Celestica Inc. · TSX:CLS
Celestica — Investor Day (March 2022)
39 slides from Celestica's investor day presentation, Mar 24, 2022
Slide 1: Investor and Analyst Webcast
Investor and Analyst Webcast March 24, 2022 1
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements, including, without limitation, those related to our future growth; trends in the electronics manufacturing services (EMS) industry and our segments (and/or their constituent businesses), and t
Slide 3: Cautionary Note Regarding Forward-Looking Statements (continued)
Cautionary Note Regarding Forward-Looking Statements (continued) The forward-looking statements contained herein are based on various assumptions, many of which involve factors that are beyond our control. Our material assumptions include those set forth on slide 39, as well as those related to the
Slide 4: Agenda
Agenda 1 The Celestica Journey Rob Mionis, President & CEO 2 Financial Outlook Mandeep Chawla, CFO 3 Hardware Platform Solutions Jason Phillips, President CCS 4 Question and Answer 4
Slide 5: The Celestica Journey
The Celestica Journey Rob Mionis President & CEO
Slide 6: Celestica is a global leader in end-to-end product lifecycle solutions
Celestica is a global leader in innovative end-to-end product lifecycle solutions • Focused on enabling the world’s leading technology brands $ 5.6 billion in 2021 revenue • Tailoring customer-centric solutions for the markets we serve $ 2.3 billion in $ 3.3 billion in Advanced Technology Connectivi
Slide 7: A solid foundation for growth – Built to Win
A solid foundation for growth – Built to Win 2016 to 2021 Transformation & Optimization Diversified the Invested in Increased Expanded portfolio engineering portfolio profitability offerings resiliency 7
Slide 8: The transformational phase of our journey is complete
The transformational phase of our journey is complete Revitalized our value proposition • Invested in differentiated capabilities across the product lifecycle • Achieved record-level bookings in 2021, 50% of which were engineering-led Reshaped the business portfolio • Exited $1.25B of non-strategic
Slide 9: Celestica aspires to become the undisputed industry leader in product and platform solutions
Celestica aspires to become the undisputed industry leader in product and platform solutions across higher value markets by focusing on the following goals1: Grow non-IFRS Lifecycle Solutions2 by leveraging our leadership position in targeted markets Invest in Differentiated Maximize shareholder, Ca
Slide 10: Growing Lifecycle Solutions revenue concentration will enable long-term profitable growth
Growing Lifecycle Solutions revenue1 concentration will enable long-term profitable growth LIFECYCLE SOLUTIONS Lifecycle Solutions Revenue1 as % of Total 61% 51% 47% 41% 39% 41% ATS HPS 36% 39% 33% 32% 20% 15% 7% 8% 8% FY 17 FY 18 FY 19 FY 20 FY 21 • Long program lifecycles • Patent portfolio HPS AT
Slide 11: Aerospace & Defense – a leading A&D EMS provider
Aerospace & Defense – a leading A&D electronics manufacturing services provider with capabilities to deliver end-to-end solutions Markets served: Commercial Aerospace, Defense, Space and Unmanned Aerial Vehicles (UAV) W H AT W E D O A&D HPS 2021 revenue: ~$520M CE Celestica designs and Projected mar
Slide 12: Capital Equipment – a leading Tier 1 capital equipment player
Capital Equipment – a leading Tier 1 capital equipment player, providing highly specialized and vertically integrated solutions Markets served: Semiconductor Capital Equipment, Display and Robotics W H AT W E D O A&D HPS 2021 revenue: ~$750M Celestica conducts high CE Projected market growth: 9.8%1
Slide 13: Industrial – high volume automated manufacturing expertise
Industrial – Expertise in high volume automated manufacturing and complex product enablement Markets served: Electrification, Energy Storage/Generation, Industrial Automation, Smart Home W H AT W E D O A&D HPS 2021 revenue: ~$1,050M1 EV CHARGING MOBILITY POWER ENERGY GENERATION CE Projected market g
Slide 14: HealthTech – partnering with leading healthcare companies
HealthTech – Partnering with leading healthcare companies to bring critical medical devices to market Markets served: Surgical Instruments, Monitoring, Imaging, Diagnostics, Dialysis, Neurostimulation, Dental Radiology W H AT W E D O A&D HPS 2021 revenue: ~$250M CE Celestica offers advanced Projecte
Slide 15: HPS – hardware platform solutions for datacenter and network infrastructure
HPS – A leading hardware platform solutions provider for datacenter and network infrastructure markets Markets served: Cloud, Networking, Storage, Edge and Application-specific Computing, ITAD services W H AT W E D O A&D HPS 2021 revenue: ~$1,150M Work with our technology CE Projected market growth:
Slide 16: Strategic network tailored to serve customer requirements across the globe
Strategic network tailored to serve customer requirements across the globe NORTH AMERICA (~25% of capacity) EUROPE (~5% of capacity) CHINA (20% of capacity) SE ASIA (~50% of capacity) • Complex highly regulated product manufacturing • Complex highly regulated product manufacturing • Automated Manufa
Slide 17: Our operations are underpinned by the Celestica Operating System
Our operations are underpinned by the Celestica Operating System 100% of our strategic customers rated us a #1 or #2 provider on customer scorecards “OUR BEST, EVERYDAY” Since deploying the Celestica Operating System (COS), our already leading, cost, quality and delivery metrics improved 17
Slide 18: ESG is at the center of how we operate
ESG is at the center of how we operate – we are a leader in sustainability1 We are the first of our ELEMENTS OF peers to have our goals Celestica is committed to distinguishing our company as a leader in S U S TAI N AB I L I T Y approved by the Science- Based Targets Initiative ESG. By partnering wi
Slide 19: Financial Outlook
Financial Outlook Mandeep Chawla CFO
Slide 20: As we transformed our business we stabilized our financial performance
As we transformed our business we stabilized our financial performance • Returned to top line growth in the fourth quarter of 2021 (4Q 2021) Revenue Growth after disengaging from $1.25B of non-strategic revenue • Improved consistency of results by growing our Lifecycle Solutions Revenue / Profit Div
Slide 21: Focused on growth and non-IFRS operating margin expansion going into 2022
Celestica is focused on growth and non-IFRS operating margin1 expansion going into 2022 Revenue ($B) $6.5 $6.3+ • Portfolio shaping complete $5.9 $5.7 $6.0 $5.5 $5.6 • Returned to top line growth in Q4 2021 $5.0 • Anticipate 10% or more growth in 2022 in Lifecycle Solutions $4.5 $4.0 FY 2019 FY 2020
Slide 22: Earnings growth with strong non-IFRS FCF generation
Celestica continues to focus on earnings growth with strong non-IFRS FCF1 generation Non-IFRS Adjusted EPS1 IFRS EPS – Diluted $2.00 $0.90 $0.82 • Nearly set a non-IFRS $1.60 $1.60 $1.55 - $1.75 adjusted EPS1 record $1.30 $1.20 $0.60 $0.53 $0.47 in Q4 2021 and $0.98 targeting 20% to 35% $0.80 $0.54
Slide 23: Capital allocation priorities
Celestica's capital allocation priorities are focused on generating strong non-IFRS FCF, returning cash to shareholders, and investing in the business Share Count Acquisitions • Celestica deploys a stringent M&A filter focused on capability-backed acquisitions intended to enhance our presence in hig
Slide 24: Targeting $2.00 or more of non-IFRS adjusted EPS in 2025
We are targeting to deliver $2.00 or more of non-IFRS adjusted EPS1 in 20252 Non-IFRS Adjusted EPS1 Outlook Growth & Stability Stage $2.00+ Transformation & Optimization Stage $1.55 - $1.75 $1.40 $1.30 $1.19 $1.07 $0.98 $0.96 $0.73 $0.82 $0.70 $0.54 $0.53 $0.47 FY 2016 FY 2017 FY 2018 FY 2019 FY 202
Slide 25: HPS
HPS Jason Phillips, President CCS
Slide 26: The Evolution of Hardware Platform Solutions
The Evolution of Hardware Platform Solutions Our customers now see us as a hardware innovator and our supplier ecosystem views us as demand generators • Portfolio reference designs Joint Design & • Customer specifications Manufacturing (JDM) • Customer-funded • Celestica innovation, investment Integ
Slide 27: 20-year legacy, R&D investments accelerated growth in HPS
Built on our 20-year legacy, R&D investments significantly accelerated growth in our HPS business HPS Revenue (Millions USD) 1,160 Shipped Engineers Patents Volume 869 500+ 280+ 3M+ 549 488 415 Products Enterprise Hyperscaler 383 Launched Customers Customers 160+ 50 27 2016 2017 2018 2019 2020 2021
Slide 28: HPS has differentiated itself from its ODM and EMS competitors
HPS has differentiated itself from its ODM and EMS competitors • Leverage portfolio of Celestica-designed platforms and services Diversified Portfolio across all core data center technologies • Focus on high-complexity systems and technologies • Design and manufacturing teams based in US, Europe, Me
Slide 29: Anticipated HPS growth buttressed by market growth and technology advancements
Anticipated HPS growth is buttressed by encouraging market growth expectations, technology advancements as well as business model expansion • Announcements by companies such as Google and Meta implies double digit data center growth will continue in the medium term Secular Growth • Large, aging inst
Slide 30: Secular growth expected to continue in data centers
Secular growth expected to continue while new demands on data centers further bolster growth Hyperscaler Data Center Spend Growth Drivers (Billions USD)1 HPS 159 • Hyperscalers announce significant data center EXPERTISE 150 capex as streaming, cloud hosting, remote 136 135 140 128 working, gaming, a
Slide 31: Data center technology is rapidly evolving
Data center technology is rapidly evolving and Celestica’s reputation for designing leading edge technology positions us well to partner with customers Hyperscalers – 100G-800G Ethernet Switching Growth Drivers Telecom – 5G Mobile Any Haul • Celestica has established a reputation for innovation and
Slide 32: HPS can leverage innovative technology in enterprise customers' data centers
HPS can leverage today’s innovative technology in tomorrow’s enterprise customers’ data centers HYPERSCALERS: ENTERPRISE CUSTOMERS: Celestica partners with hyperscalers to Celestica partners with enterprise customers to drive innovation in data center technology relevant technologies for their requi
Slide 33: Closing Remarks
Closing Remarks Rob Mionis, President & CEO
Slide 34: Celestica is well positioned for future success
Celestica is well positioned for future success We have invested in new capabilities across the product lifecycle 1 Celestica has differentiated itself from its peers which has been demonstrated through market share gains and record bookings We are growing in targeted and defendable Lifecycle Soluti
Slide 35: Question & Answer
Question & Answer
Slide 36: Built to Win
Built to Win OUR To be the undisputed industry leader in end-to-end GOAL: product lifecycle solutions across higher value markets Celestica has: • Revitalized our value proposition • Reshaped our business portfolio • Reengineered our operating model We are ready to win the future
Slide 37: Non-IFRS Supplementary Information
APPENDIX Non-IFRS Supplementary Information In addition to disclosing detailed operating results in accordance with IFRS, Celestica provides supplementary non-IFRS financial measures (including ratios) to consider in evaluating the company’s operating performance. Management uses adjusted net earnin
Slide 38: Appendix
APPENDIX Amortization charges (excluding computer software) consist of non-cash charges against intangible assets that are impacted by the timing and magnitude of acquired businesses. Amortization of intangible assets varies among our competitors, and we believe that excluding these charges permits
Slide 39: Assumptions Underlying Projections, Goals and Targets
APPENDIX Assumptions Underlying Projections, Goals and Targets In estimating certain projections, goals and targets, including: (1) non-IFRS adjusted EPS (slides 9, 22 and and 24); (2) Lifecycle Solutions revenue growth (slides 10, 21 and 24); (iii) 2022 revenue (slide 21); (iv) non-IFRS FCF (slides