Highlights

  • Celestica increased second-quarter revenue 62% to USD 4.70 billion, exceeding the upper end of its guidance.
  • Connectivity and Cloud Solutions drove growth as segment revenue rose 84% and reached USD 3.81 billion.
  • Management raised annual revenue, adjusted earnings, operating margin and free cash flow targets following the quarterly performance.
  • Celestica expects revenue growth to accelerate further next year, although customer spending and supply availability remain important dependencies.

Results above the top of guidance gave Celestica (NYSE:CLS) grounds to lift its annual targets across revenue, earnings, margin and cash flow. The electronics manufacturing and supply-chain services group reported a 62% second-quarter revenue increase, led by its cloud and connectivity business. Its outlook now extends that momentum into higher expected growth in 2027.

Sales and Earnings Beat Expectations

Second-quarter 2026 results, released on 27 July, showed revenue of USD 4.70 billion, compared with USD 2.89 billion a year earlier. That exceeded the guided range of USD 4.15 billion to USD 4.45 billion.

Adjusted earnings per share reached USD 2.54, up from USD 1.39 and above guidance of USD 2.14 to USD 2.34. GAAP earnings per share were USD 3.17, compared with USD 1.82.

Adjusted operating margin increased to 8.2% from 7.4%, while GAAP operating margin was 9.8%. Non-GAAP free cash flow rose to USD 147.1 million from USD 119.9 million. Chief executive Rob Mionis highlighted revenue and earnings exceeding the upper end of the company's expectations.

Cloud Business Sets the Pace

Connectivity and Cloud Solutions generated USD 3.81 billion of revenue, up 84%, with a segment margin of 8.7%. Within that segment, Hardware Platform Solutions revenue was approximately USD 1.9 billion, an increase of 58%.

Advanced Technology Solutions produced USD 0.89 billion of revenue, up 8%. Its margin improved to 6.3% from 5.3%, providing a separate source of profitability improvement even as its growth lagged the larger segment.

The strongest expansion came from networking and compute equipment for large data-centre operators. Individual customers were not identified. The increasing weight of cloud and connectivity also means group performance depends heavily on demand in that end market.

Annual Outlook Moves Higher

Celestica raised its 2026 revenue outlook to USD 20.5 billion from USD 19.0 billion. Its adjusted earnings-per-share target increased to USD 11.30 from USD 10.15, and adjusted operating margin guidance rose to 8.4% from 8.1%.

The free cash flow target increased to USD 600 million from USD 500 million. Management said the revised outlook implies annual revenue growth of 65% and adjusted earnings growth of 87%.

For the third quarter, revenue guidance is USD 5.25 billion to USD 5.55 billion, with adjusted earnings per share of USD 2.88 to USD 3.08. Those ranges represent expected future performance, following the completed second quarter.

Expansion Raises Delivery Requirements

Management expects 2027 revenue growth to exceed the 65% anticipated for 2026, with adjusted earnings growing faster than revenue. That expectation sets a demanding trajectory, but it remains conditional on future business performance.

Customer capital spending, component availability and production schedules remain relevant to delivery. The concentration of growth in data-centre equipment connects the raised targets closely to the pace of infrastructure investment.

The next quarterly disclosure will measure performance against the higher revenue and earnings ranges. Margin and cash generation will show how the expansion translates beyond sales. No date for that report was confirmed.