Celestica’s Strong Financial Performance in Q3 2025

Celestica Inc., a leading electronics manufacturing services (EMS) provider, has reported impressive financial results for the third quarter of 2025. The company’s revenue, profitability, and earnings per share have all seen significant improvements compared to the same period last year, showcasing the strength and resilience of its business operations.

Revenue Growth Across Segments

Celestica’s total revenue for Q3 2025 reached $3.19 billion, a 28% increase compared to Q3 2024. This strong performance was driven by growth across both of the company’s operating segments - Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS).

The ATS segment, which includes the company’s Aerospace and Defense, Industrial, HealthTech, and Capital Equipment businesses, saw revenue decrease by 4% year-over-year, primarily due to the discontinuation of a margin-dilutive program in the Aerospace and Defense business. However, the CCS segment, which encompasses the Communications and Enterprise (servers and storage) end markets, experienced a remarkable 43% increase in revenue. This was largely attributable to a surge in demand for data center networking products, including the ramp-up of Celestica’s switch programs with hyperscaler customers.

Improved Profitability and Margins

Celestica’s profitability also saw a significant boost in Q3 2025. Gross profit increased by 60% to $416.1 million, with gross margin expanding from 10.4% in Q3 2024 to 13.0% in Q3 2025. This improvement was driven by strong operating leverage and a more favorable product mix, as well as the positive impact of fair value adjustments related to the company’s total return swap (TRS) agreement.

The company’s operating earnings (adjusted EBIAT) increased by 43% to $242.2 million, with the adjusted operating margin expanding from 6.8% in Q3 2024 to 7.6% in Q3 2025. This was primarily due to the higher revenue and improved gross margins, as well as effective cost management.

Robust Earnings and Cash Flow

Celestica’s net earnings for Q3 2025 were $267.8 million, a significant increase of 199% compared to the same period in 2024. This was driven by the higher gross profit, lower selling, general, and administrative (SG&A) expenses, and a favorable impact from the TRS fair value adjustments.

The company’s adjusted earnings per share (EPS) for Q3 2025 was $1.58, exceeding the high end of the guidance range and representing a 52% increase compared to Q3 2024. This strong earnings performance was supported by the company’s ability to effectively manage its costs and leverage its operational efficiencies.

Celestica also generated robust cash flow, with net cash provided by operating activities reaching $126.2 million in Q3 2025, compared to $122.8 million in the same period last year. The company’s non-GAAP free cash flow, which excludes capital expenditures, increased by 16% to $88.9 million, demonstrating the company’s strong cash generation capabilities.

Segment Performance Highlights

The ATS segment’s income increased by 7% in Q3 2025 compared to Q3 2024, with the segment margin expanding from 4.9% to 5.5%. This improvement was primarily driven by better profitability in the Aerospace and Defense business, aided by the discontinuation of the margin-dilutive program.

The CCS segment’s income grew by 55% in Q3 2025, with the segment margin increasing from 7.6% to 8.3%. This was largely due to the higher revenue, particularly in the Communications end market, as well as the favorable impact of a higher mix of Hardware Platform Solutions (HPS) revenue and improved operating leverage.

Outlook and Strategic Initiatives

Celestica’s strong performance in Q3 2025 has positioned the company well for the remainder of the year. The company’s revenue for the quarter exceeded the high end of its guidance range, driven by higher-than-anticipated customer demand, particularly in the Communications end market.

Looking ahead, Celestica plans to launch a new normal course issuer bid (NCIB) in Q4 2025, after the expiration of its current NCIB on October 31, 2025. This reflects the company’s confidence in its financial position and its commitment to delivering value to its shareholders.

The company’s strategic initiatives, such as the expansion of its manufacturing capabilities in Thailand, Malaysia, and the United States to support growth in AI/machine learning programs, have also contributed to its strong performance. Celestica’s focus on diversifying its customer base and developing new capabilities has enabled it to capitalize on the growing demand in its end markets.

Navigating Challenges and Risks

While Celestica has demonstrated impressive financial results, the company is not immune to the various external factors that can impact the EMS industry. The report highlights several key risks and challenges that the company is actively monitoring and managing.

One such challenge is the potential impact of government policies, legislation, and increased political tensions between countries, which could adversely affect Celestica’s operations and financial performance. The company is closely monitoring the evolving global trade landscape, including the effects of tariffs and trade restrictions, and is working to mitigate any potential negative impacts.

Additionally, the company is closely monitoring the dynamics of the global economy, including the severity and duration of inflation and the potential for a recession. Celestica has been successful in offsetting the majority of its increased costs through pricing adjustments, but it acknowledges that unrecovered increased operating costs could adversely impact its margins in the future.

The report also highlights the potential impact of the pace of technological changes and the frequency of customer outsourcing or transferring business among EMS and/or original design manufacturer (ODM) competitors. Celestica is actively investing in capacity and capability expansions to support its growth in AI/machine learning programs and other high-growth markets.

Conclusion

Celestica’s impressive financial performance in Q3 2025 demonstrates the company’s ability to navigate the dynamic EMS industry and capitalize on the growing demand in its end markets. The strong revenue growth, improved profitability, and robust cash flow generation highlight the company’s operational excellence and strategic focus.

While the company faces various external challenges, Celestica’s proactive approach to managing risks, investing in strategic initiatives, and delivering value to its shareholders positions it well for continued success. Investors and stakeholders can take confidence in Celestica’s ability to adapt and thrive in the ever-evolving electronics manufacturing landscape.