CLS.TO - Earnings call 2 2023

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Operator

Good morning, ladies and gentlemen, and welcome to the Celestica Q2 2023 Earnings Conference Call. [Operator Instructions]. This call is being recorded on Thursday, July 27, 2023.I will now like to turn the conference over to Craig Oberg. Please go ahead.

Craig Oberg

Good morning and thank you for joining us on Celestica Second Quarter 2023 Earnings Conference Call.

forward-looking are Chawla President reminder Chief call, will today Officer, Chief during call meaning we Mandeep the and Financial make the Rob U.S. and Mionis, Executive this of On the within statements Officer.As a Act Private applicable Canadian XXXX securities Securities of and laws. Litigation Reform forecasts, forecasts materially outcomes uncertainties projections Such factors and or expectations, management's that forward-looking from and are statements. which could on based assumptions statements actual results other differ to subject conclusions, are cause such in current and to expressed risks,

For be well identification most our press regarding to accessed forward-looking refer and no assumptions, discussion sec.gov We note report assume any of law. such therein, yesterday's as required statements, sedar.com. update factors and to release, at Form as recent cautionary statements our concerning including annual other the can further on and information obligation statement and forward-looking by XX-F except forward-looking please as public which filings,

most presented not non-IFRS and refer companies measures measures to EBITDA and adjusted return SG&A not prescribed by trailing as available which adjusted In to designated do operating foregoing denote QX who addition, be standardized from certain including and We all modifications Unless our of is earnings diluted a financial expense measures press earnings gross to other for may non-IFRS by this specified this of measures meaning free during margin, of and flow, margin, under that measures effective per XXXX. describe financial information tab other gross dollars description reconciliation to and during capital whether various report measures and specifically adjusted adjusted not comparable me presentation, the tax non-IFRS financial and rate. turn measures, share on of IFRS under adjusted non-GAAP Investor EPS, financial adjusted call the non-IFRS now non-IFRS call or you non-IFRS Listeners XXXX U.S. our this release on information measures financial celestica.com and including Rob. should references will debt any references XXXX adjusted cash be operating U.S. under financial to at cautioned to refer consisting non-IFRS IFRS on use on otherwise public Relations such. XXmonth similar share directly the any historical financial over during that have call measures non-IFRS These to comparable call, to measures, based GAAP IFRS non-IFRS are financial to leverage to statements ratios similar adjusted more financial ratio, shares adjusted financial ROIC, outstanding.Let or based metrics. these or we per invested report dollars measures, the yesterday's specified are or a about to

Robert Mionis

Good Craig. us you, you morning, conference everyone, for Thank and on joining call. today's thank

have We delivered financial pleased in quarter. to the second are very results solid

and high of range. of non-IFRS each $X.XX billion EPS $X.XX exceeded of our the revenue Our end our guidance adjusted

for in above X highest with company's the was firmly the non-IF X.X% of margin operating operating the reflecting non-IFRS quarters, margin X% Celestica. new Our history, the consecutive past

our coupled very segment, artificial machine energy in to have year-over-year growth our years. number of million believe exposure attractive solid reflect marked growth. our green we The highest aerospace non-IFRS double-digit their ramping markets.In hyperscaler and commercial will programs, in number result a long-term of flow new In $XX continued our intelligence free support over secular strategic learning in of continue provide markets. we served in see portfolio's Finally, as diversification returning ATS of benefits our our adjusted demand, CCS tailwinds the a segment, quarterly investments our of cash to business with results of X to our our strength and

execute for on and margin has our customers excellence operational performance. growth to enabled well our continue focus and our We

Additionally, I provide outlook to financial of I and update you. material each the gradually for the XXXX. will the second over supply turn discuss the Mandeep, an environment for the efficiencies.Before markets, improve to over operational continues our end on to guidance us of in normalize, quarter who to would our to allowing Mandeep, like performance call our further quarter third

Mandeep Chawla

Rob, morning, and everyone. good Thank you,

range. end revenues high growth Second in quarter XX% was by $X.XX in segment exceeding and year-over-year, our CCS segment. came billion, higher guidance our higher Revenue XX% revenue at over of in the our supported ATS

XXX revenues year second for revenues our of period. supported end compared than our improved by segment. in XX revenue and the year-over-year. XX% proprietary revenue earnings second high strong softness Difficulty] both demand prior XX driven was offset higher by driven by returning leverage, as for in margin year outstanding.In cost margins. driven was [Technical compared as margin HPS record. up enterprise year-over-year $X.XX XX% of year on as with market our higher which ATS segment, highest proprietary in CCS quarter.Our strong non-IFRS softness second profitability applications. capacity adjusted XX% prior was favorable revenue improvements.Our $X.XX second leverage by by or business, quarter market, The per decline compared second industrial compared the XX% ramp segments, effective productivity. market the million our year-over-year, expect green growth mid-teens expectations generated Non-IFRS A&D, up and the percentage by a points and net lower compute The in adjusted in X.X%, the year-over-year second continuing $X.XX X.X% to million The a hyperscaler ATS our very per earnings reduced of XX% segment XX% by CCS leverage in year by in was additional demand with X.X% due by decrease. non-IFRS and the over than Our revenue was was operating lower anticipated HPS quarter year-over-year, basis as revenue of strong these was prior on profit mix.Moving the more to anticipated quarter demand.Our The communications exceeding volume accounted XX% our tax CapEx although our period. by networking the period. comps the the high do networking to quarter driven of per Enterprise a solutions. leverage in as end earnings our year ATS the purchases business. of volume was in industrial rate improvement segment comps ROIC percentage primarily XX.X%, points to X% revenue market higher of million, was range second products productivity XX segment capital HPS $XXX X.X% applications, in driven greater in compared compute.Turning revenues increase, the for quarter basis were working and up the increase quarter volume the in second billion to segment quarters.Communications particularly to quarter increase year, lower increase quarter recovery shares segment in and quarter.Moving our revenue by and we the supported quarter. for demand $X.XX $X.XX compared margin energy adjusted strength customers, for commercial was sequentially to in $XX margin end period. year quarter ATS driven expectation demand in guidance by over shifts share of was $XXX to XX% customers some of coming period, were increase. programs have in grow including revenue driven higher CCS segment was mid-teens and well in year-over-year year quarter, the HPS the for points equipment on higher XX% aerospace offset volume well or of by to year-over-year X.X% We share and enterprise primarily IFRS basis second driven metrics. were learning were from operating tough driven partially up net our capital. prior for HPS was up year AI aerospace compute and of from and machine moderated was prior was to business for revenues end productivity well to $XX and prior-year the gross and of Non-IFRS were and was in AI to an driven continue million tough the line Celestica second share by the by financial expectations above hyperscaler towards strong strong revenues support Adjusted company of in in total other quarter, XX% support spend commercial the strong total

new second X.X% quarter of were and million, support the revenue, compared of was the the second X in deposits of increased was at capital million Cash flat XXXX. cycle The the million higher days the $XXX inventory previously free investments were for $XX in prior million XX the increase expectations sequentially nearly aligns expenditures the adjusted of $XX period. end $XXX days up million sequentially higher win.Non-IFRS compared Capital Our was with quarter quarter, our quarter, to quarter second second period. to the the second year down during $XXX communicated $XX than lower year the year-over-year. program prior with in X $X.X billion, approximately for which our by in quarter and expenditures the prior of sequentially second year X.X% period.Cash were in million flow compared days and at or $XX end cash million

cash are million free solid for adjusted expecting year-to-date we XXXX. our in Given flow performance, now non-IFRS $XXX

Moving metrics. on to some additional key

million $XXX down Our the and of second $XX sequentially. year-over-year $X the end cash million balance up quarter was million, at

second us the cash Our the believe debt from million, of $XXX with with of our revolver, our us million quarter, debt quarter, billion, $X million of position borrowing million. $XXX to anticipated leaving gross in previous end a liquidity we of down balance business our $X the under which approximately provide was needs.At net with sufficient meet approximately combination $XXX capacity is the

approximately remainder quarter for for guidance our quarter, of opportunistic under third second the We NCIB for our repurchases XXXX. on the down at to our turns purchased we X.X continue was turns down compliant At sequentially covenants adjusted Our under were second trailing June all to turns year. and XXXX, leverage gross of quarter financial X.X last quarter to share compared agreement.During we the X.X million. $XX the XX, a to the ratio intend turning with cancellation debt cost of shares to credit same year.Now XX-month non-IFRS X.X million EBITDA be of

be $X.XX Third quarter to billion, $X.XX would range of year-over-year is if represent which midpoint this an revenues are billion expected X% to the in achieved. of the of range increase

proprietary ATS non-IFRS would the by adjusted range operating non-IFRS be range adjusted margin of third per market the Third range the points the third the period quarter to approximately for from to prior be our $X.XX would be market, our range be communications in in to the midpoint exchange.Now are be outlook non-IFRS in EPS expected our double-digit by flat the be higher continued certain percentage year-over-year, now driven guidance taxable is hyperscaler of by In are capital end Non-IFRS revenues. to over $XX our We quarter call revenues foreign to enterprise anticipated share in X.X%. turning to to to segment, adjusted compared down meaningful share.If expecting are continued million. headwinds anticipate increase expected as businesses, are our business. enterprise This be in anticipate market We quarter CCS strength Industrial, business ranges point the anticipated a rate driven low demand expense the we single-digit basis in offset of anticipated our earnings percentage mostly in customers.I'll to revenues $X.XX year-over-year, second and And we sequentially. year-over-year, networking, when represent demand increase anticipate end our achieved, back including year-over-year revenues HPS over continuing offset quarter HealthTech in and impact and lower partially to excluding quarter, comps growth R&D our third market, outlook equipment. percentage compute non-IFRS the for the end basis high lower third on per quarter.Finally, revenue tax any $XX We to Rob revenue range the driven approximately of effective and we in to a market for adjusted in in by anticipate year XX% SG&A our XX our to low tough an basis markets communications in XX in XXXX. a by programs anticipate of up discuss end revenue sequential double-digit for up end from our and be to turn overall. from the the be improvement

Robert Mionis

Thank you, Mandeep.

the pleased Following raise a we in are annual performance outlook quarter, second financial strong our for to XXXX.

revenue X% for and now achieved, if outlook is XXXX. level $X.XX highest which least represent Our revenue growth year least at the would our of billion, at since

XX XXXX, achieved, of would to points the for now compared prior is outlook XXXX basis this margin anticipate X.X% which represent operating for Our to $X.XX. year.We raised an non-IFRS XXXX. If represent would growth non-IFRS increase XX% adjusted from EPS of

to lead expect of XX% believe across margin would to EPS will secular our new program look of for revenue adjusted growth strength our and like I relative non-IFRS supported or outlook each XXXX, to of on by to continuing provide we in this growth detail strong each the outlook.Now wins. We businesses. some forward we anticipated businesses tailwinds growth more As with XXXX XXXX our that

our expect the to in XXXX compared grow XXXX. revenue continue mid-teens We range ATS to segment to in percentage

We most business than business the has is that year-to-year with year first so been significant to our year-to-date the of the in believe driver XX% compared of projects. continue EV the experienced charging year very industrial long-term that will revenues ATS as second energy, growth we up industrial in our particularly in green by and prior support tailwinds far of outlook half for the the Our XXXX, in growth year.Our segment number more on-vehicle anticipate also half positive, the a structural demand, period.

to wins in remains in we our equipment the capitalize believe for through a continues wafer demand work the as muted market continue reduction this number space.Our is outlook business on We also that a well-positioned to ramp as new program of equipment fab capital to demand.

are capital broader business We this to to our market during remain that fab in business current outlook wafer and the benefits in and expect structural capital equipment of recent years, and gains the it line return the to market. scale due to equipment mix, made we due profitable wafer encouraged adjustments XXXX, the to downturn share in equipment program our our to new with the equipment fab market wins.We most growth anticipate outperform for

pleased We new are including also to of customer. be programs, lithography a ramping a number new

strong commercial a aerospace expected to seeing continue. are We the of demand in within normalization and is traffic commercial recovery air

and in seeing aircraft defense this including ramps of aviation.Additionally, number overall new positive. are submarkets business, from business we of R&D our trend commercial are across outlook our benefits from program benefiting We single dual-aisle XXXX. all remains for The business aerospace a and

imaging surgical experiencing is ramps business instruments HealthTech double-digit of program Our and areas the driven growth, solid devices. by in year-to-year new

remains Our markets.Now turn relative with our and anticipated CCS let's less demand positive to outlook segment. for stable, other our volatility HealthTech in to business

to the to remain mid-single throughout For revenues growth expected in in the strength more We business and in are XXXX. segment communications. offset overall be to enterprise our to digits softness XXXX, XXXX, compared with CCS anticipate than up recent to accretive expected in margin continue anticipated

in hyperscalers our advanced machine customers for capacity and rates XXXX. demand very beneficiary continue anticipate revenue support Our support applications.We strong will computing throughout artificial intelligence to proprietary double-digit demand the enterprise being enterprise of compute to experiencing is the growth market for growth learning

of when for a mentioned, difficult XXXX muted our to result demand end compared in and market moderation a As comps. customer as outlook communications XXXX the remains

learning AI new moderation sequential our as businesses year-to-year stronger to as are XXXX in We to continues outlook customers our and business growth business very investments make experience the revenues in anticipate and total half the of remains XXXX. demand for their in healthy Our within compared second year, significant to to HPS machine and ramp.Our of capabilities. portfolio they HPS current calls programs and continuing capacity resume hyperscaler

to have approximately their they XX skewed center grown for the now for partner out $X.X hyperscaler represent at having over has billion been approximately of our hyperscaler a demand XXXX.Recent XX% CAGR months past infrastructure. worked We data proprietary a have revenue since build towards as compute customers key hyperscalers Celestica, products.

hyperscalers anticipate AI deployment networking we learning and of forward, ongoing will machine Moving their accelerate cycle. infrastructure refresh

As they need more investments to expected capacity. in to advanced infrastructure computing are networking support their

periods.We to win increase our based to on are investment future leaders continued we we products a HPS demand continuing XXXG As are the applications. for market in in switches our pleased engagements in and services result, next-gen XXXG anticipate are in switches that and

Our networking XXXX. with long term.I hyperscale strong pleased support to of expected customers revenue first during are over the capabilities strategic half and growth our offerings with and unique performance am the our

XXXX.With takes remain to business As the strategic on months Thank half our our targets vision, ahead execute shape, We the the in driving of latter delivering we questions. now forward the for for look and year continuing the that, and to on operator into value would shareholders. turn our for the to our by over to you. like call I prospects encouraged long-term

Operator

Canaccord. from Your Young comes [Operator Instructions] first from question Rob

Robert Young

on the Maybe the just business. a elements bit proprietary of of compute little information

enterprise [ CCS. a color it's in Maybe by of if are compute proprietary or driven little I many maybe out. in multiple, that or it's hyperscaler? little in driving around the ] more I to how customer hyperscaler give XXX% broaden assume this that's just space, all if it's and you more and if think you you're this an had one if customers color if a just could

Robert Mionis

customers proprietary hyperscaler solutions, high other proprietary XX% products. It's that, our compute, high-value doing and multiple different hardware know, types supporting customers, and it's we're actually -- compute, proprietary of is areas year-over-year. services, of number compute we're top-XX also platform across out, those engagements. the ramping just That a And In I'll Yes. of not Rob. these add right to down X% point concentration EMS now engagements. you means Sure,

Robert Young

that HPS. would deck you then suggests a assume gig that's cycle switch reference And in XXX AI to accelerate the the I you. earnings, an deployment know, which accompany network in it Okay. your that there's refresh the for

participate means, And And a more maybe so there? network be a that what refresh by little do give exactly if you driven that? cycle around color why you would there could how

Robert Mionis

mega trends AI there's interesting proliferation couple Yes, of ML with a products. associated and of the

requirement networking more power. networking AI is the driving On for the

So accelerators and TPUs for power GPUs XXx. increase usage as these and thus such significantly than need the by bandwidth more

So actually demand creating our a networking is where this other for -- migration. networking through to commanding should say, we important pull mega trend I core XXXG XXXG share.The is have products

this a higher we years. of speed volumes. anticipate XXXG. new several have in the of is you next over the of Again, engagements also couple and we to broader know, market So adoption enable on and and going heritage migration based strong we're also XXXG, our And on XXXG leader equipment, building networking XXXG XXXG

to ML those as pull So and volumes we through demand. and expect this proliferate continue create AI

Mandeep Chawla

that XXXG Rob, to to migration, just that XXXG And add HPS that's primarily product.

So talk part that the of when growth about resuming HPS in is forward periods, we driver.

Robert Young

related Great. HPS my question last then that's outlook. to And the is

down inventory of last towards and your was quarter by then proprietary I that spend a this you compute. it's shift think some driven understand more said maybe buffer customers now I large it working

businesses do the looking at demand capacity level you're You If when that forward the HPS, have current I you know, demand both make assumption. of you of XXXX, know, if manage into returns? can those to

Robert Mionis

growth. HPS second capacity, and Thailand These and at know, flagship we the lines That it's to the capacity facility has proprietary are, come the capacity our pandemic products also and operate of But out you peak do of Thailand compute in actually started highly in year. the That is will we're the Yes, half our fantastically already to expansion. efficiency. facility through we're capacity do coming expanding it, have to this enable our online facility now and products. automated continued

Robert Young

to inventory that I'll inventory inventory inventory buffer come them again drives the And working some your XXXX? pass you that if demand, into know, then of they if to if line. their eat know, are than choose or to just fast, up you -- that if build through, could customers back And faster

Robert Mionis

Yes.

should faster, the backlog broadly we're some certainly actually there. it's be ML fulfill right AI/ML to paced On to a get are products, demand. now able the the the silicon AI little products by of material, that is if -- demand But able and certainly We being speaking.

aside is also commodities. material from being defense, Aside on to That still said, back times from largely that, levels. lead extended the pre-COVID are several and and aerospace environment

Robert Young

quarter. the on Congrats Okay.

Robert Mionis

Thanks, Rob.

Operator

question comes Thanos from from next Your BMO. Moschopoulos

Thanos Moschopoulos

deployment acceleration capital about the current think your versus deleveraging M&A? in given you free cash what Just as on flow, buybacks versus are thoughts

Mandeep Chawla

cash really we're Dennis, Yes. pleased with generation. flow the

over positive X As you now flow years. know, we've generated cash free for

We're XX So to in able overall outlook. row think I quarters raise that our a pleased we're now.

about being we we've is is know, the quarter at leverage. on $XX Our we but early able accelerated been that, have has would share the results build X.Xx good balance reflected to the are say active buyback been did other of we continue of sheet that through over I to believe share, But not To dry as the opportunistic our specifically value.We'll buybacks properly than share materially were just and answer very in very continue opportunistic, healthy, which price, worth back question, be if quarter, million we a we price. in buy $XX some shares to but your powder. our you front, would course,

are We continue say expand very that continue but we We on don't in item is in acquisitions will large help M&A tuck funnel. to right a our capabilities. of focused would front have a ticket robust to have which I us,

that we're on pretty market. in the to pivot quickly to happening continue optionality, able what's to based maintain And so we want but

Thanos Moschopoulos

know was a Rob business. depressed that operating it then margins. for while doing And at Great. just on I A&D,

operating know, that to the size provide just just business you kind at, you volumes would room be of in for leverage ramp? ATS terms any as helpful. can So of then more levels. now rough margins our group color of average And continue there Is

Robert Mionis

finish. Mandy start off let I'll and Thanos,

believe So pre-pandemic is the and getting we growing A&D back business certainly XXXX. levels, in to

gating of availability, terms material item. margin mentioned a performance, is In still earlier, as I

So been has that our of margins is that a and dues, backlog a and past still strong we also have impacting impacting lot and efficiency.

of not game. at you yet, So know, it's margins the stage pre-pandemic operating this at

Mandeep Chawla

I back overall, that if the take would I Yes. margins, a talk with and step say pleased now seeing we're we're ATS What in performance very about right industrial.

As programs performance those energy many new that with pleased HealthTech. green ramping. of in We're seeing been in we're the have

We continue to believe more of into XXXX, that we go there's a margin not opportunity materials in become A&D, as in immediately drive can we as probably but availability at -- front maybe better, efficiency. us,

We evaluate longer continue opportunities term our to pricing contracts. with on

we opportunity So in still there's then equipment. capital believe there's think we course, of A&D. And in opportunity some

You know, in than profitable is getting a We're rid different now. what downturn. of We've the taken we very cost last equipment capital actions had without this right business capabilities.

XXXX. our of that continue and back, But size And an we as an this able into go we demand be our portfolio profitable is still grow.In we'd comes million often the is believe A&D the grow business, opportunity we a $XXX that even already same. of see to A&D, that business biggest so I've few industrial as we continue see terms is mentioned and a our considered times, are to which It's about do equipment business our it roughly business. to business there's though capital an opportunity, to so

Operator

Coupland comes question CIBC. Todd from next from Your

Thomas Ingham

has back capacity the the place of hoping modeling deployment out to My on context is in the and last couple in years. was XXXX. put the AI get hyperscalers by over was I worked some initial understanding how

if question. So then did? indeed you from can benefit us how have just you did a I follow-up take that, how And -- you through Celestica

Robert Mionis

We've with hyperscaler the and XX% some growing believe it's a as Yes, call. now our year over quite time, we in during for, hyperscalers mentioned Todd. XX% we've been the know, CAGR. -- been growth this you is I thanks, saw you presentation.

say scale, I our to these scale these some say, of would and and led strength and because, really in them heritage our custom use products our at products I and considerably With growth cooling provide proliferated. actually and and products. would that Todd, in to proliferated products, is being to the solutions.So we modules required these of see for, our to and by them, -- time. also see now refresh of proliferated being know, terms of the AI the lasting over we complexity and know, products when you quite the compute because these time refresh this we strengths just, ML providing this have and of really what hyperscalers, our are kicked things requirements manufacturing The has Furthermore, as cycle, silicon terms build provide in one and has the the plays proprietary you trend our xXX know, that some actually strengths provide them growth replaced advanced our not and compute it our did modules our ability these off, compute to able so with you heritage of cycle that's reliably

So it that your answers question. bodes further to growth. Hopefully

Thomas Ingham

business growth AI for about whether chip if or demand you perhaps visibility NVIDIA Then think indicators you we outside the helpful. good indicators your and for That's include context know, the like like at GPU just some provide might lumpy well? and as that be, strength could on not, are suppliers business of how

Robert Mionis

good are those Yes, indicators.

line visibility good have on of We business. especially this

orders and long go a shy place us lead year. a you time know, Our for, little customers there custom and are or out of for silicon their the of asking times to periods

and you multiple our CapEx orders types are forecasts our also will, customers. investing in placed years, we've if So robust of these in for products.

So continue. we feel, you know, very this confident growth will that

area. in of actually this leading support are good we're and our customers indicators in doing terms what GPUs So TPUs to

Mandeep Chawla

last been is, business a a requirements.And we're the market happening to It's reflective you hyperscalers the run from generative very AI in we're of that's given our amount presentation, or of close our to That CCS to hyperscalers. know, programs. through it said, applications as X Maybe we've provider Yes. over XX% hyperscaler so world. through what's lot top And pleased the is being to to multiple able with a I'll saw billion. you AI, heavy just add them that most a X a to much the the it over significant very well the servicing which shifting just years, engagement is need cloud be focused on and datacenter the to broader relates of do OEMs now $X.X which business as in the business it, is in industry. of of then compute those concentrated models, And overall within

of products, we're some focus for ones, the we're area within both HPS that's and doing customer. compute is And of doing networking and so us, which so as products as largest diversification the our real well with non-HPS

Thomas Ingham

Mandy, focused have business own interest demand be lead hyperscaler. happening large the are The their in or as one businesses, all financial could governments to the and if I Are end of specific in those large come AI you follow-up institutions apps? around seeing here. is Or customers? it any hyperscalers in seems for conduits last terms

Mandeep Chawla

time leading eventually say are needed. That what I coming being find from can we're is start as the now on. right the the seeing way applications which said, and would I'll do products their adopting, other as that Rob into primary that they off drivers But most on edge are technologies, demand hyperscalers. add the goes

robust to of so hyperscalers as the the XXXG to though even And switches, an those XXXG from have outside XXXG hyperscalers. moving switches demand example, continue are

similar the on as we compute side that would so be well. envision And

Robert Mionis

traffic. that of growth customers only also expect the tangentially would is enterprise benefit and thing to our data from due data we I of center interconnects communication AI center to growth increased proliferation the The add

number served number products, a So of our will. this is you markets a impacting our end proliferation and AI really if of

Operator

comes Markets. from Matushansky next Maxim Your RBC question from Capital

Maxim Matushansky

those fast proprietary just circle the or of strong been days Thanks. Yes. business expect on the computer past any terms in demand, to terms grow the stayed changes same you back wanted has mostly this how hyperscaler to I of the hyperscaler results. Have in over trends the XX year?

Robert Mionis

increased outlook demand for the XX over has our It's the QX year. in the increased Maxim, has I the reasons say for would one that to ability the and and serve beat days, last of also demand risen.

continue to materials from we Thailand You clear with run able supplier be know, facility very we and continue shorts our in to partners. to help efficiently our

that is has to risen to our and the demand that So increasing been demand area ability in has also -- serve occasion.

Maxim Matushansky

kind about that expect for increase XXXX, is more in with perhaps just CCS given that stronger should that that a or for mid-single of framing think that I of we you demand, in guess, of is how thing? revenue of Or communications segment weaker digit timing that So just mid-single digit the the reflection CCS? terms a

Mandeep Chawla

really incredibly with we're say Mandeep So what business. in comps dealing are the is tough here I would CCS -- Maximus,

QX know, the last CCS business year-over-year. in XX% and You grew year QX and between XX%

grow into be across able And we're so HPS one areas. shift a down be seen with been of signals now But that networking, is we're is right you've in multiple from demand the that which has XXXX, we dealing tough the we into compute. to from served that There proprietary getting comps. our go period of will the reasons as customers demand

tough of comps about really it's second in the year. this half So

Maxim Matushansky

Okay. And just for question Got me. final it.

you equipment any You different stronger AI build technology of in terms the in it that players positioning seeing build just is data are traditional competitors are to for perhaps driven of that that's that as compared for, the kind or more of either data needed and as a opposed there hyperscalers to the AI market or advantage in switches centers as data traditional? changes center out? out, competitive know, types any Just the to looking are driven the the relates center

Robert Mionis

for which the has usage power requirements. higher is silicon cooling and this Yes, AI towards has going need custom really higher

the space, that So that folks well. very to produce and are in frankly scale describes that winning that products ones us are are the at actually these able

heritage in have support a products strong complex We a HPS types these that heritage producing our with engineering, very produce that been products at we've of scale. very to very strong actually ability the all

Operator

[Operator Instructions].

Your from next question comes Chan Cowen. from TD Daniel

Daniel Chan

Just wanted for quarter. next to drill into the guide Enterprise

$XXX-ish that guessing implies about is estimated which million. going quarter. our You're double low million, for down I'm next digits $XXX from

the be next So helpful. volatility any quarter are color expecting just around they that for would

Mandeep Chawla

down going is bit. be it little to Yes, a

is in I growth. of say What again strong of going coming but comps, there's it's, year-over-year Some coming still investing a continuing that gated is be double there. tough some growth very is, Again, the digit would on basis, that gated is we're some off seasonality been of know, mentioned, QX in, well by it's of beyond And we material in to Robert also the as you demand some and some on when have then availability. is as capacity.

see we growing out come we to so QX. do even continue as business of And that

Daniel Chan

networking And you anything a programs looking cooling up of your data through pull or networking and outside you they talked of storage solutions? engaging they you number solutions of Are as AI accelerate center with different demand then, from investments. on So brought some hardware? outside helpful. times. example, cooling about for customers compute their traditional Rob, into Are That's typical Okay.

Robert Mionis

the are solutions provide them of completed we products. Most

we're also in cooling our solutions our So deploying computers. designs. HPS We're in proprietary deploying them

especially is as complete not we're solutions, these for and aftermarket we business with moving tend which growing tend of lines, service. iPad to provide a but to those things our growing in So us We huge going do also services providers, engineering to forward. along be business a the areas

Operator

you. further closing no Rob for questions are Mionis turning this There I'll at over call the time. to Thank remarks. be

Robert Mionis

half encouraged Thank continued our quarter the second you. as and our the with performance by strong pleased back the momentum in we enter of continued year. I'm

we also XXXX. us outlook year. today's the throughout joining our in raise we and majority to updating you of progress be to is on Financial continuing that a momentum this to As are into continue for markets as poised you Thank forward XXXX and our growth end also I'm we pleased XXXX. look call able for pleased

Operator

conference. that concludes Ladies your gentlemen, and

Celestica (CLS) 27 Jul 232023 Q2 Earnings call transcript