Mr. Rob Mionis reports

CELESTICA ANNOUNCES THIRD QUARTER 2023 FINANCIAL RESULTS

Celestica Inc. has released financial results for the quarter ended Sept. 30, 2023.

"Our solid [third quarter] 2023 results and year-to-date performance have positioned us to exceed our previously issued 2023 annual financial outlook and deliver new company highs for non-[international financial reporting standard] adjusted [earnings per share] and non-IFRS operating margin," said Rob Mionis, president and chief executive officer, Celestica.

"We are confident in our long-term strategy and our ability to deliver strong and consistent financial results. We are also pleased to reiterate our 2024 outlook for non-IFRS adjusted EPS growth of 10 per cent, or more, compared to our increased 2023 annual outlook."

Q3 2023 highlights:

• Key measures:
  • Revenue: $2.04-billion, increased 6 per cent compared with $1.92-billion for the third quarter of 2022;
  • Non-IFRS operating margin: 5.7 per cent, compared with 5.1 per cent for Q3 2022;
  • ATS segment revenue increased 12 per cent compared with Q3 2022; ATS segment margin was 4.9 per cent, compared with 5.0 per cent for Q3 2022;
  • CCS segment revenue increased 2 per cent compared with Q3 2022; CCS segment margin was 6.2 per cent, compared with 5.2 per cent for Q3 2022;
  • Adjusted earnings per share (non-IFRS): 65 cents, compared with 52 cents for Q3 2022;
  • Adjusted return on invested capital (non-IFRS): 21.5 per cent, compared with 19.2 per cent for Q3 2022;
  • Adjusted free cash flow (non-IFRS): $34.1-million, compared with $7.4-million for Q3 2022.
• Most directly comparable IFRS measures to non-IFRS measures above:
  • Earnings from operations as a percentage of revenue: 5.7 per cent, compared with 4.1 per cent for Q3 2022;
  • EPS: 67 cents, compared with 37 cents for Q3 2022;
  • Return on invested capital (IFRS): 21.8 per cent, compared with 15.3 per cent for Q3 2022;
  • Cash provided by operations: $88.4-million, compared with $74.4-million for Q3 2022.

For fourth quarter 2023, it expects a negative 15-cent- to 21-cent-per-share (pretax) aggregate impact on net earnings on an IFRS basis for employee stock-based compensation expense, amortization of intangible assets (excluding computer software) and restructuring charges; and a non-IFRS adjusted effective tax rate of approximately 20 per cent (which does not account for foreign exchange impacts or unanticipated tax settlements).

2023 outlook update

Assuming the achievement of the midpoint of the above revenue and non-IFRS adjusted EPS guidance for Q4 2023, its updated 2023 outlook consists of:

• Revenue of $7.90-billion (its previous outlook was at least $7.85-billion);
• Non-IFRS adjusted EPS of $2.36 (its previous outlook was $2.25);
• Non-IFRS adjusted free cash flow of $150-million (its previous outlook was $125-million).

Its outlook for 2023 non-IFRS operating margin* of 5.5 per cent remains unchanged.

2024 outlook update

As it looks forward to 2024, it expects revenue growth across each of its businesses, supported by anticipated strong secular tailwinds and new program wins. Combined with strong margins, it expects its 2024 non-IFRS adjusted EPS to grow by 10 per cent, or more, relative to its increased 2023 outlook.

Secondary offerings

As previously reported, on June 8, 2023, Onex Corp., its then-controlling shareholder, completed an underwritten secondary public offering of 12 million of its subordinate voting shares. It did not sell any shares in the June secondary offering and did not receive any proceeds therefrom.

On Aug. 1, 2023, the company and Onex entered into an underwriting agreement with BofA Securities Inc. and Merrill Lynch Canada Inc., relating to an additional underwritten secondary public offering by Onex of approximately 6.8 million SVS, which closed on Aug. 4, 2023. It did not sell any SVS in, and did not receive any proceeds from, the August secondary offering. The underwriting agreement contains customary representations, warranties, covenants and other customary provisions for agreements of this type. In connection with the August secondary offering, it agreed to indemnify the underwriters and Onex against certain claims, including claims under the U.S. Securities Act and applicable Canadian securities laws, based on the related U.S. registration statement and related U.S. and Canadian prospectuses. The company agreed to pay approximately $650,000 of the aggregate fees and expenses of the August secondary offering.

In connection with the June secondary offering and August secondary offering, it issued approximately 11.8 million SVS and approximately 6.8 million SVS, respectively, in each case upon conversion of an equivalent number of its multiple voting shares. Subsequent to the August secondary offering, it has no MVS outstanding, and Onex is no longer its controlling shareholder.

Termination of service agreement and board member resignation

Its service agreement with Onex for the services of Tawfiq Popatia (an officer of Onex) as a director of its board of directors terminated automatically as of Sept. 3, 2023. In accordance with the provisions of such agreement, it paid Onex approximately $9.2-million in cash on Oct. 18, 2023, to settle Onex's outstanding deferred share units. Mr. Popatia resigned from the board on Sept. 3, 2023.

Intention to launch new normal course issuer bid

It intends to file a notice of intention with the Toronto Stock Exchange to commence a new NCIB in Q4 2023 after its current NCIB expires in December, 2023. If this notice is accepted by the TSX, it expects to be permitted to repurchase for cancellation, at its discretion during the 12 months following such acceptance, up to 10 per cent of the public float (calculated in accordance with the rules of the TSX) of its issued and outstanding SVS. Purchases under the new NCIB, if accepted, will be conducted in the open market or as otherwise permitted, subject to applicable terms and limitations, and will be made through the facilities of the TSX and the New York Stock Exchange. It believes that a new NCIB is in the best interests of the company.

Q3 2023 webcast

Management will host its Q3 2023 results conference call on Oct. 26, 2023, at 8 a.m. Eastern Daylight Time. The webcast will be available at the Celestica website.

About Celestica Inc.

Celestica enables the world's best brands. Through its recognized customer-centric approach, it partners with leading companies in aerospace and defence, communications, enterprise, healthtech, industrial, and capital equipment to deliver solutions for their most complex challenges. As a leader in design, manufacturing, hardware platform and supply chain solutions, Celestica brings global expertise and insight at every stage of product development -- from the drawing board to full-scale production and aftermarket services. With talented teams across North America, Europe and Asia, it imagines, develops and delivers a better future with its customers.

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