TORONTO – Celestica reported second quarter revenue of $1.42 billion, down 5% year-over-year.

Net profit was $26.3 million, up 97.7% compared to the same period in 2020.

Advanced Technology Solutions (ATS) segment revenue increased 12% compared to the second quarter of 2020, driven by strong revenue growth in the firm’s capital equipment business and a return to growth in the industrial business. These increases were partially offset by continued softness in A&D, specifically commercial aerospace related to Covid-19. The company is on track to achieve a target of 10% revenue growth in ATS in 2021 compared to 2020.

“Celestica’s solid second quarter results underscore the successful execution of our strategy to reshape our portfolio and build a resilient, diversified business with a strong foundation for growth,” said Robert A. Mionis, CEO and president, Celestica. “Primarily driven by higher hardware platform solutions concentration and strong performance from our capital equipment business, we achieved second quarter 2021 revenue, non-IFRS adjusted EPS and non-IFRS operating margin at, or significantly exceeding, the high end of our second quarter 2021 guidance ranges. This represents our sixth straight quarter of year-to-year non-IFRS operating margin improvement as we continue to shift our business mix toward our higher-margin, higher growth lifecycle solutions portfolio.

“I am proud of our global teams’ ability to continue to operate with agility to successfully navigate industry headwinds and deliver innovative solutions intended to enable our customers to achieve their objectives. I am confident that as we ramp new programs, we are well positioned to build on our momentum and deliver profitable growth in the second half of 2021.”

Free cash flow for the second quarter was $31.2 million, compared to $37.9 million in the same period last year. The company had $467 million in cash/cash equivalents as of June 30.

During the second quarter, Connectivity & Cloud Solutions (CCS) segment revenue decreased 14% year-over-year, primarily due to the impact of the disengagement from programs with Cisco Systems.

Global supply chain constraints, including as a result of Covid-19, continued to impact both segments in the second quarter, resulting in extended lead times for certain components, impacting the availability of materials required to support customer programs. However, advanced planning processes and collaboration with customers and vendors helped mitigate the impact of these constraints on revenue. Celestica expects this pressure to become more severe in the second half of 2021. Although the company cannot currently estimate the overall severity or duration of the impact, it may be material.

As a result of recent resurgences of Covid-19 outbreaks, the governments of various jurisdictions, including Malaysia and Laos, have imposed mandated lockdowns and workforce curtailments. However, because Celestica’s operations are considered an essential service by relevant local government authorities, manufacturing sites have continued to operate in impacted countries, albeit at reduced capacities. Although this presents a challenge to business performance, due to effective resource management and planning, the company has been able to largely mitigate the impact of these actions to date on manufacturing capacity and revenues. Celestica continues to function at near normal operating levels worldwide.

The company had an aggregate adverse revenue impact of approximately $30 million in the second quarter, including approximately $21 million in the ATS segment, as a result of supply chain constraints and lockdowns/workforce curtailments. The firm incurred approximately $8 million of estimated Covid-19 costs during the period and recognized $6 million of Covid recoveries.

Celestica expects third quarter revenues of $1.4 billion to $1.55 billion. In 2022, the company expects the market to remain dynamic. However, Celestica believes robust secular tailwinds, strong operational performance and the ramping of new programs bode well for the firm. As a result, assuming the severity of supply chain constraints expected for the remainder of 2021 does not worsen, the company anticipates revenue of $6 billion for 2022.

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