Q4 2025 Celestica Inc Earnings Call

January 29, 2026

Speaker #1: Nine eight seven six

Robert Mionis: 8, 7, 6, 5.

Speaker #1: five?

Speaker #2: Ladies and gentlemen, thank you

Operator: Ladies and gentlemen, thank you for joining us, and welcome to the Celestica Q4 2025 financial results and conference call. After today's prepared remarks, we will host a question and answer session. If you'd like to ask a question, please raise your hand. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute when called upon. I will now hand the conference over to Matthew Pallotta, Head of Investor Relations. Please go ahead.

Speaker #2: Thank you for joining us, and welcome to the Celestica Q4 2025 financial results and conference call. After today's prepared remarks, we will host a question-and-answer session.

Speaker #2: If you'd like to ask a question, please raise your hand. If you've dialed in to today's call, please press *9 to raise your hand, and *6 to unmute when called upon.

Speaker #2: I will now hand the conference over to Matthew Pallada, Head of Investor Relations. Please go ahead.

Speaker #3: Good morning, and thank you for joining us on Celestica's Q4 2025 financial results conference call. On the call today, we have Rob Mionis, President and Chief Executive Officer, and Mandeep Chawla, Chief Financial Officer.

Matthew Pallotta: Good morning, and thank you for joining us on Celestica's Q4 2025 financial results conference call. On the call today, we have Rob Mionis, President and Chief Executive Officer, and Mandeep Chawla, Chief Financial Officer. Please note that during the course of this call, we will make forward-looking statements, including statements relating to the future performance of Celestica, our business outlook, guidance for the first quarter of 2026, our 2026 annual outlook, and anticipated trends in our industry and their anticipated impact on our business. These are based on management's current expectations, forecasts, and assumptions, including that there are no material changes to tariffs or trade restrictions compared to what is in effect as of 28 January.

Q4 2025 Celestica Inc Earnings Call

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Q4 2025 Celestica Inc Earnings Call

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Thursday, January 29th, 2026 at 1:00 PM

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Matt Pallotta: Good morning, and thank you for joining us on Celestica's Q4 2025 financial results conference call. On the call today, we have Rob Mionis, President and Chief Executive Officer, and Mandeep Chawla, Chief Financial Officer. Please note that during the course of this call, we will make forward-looking statements, including statements relating to the future performance of Celestica, our business outlook, guidance for the first quarter of 2026, our 2026 annual outlook, and anticipated trends in our industry and their anticipated impact on our business. These are based on management's current expectations, forecasts, and assumptions, including that there are no material changes to tariffs or trade restrictions compared to what is in effect as of 28 January.

Speaker #3: Please note that during the course of this call, we will make forward-looking statements, including statements relating to the future performance of Celestica, our business outlook, guidance for the first quarter of 2026, our 2026 annual outlook, and anticipated trends in our industry and their anticipated impact on our business.

Speaker #3: These are based on management's current expectations, forecasts, and assumptions, including that there are no material changes to tariffs or trade restrictions compared to what is in effect as of January 28th.

Speaker #3: These forward-looking statements are subject to risks and uncertainties that could cause actual results, to differ materially from our expectations, and their potential impact on our results cannot be reliably predicted at this time.

Matthew Pallotta: These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations, and their potential impact on our results cannot be reliably predicted at this time. For identification and discussion of the material assumptions, risks, and uncertainties, please refer to our public filings with the SEC and on SEDAR+, as well as the investor relations section on our website. We undertake no obligation to update these forward-looking statements unless expressly required to do so by law. In addition, during this call, we will refer to various non-GAAP financial measures. We have included in our earnings release, found in the investor relations section of our website, a discussion of those non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations, and their potential impact on our results cannot be reliably predicted at this time. For identification and discussion of the material assumptions, risks, and uncertainties, please refer to our public filings with the SEC and on SEDAR+, as well as the investor relations section on our website. We undertake no obligation to update these forward-looking statements unless expressly required to do so by law. In addition, during this call, we will refer to various non-GAAP financial measures. We have included in our earnings release, found in the investor relations section of our website, a discussion of those non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.

Speaker #3: For identification and discussion of the material assumptions, risks, and uncertainties, please refer to our public filings with the SEC and on Cedar Plus, as well as the Investor Relations section on our website.

Speaker #3: We undertake no obligation to update these forward-looking statements unless expressly required to do so by law. In addition, during this call, we will refer to various non-GAAP financial measures.

Speaker #3: We have included in our earnings release found in the Investor Relations section of our website a discussion of those non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.

Speaker #3: Unless otherwise specified, all references to dollars on this call are to US dollars. All per-share information is based on diluted shares outstanding. And all references to comparative figures are a year-over-year comparison.

Matthew Pallotta: Unless otherwise specified, all references to dollars on this call are to US dollars, all per share information is based on diluted shares outstanding, and all references to comparative figures are a year-over-year comparison. Let me now turn the call over to Rob.

Unless otherwise specified, all references to dollars on this call are to US dollars, all per share information is based on diluted shares outstanding, and all references to comparative figures are a year-over-year comparison. Let me now turn the call over to Rob.

Speaker #3: Let me now turn the call over to

Speaker #3: Rob. Thank you, Matt.

Robert Mionis: Thank you, Matt, and good morning, everyone, and thank you for joining us on today's call. We delivered very strong results in Q4, driven primarily by growth in our CCS segment across both our communications and enterprise end markets. This led to revenue and adjusted EPS, both exceeding the high end of our guidance ranges, while adjusted operating margin of 7.7% once again marked the strongest performance in company history. I'd like to briefly review our performance for this past fiscal year. Overall, 2025 was another exceptional year for the company. For the full year, we achieved revenue of $12.4 billion and adjusted EPS of $6.05, representing growth of 28% and 56% year-over-year, respectively.

Speaker #1: And good morning, everyone. And thank you for joining us on today's call. We delivered very strong results in the fourth quarter, driven primarily by growth in our CCS segment across both our Communications and Enterprise end markets.

Speaker #1: This led to revenue and adjusted EPS both exceeding the high end of our guidance ranges, while adjusted operating margin of 7.7% once again marked the strongest performance in company history.

Speaker #1: I'd like to briefly review our performance for this past fiscal year. Overall, 2025 was another exceptional year for the company. For the full year, we achieved revenue of $12.4 billion, and adjusted EPS of $6.05.

Speaker #1: Representing growth of 28% and 56% year-over-year, respectively. Our adjusted operating margin of 7.5% marked the second consecutive year of 100 basis points improvement, driven by growth in AI-related demand for data center technologies, strong operational execution, and improved operating leverage.

Robert Mionis: Our adjusted operating margin of 7.5% marked the second consecutive year of 100 basis points improvement, driven by growth in AI-related demand for data center technologies, strong operational execution, and improved operating leverage. We surpassed our annual outlook for each of our key financial metrics, further building on our positive momentum generated over the last several years. Looking back, our financial results reflect a consistent progression marked by sustained annual improvement across revenue, adjusted operating margin, and adjusted EPS. As we look ahead, we anticipate the strong momentum to continue, with revenue growth expected to accelerate in 2026. Furthermore, our optimism continues to strengthen regarding the significant pipeline of growth opportunities that lie ahead for our businesses, particularly in our CCS segment, which we believe will sustain this growth trajectory in 2027.

Our adjusted operating margin of 7.5% marked the second consecutive year of 100 basis points improvement, driven by growth in AI-related demand for data center technologies, strong operational execution, and improved operating leverage. We surpassed our annual outlook for each of our key financial metrics, further building on our positive momentum generated over the last several years. Looking back, our financial results reflect a consistent progression marked by sustained annual improvement across revenue, adjusted operating margin, and adjusted EPS. As we look ahead, we anticipate the strong momentum to continue, with revenue growth expected to accelerate in 2026. Furthermore, our optimism continues to strengthen regarding the significant pipeline of growth opportunities that lie ahead for our businesses, particularly in our CCS segment, which we believe will sustain this growth trajectory in 2027.

Speaker #1: We surpassed our annual outlook for each of our key financial metrics, further building on our positive momentum generated over the last several years. Looking back, our financial results reflect a consistent progression, marked by sustained annual improvement across revenue, adjusted operating margin, and adjusted EPS.

Speaker #1: As we look ahead, we anticipate the strong momentum to continue, with revenue growth expected to accelerate in 2026. Furthermore, our optimism continues to strengthen regarding the significant pipeline of growth opportunities that lie ahead for our businesses.

Speaker #1: Particularly in our CCS segment, which we believe will sustain this growth trajectory in 2027. Before I provide an update on an annual outlook for each of our businesses, I would like to hand the call over to Mandeep to discuss our financial performance during the quarter and our guidance for the first quarter of 2026.

Robert Mionis: Before I provide an update on our annual outlook for each of our businesses, I would like to hand the call over to Mandeep to discuss our financial performance during the quarter and our guidance for Q1 2026. Mandeep, over to you.

Before I provide an update on our annual outlook for each of our businesses, I would like to hand the call over to Mandeep to discuss our financial performance during the quarter and our guidance for Q1 2026. Mandeep, over to you.

Speaker #1: Mandeep, over to

Speaker #4: Thank you, Rob. And good morning, everyone. In the fourth quarter, revenue of $3.65 billion was up 44% and above the high end of our guidance range.

Mandeep Chawla: Thank you, Rob, and good morning, everyone. In Q4, revenue of $3.65 billion was up 44% and above the high end of our guidance range, driven by very strong demand in our CCS segment. Our non-GAAP operating margin was 7.7%, up 90 basis points, driven by strong margin improvement in both of our segments. Our adjusted earnings per share was $1.89 in Q4, exceeding the high end of our guidance range and an increase of 78 cents or 70%. Moving on to some additional metrics. Adjusted gross margin was 11.3%, up 30 basis points, driven by higher volumes and stronger productivity. Our adjusted effective tax rate for the quarter was 19%.

Speaker #4: Driven by very strong demand in our CCS segment. Our non-GAAP operating margin was 7.7%, up 90 basis points, driven by strong margin improvement in both of our segments.

Speaker #4: Our adjusted earnings per share was $1.89 in the fourth quarter, exceeding the high end of our guidance range and an increase of 78 cents or 70%.

Speaker #4: Moving on to some additional metrics. Adjusted gross margin was 11.3%, up 30 basis points, driven by higher volumes and stronger productivity. Our adjusted effective tax rate for the quarter was 19%.

Speaker #4: And lastly, as a result of strong profitability and disciplined working capital management, we achieved adjusted ROIC of 43%, up 14 percentage points versus the prior year.

Mandeep Chawla: Lastly, as a result of strong profitability and disciplined working capital management, we achieved adjusted ROIC of 43%, up 14 percentage points versus the prior year. Moving on to our segment performance. Revenue in our ATS segment for the quarter was $795 million, 1% lower and in line with our guidance of a low single-digit percentage decline. The decline in revenue was driven by lower volumes in our capital equipment business and previously communicated portfolio reshaping in our A&D business, partly offset by stronger demand in our other end markets. Our ATS segment accounted for 22% of total company revenue in Q4. Revenue in our CCS segment was $2.86 billion, up 64%, driven by very solid growth in both our communications and enterprise end markets.

Lastly, as a result of strong profitability and disciplined working capital management, we achieved adjusted ROIC of 43%, up 14 percentage points versus the prior year. Moving on to our segment performance. Revenue in our ATS segment for the quarter was $795 million, 1% lower and in line with our guidance of a low single-digit percentage decline. The decline in revenue was driven by lower volumes in our capital equipment business and previously communicated portfolio reshaping in our A&D business, partly offset by stronger demand in our other end markets. Our ATS segment accounted for 22% of total company revenue in Q4. Revenue in our CCS segment was $2.86 billion, up 64%, driven by very solid growth in both our communications and enterprise end markets.

Speaker #4: Moving on to our segment performance. Revenue in our ATS segment for the quarter was $795 million, 1% lower and in line with our guidance of a low single-digit percentage decline.

Speaker #4: The decline in revenue was driven by lower volumes in our capital equipment business and previously communicated portfolio reshaping in our A&D business, partly offset by stronger demand in our other end markets.

Speaker #4: Our ATS segment accounted for 22% of total company revenue. In the fourth quarter. Revenue in our CCS segment was $2.86 billion, up 64%, driven by very solid growth in both our communications and enterprise and markets.

Speaker #4: The CCS segment accounted for 78% of total company revenue in the fourth quarter. Revenue in our communications end market increased by 79%, above our guidance of high 60% growth, primarily driven by strong demand and ramping programs for 800G networking switches across our largest hyperscaler customers.

Mandeep Chawla: The CCS segment accounted for 78% of total company revenue in Q4. Revenue in our communications end market increased by 79%, above our guidance of a high 60s percentage growth, primarily driven by strong demand and ramping programs for 800G networking switches across our largest hyperscaler customers. Our enterprise end market revenue was higher by 33%, which was above our guidance of a low 20s percentage increase, driven by the acceleration in the ramping of a next generation AI ML compute program with a large hyperscaler customer. Our HPS business generated revenue of $1.4 billion in Q4, representing growth of 72% and accounted for 38% of total company revenue. The strong growth was driven by ramping volumes in 800G switch programs with multiple hyperscaler customers. Moving on to segment margins.

The CCS segment accounted for 78% of total company revenue in Q4. Revenue in our communications end market increased by 79%, above our guidance of a high 60s percentage growth, primarily driven by strong demand and ramping programs for 800G networking switches across our largest hyperscaler customers. Our enterprise end market revenue was higher by 33%, which was above our guidance of a low 20s percentage increase, driven by the acceleration in the ramping of a next generation AI ML compute program with a large hyperscaler customer. Our HPS business generated revenue of $1.4 billion in Q4, representing growth of 72% and accounted for 38% of total company revenue. The strong growth was driven by ramping volumes in 800G switch programs with multiple hyperscaler customers. Moving on to segment margins.

Speaker #4: Our enterprise and market revenue was higher by 33%, which was above our guidance of a low 20th percentage increase, driven by the acceleration in the ramping of a next-generation AI/ML compute program with a large hyperscaler customer.

Speaker #4: Our HPS business generated revenue of $1.4 billion in the fourth quarter, representing growth of 72% and accounted for 38% of total company revenue. The strong growth was driven by ramping volumes in 800G switch programs with multiple hyperscaler customers.

Speaker #4: Moving on to segment margins. ATS segment margin in the quarter was 5.3%, up 70 basis points, primarily driven by improved profitability in our A&D business.

Mandeep Chawla: ATS segment margin in the quarter was 5.3%, up 70 basis points, primarily driven by improved profitability in our A&D business. CCS segment margin in the fourth quarter was 8.4%, an improvement of 50 basis points, driven by strong operating leverage. During the fourth quarter, we had three customers that each accounted for at least 10% of total revenue, representing 36%, 15%, and 12% of revenue, respectively. For the full year 2025, we also had three customers that accounted for at least 10% of revenues at 32%, 14%, and 12% of revenue, respectively. Moving on to working capital.

ATS segment margin in the quarter was 5.3%, up 70 basis points, primarily driven by improved profitability in our A&D business. CCS segment margin in the fourth quarter was 8.4%, an improvement of 50 basis points, driven by strong operating leverage. During the fourth quarter, we had three customers that each accounted for at least 10% of total revenue, representing 36%, 15%, and 12% of revenue, respectively. For the full year 2025, we also had three customers that accounted for at least 10% of revenues at 32%, 14%, and 12% of revenue, respectively. Moving on to working capital.

Speaker #4: CCS segment margin in the fourth quarter was 8.4%, an improvement of 50 basis points, driven by strong operating leverage. During the fourth quarter, we had three customers that each accounted for at least 10% of total revenue, representing 36%, 15%, and 12% of revenue, respectively.

Speaker #4: For the full year 2025, we also had three customers that accounted for at least 10% of revenues, at 32%, 14%, and 12% of revenue respectively.

Speaker #4: Moving on to working capital. At the end of the fourth quarter, our inventory balance was $2.19 billion, a sequential increase of $141 million and higher by $427 million compared to the prior year, as we support continuing revenue growth in our CCS segment.

Mandeep Chawla: At the end of the fourth quarter, our inventory balance was $2.19 billion, a sequential increase of $141 million and higher by $427 million compared to the prior year, as we support continuing revenue growth in our CCS segment. Cash cycle days during the fourth quarter were 61, an improvement of 8 days versus the prior year and was 4 days better sequentially. Turning to cash flows. In the fourth quarter, we generated $156 million of free cash flow, resulting in total annual adjusted free cash flow of $458 million in 2025, which was an increase of $152 million compared to the full year in 2024 and above our most recent annual outlook of $425 million.

At the end of the fourth quarter, our inventory balance was $2.19 billion, a sequential increase of $141 million and higher by $427 million compared to the prior year, as we support continuing revenue growth in our CCS segment. Cash cycle days during the fourth quarter were 61, an improvement of 8 days versus the prior year and was 4 days better sequentially. Turning to cash flows. In the fourth quarter, we generated $156 million of free cash flow, resulting in total annual adjusted free cash flow of $458 million in 2025, which was an increase of $152 million compared to the full year in 2024 and above our most recent annual outlook of $425 million.

Speaker #4: Cash cycle days during the fourth quarter were 61, an improvement of eight days versus the prior year, and four days better sequentially. Turning to cash flows.

Speaker #4: In the fourth quarter, we generated $156 million of free cash flow, resulting in total annual adjusted free cash flow of $458 million in 2025, which was an increase of 152 million dollars compared to the full year in 2024 and above our most recent annual outlook of $425 million.

Speaker #4: Our capital expenditures for the fourth quarter were $95 million, or 2.6% of revenue, bringing our total capital expenditures in 2025 to $201 million, or 1.6% of revenue.

Mandeep Chawla: Our capital expenditures for the fourth quarter were $95 million or 2.6% of revenue, bringing our total capital expenditures in 2025 to $201 million or 1.6% of revenue. Since we last spoke at our Investor and Analyst Day in October, we have continued our discussions with key customers in our CCS segment in order to align on long-term capacity planning. As a result of these discussions, we are meaningfully increasing the scale and scope of our capital investment plans in 2026 and 2027 in order to build out the revenue-enabling capacity required to support the strengthening demand we see ahead. We now anticipate that our capital expenditures for 2026 will be approximately $1 billion or 6% of our current annual revenue outlook....

Our capital expenditures for the fourth quarter were $95 million or 2.6% of revenue, bringing our total capital expenditures in 2025 to $201 million or 1.6% of revenue. Since we last spoke at our Investor and Analyst Day in October, we have continued our discussions with key customers in our CCS segment in order to align on long-term capacity planning. As a result of these discussions, we are meaningfully increasing the scale and scope of our capital investment plans in 2026 and 2027 in order to build out the revenue-enabling capacity required to support the strengthening demand we see ahead. We now anticipate that our capital expenditures for 2026 will be approximately $1 billion or 6% of our current annual revenue outlook....

Speaker #4: Since we last spoke at our investor and analyst day in October, we have continued our discussions with key customers in our CCS segment in order to align on long-term capacity planning.

Speaker #4: As a result of these discussions, we are meaningfully increasing the scale and scope of our capital investment plans in 2026 and 2027, in order to build out the revenue-enabling capacity required to support the strengthening demand we see ahead.

Speaker #4: We now anticipate that our capital expenditures for 2026 will be approximately $1 billion, or 6% of our current annual revenue outlook. Importantly, we anticipate being able to fully support this increase in capital expenditures through operating cash flow. The investments we are making in new capacity, which we expect will come online throughout 2026 and 2027, are a response to record bookings, accelerating growth in the scale of our existing engagements, and meaningfully improved long-term demand visibility with our hyperscaler customers.

Mandeep Chawla: Importantly, we anticipate to be able to fully support this increase in capital expenditures through operating cash flow. The investments we are making in new capacity, which we expect will come online throughout 2026 and 2027, are a response to record bookings, accelerating growth in the scale of our existing engagements, and meaningfully improved long-term demand visibility with our hyperscaler customers. We view our investments in new capacity as highly strategic, aligning our global footprint with the multi-year capacity roadmaps of our key customers in support of their large-scale investments in data center infrastructure and AI capabilities. These investments will include a combination of capacity additions at our largest sites, new customer-driven investments in the United States, and upgrades to manufacturing capabilities, including investments in power.

Importantly, we anticipate to be able to fully support this increase in capital expenditures through operating cash flow. The investments we are making in new capacity, which we expect will come online throughout 2026 and 2027, are a response to record bookings, accelerating growth in the scale of our existing engagements, and meaningfully improved long-term demand visibility with our hyperscaler customers. We view our investments in new capacity as highly strategic, aligning our global footprint with the multi-year capacity roadmaps of our key customers in support of their large-scale investments in data center infrastructure and AI capabilities. These investments will include a combination of capacity additions at our largest sites, new customer-driven investments in the United States, and upgrades to manufacturing capabilities, including investments in power.

Speaker #4: We view our investments in new capacity as highly strategic, aligning our global footprint with the multi-year capacity roadmaps of our key customers, in support of their large-scale investments in data center infrastructure and AI capabilities.

Speaker #4: These investments will include a combination of capacity additions at our largest sites, new customer-driven investments in the United States, and upgrades to manufacturing capabilities, including investments in power.

Speaker #4: We are undertaking significant new investments in Texas, in support of growing customer demand for US capabilities in the areas of R&D, manufacturing, and advanced assembly.

Mandeep Chawla: We are undertaking significant new investments in Texas in support of growing customer demand for US capabilities in the areas of R&D, manufacturing, and advanced assembly. At both our Richardson campus and new site in Fort Worth, we are adding a total of over 700,000 sq ft of footprint with expanded power availability. This incremental capacity is expected to come online in 2027. Also, in order to facilitate greater engagement on R&D and design, we plan to establish a new HPS design center in Austin. Our CapEx plans also include large-scale investments in our manufacturing capacity and capabilities across the rest of our global network. In Thailand, we continue to add new capacity to support very strong demand from multiple customers. We are adding over 1,000,000 sq ft in additional footprint, with upgrades including expanded power availability, advanced liquid cooling manufacturing, and testing capabilities.

We are undertaking significant new investments in Texas in support of growing customer demand for US capabilities in the areas of R&D, manufacturing, and advanced assembly. At both our Richardson campus and new site in Fort Worth, we are adding a total of over 700,000 sq ft of footprint with expanded power availability. This incremental capacity is expected to come online in 2027. Also, in order to facilitate greater engagement on R&D and design, we plan to establish a new HPS design center in Austin. Our CapEx plans also include large-scale investments in our manufacturing capacity and capabilities across the rest of our global network. In Thailand, we continue to add new capacity to support very strong demand from multiple customers. We are adding over 1,000,000 sq ft in additional footprint, with upgrades including expanded power availability, advanced liquid cooling manufacturing, and testing capabilities.

Speaker #4: At both our Richardson campus and new site in Forkworth, we are adding a total of over 700,000 square feet of footprint. With expanded power availability, this incremental capacity is expected to come online in 2027.

Speaker #4: Also, in order to facilitate greater engagement on R&D and design, we plan to establish a new HPS design center in Austin. Our CapEx plans also include large-scale investments in our manufacturing capacity and capabilities across the rest of our global network.

Speaker #4: In Thailand, we continue to add new capacity to support very strong demand from multiple customers. We are adding over $1 million square feet in additional footprint, with upgrades including expanded power availability, advanced liquid cooling manufacturing, and testing capabilities.

Speaker #4: We expect this new capacity to come online towards the end of 2026 and into 2027. Elsewhere in our network, we are upgrading and retooling sites to add new manufacturing lines in locations such as Mexico and Japan, in support of customer demand for greater geographic diversification.

Mandeep Chawla: We expect this new capacity to come online towards the end of 2026 and into 2027. Elsewhere in our network, we are upgrading and retooling sites to add new manufacturing lines in locations such as Mexico and Japan, in support of customer demand for greater geographic diversification, allowing them the flexibility and optionality to de-risk their global supply chains within our network. We are also excited to announce our plans to establish a new HPS design center in Taiwan. Overall, we are very encouraged by the strong alignment and close collaboration on capacity planning we have with our customers, which underpins our confidence in making these investments. Turning to our balance sheet and capital allocation. At the end of the quarter, our cash balance was $596 million.

We expect this new capacity to come online towards the end of 2026 and into 2027. Elsewhere in our network, we are upgrading and retooling sites to add new manufacturing lines in locations such as Mexico and Japan, in support of customer demand for greater geographic diversification, allowing them the flexibility and optionality to de-risk their global supply chains within our network. We are also excited to announce our plans to establish a new HPS design center in Taiwan. Overall, we are very encouraged by the strong alignment and close collaboration on capacity planning we have with our customers, which underpins our confidence in making these investments. Turning to our balance sheet and capital allocation. At the end of the quarter, our cash balance was $596 million.

Speaker #4: Allowing them the flexibility and optionality to de-risk their global supply chains within our network. We are also excited to announce our plans to establish a new HPS design center in Taiwan.

Speaker #4: Overall, we are very encouraged by the strong alignment and close collaboration on capacity planning we have with our customers, which underpins our confidence in making these investments.

Speaker #4: Turning to our balance sheet and capital allocation. At the end of the quarter, our cash balance was $596 million. Our gross debt was $724 million.

Mandeep Chawla: Our gross debt was $724 million, resulting in a net debt position of $128 million. We had no draw outstanding on our revolver at the end of the quarter, leaving us with approximately $1.3 billion in available liquidity. Our gross debt to non-GAAP trailing twelve-month adjusted EBITDA leverage ratio was 0.7 turns, an improvement of 0.1 turns sequentially, and 0.3 turns versus the prior year period. As of 31 December, we were in compliance with all financial covenants under our credit agreement. During Q4, we received regulatory approval to launch our new normal course issuer bid, which permits us to, at our discretion, purchase up to approximately 5% of our public float until 2 November 2026.

Our gross debt was $724 million, resulting in a net debt position of $128 million. We had no draw outstanding on our revolver at the end of the quarter, leaving us with approximately $1.3 billion in available liquidity. Our gross debt to non-GAAP trailing twelve-month adjusted EBITDA leverage ratio was 0.7 turns, an improvement of 0.1 turns sequentially, and 0.3 turns versus the prior year period. As of 31 December, we were in compliance with all financial covenants under our credit agreement. During Q4, we received regulatory approval to launch our new normal course issuer bid, which permits us to, at our discretion, purchase up to approximately 5% of our public float until 2 November 2026.

Speaker #4: Resulting in a net debt position of $128 million. We had no draws outstanding on our revolver at the end of the quarter, leaving us with approximately $1.3 billion in available liquidity.

Speaker #4: Our gross debt to non-GAAP trailing 12-month adjusted EBITDA leverage ratio was 0.7 turns, an improvement of 0.1 turns sequentially and 0.3 turns versus the prior year period.

Speaker #4: As of December 31st, we were in compliance with all financial covenants under our credit agreement. During the fourth quarter, we received regulatory approval to launch our new normal course issuer bid, which permits us to, at our discretion, purchase up to approximately 5% of our public flow until November the 2nd, 2026.

Speaker #4: We will continue to be opportunistic towards share repurchases, as our approach remains unchanged. During the quarter, we repurchased approximately 132,000 shares under our normal course issuer bid for $36 million.

Mandeep Chawla: We will continue to be opportunistic towards share repurchases, as our approach remains unchanged. During the quarter, we repurchased approximately 132,000 shares under our normal course issuer bid for $36 million. For 2025, our repurchases totaled 1.36 million shares at a cost of $151 million, or an average cost of approximately $111 per share. Now moving on to our guidance for Q1 2026. Q1 revenue is projected to be between $3.85 and 4.15 billion, representing growth of 51% at the midpoint. Adjusted earnings per share are anticipated to be between $1.95 and $2.15, representing an increase of $0.85 at the midpoint or 71% growth compared to the prior year.

We will continue to be opportunistic towards share repurchases, as our approach remains unchanged. During the quarter, we repurchased approximately 132,000 shares under our normal course issuer bid for $36 million. For 2025, our repurchases totaled 1.36 million shares at a cost of $151 million, or an average cost of approximately $111 per share. Now moving on to our guidance for Q1 2026. Q1 revenue is projected to be between $3.85 and 4.15 billion, representing growth of 51% at the midpoint. Adjusted earnings per share are anticipated to be between $1.95 and $2.15, representing an increase of $0.85 at the midpoint or 71% growth compared to the prior year.

Speaker #4: For 2025, our repurchases totaled $1.36 million shares, at a cost of $151 million or an average cost of approximately $111 per share. Now moving on to our guidance for the first quarter of 2026.

Speaker #4: First quarter revenue is projected to be between $3.85 billion and $4.15 billion, representing growth of 51% at the midpoint. Adjusted earnings per share are anticipated to be between $1.95 and $2.15.

Speaker #4: Representing an increase of 85 cents as a midpoint or 71% growth compared to the prior year. Assuming the achievement of the midpoint of our revenue and adjusted EPS guidance ranges, our non-GAAP operating margin for the first quarter is expected to be 7.8%.

Mandeep Chawla: Assuming the achievement of the midpoint of our revenue and adjusted EPS guidance ranges, our non-GAAP operating margin for Q1 is expected to be 7.8%, representing an increase of 70 basis points. We expect our adjusted effective tax rate for Q1 to be approximately 21%. Finally, let's review our revenue outlook for each of our end markets. In our ATS segment, we anticipate revenue to be down in the low single-digit percentage range, as growth in our health tech and industrial businesses are being offset by market-related softness in our capital equipment business and portfolio reshaping in our A&D business. In our CCS segment, we anticipate revenue in our communications end market to grow in the low 60s percentage range, primarily driven by ongoing ramps in multiple 800G programs with our hyperscaler customers.

Assuming the achievement of the midpoint of our revenue and adjusted EPS guidance ranges, our non-GAAP operating margin for Q1 is expected to be 7.8%, representing an increase of 70 basis points. We expect our adjusted effective tax rate for Q1 to be approximately 21%. Finally, let's review our revenue outlook for each of our end markets. In our ATS segment, we anticipate revenue to be down in the low single-digit percentage range, as growth in our health tech and industrial businesses are being offset by market-related softness in our capital equipment business and portfolio reshaping in our A&D business. In our CCS segment, we anticipate revenue in our communications end market to grow in the low 60s percentage range, primarily driven by ongoing ramps in multiple 800G programs with our hyperscaler customers.

Speaker #4: Representing an increase of 70 basis points. We expect our adjusted effective tax rate for the first quarter to be approximately 21%. Finally, let's review our revenue outlook for each of our end markets.

Speaker #4: In our ATS segment, we anticipate revenue to be down in the low single-digit percentage range, as growth in our health tech and industrial businesses are being offset by market-related softness in our capital equipment business and portfolio reshaping in our A&B business.

Speaker #4: In our CCS segment, we anticipate to grow in the low 60th revenue in our communications end market percentage range. Primarily driven by ongoing ramps in multiple 800G programs with our hyperscaler customers.

Speaker #4: In our enterprise end market, we expect very strong growth in the high-teens percentage range—supported by the progression in ramping of a next-generation AI/ML hyperscaler compute program.

Mandeep Chawla: In our enterprise end market, we expect very strong growth in the 100 high teens percentage range, supported by the progression in serving of a next-generation AI/ML hyperscaler compute program. With that, I will now turn the call back over to Rob for an update on our 2026 annual financial outlook, and to provide additional color on the latest developments in our business.

In our enterprise end market, we expect very strong growth in the 100 high teens percentage range, supported by the progression in serving of a next-generation AI/ML hyperscaler compute program. With that, I will now turn the call back over to Rob for an update on our 2026 annual financial outlook, and to provide additional color on the latest developments in our business.

Speaker #4: With that, I will now turn the call back over to Rob for an update on our 2026 annual financial outlook and to provide additional color on the latest developments in our...

Speaker #4: business. Thank you, Mandeep.

Robert Mionis: Thank you, Mandeep. Given the strengthening demand forecast across our portfolio, we are raising our 2026 annual financial outlook. We are increasing our revenue outlook to $17 billion and raising our adjusted EPS outlook to $8.75, representing year-over-year growth of 37% and 45%, respectively. This represents our high confidence view for 2026, which we will continue to refine and update as the year progresses. We are also maintaining our free cash flow outlook of $500 million. This demonstrates the inherent cash-generating power of our business, allowing us to organically fund a significant increase in capital investments while continuing to generate cash to fund other investment opportunities. Since our investor and analyst day this past October, the velocity and scale of awarded programs and growth opportunities for Celestica continues to expand.

Speaker #2: Given the strengthening demand forecast across our portfolio, we are raising our 2026 annual financial outlook. We are increasing our revenue outlook to $17 billion and raising our adjusted EPS outlook to $8.75.

Speaker #2: Representing year-over-year growth of 37% and 45% respectively. This represents our high confidence view for 2026, which we will continue to refine and update as the year progresses.

Speaker #2: We are also maintaining our free cash flow outlook of $500 million. This demonstrates the inherent cash-generating power of our business, allowing us to organically fund a significant increase in capital investments while continuing to generate cash to fund other investment opportunities.

Speaker #2: Since our investor and analyst day this past October, the velocity and scale of awarded programs and growth opportunities for CELESTICA continues to expand. As Mandeep discussed, we have responded by significantly increasing our capital investment plans in order to grow our global footprint in alignment with our customers' multi-year requirements.

Robert Mionis: As Mandeep discussed, we have responded by significantly increasing our capital investment plans in order to grow our global footprint in alignment with our customers' multi-year requirements. These investments are intended to provide us with the necessary scale to support the accelerated growth we anticipate in 2026, and which we believe will be sustained in 2027. In undertaking these investments, we have closely collaborated on demand planning with our largest customers, which has informed our decisions on the location, capabilities, and scale of the new capacity we are developing. These investments are targeted to strategically support our customer base and their program-specific requirements over the long term. On this note, we are proud of our decade-long partnership with Google and are excited to continue supporting the acceleration of leading AI data center architecture.

As Mandeep discussed, we have responded by significantly increasing our capital investment plans in order to grow our global footprint in alignment with our customers' multi-year requirements. These investments are intended to provide us with the necessary scale to support the accelerated growth we anticipate in 2026, and which we believe will be sustained in 2027. In undertaking these investments, we have closely collaborated on demand planning with our largest customers, which has informed our decisions on the location, capabilities, and scale of the new capacity we are developing. These investments are targeted to strategically support our customer base and their program-specific requirements over the long term. On this note, we are proud of our decade-long partnership with Google and are excited to continue supporting the acceleration of leading AI data center architecture.

Speaker #2: These investments are intended to provide us with the necessary scale to support the accelerated growth we anticipate in 2026 and which we believe will be sustained in 2027.

Speaker #2: In undertaking these investments, we have closely collaborated on demand planning with our largest customers, which has informed our decisions on the location, capabilities, and scale of the new capacity we are developing.

Speaker #2: These investments are targeted to strategically support our customer base and their programs' specific requirements over the long term. On this note, we are proud of our decade-long partnership with Google and are excited to continue supporting the acceleration of leading AI data center architecture.

Speaker #2: CELESTICA remains closely aligned with Google on the development of complex data center hardware and systems. As a preferred manufacturing partner for Google's Tensor processing unit, or TPU systems, CELESTICA is committed to making long-term investments in both capacity and capabilities both in the United States and across our global footprint, which includes our planned investments to expand manufacturing, capacity, in 2026 and 2027.

Robert Mionis: Celestica remains closely aligned with Google on the development of complex data center hardware and systems. As a preferred manufacturing partner for Google's Tensor Processing Unit, or TPU systems, Celestica is committed to making long-term investments in both capacity and capabilities, both in the United States and across our global footprint, which includes our planned investments to expand manufacturing capacity in 2026 and 2027. These investments are designed to support the scaling of production for current and future generations of Google's custom silicon TPU systems, as well as bleeding-edge networking technologies. Based on our latest outlook, we anticipate full-year revenue growth of approximately 50% in our CCS segment, supported by strong demand and new program ramps across both end markets. In communications, demand from hyperscalers is driving strong volumes for our 800G programs, while 400G remains highly resilient.

Celestica remains closely aligned with Google on the development of complex data center hardware and systems. As a preferred manufacturing partner for Google's Tensor Processing Unit, or TPU systems, Celestica is committed to making long-term investments in both capacity and capabilities, both in the United States and across our global footprint, which includes our planned investments to expand manufacturing capacity in 2026 and 2027. These investments are designed to support the scaling of production for current and future generations of Google's custom silicon TPU systems, as well as bleeding-edge networking technologies. Based on our latest outlook, we anticipate full-year revenue growth of approximately 50% in our CCS segment, supported by strong demand and new program ramps across both end markets. In communications, demand from hyperscalers is driving strong volumes for our 800G programs, while 400G remains highly resilient.

Speaker #2: These investments are designed to support the scaling of production for current and future generations of Google's custom silicon TPU systems, as well as leading-edge networking technologies.

Speaker #2: Based on our latest outlook, we anticipate full-year revenue growth of approximately 50% in our CCS segment, supported by strong demand and new program ramps across both end markets.

Speaker #2: In Communications, demand from hyperscalers is driving strong volumes for our 800G programs, while 400G remains highly resilient. We continue to expect mass production for our first 1.6T switching programs to begin ramping in the latter part of the year.

Robert Mionis: We continue to expect mass production for our first 1.6T switching programs to begin ramping in the latter part of the year. Over the past 90 days, we have continued to add to our pipeline of newly won business in networking, adding to an already robust view of demand into 2027. We are pleased to announce that we have secured the design and manufacturing award for the 1.6T networking switch platform with a third hyperscaler customer. This HPS engagement is expected to ramp production beginning in 2027, with design work already underway. This new program award, along with strengthening demand forecasts from our largest customers and a significant funnel of opportunities, gives us confidence and optimism regarding the growth trajectory of our networking businesses. In our enterprise end market, demand signals remain solid.

We continue to expect mass production for our first 1.6T switching programs to begin ramping in the latter part of the year. Over the past 90 days, we have continued to add to our pipeline of newly won business in networking, adding to an already robust view of demand into 2027. We are pleased to announce that we have secured the design and manufacturing award for the 1.6T networking switch platform with a third hyperscaler customer. This HPS engagement is expected to ramp production beginning in 2027, with design work already underway. This new program award, along with strengthening demand forecasts from our largest customers and a significant funnel of opportunities, gives us confidence and optimism regarding the growth trajectory of our networking businesses. In our enterprise end market, demand signals remain solid.

Speaker #2: Over the past 90 days, we have continued to add to our pipeline of newly won business in networking adding to an already robust view of demand into 2027.

Speaker #2: We are pleased to announce that we have secured the design and manufacturing award for the 1.60 networking switch platform with a third hyperscaler customer.

Speaker #2: This HPS engagement is expected to ramp production beginning in 2027, with design work already underway. This new program award, along with strengthening demand forecasts from our largest customers and a significant funnel of opportunities, gives us confidence and optimism regarding the growth trajectory of our networking businesses.

Speaker #2: In our enterprise end market, demand signals remain solid. As anticipated, we saw a meaningful ramp in our next-generation AI/ML compute program with a hyperscaler customer during the fourth quarter.

Robert Mionis: As anticipated, we saw a meaningful ramp in our next-generation AI/ML compute program with a hyperscaler customer during Q4, and we continue to expect that volumes will accelerate into 2026. Looking towards 2027, we continue to anticipate strong demand from our hyperscaler and digital native customers, driven by ramps in next-gen AI/ML compute programs. Now moving on to our ATS segment. We are maintaining our outlook for revenues to remain approximately flat to up in the mid-single digits percentage range for the full year of 2026, consistent with the targets we shared at our investor and analyst day in October. We continue to expect growth in our industrial and health tech business, supported primarily by the ramping of new programs. We anticipate this growth will be at least partially moderated by lower volumes in our capital equipment business in the near term.

As anticipated, we saw a meaningful ramp in our next-generation AI/ML compute program with a hyperscaler customer during Q4, and we continue to expect that volumes will accelerate into 2026. Looking towards 2027, we continue to anticipate strong demand from our hyperscaler and digital native customers, driven by ramps in next-gen AI/ML compute programs. Now moving on to our ATS segment. We are maintaining our outlook for revenues to remain approximately flat to up in the mid-single digits percentage range for the full year of 2026, consistent with the targets we shared at our investor and analyst day in October. We continue to expect growth in our industrial and health tech business, supported primarily by the ramping of new programs. We anticipate this growth will be at least partially moderated by lower volumes in our capital equipment business in the near term.

Speaker #2: And we continue to expect that volumes will accelerate into 2026. Looking towards 2027, we continue to anticipate strong demand from our hyperscaler and digital native customers driven by ramps in next-gen AI/ML compute programs.

Speaker #2: Now moving on to our ATS segment. We are maintaining our outlook for revenues to remain approximately flat to up in the mid-single digits percentage range for the full year 2026.

Speaker #2: Consistent with the targets we shared at our Investor and Analyst Day in October, we continue to expect growth in our industrial and health tech business, supported primarily by the ramping of new programs.

Speaker #2: We anticipate this growth will be at least partially moderated by lower volumes in our capital equipment business in the near term. As we progress through 2026, we anticipate overall ATS revenues to be higher in the second half of the year, led by a recovery in capital equipment volumes as broader market growth tailwinds come into effect.

Robert Mionis: As we progress through 2026, we anticipate overall ATS revenues to be higher in the second half of the year, led by a recovery in capital equipment volumes as broader market growth tailwinds come into effect. We also expect year-over-year growth to improve as we lap the impact from the strategic portfolio reshaping activities we undertook in A&D during the first half of 2025. Overall, we expect 2026 to be another year of transformational progress in the growth and evolution of our business. We are experiencing an unprecedented level of demand, supported by the sustained large-scale multi-year investments from our largest data center customers. We believe our company is uniquely positioned as a critical enabler of the AI ML revolution, helping to solve the most difficult challenges in the data center, from advanced liquid cooling solutions throughout the rack, to the transition to next generation networking platforms.

As we progress through 2026, we anticipate overall ATS revenues to be higher in the second half of the year, led by a recovery in capital equipment volumes as broader market growth tailwinds come into effect. We also expect year-over-year growth to improve as we lap the impact from the strategic portfolio reshaping activities we undertook in A&D during the first half of 2025. Overall, we expect 2026 to be another year of transformational progress in the growth and evolution of our business. We are experiencing an unprecedented level of demand, supported by the sustained large-scale multi-year investments from our largest data center customers. We believe our company is uniquely positioned as a critical enabler of the AI ML revolution, helping to solve the most difficult challenges in the data center, from advanced liquid cooling solutions throughout the rack, to the transition to next generation networking platforms.

Speaker #2: We also expect year-over-year growth to improve as we lap the impact from the strategic portfolio reshaping activities we undertook in A&D during the first half of 2025.

Speaker #2: Overall, we expect 2026 to be another year of transformational progress in the growth and evolution of our business. We are experiencing an unprecedented level of demand, supported by the sustained, large-scale, multi-year investments from our largest data center customers.

Speaker #2: We believe our company is uniquely positioned as a critical enabler of the AI/ML revolution, helping to solve the most difficult challenges in the data center—from advanced liquid cooling solutions throughout the rack to the transition to next-generation networking platforms.

Speaker #2: It's our ability to deliver these complex, system-level solutions that allows us to win new mandates and solidify our leadership in the technologies of tomorrow.

Robert Mionis: It's our ability to deliver these complex system-level solutions that allows us to win new mandates and solidify our leadership in the technologies of tomorrow. Today, our team is intently focused on our operational execution as we scale our global footprint to meet this growing demand. With that, I will now turn the call back to the operator to begin the Q&A session.

It's our ability to deliver these complex system-level solutions that allows us to win new mandates and solidify our leadership in the technologies of tomorrow. Today, our team is intently focused on our operational execution as we scale our global footprint to meet this growing demand. With that, I will now turn the call back to the operator to begin the Q&A session.

Speaker #2: Today, our team is intently focused on our operational execution as we scale our global footprint to meet this growing demand. With that, I will now turn the call back to the operator to begin the Q&A

Speaker #2: session. Thank you.

Operator: Thank you. We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please raise your hand now. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute when you're called upon. Please stand by while we compile the Q&A roster. And your first question comes from the line of Ruplu Bhattacharya from Bank of America. Your line is... Ruplu, your line is now open. You might have to unmute.

Speaker #1: We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please raise your hand now.

Speaker #1: If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute when you're called upon. Please stand by while we compile the Q&A roster.

Speaker #1: And your first question comes from the line of Rupu Bhattacharya from Bank of America. Your line is... Rupu, your line is now open. You might have to unmute.

Speaker #2: Sorry, can you hear me now?

[Analyst] (Bank of America): Sorry, can you hear me now?

Ruplu Bhattacharya: Sorry, can you hear me now?

Mandeep Chawla: Yes. Hi, Ruplu. Hi, welcome back.

Speaker #3: Hi, Rupu.

Speaker #4: Hi. Yes.

Speaker #4: Welcome back. Hi.

[Analyst] (Bank of America): Hi. Good morning. Thanks for taking my questions. So looks like you've taken up both the top line and the bottom line guide for fiscal 2026. If we take the midpoint of the guidance literally, then there seems to be a slowdown coming in fiscal second half, and also some loss of operating leverage. I mean, the revenue guidance is 51% year-over-year for fiscal Q1, but the full year is 37%, so implying some slower growth in the remaining three quarters. Likewise, in EPS, it's 71% for the first quarter, but full year is 45%. So EPS is definitely growing faster than revenue, and there is leverage in the model, but looks like some operating leverage decline in the remaining three quarters.

Ruplu Bhattacharya: Hi. Good morning. Thanks for taking my questions. So looks like you've taken up both the top line and the bottom line guide for fiscal 2026. If we take the midpoint of the guidance literally, then there seems to be a slowdown coming in fiscal second half, and also some loss of operating leverage. I mean, the revenue guidance is 51% year-over-year for fiscal Q1, but the full year is 37%, so implying some slower growth in the remaining three quarters. Likewise, in EPS, it's 71% for the first quarter, but full year is 45%. So EPS is definitely growing faster than revenue, and there is leverage in the model, but looks like some operating leverage decline in the remaining three quarters.

Speaker #2: Good morning. Thanks for taking my questions. So, it looks like you’ve raised both the top-line and the bottom-line guidance for fiscal ’26.

Speaker #2: If we take the midpoint of the guidance literally, then there seems to be a slowdown coming in the fiscal second half, and also some loss of operating leverage.

Speaker #2: I mean, the revenue guidance is 51% year-on-year for fiscal one Q, but the full year is 37%. So implying some slower growth in the remaining three quarters.

Speaker #2: Likewise, in EPS, it's 71% for the first quarter, but full year is 45%. So EPS is definitely growing faster than revenue, and there is leverage in the model.

Speaker #2: But it looks like some operating leverage decline in the remaining three quarters. So can you just clarify for us, is there something specific that's causing this slowdown, or should investors just chalk this up to conservativeism in the guide?

[Analyst] (Bank of America): So can you just clarify for us, is there something specific that's causing this slowdown, or should investors just chalk this up to conservatism in the guide?

So can you just clarify for us, is there something specific that's causing this slowdown, or should investors just chalk this up to conservatism in the guide?

Speaker #3: That's a good morning, Rupu. And first of all, welcome back. We're always very happy to work with you. So thank you for the coverage.

Mandeep Chawla: Good morning, Ruplu, and first of all, welcome back. We're always very happy to work with you, so thank you for the coverage. Yeah, look, we're very confident on our 2026 outlook, and as we said in our commentary and Rob mentioned, it's our high confidence view. Our customer forecasts right now for 2026 are higher than the $17 billion that we are guiding. And what's also really nice to see right now is that the demand outlook with our customers is actually extending beyond sometimes our typical four-quarter outlook. You know, similar to past outlooks that we've had, Ruplu, where we're taking a pretty pragmatic view.

Speaker #3: Yeah. Look, we're very confident on our 2026 outlook, and as we said in our commentary and Rob mentioned, it's our high-confidence view. Our customer forecast right now for 2026 are higher than the $17 billion that we are guiding and what's also really nice to see right now is that the demand outlook with our customers is actually extending beyond sometimes our typical four-quarter outlook.

Speaker #3: Similar to past outlooks that we've had, Rupu, we're taking a pretty pragmatic view, our views on next quarter and the quarter after that are typically going to be very much dialed in, and we're going to share with you what that visibility exactly looks like.

Mandeep Chawla: Our views on next quarter and the quarter after that are typically going to be very much dialed in, and we're going to share it with you what that visibility exactly looks like. But when we look beyond the two quarters, we're just being pragmatic. We're focusing on securing supply. We have no concerns at this time, but we just want to make sure that the supply base can also ramp as fast as we are ramping. And then we take into account the macro uncertainties, which, as you know, there's a lot of them. But as we go through the year, we are working towards a higher number, and we'll look to be updating the numbers as we go.

Our views on next quarter and the quarter after that are typically going to be very much dialed in, and we're going to share it with you what that visibility exactly looks like. But when we look beyond the two quarters, we're just being pragmatic. We're focusing on securing supply. We have no concerns at this time, but we just want to make sure that the supply base can also ramp as fast as we are ramping. And then we take into account the macro uncertainties, which, as you know, there's a lot of them. But as we go through the year, we are working towards a higher number, and we'll look to be updating the numbers as we go.

Speaker #3: But when we look beyond the two quarters, we're just being pragmatic. We're focusing on securing supply. We have no concerns at this time that we just want to make sure that the supply base can also ramp as fast as we are ramping.

Speaker #3: And then we take into account the macro uncertainties, which, as you know, there's a lot of them. But as we go through the year, we are working towards a higher number, and we'll look to be updating the numbers

Speaker #2: Okay, thanks for the details there. If I can ask a quick follow-up, I want to ask about risk management. So, you obviously have a lot of opportunity in both your white box switching business and the custom ASIC server business.

[Analyst] (Bank of America): Okay, thanks for the details there. If I can ask a quick follow-up, I want to ask about risk management. So, you know, you've obviously have a lot of opportunity in both your white box switching business and the custom ASIC server business. One thing you've mentioned is you're increasing CapEx to fund the growth. Can I ask if you're concerned about any potential funding for future AI-related projects? And is there any risk to programs materializing, and have you taken that into account? And also, you've, you've kept free cash flow at $500 million. You know, given that the CapEx is going up and you're probably going to need more working capital to support revenue growth, can you just tell us like, you know, is there a risk to, to, the story here?

Ruplu Bhattacharya: Okay, thanks for the details there. If I can ask a quick follow-up, I want to ask about risk management. So, you know, you've obviously have a lot of opportunity in both your white box switching business and the custom ASIC server business. One thing you've mentioned is you're increasing CapEx to fund the growth. Can I ask if you're concerned about any potential funding for future AI-related projects? And is there any risk to programs materializing, and have you taken that into account? And also, you've, you've kept free cash flow at $500 million. You know, given that the CapEx is going up and you're probably going to need more working capital to support revenue growth, can you just tell us like, you know, is there a risk to, to, the story here?

Speaker #2: One thing you've mentioned is you're increasing CAPEX to fund the growth. Can I ask if you're concerned about any potential funding for future AI-related projects?

Speaker #2: And is there any risk to programs materializing? And have you taken that into account? And also, you've kept free cash flow at $500 million.

Speaker #2: Given that CAPEX is going up and you probably going to need more working capital to support revenue growth, can you just tell us, is there a risk to the story here?

Speaker #2: And what is giving you confidence to maintain the free cash flow guide? And again, congrats on the quarter. Thanks for taking my—

[Analyst] (Bank of America): What is giving you confidence to maintain the free cash flow guide? Again, congrats on the quarter. Thanks for taking my questions.

What is giving you confidence to maintain the free cash flow guide? Again, congrats on the quarter. Thanks for taking my questions.

Speaker #2: questions. Thanks, Rupu.

Robert Mionis: Thanks, Ruplu. I'll start off, I'll let Mandeep finish up. With respect to programs on materializing, you know, the build-out that we're doing is based on booked business. We had a record bookings year in 2025, and we're really just building out to support those bookings. So there's very little risk in those programs materializing. They've been in the development cycle right now, and we're doing proof of concepts with respect to validation testing, and they're well on the way to ramping in 2026. In terms of risks to the entire story, Mandeep talked about it. We view it more as uncontrollable, like geopolitical risks. There's always an opportunity of tightening supply chain.

Speaker #3: I'll start off. I'll let Mandeep finish up. With respect to programs materializing, the build-out that we're doing is based on both business. We had a record booking year in 2025, and we're really just building out to support those bookings.

Speaker #3: So there's very little risk in those programs materializing. They've been in the development cycle right now, and we're doing proof of concepts with respect to validation testing.

Speaker #3: And they're well on the way to ramping in 2026. In terms of risks to the entire story, Mandeep talked about it. We view it more as uncontrollable.

Speaker #3: It's like a geopolitical risk. There's always an opportunity of tightening supply chain, but frankly, our suppliers realize now that we have a lot of leverage these days given our scale.

Robert Mionis: But frankly, our suppliers realize now that we have a lot of leverage these days, given our scale. And we're also a design agent, which has given us some leverage in the supply chain. We also have a lot of opportunities, as Mandeep mentioned, demand continues to well outstrip our ability to provide it in a very short term. We have very strong demand from networking with respect to 400G, 800G, and the 1.6-

But frankly, our suppliers realize now that we have a lot of leverage these days, given our scale. And we're also a design agent, which has given us some leverage in the supply chain. We also have a lot of opportunities, as Mandeep mentioned, demand continues to well outstrip our ability to provide it in a very short term. We have very strong demand from networking with respect to 400G, 800G, and the 1.6-

Speaker #3: And we're also a design agent, which has given us some leverage in the supply chain. We also have a lot of opportunities as Mandeep mentioned.

Speaker #3: Demand continues to well upshift our ability to provide it in a very short term. We have very strong demand from networking with respect to 400G, 800G, and the 1.6T ramps that are happening later on this year.

Robert Mionis: ... later on this year. On top of this, we have some very strong demand for AI/ML compute. Within the enterprise market, we're also seeing signs of very significant growth. Overall, we see more opportunities than risk at this time.

... later on this year. On top of this, we have some very strong demand for AI/ML compute. Within the enterprise market, we're also seeing signs of very significant growth. Overall, we see more opportunities than risk at this time.

Speaker #3: And on top of this, we have some very strong demand for AI/ML compute. And within the enterprise market, we're also seeing signs of very significant growth.

Speaker #3: So overall, we see more opportunities than risk at this time.

Speaker #2: Thank you. Thanks for all the details. Sorry, go ahead.

[Analyst] (BMO Capital Markets): Sorry, go ahead.

Ruplu Bhattacharya: Sorry, go ahead.

Mandeep Chawla: Talk about cash generation, and look, we're very comfortable with our ability to invest, and frankly, we're willing to invest even more as we go through the year. That's what's in front of us. We think we'll generate at least $500 million of free cash flow this year. That's after paying for $1 billion of CapEx. I know that those on the call already are aware of this. We've generated positive free cash flow every quarter for almost seven years now, and it's because we are very focused on generating strong, positive free cash flow every quarter. And so with the growth plans that we have in front of us, we don't see that being at risk. And you know, this is even going beyond the fact that we have an incredibly healthy balance sheet.

Speaker #3: Rupu, I was going to talk about cash generation. And look, we're very comfortable with our ability to invest and frankly, we're willing to invest even more as we go through the year.

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Q4 2025 Celestica Inc Earnings Call

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Q4 2025 Celestica Inc Earnings Call

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