TORONTO -- Celestica today reported first quarter revenue increased 1% from a year ago to $1.5 billion.

The results were within previous company guidance of $1.425 billion to $1.525 billion.

During the quarter, Celestica completed a reorganization of its business into two operating and reportable segments — Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). Celestica also adopted new accounting standards effective Jan. 1.

Net income under the new standards was $14.1 million, versus $22.5 million last year. Overall operating margin was 3%, compared to 3.6% in 2017. Free cash flow was -$34.1 million, compared to $13.5 million in 2017. Celestica took restructuring charges of $6.9 million in the period, versus $5.8 million for the first quarter of 2017.

ATS segment revenue increased 8%, and represented 36% of total revenue, compared to 33% of total revenue for the first quarter of 2017. Operating margin under the new accounting rules was 5.2%, compared to 4.7% for the first quarter of 2017. CCS segment revenue decreased 2%, and operating margin was 1.7%, versus 3% a year ago.

“Celestica's first quarter results highlight the steady operating and financial performance being achieved in our ATS segment, as well as pressure being experienced in our more volatile CCS segment,” said Rob Mionis, president and CEO, Celestica. “Despite the component constrained environment affecting our entire industry, we achieved results in line with our guidance for the first quarter, and anticipate additional revenue growth and improved operational efficiency in the second quarter of 2018.”

“We have made significant investments in our ATS segment over the past several years, and we are now starting to see the operational and financial improvements we anticipated in this segment when we first launched our transformational strategy two years ago. While our CCS segment continues to experience a volatile pricing and demand environment, Celestica has an extensive track record in helping customers manage through these conditions, and our teams are focused on implementing productivity and efficiency initiatives across our operations to improve performance in the second half of 2018.”

ATS consists of aerospace and defense, industrial, smart energy, healthtech, semiconductor capital equipment, and consumer businesses. CCS consists of enterprise communications, telecommunications, servers and storage businesses.

The EMS company said it anticipates the sale of its Toronto corporate headquarters and manufacturing operations to close by the end of 2018, subject to potential delays that could move closing to early 2019. The property was sold for approximately C$137 million, some of which will be used to relocate to a new manufacturing facility. Celestica expect to incur total transition costs of up to $15 million, through to the end of the first quarter of 2019.

For the quarter ending Jun. 30, Celestica anticipates revenue in the range of $1.575 billion to $1.675 billion.

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