Celestica Announces First Quarter 2023 Financial Results

The economic substance of the exclusions described above (where applicable to the periods presented) and management’s rationale for excluding them from non-IFRS financial measures is provided below:

Employee SBC expense, which represents the estimated fair value of stock options, restricted share units and performance share units granted to employees, is excluded because grant activities vary significantly from quarter-to-quarter in both quantity and fair value. In addition, excluding this expense allows us to better compare core operating results with those of our competitors who also generally exclude employee SBC expense in assessing operating performance, who may have different granting patterns and types of equity awards, and who may use different valuation assumptions than we do.

TRS FVAs represent mark-to-market adjustments to our TRS, as the TRS is recorded at fair value at each quarter end. We exclude the impact of these non-cash fair value adjustments (both positive and negative), as they reflect fluctuations in the market price of our SVS from period to period, and not our ongoing operating performance. In addition, we believe that excluding these non-cash adjustments permits a better comparison of our core operating results to those of our competitors.

Amortization charges (excluding computer software) consist of non-cash charges against intangible assets that are impacted by the timing and magnitude of acquired businesses. Amortization of intangible assets varies among our competitors, and we believe that excluding these charges permits a better comparison of core operating results with those of our competitors who also generally exclude amortization charges in assessing operating performance.

Other Charges (Recoveries) consist of, when applicable: Restructuring Charges, net of recoveries (defined below); Transition Costs (Recoveries) (defined below); net Impairment charges (defined below); consulting, transaction and integration costs related to potential and completed acquisitions, and charges or releases related to the subsequent re-measurement of indemnification assets or the release of indemnification or other liabilities recorded in connection with acquisitions, when applicable; legal settlements (recoveries); specified credit facility-related charges; and post-employment benefit plan losses. We exclude these charges and recoveries, because we believe that they are not directly related to ongoing operating results and do not reflect expected future operating expenses after completion of these activities or incurrence of the relevant costs, net of recoveries. Our competitors may record similar charges at different times, and we believe these exclusions permit a better comparison of our core operating results with those of our competitors who also generally exclude these types of charges, net of recoveries, in assessing operating performance.

Restructuring Charges, net of recoveries, consist of costs relating to: employee severance, lease terminations, site closings and consolidations, accelerated depreciation of owned property and equipment which are no longer used and are available for sale and reductions in infrastructure.

Transition Costs consist of costs recorded in connection with: (i) the transfer of manufacturing lines from closed sites to other sites within our global network; and (ii) the sale of real properties unrelated to restructuring actions (Property Dispositions). Transition Costs consist of direct relocation and duplicate costs (such as rent expense, utility costs, depreciation charges, and personnel costs) incurred during the transition periods, as well as cease-use and other costs incurred in connection with idle or vacated portions of the relevant premises that we would not have incurred but for these relocations, transfers and dispositions. Transition Recoveries consist of any gains recorded in connection with Property Dispositions. We believe that excluding these costs and recoveries permits a better comparison of our core operating results from period-to-period, as these costs or recoveries do not reflect our ongoing operations once these specified events are complete.

Impairment charges, which consist of non-cash charges against goodwill, intangible assets, property, plant and equipment, and right-of-use (ROU) assets, result primarily when the carrying value of these assets exceeds their recoverable amount.

Non-core tax impacts are excluded, as we believe that these costs or recoveries do not reflect core operating performance and vary significantly among those of our competitors who also generally exclude these costs or recoveries in assessing operating performance.

The following table (which is unaudited) sets forth, for the periods indicated, the various non-IFRS financial measures discussed above, and a reconciliation of non-IFRS financial measures to the most directly comparable financial measures determined under IFRS (in millions, except percentages and per share amounts):

  Three months ended March 31
  2022
  2023
  % of
revenue
  % of
revenue
IFRS revenue$1,566.9   $1,837.8  
      
IFRS gross profit$132.5 8.5% $164.0 8.9%
Employee SBC expense   5.6         8.5    
TRS FVAs           0.1    
Non-IFRS adjusted gross profit $ 138.1   8.8 %   $ 172.6   9.4 %
           
IFRS SG&A $ 65.7   4.2 %   $ 77.9   4.2 %
Employee SBC expense   (9.0 )       (13.5 )  
TRS FVAs           (0.1 )  
Non-IFRS adjusted SG&A $ 56.7   3.6 %   $ 64.3   3.5 %
           
IFRS earnings from operations $ 40.6   2.6 %   $ 59.4   3.2 %
Employee SBC expense   14.6         22.0    
TRS FVAs           0.2    
Amortization of intangible assets (excluding computer software)   9.3         9.2    
Other Charges   4.8         4.6    
Non-IFRS operating earnings (adjusted EBIAT) (1) $ 69.3   4.4 %   $ 95.4   5.2 %
           
IFRS net earnings $ 21.8   1.4 %   $ 24.7   1.3 %
Employee SBC expense   14.6         22.0    
TRS FVAs           0.2    
Amortization of intangible assets (excluding computer software)   9.3         9.2    
Other Charges   4.8         4.6    
Adjustments for taxes (2)   (2.3 )       (3.5 )  
Non-IFRS adjusted net earnings $ 48.2       $ 57.2    
           
Diluted EPS          
Weighted average # of shares (in millions)   124.7         121.6    
IFRS earnings per share $ 0.17       $ 0.20    
Non-IFRS adjusted earnings per share $ 0.39       $ 0.47    
# of shares outstanding at period end (in millions)   124.1         120.7    
           
IFRS cash provided by operations $ 35.3       $ 72.3    
Purchase of property, plant and equipment, net of sales proceeds   (16.4 )       (33.1 )  
Lease payments   (11.2 )       (11.3 )  
Finance Costs paid (excluding debt issuance costs paid)   (7.2 )       (18.7 )  
Non-IFRS adjusted free cash flow (3) $ 0.5       $ 9.2    
           
IFRS ROIC % (4)   8.1 %       11.2 %  
Non-IFRS adjusted ROIC % (4)   13.9 %       17.9 %  

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