Celestica Inc. CLS reported second-quarter 2026 adjusted earnings of $2.54 per share, up 82.7% year over year and ahead of the Zacks Consensus Estimate of $2.29 by 10.9%. Revenues jumped 62.4% to $4.70 billion and surpassed the consensus mark of $4.35 billion by 8.1%.
Robust momentum in the Connectivity & Cloud Solutions (CCS) business remained the primary growth driver. CCS revenues surged 84% year over year, reflecting sustained strength in data center infrastructure demand, while management raised its 2026 outlook and now expects revenue growth to accelerate further in 2027.
Celestica, Inc. Price, Consensus and EPS Surprise
Celestica, Inc. price-consensus-eps-surprise-chart | Celestica, Inc. Quote
CLS Delivers Another Quarter of Margin Expansion
GAAP net earnings climbed to $368.8 million, or $3.17 per share, from $211 million, or $1.82 per share, in the year-ago quarter. Higher revenues and improved operating leverage continued to support profitability.
GAAP earnings from operations increased to $458.3 million from $272.5 million a year earlier. Operating margin improved to 9.8% from 9.4%.
Celestica Margins Improves on Better Mix
Adjusted operating earnings increased to $386.3 million from $214.7 million in the second quarter of 2025. Adjusted operating margin expanded to a record 8.2% from 7.4%, reflecting stronger operating leverage and favorable business mix as revenue scaled sharply.
Adjusted earnings rose to $2.54 per share from $1.39 in the year-ago quarter, comfortably exceeding the Zacks Consensus Estimate of $2.29. Management attributed the better-than-expected profitability to stronger-than-anticipated operating leverage, while the adjusted effective tax rate was 20%, slightly below its prior expectation of approximately 21% due to a favorable profit mix.
Celestica's CCS Business Drives Growth
Connectivity & Cloud Solutions revenues increased 84% year over year to $3.81 billion. Segment margin improved to 8.7% from 8.3%, reflecting favorable operating leverage and stronger execution as demand from hyperscale data center customers remained robust.
Hardware Platform Solutions revenues reached approximately $1.9 billion, increasing 58% from the prior-year period. Management attributed the overall outperformance to stronger-than-anticipated customer demand and improved component availability, enabling revenues to exceed the high end of its guidance range.
CLS ATS Business Improves Profitability
Advanced Technology Solutions revenues rose 8% year over year to $890 million, marking a steadier performance than the rapidly expanding CCS segment.
Despite the more modest sales growth, ATS segment margin improved to 6.3% from 5.3% a year earlier, reflecting stronger execution across its Aerospace and Defense, Industrial, HealthTech and Capital Equipment businesses. The segment continued to contribute to the company's overall margin expansion during the quarter.
Celestica Invests for Future Capacity
Cash provided by operating activities increased to $410.9 million from $152.4 million in the year-ago quarter, supported by stronger earnings despite higher working capital requirements tied to rapid growth.
Capital expenditures rose significantly, with purchases of property, plant and equipment totaling $263.8 million. As a result, free cash flow reached $147.1 million compared with $119.9 million a year earlier. Cash and cash equivalents stood at $535.7 million at quarter end, while long-term borrowings under the credit facility and finance lease obligations totaled $784 million.
CLS Raises Guidance After Strong First Half
For the third quarter of 2026, Celestica expects revenues between $5.25 billion and $5.55 billion. Adjusted earnings are projected in the range of $2.88 to $3.08 per share, while adjusted operating margin is expected to be 8.4% at the midpoint of the revenue and adjusted earnings guidance ranges.
Management also increased its 2026 outlook, citing stronger customer forecasts and improved component supply. The company now expects revenues of $20.5 billion, up from its previous outlook of $19 billion, adjusted earnings of $11.30 per share versus the prior forecast of $10.15, adjusted operating margin of 8.4% compared with 8.1% previously, and free cash flow of $600 million versus the earlier expectation of $500 million. Celestica also said it expects revenue growth in 2027 to accelerate beyond the approximately 65% growth anticipated for 2026, with adjusted earnings projected to grow faster than revenues.
CLS’ Zacks Rank
CLS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Arista Networks Inc. ANET is scheduled to release second-quarter 2026 earnings on Aug. 4. The Zacks Consensus Estimate for earnings is pegged at 89 cents per share, suggesting growth of 21.92% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 19.86%. The company delivered an average earnings surprise of 8.31% in the last four reported quarters.
Keysight Technologies, Inc. KEYS is set to release third-quarter 2026 earnings on Aug. 18. The Zacks Consensus Estimate for earnings is pegged at $2.46 per share, suggesting growth of 43.02% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 19.44%. The company delivered an average earnings surprise of 9.46% in the last four reported quarters.
Motorola Solutions, Inc. MSI is set to release second-quarter 2026 earnings on Aug. 5. The Zacks Consensus Estimate for earnings is pegged at $3.86 per share, implying growth of 8.12% from the year-ago reported figure.
Motorola has a long-term earnings growth expectation of 9.47%. The company delivered an average earnings surprise of 5.17% in the last four reported quarters.
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