Celestica (NYSE:CLS) reported third-quarter 2026 revenue of $5.83 billion, up 83% from a year earlier and above the high end of its guidance range, as demand for AI infrastructure lifted both of its operating segments.
Adjusted earnings per share rose 109% to $3.30, while non-GAAP operating margin expanded 90 basis points to a record 8.5%. The company said adjusted return on invested capital reached 64.7%, up about 27 percentage points year over year.
“Strong demand and solid operational execution led to higher than expected revenue in both our CCS and ATS segments,” Chief Financial Officer Todd Ankenmann said on the call.
Cloud and Connectivity Growth Drives Results
Revenue in Celestica’s Connectivity & Cloud Solutions, or CCS, segment increased 102% to $4.9 billion and represented 84% of total company revenue. The company renamed its communications end market as Networking and its enterprise end market as Compute and Storage, a nomenclature change that did not alter the composition of those businesses or prior reported results.
Networking revenue grew 68%, supported by 800G networking products, early production volumes for 1.6T programs, and continuing demand for 400G products. Compute and Storage revenue rose 242%, driven by hyperscaler AI-compute ramps and stronger storage demand.
Celestica’s Hardware Platform Solutions, or HPS, business generated $2.3 billion in quarterly revenue, up 70%, as 1.6T and 800G switch programs ramped across multiple hyperscaler customers. HPS accounted for 40% of total company revenue.
The CCS segment’s margin increased 60 basis points to 8.9%, which the company attributed to operating leverage. Advanced Technology Solutions, or ATS, revenue rose 23% to $957 million, led by accelerating capital-equipment demand and higher demand across its other businesses. ATS margin expanded 110 basis points to 6.6% on improved mix and operating leverage.
Three customers accounted for at least 10% of quarterly revenue, representing 35%, 17%, and 14% of sales, respectively.
Higher Outlook for 2026 and 2027
For the fourth quarter, Celestica forecast revenue of $6.275 billion to $6.575 billion, representing 76% growth at the midpoint. It expects adjusted EPS of $3.37 to $3.57, or 84% growth at the midpoint, and an adjusted operating margin of approximately 8.7% at the midpoint of its guidance ranges.
The company raised its full-year 2026 revenue outlook to $21 billion from a prior range of $20.5 billion to $21 billion. It increased its adjusted EPS outlook to $11.55 from $11.30, while maintaining its full-year adjusted operating-margin outlook of 8.4%.
Celestica lowered its 2026 free-cash-flow outlook to $460 million from $600 million, citing targeted working-capital investments intended to support accelerating growth in 2027. Inventory stood at $4.5 billion at the end of the third quarter, up $1.1 billion sequentially, as the company prepared for expected demand growth.
The company provided a 2027 outlook calling for $40 billion in revenue, a 90% increase from its 2026 outlook, and non-GAAP operating margin of 9%. It expects adjusted EPS of $21.50 for the year. CCS revenue is projected to grow roughly 110%, while ATS revenue is expected to increase about 10%.
Ankenmann said Celestica expects meaningful sequential growth through 2027, with revenue in the second half higher than the first half as large programs ramp. He also said the company’s forecast for 2028 customer demand from awarded programs alone is “meaningfully higher” than its 2027 revenue outlook.
Investment Plans and Cash Use
Celestica generated $128 million in free cash flow during the third quarter and $413 million year to date. Capital expenditures totaled $274 million in the quarter, or 4.7% of revenue, and the company continues to expect about $1 billion in 2026 capital spending.
The company completed a public offering of approximately 11.1 million shares during the quarter, generating gross proceeds of $3.45 billion before costs. It ended the period with about $4 billion in cash, $736 million in gross debt, and a net cash position of $3.2 billion.
For 2027, Celestica expects capital expenditures of $1.5 billion to $2 billion to support awarded programs and capacity expansion. The company expects a net use of cash during the year because of the scale of the anticipated revenue increase, working-capital needs, and capital investments. Ankenmann said Celestica is targeting a return to positive cash flow in 2028 based on its current view.
Chief Executive Officer Rob Mionis said the company is adding capacity across multiple Texas sites, expanding its Thailand campus, upgrading its Monterrey, Mexico, operations, and making targeted investments in Japan and Malaysia. The investments are intended to support networking programs, liquid-cooled AI rack integration, and customer demand for regional manufacturing capacity.
Focus on AI Networking, Compute and Rack-Scale Systems
Management described the AI infrastructure market as a multi-year investment cycle characterized by longer customer planning horizons, constrained compute capacity, and demand for advanced networking, custom compute systems, power delivery, liquid cooling, and optical connectivity.
Celestica expects its 2026 CCS revenue to reach $17.4 billion. Within the segment, the company expects 2026 networking revenue of $11.8 billion, up 66%, and Compute and Storage revenue of $5.6 billion, up 170%.
Steven Dorwart, president of Connectivity and Cloud Solutions, said Celestica expects 1.6T networking revenue to surpass 800G revenue in 2027. The company expects most 1.6T transceiver demand to remain in pluggable optics, while integrated-optics approaches such as co-packaged optics may become more prominent with future 3.2T systems.
The company said it expects production of its OpenAI Jalapeño custom-ASIC platform to begin in 2027, with the ramp weighted toward the second half of the year. It also expects to ramp its DS6010 switch, developed with AMD for the Helios rack-scale architecture, by the end of 2026.
Celestica said it has more than 1,600 HPS engineers across nine design centers and expects that figure to exceed 2,000 next year. The company plans to invest more than $300 million in HPS research and development in 2027 as it expands work in networking, compute racks, storage, optical technologies, power systems and liquid cooling.
About Celestica (NYSE:CLS)
Celestica Inc is a global provider of design, manufacturing, and supply chain solutions for original equipment manufacturers and other technology companies. The company helps customers develop, produce, and support complex hardware and integrated systems across their product life cycles.
Its services include product design and engineering, electronics and mechanical manufacturing, systems integration, testing, supply chain management, logistics, and after-market support. Celestica serves markets such as communications, enterprise and cloud computing, aerospace and defense, industrial technology, health technology, and capital equipment.
Headquartered in Toronto, Canada, Celestica operates a global network of manufacturing, engineering, and supply chain facilities serving customers in North America, Europe, and Asia.
