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Highlights

  • CLS posted a 20.2% year-on-year growth in revenue and a 311.7% surge in net income in Q1 FY24
  • CLS is looking forward to acquiring NCS Global Services for US$ 36 million
  • The company’s management projects FY 2024 revenue to surpass US$ 9.1 billion

Celestica Inc (TSX: CLS) excels in high-reliability design, manufacturing, and supply chain solutions, offering global expertise throughout product development. The company operates in two segments:

  • Advanced Technology Solutions (ATS): Encompasses A&D, Energy, Industrial, HealthTech, and capital equipment businesses.
  • Connectivity & Cloud Solutions (CCS): Focuses on communications and enterprise markets, driving the majority of revenue.

In the first quarter of FY2024, Celestica’s revenue increased to US$ 2,208.9 million compared to US$ 1,837.8 million in the previous corresponding period (pcp), demonstrating a year-on-year increment of 20.2%. The company’s net income also surged by 311.7% in the same period. Moreover, the company’s adjusted free cash flow also increased to US$ 65.2 million in Q1 2024, against US$ 9.2mn in pcp.

Further, the company provided a higher return on equity of 5.8% in Q1 2024, versus the industry median of 2.1%.

Recent business update

Celestica entered into a definitive agreement in April 2024 to acquire NCS Global Services LLC. NCS is an IT infrastructure and asset management business based in the US. The transaction for acquisition, which is expected to conclude in May 2024 or earlier, will happen at a value of US$ 36 million. Successful completion of the transaction is dependent on the fulfillment of customary closing conditions.

Company outlook

The company’s management foresees robust organic revenue growth and expects FY24 revenue to reach approximately US$ 9.1 billion or exceed it, marking an increase from FY23.

The company also anticipates a rise in free cash flow to US$ 250 million or beyond for FY 2024. This projection is underpinned by revenue expansion in all its business segments, driven by expected robust secular trends and successful acquisition of new programs.

Top 10 shareholders

The top 10 shareholders collectively hold around 30.52% of Celestica's total shares. Connor, Clark & Lunn Investment Management Ltd. and Letko, Brosseau & Associates Inc. hold maximum stake in the company at around 5.16% and 3.93%, respectively.

Stock performance

Over the last week, the stock price of CLS has surged by approximately 1.99%, while over the past month, it has declined by about 8.47%. Additionally, it is currently trading above the average of its 52-week high price of CAD 68.91 and 52-week low price of CAD 14.40.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 3, 2024. The reference data in this report has been partly sourced from EODHD/Others.