Your line is now open.
Speaker Change: Net.
Speaker Change: Networking really remains.
Speaker Change: Crucial it is crucial for scaling all the AI systems for transporting data for training.
Paul Treiber: Alright, thanks, very much and good morning.
Speaker Change: And networking really is agnostic to the type of large language models that are being used today.
Paul Treiber: A comment or a question on the win with the digital native customer.
Paul Treiber: And just more broadly speaking in terms of your your pipeline are you seeing a trend towards customers shifting to procuring end to end full.
Speaker Change: If you think about networking.
Speaker Change: It might require real time analytics service deep sequencing is for real time applications like high frequency trading.
Paul Treiber: Full rack solutions versus you know maybe in the past procuring individual components.
Speaker Change: <unk>.
Speaker Change: Thomas vehicle control the need for minimal licensee becomes critical and high bandwidth switching offerings a solution for that even as you think.
Paul Treiber: But certainly.
Paul Treiber: Thanks, Paul.
Paul Treiber: Native customers I mean, this class of customers.
Paul Treiber: Really want a full solution as I mentioned with this particular customer not only is it the full rack solution and we're actually doing services.
Speaker Change: Sequel Triangle distributed computing.
Speaker Change: Okay.
Speaker Change: It's distributed across the cluster of sovereigns again, you'll still need.
Speaker Change: I'd, probably signs all service solution.
Speaker Change: Hi.
Speaker Change: And with switching so.
Paul Treiber: We think that.
Speaker Change: We actually view in terms of our network.
Paul Treiber: This win will.
Paul Treiber: Give us some product proof point to expand our market share.
Speaker Change: So very positive.
Speaker Change: Development.
Paul Treiber: Customers with respect to Hyperscale.
Speaker Change: Okay.
Speaker Change: Portfolio.
Paul Treiber: Does depend.
Speaker Change: That's great detail. Thanks.
Paul Treiber: <unk>.
Paul Treiber: Mentioned.
Speaker Change: Okay.
Paul Treiber: Great.
Paul Treiber: Hyper scaler win that we had on the wind down.
Speaker Change: Thank you once again that is star one should you wish to ask a question and your next question is from Paul Treiber from RBC. Your line is now open.
Paul Treiber: Switching was an inflection point.
Paul Treiber: We're providing them with a customer.
Paul Treiber: Alright, thanks, very much and good morning.
Paul Treiber: A dedicated.
Paul Treiber: Working rack and.
Paul Treiber: A comment or a question on that day the win with the digitally native customer and just more broadly speaking in terms of your your pipeline are you seeing a trend towards customers shifting to procuring end to end.
Paul Treiber: Again.
Paul Treiber: Perfectly for malware.
Paul Treiber: Workloads and it's optimized.
Paul Treiber: As an optimize fabric and improves efficiency.
Paul Treiber: Liquid cooling directly within the rock and the switch itself.
Paul Treiber: We'll rack solutions versus.
Paul Treiber: Maybe in the past.
Paul Treiber: This will most likely be required for all of the latest.
Paul Treiber: Individual components.
Why not 60 design. So again in terms of full rack solutions, that's where we think the market is growing and we think we're very well positioned.
Paul Treiber: But certainly.
Paul Treiber: Thanks, Paul.
Paul Treiber: Native customers I mean, this class of customers.
Paul Treiber: And.
Paul Treiber: Oh really want a full solution as I mentioned with this particular customer not only is it the full rack solution and we're actually doing services.
Paul Treiber: Along with that you made an interesting comment about the shift from contract manufacturing EMS to ODM, and then product and the importance of.
Paul Treiber: Fairly sizeable service solution.
Paul Treiber: Your <unk>.
Paul Treiber: We think that.
Paul Treiber: This win will.
Paul Treiber: Business two contract wins when you when you look at your pipeline and you look at the mix of differentiation from HP.
Paul Treiber: Give us a further proof point to expand our market share.
Paul Treiber: Customers with respect to Hyperscale.
Paul Treiber: Does it depend on Hyperscale as we mentioned.
Speaker Change: How would you compare that like how much of a factor.
Paul Treiber: Mentioned.
Paul Treiber: Or is that having to your ability to win.
Paul Treiber: In the script.
Paul Treiber: Hyper scaler win that we had on the wind down.
Speaker Change: These contracts as you look out in the next couple of years.
Paul Treiber: 1000, <unk> switching was an inflection point.
Paul Treiber: We have been.
Paul Treiber: Increasingly investing in R&D and design capability and expanding our define net.
Paul Treiber: Providing them with a customer.
Paul Treiber: With a dedicated networking rack and.
Paul Treiber: Network.
Paul Treiber: Again designed specifically for.
Paul Treiber: For the past 10 plus years.
Paul Treiber: I am not workloads.
Paul Treiber: And then the more time and more over.
Paul Treiber: And it's optimized.
Paul Treiber: $875 million, we're spending this year end.
Paul Treiber: Haven't optimized fabric and improves efficiency incorporates liquid cooling directly within the rock and the switch itself.
We're comfortable spending up to $100 million nine in 2025 as well.
Paul Treiber: And based on our growth.
And this will most likely be required for all of the latest one.
Paul Treiber: Anticipate to continue to invest in design capabilities and migrating towards that journey that I mentioned.
Paul Treiber: 60 design. So again in terms of full rack solutions is where we think the market is going and we think we're very well positioned.
Paul Treiber: Yes.
Paul Treiber: I know you know this.
Paul Treiber: Paul we have over 900 design engineers.
Paul Treiber: And along with that you made an interesting comment about the shift from contract manufacturing EMS to ODM, and then and then product and the.
Speaker Change: We are engaging with customers in multiple ways, so as Rob talked about.
Paul Treiber: OEM type of offerings that we have.
Paul Treiber: The importance of <unk>.
Paul Treiber: Celestica products that have us, let's go logo on it that our customers that have been tested in.
Paul Treiber: Your H P S.
Speaker Change: Business to contract wins when you when you look at your pipeline and you look at the mix sort of differentiation from <unk>, how would you compare that like how how how much of a factor is that having to your ability to win.
Paul Treiber: Meet our customers' needs directly but then in addition to that we have the same engineers, who can work with customers on customizing our solution to what they were looking for.
Paul Treiber: We work in collaboration along the way and so while some of our wins do fall under the Hbf umbrella.
Paul Treiber: These contracts as you look out over the next couple of years.
Paul Treiber: A heavy level of our design content.
Speaker Change: We've been.
Paul Treiber: We also use our engineers to help us win on the EMA side.
Speaker Change: Increasingly investing in R&D and design capability and expanding our design net.
Paul Treiber: So we find that our engineering expertise is a key differentiator, which is why again, if you think back like five years ago, we were spending about $25 million in R&D. We're now spending three ex that and going again into 25, it before or after that.
Speaker Change: Network.
Speaker Change: For the past 10 plus years.
Speaker Change: The amendment will chime in.
Speaker Change: $175 million, we're spending this year end.
Speaker Change: We're comfortable spending up to $100 million nine in 2025 as well.
Paul Treiber: The return on that investment is very high.
Speaker Change: And based on our growth.
Paul Treiber: And lastly, if I can squeeze in one more just with the change in the U S Administration, you can talk about tariffs and also enthusiasm for onshoring is are your customers you mentioned, Thailand and expanding in time, but are you getting more requests for production in the U S and how you're thinking about.
Speaker Change: Anticipate to continue to invest in design capabilities and migrating towards that journey that I mentioned.
Speaker Change: Yes.
Speaker Change: I know you know this is.
Speaker Change: Paul we have over 900 diamond shares.
Speaker Change: We are engaging with customers in multiple ways, so as Rob talked about.
Paul Treiber: U S.
Speaker Change: Our OEM type of offerings that we have.
Paul Treiber: Facility expansion going forward.
Speaker Change: Select products that have us, let's go logo on it and our customers that have been tested in.
Paul Treiber: Okay.
Paul Treiber: Yeah right now.
Paul Treiber: Customers are in a wait and see mode.
Speaker Change: Meet our customers' needs directly but then in addition to that we have the same engineers, who can work with customers on customizing our solution to what they were looking for.
Paul Treiber: Okay.
Paul Treiber: We have done in the past.
Paul Treiber: Resilience inside our network.
Speaker Change: And we work in collaboration along the way and so while some of our wins do fall under the <unk> umbrella.
Paul Treiber: Paris in one area.
Paul Treiber: Okay.
Paul Treiber: Causing our customer to want to shift we feel I can serve them in another area.
Speaker Change: The heavy metal card design content.
Paul Treiber: Right now.
Speaker Change: We also use our engineers to help us with on the EMA side.
Paul Treiber: We have ample capacity in the U S.
Speaker Change: So we find that our engineering expertise is a key differentiator, which is why again, if you think back like five years ago, we were spending about $25 million in R&D. We're now spending three ex that and going again into 25 million Forex that return.
Paul Treiber: Capacity, not just physical capacity, but it also means power we've actually secured.
Paul Treiber: Our Ccs business for years to come in anticipation of growing.
Paul Treiber: So we're keeping our eyes open and we're keeping them on the right customers are in a.
Speaker Change: Return on that investment is very high.
Paul Treiber: I'll wait and see mode.
Speaker Change: And lastly, if I can squeeze in one more just with the change in the U S Administration, you can talk about tariffs and also enthusiasm onshoring is or are your customers that you mentioned in Thailand, and expanding in time, but are you getting more requests for production in the U S and how you're thinking about.
Paul Treiber: No.
Paul Treiber: Every day.
Paul Treiber: Or a new direction.
Paul Treiber: And specifically to the U S. Just as a reminder, we do a lot of semiconductor manufacturing on the west coast of the United States, We do very complex aerospace and defense work.
Paul Treiber: The Midwest and then we do.
Speaker Change: U S.
Speaker Change: So any expansion going forward.
Paul Treiber: Richardson, Texas, a very large facility, which is supporting our hyperscale customers and we've been doubling revenue for a couple of years now.
Speaker Change: Okay.
Speaker Change: Yeah right now.
Speaker Change: Are in a wait and see mode.
Paul Treiber: This facility will be more than doubling our revenue again in 2025 and again as I mentioned earlier all within the Capex envelope that we would expect.
Speaker Change: Okay.
Speaker Change: We have done in the past we have resilience inside our network. So.
Speaker Change: And one area.
Paul Treiber: Thanks for taking my questions.
Speaker Change: Causing our customer to want to shift we feel we can serve them in another area.
Paul Treiber: Yes.
Paul Treiber: Thank you.
Speaker Change: Right now.
Speaker Change: Your next question is from Todd Coupland CIBC. Your line is now open.
We have ample capacity in the U S and ample capacity not just physical capacity, but it also means power we've actually secured power.
Paul Treiber: Yes, good morning, everyone.
Paul Treiber: I wanted to ask about the communications business.
Speaker Change: Power for our Ccs business for years to come in anticipation of growth.
Paul Treiber: Specifically on the margin side. So if you could help US bridge your networking margins relative to peers in the market that are nicely into the double digits and we think about your guide. It implies the majority of your business will be a networking by the end of the year.
Speaker Change: <unk>.
Speaker Change: So we're keeping our eyes open and we're keeping them on the right customers are in a wait and see mode.
Speaker Change: No.
Speaker Change: Every day is a kind of a new direction.
Speaker Change: Specifically to the U S. Just as a reminder, we do a lot of semiconductor manufacturing on the west coast of the United States, We do very complex aerospace and defense work.
Paul Treiber: So why shouldn't your margins be a lot higher than they are just talk us through that that spread thanks a lot.
Speaker Change: Hey, Todd So of course, our communications business has.
Speaker Change: The Midwest and then we do have.
Speaker Change: A lot of what our networking businesses Theres, a substantial amount of Brooklyn there.
Speaker Change: In Richardson, Texas.
Speaker Change: Large facility, which is supporting our hyperscale customers and.
Speaker Change: It includes a lot of our HTS revenue, but it also includes EMS revenue as well, we do manufacture communications gear for leading Oems.
Speaker Change: We've been doubling revenue for a couple of years now and the Texas facility, we will be more than doubling our revenue again in 2025 and again as I mentioned earlier all within the Capex envelope that we would expect.
Speaker Change: That are sometimes selling into the small medium business.
Speaker Change: Side of things, sometimes selling into the hyperscale side of things.
Speaker Change: Thanks for taking my questions.
Speaker Change: Do you need to think about communications on a blended basis.
Speaker Change: I would characterize the margins overall, though.
Speaker Change: Thank you.
Speaker Change: Look Ccs had record operating margin in the fourth quarter, seven 9% and our Hps business.
Speaker Change: Your next question is from Todd Coupland CIBC. Your line is now open.
Todd Coupland: Yes, good morning, everyone.
Todd Coupland: I wanted to ask about the communications business.
Speaker Change: Is accretive to that.
Speaker Change: So as we continue to grow <unk> types of revenue.
Todd Coupland: Specifically on the margin side. So if you could help US bridge your networking margins relative to peers in the market that are nicely into the double digits and we think about your guide. It implies the majority of your business will be a networking by the end of the year.
Speaker Change: It's an opportunity for continuing margin expansion the majority of our hps portfolio today is switches.
Speaker Change: So we would expect to see some margin expansion. It will also lift up the communication of the numbers, but the best way to think about.
Speaker Change: More of an apples to apples comparison, if youre thinking about an ODM.
Todd Coupland: So why shouldn't your margins be a lot higher than they are just talk us through that that spread thanks a lot.
Speaker Change: Example, would be how does our HTS business performed relative to those Oems and we're not that.
Todd Coupland: Hey, Todd.
Speaker Change: All of them pretty much the same Zip code.
Todd Coupland: So of course, our communications business has.
Speaker Change: That's great. Thanks for that color and then I just wanted to go back to deep seek as well.
Todd Coupland: A lot of what our networking businesses theres, a substantial amount of growth in there.
Speaker Change: So is your takeaway at this point that it's going to drive custom silicon demand at the expense of merchant Silicon and that's an incremental driver. Thanks a lot.
Todd Coupland: It includes a lot of our hps revenue, but it also includes the EMS revenue as well, we do manufacture communications gear for leading Oems.
Todd Coupland: Or sometimes selling into the small medium business.
Speaker Change: Yes in terms of.
Todd Coupland: Side of things, sometimes selling into the Hyperscale side of things. So you need to think about communications on a blended basis.
Speaker Change: Our custom silicon demand, that's where we play and our view is that.
Todd Coupland: I would characterize the margins overall, though.
Speaker Change: We're growing.
Speaker Change: Market custom silicon Israeli around specialized applications.
Todd Coupland: Look Ccs had record operating margins in the fourth quarter, seven 9% and our Hps business.
Speaker Change: We feel that.
Speaker Change: Place.
Todd Coupland: Is accretive to that.
Speaker Change: We're focusing on where the majority of our growth.
Todd Coupland: So as we continue to grow <unk> types of revenue. It provides an opportunity for continuing margin expansion. The majority of our HTS portfolio today is switches.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, a lot I appreciate the color.
Speaker Change: Yeah.
Todd Coupland: So we would expect to see some margin expansion. It will also lift up the communications numbers, but the best way to think about.
Speaker Change: Thank you.
Speaker Change: No further questions at this time I will now hand, the call back to Rob Owens for any closing remarks.
Todd Coupland: More of an apples to apples comparison, if you're thinking about an ODM and that's an example would be how does our hps business performed relative to those Oems and we're not that.
Speaker Change: Thank you operator and again, thank you for joining US. This morning, 2024 was a solid year for us and we're looking forward on building on this positive momentum as we get further into 2025.
Todd Coupland: All of them pretty much the same Zip code.
Todd Coupland: That's great. Thanks for that color and then I just wanted to go back to deep seek as well.
Speaker Change: The products that we have in development combined with our recent wins also gives us confidence in our long term outlook and our future is certainly quite Brian we're looking at.
So is your takeaway at this point that it's going to drive custom silicon demand at the expense of merchant Silicon and that's an incremental driver. Thanks a lot.
Speaker Change: Forward to updating you next quarter and have a wonderful day.
Speaker Change: Thank you ladies and gentleman. The conference has now ended thank you all for joining you may all disconnect your lines.
Todd Coupland: Yes in terms of.
Todd Coupland: Our custom silicon demand, that's where we play and our view is that.
Todd Coupland: Uh huh.
Todd Coupland: We're growing.
Todd Coupland: Market custom silicon who's really around specialized AI application.
Todd Coupland: We feel that.
Todd Coupland: Yes.
Todd Coupland: We're focusing on where the majority of growth actually comes from.
Todd Coupland: Yeah.
Todd Coupland: Great. Thanks, a lot I appreciate the color.
Todd Coupland: Yeah.
Todd Coupland: Thank you there are no further questions at this time I will now hand, the call back to Robert.
Todd Coupland: Credit closing remarks.
Robert Young: Thank you operator and again, thank you for joining US. This morning, 2024 was a solid year for us and we're looking forward on building on this positive momentum as we get further into 2025.
Todd Coupland: So we Havent development combined with our recent wins.
Todd Coupland: So it gives us confidence in our long term outlook and our future is certainly quite Brian we look forward to updating you next quarter and have a wonderful day.
Todd Coupland: Thank you.
Speaker Change: Ladies and gentleman. The conference has now ended thank you all for joining you may all disconnect your lines.
Todd Coupland: Okay.