Celestica Raises 2026 Outlook to $20.5B as Revenue Jumps 62%

A quarter that beat its own guidance

Celestica guided the second quarter to revenue of $4.15 billion to $4.45 billion and adjusted earnings per share of $2.14 to $2.34. It delivered $4.70 billion and $2.54. Adjusted operating margin reached 8.2% against 7.4% a year earlier, which the company described as a new high for the business.

Almost all of the growth sits in one segment. Connectivity and Cloud Solutions, which covers communications gear and the servers and storage sold to hyperscale operators, produced $3.81 billion of revenue, up 84%, at an 8.7% segment margin against 8.3%. Inside it, Hardware Platform Solutions revenue was about $1.9 billion, up 58%. The Advanced Technology Solutions segment, which holds aerospace and defense, industrial, health technology and capital equipment, grew 8% to $0.89 billion, though its margin improved to 6.3% from 5.3%.

The demand behind those numbers has been visible in other filings all month. GE Vernova raised its own 2026 outlook on an 88% order surge, Baker Hughes booked $4.9 billion of gas equipment orders on Monday morning, and Alphabet reported cloud revenue up 82% while free cash flow turned negative on capital spending. Celestica sells into the same build.

Why the GAAP number came in above the adjusted one

Adjusted earnings usually sit above GAAP earnings, because the adjustments remove costs. Celestica reported the opposite this quarter. GAAP earnings per share were $3.17 and adjusted earnings per share were $2.54, a gap of $0.63 running the other way.

The cash flow statement filed with the release explains it. Net earnings of $368.8 million include a $104.1 million non-cash gain from fair value adjustments on a total return swap, an instrument re-measured each quarter against the market price of Celestica’s own shares. The company excludes those swings from its adjusted measures in both directions, and it excluded a $97.4 million gain on the same line a year ago. Working the other way, the GAAP figure absorbed an aggregate charge of $0.28 a share before tax for stock-based compensation, amortization of intangible assets and restructuring.

Building for the guidance

The balance sheet moved harder than the income statement. Purchases of property, plant and equipment reached $263.8 million in the quarter against $32.5 million a year earlier, and $493.3 million across the first half against $69.2 million. A further $180.0 million of equipment purchases sat unpaid at June 30. Inventories rose $728.8 million in the quarter and $1.21 billion across the half, against $129.8 million and $157.5 million in the comparable periods.

Suppliers are carrying part of that. Accounts payable, accrued liabilities, provisions and income taxes payable rose $1,025.3 million in the quarter, which is why operating cash flow still reached $410.9 million against $152.4 million. Celestica drew $250.0 million under term loans, repaid $229.3 million, and closed the quarter with $535.7 million of cash against $313.8 million a year earlier.

What to watch

1. The third quarter, expected in late October. Guidance is $5.25 billion to $5.55 billion of revenue and $2.88 to $3.08 of adjusted earnings per share, with adjusted operating margin of 8.4% at the midpoint. The low end of that revenue range sits 12% above the record just reported, so the guidance itself is the test.

2. The raised 2026 outlook. Revenue of $20.5 billion, adjusted earnings per share of $11.30, adjusted operating margin of 8.4% and free cash flow of $600 million, each lifted from $19.0 billion, $10.15, 8.1% and $500 million. Two quarters remain to hit it.

3. Whether the spending converts. Capital expenditure of $263.8 million in a single quarter and a $728.8 million inventory build are commitments made against forecasts, and the company has told the SEC it expects 2027 revenue growth to run above the 65% rate it now anticipates for 2026. The next two cash flow statements show whether the equipment and the inventory turn into shipments.