Celestica Inc. · TSX:CLS
Celestica — Investor Day (October 2024)
38 slides from Celestica's investor day presentation, Oct 23, 2024
Slide 1: Virtual Investor Meeting
Virtual Investor Meeting October 23, 2024
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; our strategies; trends in the electronics manufacturing services (EMS) industry, our segments, and their constituent business
Slide 3: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements The forward-looking statements contained herein, including our 2024 and 2025 outlook, are based on various assumptions, many of which involve factors that are beyond our control. Our material assumptions include (in addition to the specific assump
Slide 4: Agenda
Agenda 1 Overview & Strategy 2 Connectivity & Cloud Solutions 3 Advanced Technology Solutions 4 Financial Outlook 5 Closing Remarks 6 Q&A 4
Slide 5: Overview & Strategy
Overview & Strategy Rob Mionis, President & Chief Executive Officer 5
Slide 6: Celestica is uniquely positioned as a North American Tier 1 EMS and ODM company
Celestica is uniquely positioned as a North American Tier 1 EMS and ODM company ~900 Design $9.6B 2024E Revenue 27,000 engineers Global supporting ODM 6.5% 2024E Non-IFRS Operating Margin1 employees business BY SOLUTION2 ($B) BY SEGMENT2 ($B) 44 sites in 16 countries across North America, Europe and
Slide 7: Celestica's strategy is delivering exceptional results
Celestica’s strategy is delivering exceptional results Growing and building a resilient portfolio Investing to enhance capabilities and differentiated offerings Drive operational excellence Maximize Total Shareholder Return 7
Slide 8: Connectivity & Cloud Solutions (CCS)
Connectivity & Cloud Solutions (CCS) Jason Phillips, President, CCS 8
Slide 9: CCS Overview
CCS Overview1 Market leadership and industry tailwinds continue to support exceptional growth CCS 2024E Revenue ($B) CUSTOMER END MARKET SOLUTION 2024E Revenue Storage2 Enterprise 0.9 $6.4B 39 % & OEM 1.6 Server2 HPS EMS 2.8 Hyperscaler 1.6 Communications 3.6 3-Yr. Est. Revenue CAGR 4.8 3.9 % 25 END
Slide 10: Data Center Market Trends
Data Center Market Trends Market trends continue to present opportunities for Celestica’s portfolio HYPERSCALER DATA CENTER HARDWARE CAPEX FORECAST 2027 • AI driving growth in Hyperscaler spending on DC1 Hardware 2024 – Hyperscaler DC Hardware spend expected to grow by >$50B (+40%) by 20272 $133B2 $
Slide 11: Hardware Platform Solutions is our comprehensive ODM offering
Hardware Platform Solutions is our comprehensive ODM offering Investing in leading edge product roadmaps across all technologies we support HPS Revenue KEY AREAS OF INVESTMENT Celestica’s Full Rack Capabilities 2024E vs 2023 Networking Top of Rack (TOR) Network Switch1 $2.8B 63% 1.6T designs in deve
Slide 12: Communications portfolio
Communications portfolio The leading global ODM provider of Ethernet switches • Leading market share in 400G Ethernet switching1 Communications Revenue – Supporting Hyperscalers and OEMs with JDM and White Box designs 2024E vs 2023 • Strongly positioned in the 800G upgrade cycle $3.9B 46% – Enabling
Slide 13: Networking market outlook
Networking market outlook Upgrade cycles to 800G and 1.6T expected to drive multi-year growth through 2027 • Ethernet switching TAM (400G+)1 expected to grow at 52% CAGR into 20272 • 400G+ bandwidths expected to be growing share of Ethernet switch market • Initial win for 1.6T (102.4Tbps) switch, de
Slide 14: Server portfolio
Server portfolio A leader in Hyperscaler custom ASIC platforms for AI/ML compute • Led multiple generations of custom ASIC-based compute AI Server programs for a leading Hyperscaler Front Storage • Engineering expertise supporting high-complexity designs Front and technical requirements Network IO L
Slide 15: AI/ML Compute market outlook
AI/ML Compute market outlook AI server market expected to see solid demand growth through 2027 New opportunities to grow and diversify AI/ML Compute portfolio • 36% CAGR in AI/ML Compute spending expected from 2024 to 20271 Base Portfolio • AI/ML Compute TAM expected to exceed $250 billion by 20271
Slide 16: Storage portfolio and market outlook
Storage portfolio and market outlook High performance storage solutions for demanding AI, Cloud and Enterprise workloads Storage Revenue • Servicing Hyperscaler and OEM customers 2024E vs 2023 – Solutions gaining traction with Hyperscalers $0.9B 34% STORAGE – Products support low-latency Software-De
Slide 17: Advanced Technology Solutions (ATS)
Advanced Technology Solutions (ATS) Todd Cooper, President, ATS 17
Slide 18: ATS Overview
ATS Overview1 Engineering-led, end-to-end lifecycle support for high-reliability engagements ATS 2024E Revenue by Business ($B) HealthTech 0.3 2024E Revenue 2025 Revenue Outlook • Expected to grow Capital Equipment Industrial & $3.2B 5 % low-single digits Smart Energy 0.7 • Back-half weighted 1.3 3-
Slide 19: Industrial & Smart Energy
Industrial & Smart Energy Revenue 2025 Portfolio Trends 2024E vs 2023 • Markets are stabilizing, % $1.3B 22 return to growth by late 2025 Industrial & Long-term Growth Opportunities MARKETS Smart Energy EV Charging • Energy Storage & Generation Industrial Automation • DC Power 40% • Telematics Test
Slide 20: Aerospace & Defense
Aerospace & Defense Revenue 2025 Portfolio Trends 2024E vs 2023 • Sun-setting program, % $0.9B 13 partially offset by base business growth and margin-accretive wins Long-term Growth Opportunities MARKETS Commercial Aerospace • Defense Defense • Space • UAM UAV / Drones Space 29% Aerospace & Defense
Slide 21: Capital Equipment
Capital Equipment Revenue 2025 Portfolio Trends 2024E vs 2023 • Continuing growth driven % $0.7B 16 by market recovery in Memory, Lithography ramps Long-term Growth Opportunities CAPABILITIES Capital Equipment Full System Assembly • Leading-edge Lithography proof points to help drive Systems Integra
Slide 22: HealthTech
HealthTech Revenue 2025 Portfolio Trends 2024E vs 2023 • Growth expected as new % $0.3B 5 Finished Device programs ramp HealthTech Long-term Growth Opportunities MARKETS Surgical Instruments 8% • Diabetes Care Imaging and Patient • Surgical Instruments Monitoring • In-Vitro Diagnostics In-Vitro Diag
Slide 23: Financial Overview
Financial Overview Mandeep Chawla, Chief Financial Officer 23
Slide 24: 5 Year Financial Progression
5 Year Financial Progression1 Celestica is driving strong revenue growth with record profitability Non-IFRS Operating Margin / Revenue ($Billions) Earnings from Operations as a Percentage of Revenue IFRS Non-IFRS 9.6 6.5% 8.0 5.6% 7.3 4.9% 5.7 5.6 4.2% 3.5% 4.8% 3.6% 3.0% 2.2% 2020 2021 2022 2023 20
Slide 25: 2025 Financial Outlook
2025 Financial Outlook1 Initial outlook for non-IFRS adjusted EPS growth of 15% 2025 2024 2025 YTY Assumptions Revenue $9.6B $10.4B +8% • Low double-digit percentage CCS revenue growth • Low single-digit percentage Non-IFRS operating margin 6.5% 6.7% +20 bps ATS revenue growth • Continuing operating
Slide 26: Capital allocation
Capital allocation Disciplined framework with a focus on maximizing shareholder returns Organic investments in operations & capabilities Share Count (FY2013 – YTD 2024) HPS R&D Targeted growth Capex Automation M&A 181 175 Capabilities Accelerate scale in target markets 144 Return of capital 141 142
Slide 27: Celestica's financial performance is not fully reflected in its share price
We believe Celestica’s financial performance is not fully reflected in its share price CLS Trailing Four Qtrs (TFQ) Performance1 CLS TFQ Performance1 vs. EMS Peers3 Non-IFRS Earnings from Operations Celestica Average EMS Peer Operating Margin2 as a % of Revenue Revenue Revenue3 +90bps +130bps +18% -
Slide 28: Closing Remarks
Closing Remarks Rob Mionis, President & Chief Executive Officer 28
Slide 29: Management on today's call for Q&A
Management on today’s call for Q&A Rob Mionis Mandeep Chawla Jason Phillips President & Chief Chief Financial Officer President, Connectivity Executive Officer & Cloud Solutions Todd Cooper Steven Dorwart President, Advanced SVP, Hyperscalers and Technology Solutions Service Provider Business 29
Slide 30: Q&A
30 Q&A “Celestica
Slide 31: Appendix
Appendix “Hey Celestica’
Slide 32: Non-IFRS Supplementary Information
Non-IFRS Supplementary Information In addition to disclosing detailed operating results in accordance with International Financial Reporting Standards (IFRS), Celestica provides supplementary non-IFRS financial measures (including ratios based on non-IFRS financial measures) to consider in evaluatin
Slide 33: Non-IFRS Supplementary Information…continued
Non-IFRS Supplementary Information…continued The economic substance of the exclusions described above (where applicable to the periods presented) and management’s rationale for excluding them from non-IFRS financial measures is provided below: Employee SBC expense, which represents the estimated fai
Slide 34: IFRS to non-IFRS Reconciliation
IFRS to non-IFRS Reconciliation* (in millions, except % and per share amounts) FY 2020 FY 2021 FY 2022 FY 2023 IFRS Revenue $ 5,748.1 $ 5,634.7 $ 7,250.0 $ 7,961.0 Net earnings 60.6 103.9 145.5 244.6 Earnings per share - diluted $ 0.47 $ 0.82 $ 1.18 $ 2.03 W.A. # of shares (in millions), on a dilute
Slide 35: IFRS to non-IFRS Reconciliation
IFRS to non-IFRS Reconciliation* (in millions, except % and per share amounts) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 TFQ Q3 2024(4) TFQ Q3 2023(4) IFRS Revenue $ 2,042.6 $ 1,837.8 $ 1,939.4 $ 2,043.3 $ 2,140.5 $ 2,208.9 $ 2,391.9 $ 2,499.5 $ 9,240.8 $ 7,863.1 Net earnings 4
Slide 36: IFRS to non-IFRS Reconciliation…continued
IFRS to non-IFRS Reconciliation…continued* (1) Management uses non-IFRS operating earnings (adjusted EBIAT) as a measure to assess performance related to our core operations. Non-IFRS operating earnings (adjusted EBIAT) is defined as earnings from operations before Other Charges (Recoveries) (define
Slide 37: Non-IFRS Supplementary Information…continued
Non-IFRS Supplementary Information…continued The following table sets forth a reconciliation of our non-IFRS adjusted tax expense and our non-IFRS adjusted effective tax rate to our IFRS tax expense and IFRS effective tax rate for the periods indicated, in each case determined by excluding the tax b
Slide 38: Celestica's Global Network
Celestica’s Global Network More than 7 million square feet of capacity across 44 sites in 16 countries North America USA Canada Mexico • Alburtis • Portland • Mississauga • Monterrey • Alpharetta • Richardson • Newmarket • Mexicali • Boston • Rochester • Toronto • Campbell • San Jose • Fremont • Sil