TORONTO – Celestica reported first quarter revenue was $1.23 billion, a decrease of 6% year-over-year.

Net earnings were $10.5 million, compared to net loss of $3.2 million in the same period last year.

ATS segment revenue decreased 2.9% to $531.3 million, representing 43% of total revenue, compared to 41% of total revenue for the same quarter in 2020. The decrease is primarily a result of adverse demand impacts related to Covid-19, specifically in the company’s commercial aerospace and industrial businesses, as well as adverse revenue impacts due to Covid-19-related materials constraints across the segment.

The decreases were largely offset by revenue growth in health tech and capital equipment businesses, driven by new program ramps and market-share gains. Celestica expects ATS segment revenue to grow 10% in 2021.

Revenue from semiconductor capital equipment customers grew in the first quarter year-over-year, driven by strong demand, new program wins and market-share gains. The company expects semiconductor demand to remain strong in 2021 and anticipates demand growth to accelerate toward the end of 2021 and into 2022 in the display business.

Within A&D, Celestica continues to experience demand softness in commercial aerospace. While the company does not expect commercial aerospace to return to pre-Covid levels in the near term, the firm does expect a modest sequential recovery in the second half of the year, driven by new program wins.

Demand in the company’s industrial business has largely stabilized, and revenue growth is expected to resume in the second quarter.

Health tech continues to see strong growth, supported by ramping new program wins in the first quarter, attributable in part to programs in support of the fight against Covid-19. Celestica anticipates continued strength in demand in this business in 2021.

CCS segment revenue decreased 8.8% year-over-year to $703.6 million, representing 57% of total revenue, compared to 59% of total revenue for the first quarter last year.

The decrease is a result of the impact of Celestica’s disengagement from programs with Cisco Systems, which were completed at the end of 2020 as planned, as well as program-specific demand softness from certain storage customers in the enterprise end market. This decline was partially offset by strong demand from service provider customers, including in hardware platform solutions.

HPS experienced strong revenue growth in the first quarter, increasing 46% year-over-year, driven by increased service provider demand. CCS segment revenue from programs with customers other than Cisco increased 16%. Total CCS segment revenue for 2021 will decline compared to 2020, but Celestica currently expects double-digit percentage revenue growth for the HPS business this year.

“We had a strong start to the year as we delivered solid results for the quarter,” said Celestica president and CEO Rob Mionis. “Our revenue, non-IFRS adjusted EPS and non-IFRS operating margin were all above the midpoint of our guidance ranges for the first quarter 2021. In addition, we were able to further reduce our debt, while also returning capital to shareholders through our share buyback program.

“We are pleased with our operating performance despite the continuing challenges from the Covid-19 pandemic. We are excited by the opportunities in front of us and continue to focus on executing for our customers while driving profitable growth.”

Free cash flow in the first quarter was $20.9 million, compared to $53.8 million in the first quarter of 2020.

During the period, Celestica repaid $30 million of outstanding term loan borrowings.

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