Celestica Inc. (TSX: CLS) (NYSE: CLS), a leader in design, manufacturing and supply chain solutions for the world’s most innovative companies, announced financial results for the quarter ended December 31, 2020 (Q4 2020).
- ATS segment revenue: decreased 12% compared to Q4 2019, and represented 37% of total revenue, compared to 39% of total revenue for Q4 2019; ATS segment margin was 3.9%, compared to 3.0% for Q4 2019.
- CCS segment revenue: decreased 4% compared to Q4 2019, and represented 63% of total revenue, compared to 61% of total revenue for Q4 2019; CCS segment margin was 3.4%, compared to 2.9% for Q4 2019.
ATS segment revenue decreased in Q4 2020 compared to Q4 2019, primarily driven by adverse demand impacts related to the coronavirus 2019 disease (COVID-19) pandemic, specifically in our commercial aerospace and Industrial businesses. The decreases were partially offset by revenue growth in our HealthTech and Capital Equipment businesses, driven by new program ramps. The increase in ATS segment margin in Q4 2020 compared to Q4 2019 was primarily due to improvements in our Capital Equipment and HealthTech businesses, driven by improved productivity, the beneficial impact of our cost actions and volume leverage, partly offset by the performance of our A&D business. We are pleased with the improvement in ATS segment margin, and are targeting ATS segment margin to be within our target range of 5% to 6% by the end of 2021.
While demand in our Industrial business in Q4 2020 compared to Q4 2019 was adversely impacted by COVID-19, there has been a gradual recovery of demand across our customer base in this business since the second quarter of 2020. Although revenues declined compared to the prior year period, the contribution of this business to our profitability improved from Q4 2019 as a result of our cost reduction initiatives and the ramp of new programs.
CCS segment revenue decreased in Q4 2020 compared to Q4 2019, primarily as a result of our disengagement from programs with Cisco Systems, Inc. (Cisco Disengagement), which was completed at the end of 2020 as planned. This decline was offset in large part by strong demand from service providers in our Communications end market. Our CCS Joint Design & Manufacturing (JDM) business (which we have renamed “Hardware Platform Solutions” or “HPS,” as described below) experienced strong demand, up 53% in Q4 2020 compared to Q4 2019 driven by Hyperscaler demand strength.
As anticipated, our HPS revenue for the full year of 2020 (FY 2020) was $862 million, an increase of 80% compared to the full year of 2019 (FY 2019), and accounted for 15% of FY 2020 revenue. Although we continue to anticipate that total CCS segment revenue will decline for the full year 2021 (FY 2021) compared to FY 2020, we expect continued strength in our HPS business in 2021. We anticipate that FY 2021 HPS revenue will increase compared to the prior year, and we are targeting high single digit percentage growth in HPS revenue for FY 2021 compared to FY 2020.
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