Celestica Surpasses Q4 Earnings Estimates on Higher Revenues

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

This 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 was a key growth driver. Solid growth in free cash flow was a tailwind.

Net Income

Quarterly net earnings were $267.5 million or $2.31 per share, up from $151.7 million or $1.29 per share in the year-ago quarter. The growth in GAAP earnings was primarily attributable to top-line improvement.

Non-GAAP net earnings increased to $218.8 million or $1.89 per share from $130.2 million or $1.11 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 15 cents.

Revenues

Quarterly revenues were $3.65 billion, up 44% year over year, led by healthy demand in the CCS segment. The top line exceeded management’s guidance of $3.325 billion to $3.575 billion and beat the Zacks Consensus Estimate by $189 million.

Quarterly Segment Results

Total revenues in the Connectivity & Cloud Solutions (CCS) segment improved 64% year over year to $2.86 billion, primarily driven by strong demand in the Communications end market. The segment accounted for 78.3% of the company’s total revenues in the fourth quarter.

The Communications end market benefited from solid growth in the hardware platform solutions (HPS) portfolio backed by hyperscale customer demand for networking products, including 400G switches and 800G switches. HPS revenues increased 72% year over year to $1.4 billion. The segment’s margin was 8.4% compared with 7.9% in fourth-quarter 2024.

Total revenues in the Advanced Technology Solutions segment declined 1% year over year to $0.8 billion. The segment’s margin was 5.3% year over year compared with 4.6% a year ago.

Cash Flow & Liquidity

In the reported quarter, Celestica generated an operating cash flow of $250.6 million compared with $143.4 million in the year-ago quarter, bringing the respective tallies for 2025 and 2024 to $659.5 million and $473.9 million. Free cash flow was $155.9 million in the fourth quarter compared with $95.8 million in the prior-year quarter.

As of Dec. 31, 2025, the company had $595.6 million in cash and cash equivalents with a long-term debt of $750.5 million compared with respective tallies of $423.3 million and $770.2 million a year ago.

Guidance Up

For the first quarter of 2026, Celestica expects revenues in the range of $3.85 billion to $4.15 billion. Non-GAAP earnings per share are expected to be in the band of $1.95-$2.15. Management expects the non-GAAP operating margin to be about 7.8%. 

With strong quarterly results, Celestica currently anticipates 2026 revenues to be approximately $17 billion, up from the previous projection of $16 billion. Non-GAAP operating margin is expected to be 7.8%. Non-GAAP adjusted earnings are expected to be $8.75 per share, up from the previous view of $8.2 per share. Non-GAAP free cash flow is estimated to be $500 million.

Zacks Rank

CLS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Arista Networks Inc. ANET is scheduled to release fourth-quarter 2025 earnings on Feb. 12. The Zacks Consensus Estimate for earnings is pegged at 75 cents per share, suggesting growth of 15.38% from the year-ago reported figure.

Arista has a long-term earnings growth expectation of 20.08%. The company delivered an average earnings surprise of 10.17% in the last four reported quarters.

Akamai Technologies, Inc. AKAM is slated to release fourth-quarter 2025 earnings on Feb. 19. The Zacks Consensus Estimate for earnings is pegged at $1.75 per share, indicating 5.4% growth from the year-ago reported figure.

Akamai has a long-term earnings growth expectation of 5.96%. The company delivered an average earnings surprise of 10.46% in the last four reported quarters.

Motorola Solutions, Inc. MSI is set to release fourth-quarter 2025 earnings on Feb. 12. The Zacks Consensus Estimate for earnings is pegged at $4.36 per share, implying growth of 7.92% from the year-ago reported figure.

Motorola has a long-term earnings growth expectation of 9.07%. The company delivered an average earnings surprise of 5.5% in the last four reported quarters.

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

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