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Celestica Inc. (NYSE: CLS; TSX: CLS) announced second-quarter 2026 revenue of $4.70 billion, vastly exceeding guidance and reflecting a 62% year-over-year surge as the Toronto-based technology solutions provider benefits from escalating demand for data center infrastructure and AI computing platforms. The company increased its full-year 2026 revenue forecast to $20.5 billion from $19.0 billion and raised adjusted earnings-per-share guidance to $11.30 from $10.15, while indicating that revenue growth in 2027 will surpass the projected 65% expansion in 2026. This robust performance stems from sustained customer demand, enhanced component supply, and operational leverage within Celestica's core Connectivity & Cloud Solutions segment.
Key Points
- Celestica Inc. (NYSE: CLS; TSX: CLS) reported Q2 2026 revenue of $4.70 billion, up 62% from $2.89 billion in Q2 2025, surpassing the high end of guidance between $4.15 billion and $4.45 billion
- Adjusted operating margin reached a record 8.2%, up from 7.4% in the same quarter last year, highlighting improved execution and operating leverage
- The company raised 2026 full-year revenue guidance to $20.5 billion (from $19.0 billion) and adjusted EPS guidance to $11.30 (from $10.15), reflecting 65% and 87% year-over-year growth respectively
- Management forecasts 2027 revenue growth to accelerate beyond 2026 levels, with adjusted EPS expected to increase faster than revenue due to enhanced operating margins and new program wins
Q2 2026 Financial Results Surpass Analyst Expectations
Celestica delivered outstanding second-quarter results, reporting revenue of $4.70 billion for the quarter ending June 30, 2026. This marks a 62% increase compared to $2.89 billion in Q2 2025 and exceeds the company’s guidance range of $4.15 billion to $4.45 billion. The surge was driven by stronger-than-expected customer demand and effective operational execution, according to the company’s official release.
The revenue growth highlights the robust demand in Celestica’s primary markets, especially data center infrastructure and advanced technology solutions. CEO Rob Mionis emphasized that strong operational performance contributed to multiple financial metric improvements, positioning the company for sustained momentum through the rest of 2026.
Adjusted Operating Margin Hits Record High
In addition to revenue growth, Celestica achieved significant margin expansion, with adjusted operating margin (non-GAAP) reaching 8.2% in Q2 2026, up from 7.4% in Q2 2025. This represents a new company record, underscoring enhanced operational efficiency and cost control. The margin also exceeded the midpoint of management’s guidance, reflecting stronger operating leverage.
On a GAAP basis, operating earnings as a percentage of revenue rose to 9.8% in Q2 2026 from 9.4% in the prior year. Adjusted EPS (non-GAAP) reached $2.54, an 82.7% increase from $1.39 in Q2 2025, surpassing guidance of $2.14 to $2.34. GAAP EPS was $3.17 versus $1.82 in the previous year, partly benefiting from a total return swap agreement.
Connectivity & Cloud Solutions Segment Drives Robust Growth
The Connectivity & Cloud Solutions (CCS) segment, covering Communications and Enterprise (servers and storage) markets, generated $3.81 billion in Q2 2026 revenue, up 84% year-over-year. Within CCS, Hardware Platform Solutions—key to the company’s data center offerings—delivered approximately $1.9 billion, a 58% increase from Q2 2025. The CCS segment margin improved to 8.7% from 8.3% year-over-year.
The Advanced Technology Solutions (ATS) segment, including Aerospace and Defense, Industrial, HealthTech, and Capital Equipment, posted $0.89 billion in revenue, up 8% from Q2 2025. ATS margin rose to 6.3% from 5.3%, indicating margin gains across both segments. The differing growth rates highlight stronger demand in data center and cloud infrastructure compared to traditional advanced technology sectors.
Significant 2026 Annual Guidance Increase
Due to heightened customer demand and improved component availability, Celestica raised its full-year 2026 revenue forecast to $20.5 billion from $19.0 billion, a $1.5 billion increase. Adjusted EPS guidance was raised to $11.30 from $10.15, projecting 87% year-over-year growth.
Full-year adjusted operating margin guidance was increased to 8.4% from 8.1%, and free cash flow guidance (non-GAAP) was raised to $600 million from $500 million. Management attributed these revisions to stronger Q3 demand and improved demand visibility for the remainder of 2026. The guidance assumes an adjusted effective tax rate near 20% and no share repurchases or issuances for the rest of the year.
Q3 2026 Guidance Indicates Ongoing Growth
For Q3 2026, Celestica projects revenue between $5.25 billion and $5.55 billion, with adjusted EPS (non-GAAP) guidance of $2.88 to $3.08. Adjusted operating margin is expected to be 8.4% at the midpoint of these ranges, suggesting continued sequential revenue growth and margin stability.
The Q3 guidance assumes an adjusted effective tax rate of approximately 20%, excludes $0.27 to $0.33 per share pre-tax impacts related to stock-based compensation, intangible asset amortization (excluding software), and restructuring charges, and assumes no share repurchases or issuances during the quarter.
Expectations for Accelerated 2027 Growth
Management projects 2027 revenue growth to outpace the 65% expansion forecast for 2026, with adjusted EPS expected to increase faster than revenue due to higher operating margins. This outlook reflects anticipated operational leverage and margin expansion as the company scales to meet sustained demand.
The company attributes this acceleration to "very strong customer demand" and "new program wins," though specific details on customers or contracts were not disclosed. This guidance underscores management’s confidence in demand durability and execution heading into 2027.
Improved Supply Chain and Operational Execution Strengthen Results
Celestica cited improved component supply as a key factor behind its strong Q2 2026 results and raised full-year outlook. After industry-wide semiconductor and component shortages in 2025 and early 2026, the company benefited from better availability, enabling fuller order fulfillment and demand capture.
Management also highlighted "strong operational execution," with improvements in manufacturing efficiency, supply chain management, and program delivery contributing to results that exceeded forecasts made just three months earlier.
Data Center Infrastructure Demand Bolsters Market Position
The surge in revenue and optimistic 2027 outlook reflect robust investment in data center infrastructure driven by AI and cloud computing growth. Celestica’s involvement in networking solutions (including 800G and 1.6T programs) and AI/machine learning compute platforms positions it to capture a significant share of capital spending.
Customer capital expenditures by leading hyperscalers, AI, and data center operators remain elevated, with management expecting sustained investment through 2026 and 2027. This strong demand underpins expectations for continued growth in data center infrastructure, cooling solutions, networking equipment, and compute platforms.
Capital Allocation and Strategic Growth Plans
Raised free cash flow guidance of $600 million for 2026 (up from $500 million) signals strengthening operational cash generation alongside profit growth. This enhanced cash flow provides flexibility for capacity expansion, acquisitions, or shareholder returns. The guidance assumes no share repurchases or issuances in 2026, indicating a focus on operational investment and financial flexibility.
The announcement did not specify planned capital expenditures, facility expansions, or acquisitions, though management has previously noted investments aligned with growth and capacity needs.
