Celestica Reports 20% Revenue Growth to $2.65 Billion in Q1 2025

Celestica Inc. reported a significant increase in its financial performance for the first quarter of 2025, with total revenue reaching $2.65 billion, a 20% increase from $2.21 billion in the same period last year. The company's gross profit also rose by 23% to $273.9 million, resulting in a gross margin of 10.3%, up from 10.1% in Q1 2024. However, net earnings decreased to $86.2 million, down from $91.8 million a year earlier, primarily due to a 74% increase in selling, general, and administrative expenses, which rose to $112.5 million.

The company's performance was bolstered by strong growth in its Connectivity & Cloud Solutions (CCS) segment, which saw revenue increase by 28% year-over-year, driven by a remarkable 87% rise in the Communications end market. This segment accounted for 70% of total revenue, with Hardware Platform Solutions (HPS) revenue alone reaching approximately $1 billion, a 99% increase compared to the previous year. In contrast, the Advanced Technology Solutions (ATS) segment experienced a modest 5% revenue growth, attributed mainly to the Capital Equipment business.

Operationally, Celestica's customer base remains concentrated, with its top ten customers representing 78% of total revenue in Q1 2025, compared to 70% in Q1 2024. The company also completed the acquisition of NCS Global Services LLC for $39.6 million, which is expected to enhance its IT infrastructure and asset management capabilities. This acquisition is anticipated to contribute positively to the CCS segment's performance.

In terms of liquidity, Celestica reported cash and cash equivalents of $303 million as of March 31, 2025, down from $423.3 million at the end of 2024. The company generated $130.3 million in cash from operating activities, an increase from $108.1 million in the prior year. However, cash used in financing activities rose significantly to $213.9 million, reflecting increased share repurchase activities and cash settlements related to stock-based compensation plans.

Looking ahead, Celestica remains optimistic about its growth trajectory, particularly in the CCS segment, driven by ongoing demand for its HPS products. The company anticipates continued revenue growth, supported by strategic investments and operational improvements. However, it also acknowledges potential risks related to market conditions, supply chain constraints, and geopolitical factors that could impact its performance in the coming quarters.