Celestica Beats Q2 Earnings Estimates on Solid Top-Line Growth

Celestica Inc. CLS recorded strong second-quarter 2025 results with adjusted earnings and revenues beating the respective Zacks Consensus Estimate. 

The Toronto-based electronics manufacturing service provider reported healthy year-over-year revenues backed by robust expansion in the Connectivity & Cloud Solutions (CCS) segment. Management’s emphasis on innovation, product diversification and AI advancements is a key growth driver. Solid growth in free cash flow is a tailwind.

Net Income

Quarterly net earnings were $211 million or $1.82 per share, up from $95 million or 80 cents per share in the year-ago quarter. The more than two-fold growth in GAAP earnings was primarily attributable to top-line improvement.

Non-GAAP net earnings improved to $161.2 million or $1.39 per share from $108 million or 90 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 15 cents.

Revenues

Quarterly revenues were $2.89 billion, up 21% year over year, led by healthy demand in the CCS segment. The top line exceeded management’s guidance of $2.575 billion-$2.725 billion and beat the Zacks Consensus Estimate by $223 million.

Quarterly Segment Results

CCS: Total revenues in this segment improved 28% year over year to $2.07 billion, primarily driven by strong demand in the Communications end market. The segment accounted for 71.6% of the company’s total revenues in the second quarter.

Revenues in the Enterprise end market declined 37% year over year to $433 million in the second quarter. The Communications end market reported 75% revenue growth to $1.64 billion, with solid growth in the hardware platform solutions portfolio backed by hyperscaler customer demand for networking products, including 400G switches and 800G switches. The segment’s operating income increased to $171 million (up 50%) with a margin of 8.3% (up 130 bps), driven by greater operating leverage and improved mix.

Advanced Technology Solutions (ATS): The segment’s revenues were $819 million (up 7%), accounting for 28.4% of total revenues in the second quarter. The segment’s operating income increased 24% year over year to $44 million with a margin of 5.3% (up 70 bps).

Cash Flow & Liquidity

In the reported quarter, Celestica generated an operating cash flow of $152.4 million compared with $99.6 million in the year-ago quarter, bringing the respective tallies for the first six months of 2025 and 2024 to $282.7 million and $207.7 million. Free cash flow was $119.9 million in the second quarter compared with $65.6 million in the prior-year quarter.

As of June 30, 2025, the company had $313.8 million in cash and cash equivalents with a long-term debt of $848.6 million.

Guidance Up

For the third quarter of 2025, Celestica expects revenues in the range of $2.875 billion to $3.125 billion. Non-GAAP earnings per share are expected to be in the range of $1.37-$1.53. Management expects the non-GAAP operating margin to be 7.4%. 

With strong quarterly results, Celestica currently anticipates 2025 revenues to be approximately $11.55 billion, up from the previous projection of $10.85 billion. Non-GAAP operating margin is expected to be 7.4%, up from the prior outlook of 7.2%. Non-GAAP adjusted earnings are expected to be $5.50 per share, up from the previous view of $5.00. Non-GAAP free cash flow is expected to be $400 million, up from $350 million expected earlier.

Zacks Rank & Stock to Consider

Celestica currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release second-quarter 2025 earnings on Aug. 5. The Zacks Consensus Estimate for earnings is pegged at 65 cents per share, suggesting a growth of 25% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 14.8%. Arista delivered an average earnings surprise of 11.8% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release second-quarter 2025 earnings on Aug. 7. The Zacks Consensus Estimate for earnings is pegged at $1.55 per share, indicating a 1.9% decline from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 8%. Akamai delivered an average earnings surprise of 4.8% in the last four reported quarters.

Pinterest, Inc. PINS is set to release second-quarter 2025 earnings on Aug. 7. The Zacks Consensus Estimate for earnings is pegged at 34 cents per share, implying a growth of 17.2% from the year-ago reported figure.

Pinterest has a long-term earnings growth expectation of 33.3%. Pinterest delivered an average earnings surprise of 0.5% in the last four reported quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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