Celestica revenue jumps 83% to $5.83 billion in third quarter
Key Facts
Celestica reported revenue of $5.83 billion on October 26 for the third quarter ended September 30, up 83% from $3.19 billion a year earlier, while adjusted earnings per share rose to $3.30 from $1.58. Earnings per share under generally accepted accounting principles were $3.26, and GAAP net income was $397.2 million, compared with $267.8 million in the corresponding quarter of 2025. Revenue and adjusted EPS exceeded the company's guidance ranges of $5.25 billion to $5.55 billion and $2.88 to $3.08, respectively. The company attributed the beat to higher-than-expected customer demand, strong operational execution and operating leverage above its estimates. Revenue for the first nine months of 2026 totaled $14.5753 billion, compared with $8.736 billion in the same period a year earlier.
Most of the growth came from the Connectivity and Cloud Solutions segment, which generated revenue of $4.87 billion, up 102% year over year. Advanced Technology Solutions recorded $960 million, an increase of 23% from the third quarter of 2025. Within Hardware Platforms, revenue was about $2.3 billion, up 70% year over year. Adjusted operating margin rose to 8.5% from 7.6%, and the chief executive said the new level was a company record. By contrast, GAAP operating margin fell to 7.9% from 10.2% in the comparable period.
Celestica raised its 2026 revenue outlook to $21.0 billion from $20.5 billion and increased its adjusted EPS estimate to $11.55 from $11.30. But it cut its free cash flow outlook to $460 million from $600 million, citing targeted working capital investments to support growth in 2027. Third-quarter free cash flow was $127.5 million, compared with $88.9 million a year earlier, while net capital expenditures rose to $262.2 million from $37.3 million. The company said capital expenditures totaled $767.4 million in the first nine months of 2026. It added that it expects net cash usage in 2027 due to higher working capital needs and capital spending.
The company gave preliminary 2027 guidance for revenue of $40.0 billion, adjusted EPS of $21.50 and adjusted operating margin of 9.0%. It also estimated capital expenditures of $1.5 billion to $2.0 billion that year and said customers' demand outlook for 2028 was clearly above its 2027 revenue forecast. The company said working capital needs and expansion spending would drive net cash usage during 2027. Celestica completed a previously announced public offering with gross proceeds of $3.45 billion. That places expansion funding alongside its growth targets as the company anticipates demand exceeding its revenue target for the following year.
For the fourth quarter of 2026, the company forecast revenue of $6.275 billion to $6.575 billion and adjusted EPS of $3.37 to $3.57, with adjusted operating margin of 8.7% at the midpoint of the revenue and earnings ranges. The stock rose 10.3% in the October 26 session after the results and a beat on analyst estimates, according to Investing.com. EL7 data showed it closed at $246.65 that day, then $276.54 on October 27 and $299.80 on October 28, after closing at $269.01 on October 22 and $260.01 on October 23. On financing needs, an Investing.com report said Goldman Sachs cut its price target to $435 from $480 and maintained its Conviction Buy rating, citing capital expenditure and working capital needs and its forecast of negative free cash flow in 2027 and positive free cash flow in 2028. The report attributed expected growth in the Connectivity and Cloud segment to continued demand for 800G networks, an accelerating 1.6T rollout, Ethernet adoption for in-system connectivity and custom ASIC computing programs.
Celestica said it intends to file notice of a new share repurchase program during the fourth quarter of 2026, after the current program expires on November 2. If the Toronto Stock Exchange accepts the notice, the program could allow the repurchase of up to 2.5% of the public float during the twelve months following acceptance. On October 27, management held its third-quarter results call and 2026 Investor and Analyst Day, following the results announcement the previous day. The company ties its outlook for next year to capacity expansion and capital spending, while its estimate points to continued growth in customer demand through 2028. The revenue and profitability targets announced for 2027 remain coupled with increased working capital needs and spending, according to the company's disclosure.