Celestica revenue jumps 83% to $5.83 billion in third quarter
Key Facts
Celestica reported revenue of $5.83 billion in the third quarter of 2026, up 83% year over year, and raised its full-year revenue and adjusted earnings per share outlook. The company said customer demand exceeded its expectations and operational execution was strong, while higher-than-expected operating leverage helped adjusted earnings per share exceed the top end of its guidance range. Adjusted earnings per share were $3.30, compared with $1.58 in the same quarter of 2025, and above the company's range of $2.88 to $3.08. Earnings per share under generally accepted accounting principles were $3.26. The results came as the company bets on continued expansion in demand related to AI infrastructure and growth in its business in the coming years.
Growth was concentrated in the Connectivity and Cloud Solutions segment, which reported revenue of $4.87 billion, up 102% from the third quarter of 2025. Advanced Technology Solutions generated $960 million, up 23% year over year. Adjusted operating margin rose to 8.5% from 7.6% a year earlier, and CEO Rob Mionis said the figure marked a new company record. By contrast, operating margin under generally accepted accounting principles fell to 7.9% from 10.2% in the comparable period. The diverging direction of the two margins highlights the impact of unadjusted accounting items alongside improvement in the operating profitability measure the company uses to present its adjusted performance.
Celestica raised its 2026 revenue outlook to $21.0 billion from $20.5 billion and increased its adjusted earnings per share estimate to $11.55 from $11.30. But it lowered its free cash flow outlook to $460 million from $600 million. The company attributed the reduction to targeted working capital investments to support growth in 2027. This reflects a divergence between improved revenue and earnings expectations and the cash expected to be generated during the year, as additional resources are directed to fund expansion. Mionis said the higher 2026 outlook followed strong results and a demand environment that continues to improve.
The company provided an initial outlook for 2027 that included revenue of $40.0 billion, adjusted earnings per share of $21.50 and an adjusted operating margin of 9.0%. It also said customers' demand expectations for 2028 were clearly above its targeted 2027 revenue. Supporting its growth plans will require capital spending of between $1.5 and $2.0 billion in 2027. Goldman Sachs said the expansion would also require substantial working capital, and that it expects free cash flow to be negative in 2027 and positive in 2028. The investment bank cut its price target on the stock to $435 from $480, while maintaining its Conviction Buy rating; management also expressed confidence in achieving its 2027 revenue outlook.
The company's fourth-quarter 2026 outlook included revenue of between $6.275 and $6.575 billion and adjusted earnings per share of between $3.37 and $3.57. In trading, shares closed at $269.01 on October 22, then at $260.01 on October 23 and $246.65 on October 26, before rising to $276.54 on October 27 and $299.80 on October 28. The company and available sources did not link the stock's move on October 28 to any specific execution or investment concerns. The current share repurchase program is set to expire on November 2, 2026, and the company intends to provide notice of a new program during the fourth quarter that could allow it to buy back up to 2.5% of the public float during the twelve months following Toronto Stock Exchange approval.