(All amounts in U.S. dollars.
Per share information based on diluted
shares outstanding unless noted otherwise).
Second Quarter Summary
----------------------
- Revenue of $1,402 million, compared to $1,876 million for the same
period last year
- GAAP earnings of $5.3 million or $0.02 per share, compared to GAAP
earnings of $39.8 million or $0.17 per share last year
- Adjusted net earnings of $0.11 per share, compared to $0.17 per share
for the same period last year
- Return on invested capital, including intangibles, of 15.3%, compared
to 11.8% last year
- Operating margin of 2.7%, compared to 3.0% last year
- Gross margin of 7.3%, compared to 6.7% last year
- Cash flow from operations of $55 million, free cash flow of
$41 million
- Third quarter of 2009 revenue guidance of $1.425 billion -
$1.575 billion, adjusted net earnings per share of $0.11 - $0.17
- Company plans $75 - $100 million restructuring program to further
reduce cost and improve efficiency
TORONTO, July 23 /CNW/ - Celestica Inc. (NYSE, TSX: CLS), a global leader
in the delivery of end-to-end product lifecycle solutions, today announced
financial results for the second quarter ended June 30, 2009.
Revenue for the quarter was $1,402 million, compared to $1,876 million in
the second quarter of 2008. GAAP net earnings were $5.3 million, or $0.02 per
share, compared to GAAP net earnings of $39.8 million, or $0.17 per share, for
the same period last year. The year-over-year change reflects the impact of
weaker end-market demand, as well as higher restructuring costs in 2009
associated with the company's restructuring program announced at the beginning
of 2008.
Adjusted net earnings for the quarter were $25 million, or $0.11 per
share, compared to adjusted net earnings of $38.9 million, or $0.17 per share,
for the same period last year. The term adjusted net earnings is defined as
net earnings before other charges, amortization of intangible assets
(excluding amortization of computer software), option expense, gains or losses
related to the repurchase of shares and debt, net of tax and significant
deferred tax write-offs or recoveries. Detailed GAAP financial statements and
supplementary information related to adjusted net earnings appears at the end
of this press release.
The company's revenue and adjusted net earnings for the second quarter of
2009 were within the company's published guidance, announced on April 23,
2009, of revenue of $1.30 billion to $1.45 billion and adjusted net earnings
per share of $0.07 to $0.13.
For the six months ended June 30, 2009, revenue was $2,872 million,
compared to $3,712 million for the same period in 2008. GAAP net earnings were
$24.5 million, or $0.11 per share, compared to $69.6 million, or $0.30 per
share, for the same period last year. Adjusted net earnings for the six months
ended June 30, 2009 were $54.3 million, or $0.24 per share, compared to $74.3
million, or $0.32 per share, for the same period in 2008.
"Celestica's second quarter financial results reflect our continued
success at driving quality and efficiency throughout the company while
delivering value for our customers, despite the challenging economic
environment," said Craig Muhlhauser, President and Chief Executive Officer,
Celestica.
"The combination of our financial strength, operational excellence and
the speed and flexibility of Celestica's global supply chain network creates a
unique advantage to support our future growth and profitability as markets
begin to improve."
Third Quarter Outlook
---------------------
For the third quarter ending September 30, 2009, the company anticipates
revenue to be in the range of $1.425 billion to $1.575 billion, and adjusted
net earnings per share to range from $0.11 to $0.17.
The company also announced plans to further reduce fixed costs and
overhead expenses and to eliminate excess capacity through a $75 - $100
million restructuring program.
Second Quarter Webcast
----------------------
Management will host its quarterly results conference call today at 8:00
a.m. Eastern. The webcast can be accessed at www.celestica.com.
Supplementary Information
-------------------------
In addition to disclosing detailed results in accordance with Canadian
generally accepted accounting principles (GAAP), Celestica provides
supplementary non-GAAP measures as a method to evaluate the company's
operating performance. See table below.
Management uses adjusted net earnings as a measure of enterprise-wide
performance. Management believes adjusted net earnings is a useful measure for
management, as well as investors, to facilitate period-to-period operating
comparisons. Adjusted net earnings do not include the effects of other
charges, most significantly the write-down of goodwill and long-lived assets,
gains or losses on the repurchase of shares or debt and the related income tax
effect of these adjustments, and any significant deferred tax write-offs or
recoveries. The company also excludes the following recurring charges:
restructuring costs, option expense, the amortization of intangible assets
(except amortization of computer software), and the related income tax effect
of these adjustments. The term adjusted net earnings does not have any
standardized meaning prescribed by GAAP and is not necessarily comparable to
similar measures presented by other companies. Adjusted net earnings is not a
measure of performance under Canadian or U.S. GAAP and should not be
considered in isolation or as a substitute for net earnings prepared in
accordance with Canadian or U.S. GAAP. The company has provided a
reconciliation of adjusted net earnings to Canadian GAAP net earnings below.
About Celestica
---------------
Celestica is dedicated to delivering end-to-end product lifecycle
solutions to drive our customers' success. Through our simplified global
operations network and information technology platform, we are solid partners
who deliver informed, flexible solutions that enable our customers to succeed
in the markets they serve. Committed to providing a truly differentiated
customer experience, our agile and adaptive employees share a proud history of
demonstrated expertise and creativity that provides our customers with the
ability to overcome any challenge.
For further information on Celestica, visit its website at
http://www.celestica.com. The company's security filings can also be accessed
at http://www.sedar.com and http://www.sec.gov.
Safe Harbour and Fair Disclosure Statement
------------------------------------------
This news release contains forward-looking statements related to our
future growth, trends in our industry, our financial and/or operational
results including anticipated expenses, and our financial or operational
performance. Such forward-looking statements are predictive in nature and may
be based on current expectations, forecasts or assumptions involving risks and
uncertainties that could cause actual outcomes and results to differ
materially from the forward-looking statements themselves. Such
forward-looking statements may, without limitation, be preceded by, followed
by, or include words such as "believes", "expects", "anticipates",
"estimates", "intends", "plans", or similar expressions, or may employ such
future or conditional verbs as "may", "will", "should" or "would", or may
otherwise be indicated as forward-looking statements by grammatical
construction, phrasing or context. For those statements, we claim the
protection of the safe harbor for forward-looking statements contained in the
U.S. Private Securities Litigation Reform Act of 1995, and in any applicable
Canadian securities legislation. Forward-looking statements are not guarantees
of future performance. You should understand that the following important
factors could affect our future results and could cause those results to
differ materially from those expressed in such forward-looking statements: the
challenges of effectively managing our operations during uncertain economic
conditions, including significant changes in demand from our customers as a
result of the impact of the global economic crisis and capital markets
weakness; the risk of potential non-performance by counterparties, including
but not limited to financial institutions, customers and suppliers, during
uncertain economic conditions; the effects of price competition and other
business and competitive factors generally affecting the EMS industry,
including changes in the trend for outsourcing; our dependence on a limited
number of customers; variability of operating results among periods; the
challenge of managing our financial exposures to foreign currency
fluctuations; the challenge of responding to lower-than-expected customer
demand; our inability to retain or grow our business due to execution problems
resulting from significant headcount reductions, plant closures and product
transfers associated with major restructuring activities; our dependence on
industries affected by rapid technological change; our ability to successfully
manage our international operations; and the delays in the delivery and/or
general availability of various components used in our manufacturing process.
These and other risks and uncertainties, as well as other information related
to the company, are discussed in the Company's various public filings at
www.sedar.com and www.sec.gov, including our Annual Report on Form 20-F and
subsequent reports on Form 6-K filed with the Securities and Exchange
Commission and our Annual Information Form filed with the Canadian Securities
Commissions. Forward-looking statements are provided for the purpose of
providing information about management's current expectations and plans
relating to the future. Readers are cautioned that such information may not be
appropriate for other purposes.
As of its date, this press release contains any material information
associated with the Company's financial results for the second quarter ended
June 30, 2009 and revenue and adjusted net earnings guidance for the third
quarter ending September 30, 2009. Revenue and earnings guidance is reviewed
by the Company's board of directors. Our revenue and earnings guidance is
based on various assumptions which management believes are reasonable under
the current circumstances, but may prove to be inaccurate, and many of which
involve factors that are beyond the control of the Company. The material
assumptions may include assumptions regarding the following: forecasts from
our customers, which range from 30 to 90 days; timing and investments
associated with ramping new business; general economic and market conditions;
currency exchange rates; pricing and competition; anticipated customer demand;
supplier performance and pricing; commodity, labor, energy and transportation
costs; operational and financial matters; technological developments; and the
timing and execution of our restructuring plan. These assumptions are based on
management's current views with respect to current plans and events, and are
and will be subject to the risks and uncertainties referred to above. It is
Celestica's policy that revenue and earnings guidance is effective on the date
given, and will only be updated through a public announcement.
The following table sets forth, for the periods indicated, a
reconciliation of Canadian GAAP net earnings to adjusted net earnings and
other non-GAAP information (in millions of U.S. dollars, except per share
amounts):
2008 2009
Three months ----------------------------- -----------------------------
ended Adjust- Adjust-
June 30 GAAP ments Adjusted GAAP ments Adjusted
--------- --------- --------- --------- --------- ---------
Revenue $1,876.3 $ - $1,876.3 $1,402.2 $ - $1,402.2
Cost of
sales(1) 1,750.8 (0.8) 1,750.0 1,300.5 (0.6) 1,299.9
--------- --------- --------- --------- --------- ---------
Gross profit 125.5 0.8 126.3 101.7 0.6 102.3
SG&A(1)(2) 68.8 (1.4) 67.4 61.9 (1.0) 60.9
Amortization
of intangible
assets(2) 7.0 (4.2) 2.8 4.8 (1.9) 2.9
Other charges 3.6 (3.6) - 20.7 (20.7) -
--------- --------- --------- --------- --------- ---------
Operating
earnings -
EBIAT(3) 46.1 10.0 56.1 14.3 24.2 38.5
Interest
expense, net 10.3 - 10.3 10.7 - 10.7
--------- --------- --------- --------- --------- ---------
Net earnings
before tax 35.8 10.0 45.8 3.6 24.2 27.8
Income tax
expense
(recovery) (4.0) 10.9 6.9 (1.7) 4.5 2.8
--------- --------- --------- --------- --------- ---------
Net earnings $ 39.8 $ (0.9) $ 38.9 $ 5.3 $ 19.7 $ 25.0
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
W.A. no. of
shares (in
millions) -
diluted 230.4 230.4 230.2 230.2
Earnings
per share -
diluted $ 0.17 $ 0.17 $ 0.02 $ 0.11
ROIC(4) 11.8% 15.3%
Free cash
flow(5) $ 53.9 $ 41.0
2008 2009
Six months ----------------------------- -----------------------------
ended Adjust- Adjust-
June 30 GAAP ments Adjusted GAAP ments Adjusted
--------- --------- --------- --------- --------- ---------
Revenue $3,712.0 $ - $3,712.0 $2,871.6 $ - $2,871.6
Cost of
sales(1) 3,471.5 (1.8) 3,469.7 2,658.7 (1.3) 2,657.4
--------- --------- --------- --------- --------- ---------
Gross profit 240.5 1.8 242.3 212.9 1.3 214.2
SG&A(1)(2) 132.1 (2.1) 130.0 129.3 (2.0) 127.3
Amortization
of intangible
assets(2) 14.2 (8.4) 5.8 10.6 (5.0) 5.6
Other charges 6.9 (6.9) - 33.2 (33.2) -
--------- --------- --------- --------- --------- ---------
Operating
earnings -
EBIAT(3) 87.3 19.2 106.5 39.8 41.5 81.3
Interest
expense, net 19.0 - 19.0 20.9 - 20.9
--------- --------- --------- --------- --------- ---------
Net earnings
before tax 68.3 19.2 87.5 18.9 41.5 60.4
Income tax
expense
(recovery) (1.3) 14.5 13.2 (5.6) 11.7 6.1
--------- --------- --------- --------- --------- ---------
Net earnings $ 69.6 $ 4.7 $ 74.3 $ 24.5 $ 29.8 $ 54.3
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
W.A. no. of
shares (in
millions) -
diluted 229.7 229.7 229.7 229.7
Earnings per
share -
diluted $ 0.30 $ 0.32 $ 0.11 $ 0.24
ROIC(4) 11.2% 16.1%
Free cash
flow(5) $ 87.0 $ 57.1
(1) Non-cash option expense included in cost of sales and SG&A is added
back for adjusted net earnings.
(2) Certain 2008 GAAP numbers have been restated to reflect the change in
accounting for computer software effective January 1, 2009 as
required under Canadian GAAP. For the second quarter of 2008,
$2.8 million in amortization of computer software has been
reclassified from SG&A expenses to amortization of intangible assets
(first half of 2008 - $5.8 million). Amortization of computer
software is not added back for EBIAT and adjusted net earnings. There
is no impact to our current or previously reported EBIAT, adjusted
net earnings or net earnings.
(3) Management uses EBIAT as a measure to assess operating performance.
Excluded from EBIAT are the effects of other charges, most
significantly the write-down of goodwill and long-lived assets, gains
or losses on the repurchase of shares or debt, the related income tax
effect of these adjustments, and any significant deferred tax
write-offs or recoveries. We also exclude the following recurring
charges: restructuring costs, option expense, amortization of
intangible assets (except amortization of computer software),
interest expense or income, and the related income tax effect of
these adjustments. Management believes EBIAT, which isolates
operating activities before interest and taxes, is an appropriate
measure for management, as well as investors, to compare the
company's operating performance from period-to-period. The term EBIAT
does not have any standardized meaning prescribed by Canadian or U.S.
GAAP and is therefore unlikely to be comparable to similar measures
presented by other companies. EBIAT is not a measure of performance
under Canadian or U.S. GAAP and should not be considered in isolation
or as a substitute for net earnings prepared in accordance with
Canadian or U.S. GAAP.
(4) Management uses ROIC as a measure to assess the effectiveness of the
invested capital it uses to build products or provide services to its
customers. A ROIC metric encompasses operating margin, working
capital management and asset utilization. ROIC is calculated by
dividing EBIAT by average net invested capital. Net invested capital
consists of total assets less cash, accounts payable, accrued
liabilities and income taxes payable. The term ROIC does not have any
standardized meaning prescribed by Canadian or U.S. GAAP and is
therefore unlikely to be comparable to similar measures presented by
other companies. ROIC is not a measure of performance under Canadian
or U.S. GAAP and should not be considered in isolation or as a
substitute for any standardized measure.
(5) Management uses free cash flow as a measure to assess cash flow
performance. Free cash flow is calculated as cash generated from
operations less capital expenditures (net of proceeds from the sale
of surplus property and equipment). The term free cash flow does not
have any standardized meaning prescribed by Canadian or U.S. GAAP and
is therefore unlikely to be comparable to similar measures presented
by other companies. Free cash flow is not a measure of performance
under Canadian or U.S. GAAP and should not be considered in isolation
or as a substitute for any standardized measure.
GUIDANCE SUMMARY
2Q 09 Guidance 2Q 09 Actual 3Q 09 Guidance(6)
-------------- ------------ -----------------
Revenue $1.3B - $1.45B $1.4B $1.425B - $1.575B
Adjusted net EPS $0.07 - $0.13 $0.11 $0.11 - $0.17
(6) Guidance for the third quarter is provided only on an adjusted net
earnings basis. This is due to the difficulty in forecasting the
various items impacting GAAP net earnings, such as the amount and
timing of our restructuring activities.
CELESTICA INC.
CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars)
December 31 June 30
2008 2009
------------ -----------
Assets (unaudited)
Current assets:
Cash and cash equivalents (note 6)............. $ 1,201.0 $ 1,119.3
Accounts receivable (note 10(c))............... 1,074.0 808.9
Inventories (note 2)........................... 787.4 634.3
Prepaid and other assets (note 7(i))........... 87.1 67.1
Income taxes recoverable....................... 14.1 18.7
Deferred income taxes.......................... 8.2 6.1
----------- -----------
3,171.8 2,654.4
Property, plant and equipment (note 1(i))........ 433.5 422.4
Intangible assets (note 1(i)).................... 54.1 44.9
Other long-term assets (note 7(ii)).............. 126.8 123.7
----------- -----------
$ 3,786.2 $ 3,245.4
----------- -----------
----------- -----------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable............................... $ 1,090.6 $ 790.5
Accrued liabilities (notes 4 and 7(i))......... 463.1 312.5
Income taxes payable........................... 13.5 10.7
Deferred income taxes.......................... 0.2 0.2
Current portion of long-term debt (note 3)..... 1.0 0.1
----------- -----------
1,568.4 1,114.0
Long-term debt (note 3).......................... 732.1 583.2
Accrued pension and post-employment benefits..... 63.2 66.9
Deferred income taxes............................ 47.2 35.6
Other long-term liabilities...................... 9.8 9.1
----------- -----------
2,420.7 1,808.8
Shareholders' equity (note 8):
Capital stock.................................. 3,588.5 3,588.7
Contributed surplus............................ 204.4 219.9
Deficit........................................ (2,436.8) (2,412.3)
Accumulated other comprehensive income......... 9.4 40.3
----------- -----------
1,365.5 1,436.6
----------- -----------
$ 3,786.2 $ 3,245.4
----------- -----------
----------- -----------
Guarantees and contingencies (note 9)
See accompanying notes to unaudited consolidated financial statements.
These unaudited interim consolidated financial statements should be read
in conjunction with the 2008 annual consolidated financial statements.
CELESTICA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions of U.S. dollars, except per share amounts)
Three months ended Six months ended
June 30 June 30
2008 2009 2008 2009
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue.................. $ 1,876.3 $ 1,402.2 $ 3,712.0 $ 2,871.6
Cost of sales............
