CELESTICA INC

Previous wording

In this Quarterly Report on Form 10-Q (Q1 2025 10-Q), including this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), "Celestica," the "Company," "we," "us," and "our" refer to Celestica Inc. and its subsidiaries. This MD&A should be read in conjunction with our March 31, 2025 unaudited interim financial statements (Q1 2025 Interim Financial Statements), and our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 10-K), including our 2024 audited consolidated annual financial statements (2024 AFS) and related notes, which we prepared in accordance with U.S. generally accepted accounting principles (GAAP). Unless otherwise noted, all dollar amounts are expressed in United States (U.S.) dollars. The information in this discussion is provided as of April 24, 2025 unless we indicate otherwise. As used herein, "Q1," "Q2," "Q3," and "Q4" followed by a year refers to the first quarter, second quarter, third quarter and fourth quarter of such year, respectively.

Current wording

In this Quarterly Report on Form 10-Q (Q2 2025 10-Q), including this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), "Celestica," the "Company," "we," "us," and "our" refer to Celestica Inc. and its subsidiaries. This MD&A should be read in conjunction with our June 30, 2025 unaudited interim financial statements (Q2 2025 Interim Financial Statements) and our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 10-K), including our 2024 audited consolidated annual financial statements (2024 AFS) and related notes, which we prepared in accordance with U.S. generally accepted accounting principles (GAAP). Unless otherwise noted, all dollar amounts are expressed in United States (U.S.) dollars. The information in this MD&A is provided as of July 28, 2025 unless we indicate otherwise. As used herein, "Q1," "Q2," "Q3," and "Q4" followed by a year refers to the first quarter, second quarter, third quarter and fourth quarter of such year, respectively. The first half of 2025 is referred to herein as "1H 2025", and the first half of 2024 is referred to herein as "1H 2024".

Previous wording

Certain statements contained in this Q1 2025 10-Q, including this MD&A constitute "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (U.S. Securities Act), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (U.S. Exchange Act), and "forward-looking information" within the meaning of applicable Canadian securities laws (collectively, forward-looking statements), including, without limitation, statements related to: our priorities, intended areas of focus, targets, objectives and goals; trends in the electronics manufacturing services (EMS) industry and our segments (and/or their constituent businesses) and their anticipated impact; the anticipated impact of current market conditions and customer-specific factors on each of our segments (and/or their constituent businesses) and near term expectations; potential restructuring and divestiture actions; our anticipated financial and/or operating results and outlook, including expected revenue increases and decreases (or remaining flat), as well as growth in certain businesses and end markets; our strategies; our credit risk; the potential impact of acquisitions, or program wins, transfers, losses or disengagements; materials, component and supply chain constraints; anticipated expenses, capital expenditures and other working capital requirements and contractual obligations (and intended methods of funding such items); the potential impact of trade policies between countries in which we conduct business (including the tariffs implemented by the U.S. government, and any reciprocal or retaliatory tariffs); the impact of our price reductions and longer payment terms; our intended repatriation of certain undistributed earnings from non-Canadian subsidiaries (and amounts we do not intend to repatriate in the foreseeable future); the potential impact of tax and litigation outcomes; investor dissatisfaction with inclusion, employee engagement, and other environmental, social and governance matters; our ability to use certain tax losses; intended investments in our business; the potential impact of the pace of technological changes, customer outsourcing, program transfers, and the global economic environment; the intended method of funding common share (Common Share) repurchases; the impact of our outstanding indebtedness; liquidity and the sufficiency of our capital resources; our intention to settle outstanding equity and share unit awards with Common Shares; our financial statement estimates and assumptions; recently issued accounting pronouncements and amendments; the potential adverse impacts of events outside of our control (including those described under "External factors that may impact our business" below); mandatory prepayments under our credit facility; pension plan funding requirements and obligations, and the impact of annuity purchases; our compliance with covenants under our credit facility; refinancing debt at matur…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements contained in this Q2 2025 10-Q, including this MD&A constitute "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (U.S. Securities Act), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (U.S. Exchange Act), and "forward-looking information" within the meaning of applicable Canadian securities laws (collectively, forward-looking statements), including, without limitation, statements related to: our priorities, intended areas of focus, targets, objectives and goals; trends in the electronics manufacturing services (EMS) industry and our segments (and/or their constituent businesses) and their anticipated impact; the anticipated impact of current market conditions and customer-specific factors on each of our segments (and/or their constituent businesses) and near term expectations; potential restructuring and divestiture actions; our anticipated financial and/or operating results and outlook, including expected revenue increases and decreases (or remaining flat), as well as growth in certain businesses and end markets; our strategies; our credit risk; the potential impact of acquisitions, or program wins, transfers, losses or disengagements; materials, component and supply chain constraints; anticipated expenses, capital expenditures and other working capital requirements and contractual obligations (and intended methods of funding such items); the potential impact of trade policies between countries in which we conduct business (including the tariffs proposed and implemented by the U.S. government, and any reciprocal or retaliatory tariffs); the impact of our price reductions and longer payment terms; our intended repatriation of certain undistributed earnings from non-Canadian subsidiaries (and amounts we do not intend to repatriate in the foreseeable future); the potential impact of tax and litigation outcomes; investor dissatisfaction with inclusion, employee engagement, and other environmental, social and governance matters; our ability to use certain tax losses; intended investments in our business; the potential impact of the pace of technological changes, customer outsourcing, program transfers, and the global economic environment; the intended method of funding common share (Common Share) repurchases; the impact of our outstanding indebtedness; liquidity and the sufficiency of our capital resources; our intention to settle outstanding equity and share unit awards with Common Shares; our financial statement estimates and assumptions; recently issued accounting pronouncements and amendments; the potential adverse impacts of events outside of our control (including those described under "External factors that may impact our business" below); mandatory prepayments under our credit facility; pension plan funding requirements and obligations, and the impact of annuity purchases; our compliance with covenants under our credit facility; refinancing …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We continue to monitor current macroeconomic trends and uncertainties including the effects of recently implemented tariffs, and the potential imposition of modified or additional tariffs, which may materially and adversely impact demand for our services, our results of operations or our financial condition. In addition, potential supply chain challenges and economic uncertainty may result from rapid changes in global trade policies. Governmental actions related to international trade agreements have increased (and could further increase) the cost to our U.S. customers who use our non-U.S. manufacturing sites and components, and vice versa, which may materially and adversely impact demand for our services, our results of operations or our financial condition. Substantially all tariffs paid by Celestica are expected to be recovered from our customers. Any increase in our costs that we are unable to recover from our customers would negatively impact our results of operations or our financial condition. Changes in policies by the U.S. or other governments could negatively affect our operating results due to changes in duties, tariffs, or taxes, or limitations on currency or fund transfers, as well as government-imposed restrictions on producing certain products in, or shipping them to, specific countries, or as the result of other similar actions by other countries or citizens affected by such changes in policies. In prior periods, our Capital Equipment business and our CCS segment were negatively impacted by U.S. technology export controls with respect to China, and China's policy supporting its private sector businesses. We have increased the resilience of our global network to manage this dynamic. However, given the uncertainty regarding the scope and duration of these or further trade actions and whether trade tensions will escalate further, their impact on the demand for our services, our operations and results for future periods cannot be currently quantified, but may be material. We will continue to monitor the scope and duration of trade actions by the U.S. and other governments on our business.

Current wording

We continue to monitor current macroeconomic trends and uncertainties including the effects of recently proposed and implemented tariffs, and the potential imposition of modified or additional tariffs, changes in policies by the U.S. or other governments, including changes in duties, taxes, or limitations on currency or fund transfers, as well as government imposed restrictions on producing certain products in, or shipping them to, specific countries, or as the result of similar actions by other countries or citizens affected by such changes and policies, which may materially and adversely impact demand for our services, our results of operations or our financial condition. In addition, potential supply chain challenges and economic uncertainty have and may continue to result from rapid changes in global trade policies. Governmental actions related to international trade agreements have increased (and could further increase) the cost to our U.S. customers who use our non-U.S. manufacturing sites and components, and vice versa, which may materially and adversely impact demand for our services, our results of operations or our financial condition. Substantially all tariffs paid by Celestica are expected to be recovered from our customers. Any increase in our costs that we are unable to recover from our customers would negatively impact our results of operations or our financial condition. Our Capital Equipment business and our CCS segment have been in prior periods and may continue to be negatively impacted by U.S. technology export controls with respect to China, and China's policy supporting its private sector businesses. We have increased the resilience of our global network to manage this dynamic. However, given the uncertainty regarding the scope and duration of these or further trade actions and/or restrictions and whether trade tensions will escalate further, their impact on the demand for our services, our operations and results for future periods cannot be currently quantified, but may be material. We will continue to monitor the scope and duration of trade actions by the U.S. and other governments on our business.

Previous wording

We rely on a variety of contracted or common carriers to transport raw materials and components from our suppliers to us, and to transport our products to our customers. The use of contracted or common carriers is subject to a number of risks, including increased costs due to rising energy prices and labor, vehicle and insurance costs, hijacking and theft resulting in lost shipments, delivery delays resulting from port congestion and labor shortages and/or strikes, and other factors beyond our control. Although we attempt to mitigate our liability for any losses resulting from these risks through the use of multiple carriers and modes of transport, as well as insurance, any costs or losses relating to shipping or shipping delays that cannot be mitigated, avoided or passed on to our customers could reduce our profitability, require us to manufacture replacement products or damage our relationships with our customers. Although we have incurred some increased shipping expenses and delays as a result of the Middle East Conflicts, such increases and delays have not been significant to date. However, there can be no assurance that this will continue to be the case.

Current wording

We rely on a variety of contracted or common carriers to transport raw materials and components from our suppliers to us, and to transport our products to our customers. The use of contracted or common carriers is subject to a number of risks, including increased costs due to rising energy prices and labor, vehicle and insurance costs, hijacking and theft resulting in lost shipments, delivery delays resulting from port congestion and labor shortages and/or strikes, and other factors beyond our control. Although we attempt to mitigate our liability for any losses resulting from these risks through the use of multiple carriers and modes of transport, as well as insurance, any costs or losses relating to shipping or shipping delays that cannot be mitigated, avoided or passed on to our customers could reduce our profitability, require us to manufacture replacement products or damage our relationships with our customers. Although we have incurred some increased shipping expenses and delays as a result of the Middle East Conflicts, such increases and delays have not been significant to date. However, there can be no assurance that this will continue to be the case. We continue to closely monitor tensions in the Middle East and assess potential impacts on transportation routes in the region.

Previous wording

The pace of technological changes (including AI-related technologies) and the frequency of customer outsourcing or transferring business among EMS and/or ODM competitors, may impact our business, results of operations and/or financial condition. Data center deployments, which have numerous, specific infrastructure requirements, have influenced our revenue variability and may continue to impact our future demand.

Current wording

The pace of technological changes (including AI-related technologies) and the frequency of customer outsourcing or transferring business among EMS and/or ODM competitors, may impact our business, results of operations and/or financial condition. Data center deployments, which have numerous and specific infrastructure requirements, have influenced our revenue variability and may continue to impact our future demand. In recent periods, we have undertaken investments geared towards capacity and capability expansions at our Thailand, Malaysia and Richardson, U.S. facilities in support of our growth in AI/machine learning (ML) programs.

Previous wording

CCS segment revenue for Q1 2025 increased 28% compared to Q1 2024. Revenue in our Communications end market increased by 87% in Q1 2025 compared to Q1 2024, driven by increased demand for our Hardware Platform Solutions (HPS) networking products. Revenue in our Enterprise end market decreased by 39% in Q1 2025 compared to Q1 2024, driven by the anticipated technology transition in an artificial intelligence/machine learning (AI/ML) compute program with one of our hyperscaler customers. HPS revenue of approximately $1 billion in Q1 2025 increased 99% compared to Q1 2024 and accounted for 39% of our total revenues.

Current wording

CCS segment revenue for Q2 2025 increased 28% compared to Q2 2024. Revenue in our Communications end market increased by 75% in Q2 2025 compared to Q2 2024, driven by strong demand and ramping programs in our Hardware Platform Solutions (HPS) networking business. Revenue in our Enterprise end market decreased by 37% in Q2 2025 compared to Q2 2024, driven by the anticipated technology transition in an AI/ML compute program with one of our hyperscaler customers. HPS revenue of approximately $1.2 billion in Q2 2025 increased 82% compared to Q2 2024 and accounted for 43% of our total revenues.

Previous wording

CCS segment margin increased to 8.0% in Q1 2025 compared to 6.8% in Q1 2024, driven by a higher mix of HPS revenue and strong operational performance.

Current wording

CCS segment margin increased to 8.3% in Q2 2025 compared to 7.0% in Q2 2024, driven by a higher mix of HPS revenue and strong productivity.

Previous wording

As of March 31, 2025, approximately 7.7 million of our Common Shares remain available for repurchase under our current NCIB, which expires in October 2025. The maximum number of Common Shares we are permitted to repurchase for cancellation under the NCIB is reduced by the number of Common Shares we arrange to be purchased by any non-independent broker in the open market during the term of the NCIB to satisfy delivery obligations under our stock-based compensation (SBC) plans. In Q1 2025, we paid a total of $75.0 million (including transaction fees and excluding share buyback taxes) to repurchase 0.6 million Common Shares for cancellation under the NCIB and paid a total of $221.6 million (including transaction fees) to repurchase 1.7 million Common Shares, through an independent broker, for delivery obligations under our

Current wording

As of June 30, 2025, approximately 7.1 million of our Common Shares remain available for repurchase under our current NCIB, which expires in October 2025. The maximum number of Common Shares we are permitted to repurchase for cancellation under the NCIB is reduced by the number of Common Shares we arrange to be purchased by any non-independent broker in the open market during the term of the NCIB to satisfy delivery obligations under our stock-based compensation (SBC) plans. In Q2 2025, we paid a total of $40.0 million (including transaction fees and excluding share buyback taxes) to repurchase 0.6 million Common Shares for cancellation under the NCIB. See "Summary of Q2 2025 and Year-to-Date period" and Part II, Item 2, "Unregistered Sales of Equity Securities and Use of Proceeds" below. See note 9 to our Q2 2025 Interim Financial Statements for further details.

Previous wording

Our Q1 2025 Interim Financial Statements have been prepared in accordance with GAAP. The Q1 2025 Interim Financial Statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly our financial position as at March 31, 2025 and the operating results and cash flows for the three months ended March 31, 2025. Also see "Recently adopted accounting pronouncements" in note 2 to the Q1 2025 Interim Financial Statements. A discussion of our Q1 2025 financial results is set forth under "Operating Results" below.

Current wording

Our Q2 2025 Interim Financial Statements have been prepared in accordance with GAAP. The Q2 2025 Interim Financial Statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly our financial position as at June 30, 2025 and the operating results and cash flows for the three and six months ended June 30, 2025. Also see "Recently adopted accounting pronouncements" in note 2 to the Q2 2025 Interim Financial Statements. A discussion of our Q2 2025 and 1H 2025 financial results is set forth under "Operating Results" below.

Previous wording

(1)For Q1 2024, includes 0.5 million Common Shares purchased for cancellation under automatic share purchase plans (ASPPs).

Current wording

(1)For Q2 2025 and 1H 2025, includes 0.6 million Common Shares purchased for cancellation under automatic share purchase plans (ASPPs) (Q2 2024— nil;1H 2024— 0.5 million).

Previous wording

(2)Consists entirely of Common Share repurchases for SBC delivery obligations under ASPPs through an independent broker.

Current wording

(2)Consists entirely of SBC ASPP purchases through an independent broker.

Previous wording

Revenue of $2.65 billion for Q1 2025 increased 20% compared to Q1 2024.

Current wording

Revenue of $2.89 billion for Q2 2025 increased 21% compared to Q2 2024. Aggregate revenue of $5.54 billion for 1H 2025 increased 20% compared to 1H 2024.

Previous wording

CCS segment revenue for Q1 2025 increased $400.4 million (28%) compared to Q1 2024. Communications end market revenue for Q1 2025 increased $663.5 million (87%) compared to Q1 2024, driven by increased demand for our HPS networking products. HPS revenue for Q1 2025 increased 99% to approximately$1 billion compared to Q1 2024, and accounted for 39% of our total Q1 2025 revenue (Q1 2024 — 23% of our total Q1 2024 revenue), driven by increased hyperscaler customer demand and program ramps. Enterprise end market revenue for Q1 2025 decreased $263.1 million (39%) compared to Q1 2024, driven by the anticipated technology transition in an AI/ML compute program with one of our hyperscaler customers.

Current wording

CCS segment revenue increased $450.1 million (28%) in Q2 2025 compared to Q2 2024 and increased $850.5 million (28%) in 1H 2025 compared to 1H 2024. Communications end market revenue increased $706.0 million (75%) in Q2 2025 compared to Q2 2024, and increased $1,369.5 million (81%) in 1H 2025 compared to 1H 2024, driven by strong demand and ramping programs in our HPS networking business. HPS revenue for Q2 2025 increased 82% to approximately $1.2 billion compared to Q2 2024, and accounted for 43% of our total Q2 2025 revenue (Q2 2024 — 29% of our total Q2 2024 revenue), driven by increased hyperscaler customer demand and program ramps. Our HPS revenue for 1H 2025 increased 89% to approximately $2.2 billion compared to 1H 2024, and accounted for 41% of our total 1H 2025 revenue (1H 2024 — 26% of our total 1H 2024 revenue). Enterprise end market revenue decreased $255.9 million (37%) in Q2 2025 compared to Q2 2024 and decreased $519.0 million (38%) in 1H 2025 compared to 1H 2024, driven by the anticipated technology transition in an AI/ML compute program with one of our hyperscaler customers.

Previous wording

We depend on a small number of customers for a substantial portion of our revenue. In the aggregate, our top 10 customers represented 78% of total revenue for Q1 2025 (Q1 2024 — 70%). Three customers (all in our CCS segment) individually represented 10% or more of total revenue in Q1 2025 (28%, 13% and 10%). One customer (in our CCS segment) individually represented 10% or more of total revenue in Q1 2024 (34%).

Current wording

We depend on a small number of customers for a substantial portion of our revenue. In the aggregate, our top 10 customers represented 78% of total revenue for Q2 2025 and 1H 2025 (Q2 2024 — 74%; 1H 2024 — 72%). Two customers (both in our CCS segment) individually represented 10% or more of total revenue in Q2 2025 (31% and 13%). Three customers (all in our CCS segment) individually represented 10% or more of total revenue in 1H 2025 (30%, 13% and 10%). Two customers (both in our CCS segment) individually represented 10% or more of total revenue in Q2 2024 (32% and 12%) and 1H 2024 (33% and 10%).

Previous wording

Gross profit for Q1 2025 increased by 23% or $51.8 million to $273.9 million compared to Q1 2024, primarily due to our strong revenue growth. Gross margin increased to 10.3% in Q1 2025 from 10.1% in Q1 2024, primarily driven by strong operating performance and favorable mix. Both our gross profit and gross margin in Q1 2025 were negatively impacted by $7.5 million of unfavorable fair value adjustments (TRS FVAs) related to our total return swap agreement (TRS Agreement) (Q1 2024 — positively impacted by $12.8 million of favorable TRS FVAs). See "Liquidity —Cash requirements — TRS" below for a description of our TRS Agreement.

Current wording

2024, primarily driven by higher volumes and more favorable mix. Our gross profit and gross margin in Q2 2025 and 1H 2025 also included $33.5 million and $13.2 million, respectively, of higher favorable fair value adjustments (TRS FVAs) related to our total return swap agreement (TRS Agreement) compared to Q2 2024 and 1H 2024, respectively. See "Liquidity —Cash requirements — TRS" below for a description of our TRS Agreement.

Previous wording

Segment performance is evaluated based on segment revenue (set forth above), segment income and segment margin (segment income as a percentage of segment revenue). See "Summary of Q1 2025" above for a table showing segment income and segment margin for Q1 2025 and Q1 2024. See the reconciliation of segment income to our earnings before income taxes for Q1 2025 and Q1 2024 in note 3 to the Q1 2025 Interim Financial Statements.

Current wording

Segment performance is evaluated based on segment revenue (set forth above), segment income and segment margin (segment income as a percentage of segment revenue). See "Summary of Q2 2025 and Year-to-Date Period" above for a table showing segment income and segment margin for Q2 2025, 1H 2025 and the respective prior year periods. See the reconciliation of segment income to our earnings before income taxes for Q2 2025, 1H 2025 and the respective prior year periods in note 3 to the Q2 2025 Interim Financial Statements.

Previous wording

CCS segment income for Q1 2025 increased $48.4 million (49%) compared to Q1 2024 as a result of the segment revenue increase described above. CCS segment margin increased to 8.0% in Q1 2025 from 6.8% in Q1 2024, driven by a higher mix of HPS revenue and strong operational performance.

Current wording

CCS segment income increased $56.7 million (50%) in Q2 2025 compared to Q2 2024 and increased $105.1 million (49%) in 1H 2025 compared to 1H 2024, as a result of the CCS segment revenue increases in Q2 2025 and 1H 2025 described above. CCS segment margin increased to 8.3% in Q2 2025 from 7.0% in Q2 2024 and increased to 8.1% in 1H 2025 from 7.0% in 1H 2024, driven by a higher mix of HPS revenue and strong productivity.

Previous wording

(1)Expense consists of director compensation to be settled in Common Shares, or Common Shares and cash, as elected by each director.

Current wording

(1)Expense consists of director compensation to be settled with Common Shares, or Common Shares and cash.

Previous wording

The unfavorable changes in TRS FVAs in Q1 2025 compared to Q1 2024 were due to fluctuations in our Common Share price.

Current wording

The changes in TRS FVAs in Q2 2025 compared to Q2 2024 and in 1H 2025 compared to 1H 2024 were due to fluctuations in our Common Share price.

Previous wording

In Q1 2025 and Q1 2024, our restructuring charges consisted primarily of cash charges related to employee terminations. At March 31, 2025, our restructuring provision of$2.3 million (December 31, 2024 —$2.9 million) was recorded in accrued and other current liabilities and provisions on our consolidated balance sheet, which we intend to fund with cash on hand.

Current wording

In Q2 2025, 1H 2025 andrespective prior year periods, our restructuring charges consisted primarily of cash charges related to employee terminations. At June 30, 2025, our restructuring provision of$11.5 million (December 31, 2024 —$2.9 million) was recorded in accrued and other current liabilities and provisions on our consolidated balance sheet, which we intend to fund with cash on hand.

Previous wording

In Q1 2025, we recorded other charges of $1.1 million related to our transition as a U.S. domestic filer. Other recoveries of $1.3 million in Q1 2024 consisted of legal recoveries in connection with the settlement of class action lawsuits (for component parts purchased in prior periods) in which we were a plaintiff.

Current wording

In Q2 2025 and 1H 2025, we recorded other charges of $0.3 million and $1.4 million, respectively, related to our transition as a U.S. domestic filer. Other recoveries of$1.3 million in 1H 2024 consisted of legal recoveries in connection with the settlement of class action lawsuits (for component parts purchased in prior periods) in which we were a plaintiff.

Previous wording

Finance Costs consist of interest expense and fees related to our credit facility (including debt issuance and related amortization costs), our interest rate swap agreements, our TRS Agreement, our A/R sales program, customer SFPs, and interest expense on our finance lease obligations, net of interest income earned. During Q1 2025, we incurred Finance Costs of $13.7 million (Q1 2024 — $14.0 million). Interest expense under our credit facility recorded in Finance Costs, including the impact of our interest rate swap agreements (described under "Capital Resources" below), was $13.1 million in Q1 2025 (Q1 2024 — $11.9 million).

Current wording

Finance Costs consist of interest expense and fees related to our credit facility (including debt issuance and related amortization costs), our interest rate swap agreements, our TRS Agreement, our A/R sales program, customer SFPs, and interest expense on our finance lease obligations, net of interest income earned. During Q2 2025 and 1H 2025, we incurred Finance Costs of $13.5 million and $27.2 million, respectively (Q2 2024 — $15.0 million;1H 2024 —$29.0 million). Interest expense under our credit facility recorded in Finance Costs, including the impact of our interest rate swap agreements (described under "Capital Resources" below), was $11.2 million in Q2 2025 and$24.3 million in 1H 2025 (Q2 2024 — $12.1 million; 1H 2024 — $24.0 million). In Q2 2024 and 1H 2024, we also recorded as Finance Costs $2.0 million in fees and costs incurred in connection with the amendment of our credit facility in June 2024. See "Liquidity—Cash provided by and used in financing activities— Financing and Finance Costs" below.

Previous wording

See note 12 to the Q1 2025 Interim Financial Statements for details. Miscellaneous Expense for Q1 2025 totaled $1.4 million (Q1 2024 — $6.6 million).

Current wording

We recorded Miscellaneous Expense of $1.7 million for Q2 2025 and $3.1 million for 1H 2025 (Q2 2024 — $4.4 million;1H 2024— $11.0 million). See note 12 to the Q2 2025 Interim Financial Statements for details.

Previous wording

For Q1 2025, we had a net income tax expense of $27.5 million on earnings before tax of $113.7 million, compared to a net income tax expense of $13.4 million on earnings before tax of $105.2 million for Q1 2024.

Current wording

For Q2 2025, we had a net income tax expense of $46.3 million on earnings before tax of $257.3 million, compared to a net income tax expense of $18.5 million on earnings before tax of $113.5 million for Q2 2024. For 1H 2025, we had a net income tax expense of $73.8 million on earnings before tax of $371.0 million, compared to a net income tax expense of $31.9 million on earnings before tax of $218.7 million for 1H 2024.

Previous wording

Our Q1 2025 net income tax expense included $6.8 million withholding tax expense incurred to minimize the impact of the enactment of Pillar Two (global minimum tax) legislation in Canada and $3.0 million tax expense for tax uncertainties relating to one of our Asian subsidiaries, offset in part by $1.9 million of reversals of tax uncertainties relating to another of our Asian subsidiaries. Taxable foreign exchange impacts were not significant in Q1 2025.

Current wording

Our Q2 2025 net income tax expense included $7.1 million of income taxes related to Pillar Two global minimum tax legislation in jurisdictions where we operate (GMT). Our 1H 2025 net income tax expense included $13.9 millionof income taxes related to GMT and a $3.0 million tax expense for tax uncertainties relating to one of our Asian subsidiaries, offset in part by $1.9 million of reversals of tax uncertainties relating to another of our Asian subsidiaries. Taxable foreign exchange impacts were not significant in Q2 2025 or 1H 2025.

Previous wording

In Q4 2024, the Thailand tax authorities issued an assessment letter seeking to impose additional value-added taxes and surcharges in the aggregate amount of approximately 403 million Thai baht (approximately $12 million at Q1 2025 period-end exchange rates) for our Thai subsidiary for the 2019 tax year. We believe that our original positions with respect to the value-added taxes are in compliance with applicable Thai tax laws and regulations, and continue to vigorously defend our position through all necessary appeals or other judicial processes. A bank guarantee has been issued for the maximum potential liability.

Current wording

In Q4 2024, the Thailand tax authorities issued an assessment letter seeking to impose additional value-added taxes and surcharges in the aggregate amount of approximately 403 million Thai baht (approximately $12 million at Q2 2025 period-end exchange rates) for our Thailand subsidiary for the 2019 tax year. We believe that our original positions with respect to the value-added taxes are in compliance with applicable Thailand tax laws and regulations, and continue to vigorously defend our position through all necessary appeals or other judicial processes. A bank guarantee has been issued for the maximum potential liability.

Previous wording

Non-GAAP free cash flow is a non-GAAP financial measure without a standardized meaning and may not be comparable to similar measures presented by other companies. We define non-GAAP free cash flow as cash provided by or used in operations after the purchase of property, plant and equipment (net of proceeds from the sale of certain surplus equipment and property, when applicable). Non-GAAP free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures. Management uses non-GAAP free cash flow as a measure, in addition to GAAP cash provided by or used in operations (described above), to assess our operational cash flow performance. We believe non-GAAP free cash flow provides another level of transparency to our ability to generate cash from normal business operations.

Current wording

Non-GAAP free cash flow is a non-GAAP financial measure without a standardized meaning and may not be comparable to similar measures presented by other companies. We define non-GAAP free cash flow as cash provided by or used in operations less the purchase of property, plant and equipment (net of proceeds from the sale of certain surplus equipment and property, when applicable). Non-GAAP free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures. Management uses non-GAAP free cash flow as a measure, in addition to GAAP cash provided by or used in operations (described above), to assess our operational cash flow performance. We believe non-GAAP free cash flow provides another level of transparency to our ability to generate cash from normal business operations.

Previous wording

Our non-GAAP free cash flow of $93.6 million for Q1 2025 increased $25.9 million compared to $67.7 million for Q1 2024, primarily due to $22.2 million in higher cash generated from operations (as described above).

Current wording

Our non-GAAP free cash flow of $213.5 million for 1H 2025 increased $80.2 million compared to 1H 2024, primarily due to $75.0 million in higher cash generated from operations (as described above).

Previous wording

Our capital expenditures for Q1 2025 were $36.7 million (Q1 2024 — $40.4 million), primarily to enhance our manufacturing capabilities in various geographies (including the expansion of our Thailand facility) and to support new customer programs. Most of our Q1 2025 and Q1 2024 capital expenditures pertained to our CCS segment. We fund our capital expenditures from cash on hand and through the financing arrangements described below.

Current wording

Our capital expenditures for 1H 2025 were $69.2 million (1H 2024 — $77.3 million), primarily to enhance our manufacturing capabilities in various geographies (including the expansion of our Thailand facility) and to support new customer programs. Most of our capital expenditures in 1H 2025 and 1H 2024 pertained to our CCS segment. We fund our capital expenditures from cash on hand and through the financing arrangements described below.

Previous wording

See "Summary of Q1 2025" above for a table detailing Common Share repurchases for the periods indicated.

Current wording

See "Summary of Q2 2025 and Year-to-Date Period" above for a table detailing Common Share repurchases for the periods indicated.

Previous wording

Activity under our Credit Facility during Q1 2025 is set forth below (in millions):

Current wording

Activity under our Credit Facility during 1H 2025 is set forth below (in millions):

Previous wording

2024 — $0.5 million). Any increase in prevailing interest rates, margins, or amounts borrowed, would cause our interest expense to increase. Interest rates for outstanding borrowings under the Credit Facility as at March 31, 2025 are described under "Capital Resources" below.

Current wording

Interest we paid under the Credit Facility (included in "net cash provided by or used in operating activities"), including the impact of our interest rate swap agreements (described below), was $23.1 million in 1H 2025 (1H 2024 — $23.1 million). Interest rates for outstanding borrowings under the Credit Facility as at June 30, 2025 are described under "Capital Resources" below. Any increase in prevailing interest rates, margins, or amounts borrowed, would cause our interest expense to increase. Commitment fees paid in 1H 2025 were $1.7 million (1H 2024 — $1.2 million). During 1H 2024, we paid $9.0 million in debt issuance costs related to the June 2024 amendment to our Credit Facility.

Previous wording

See "Operating Results —Finance Costs" above for a description of Finance Costs incurred in Q1 2025 and Q1 2024.

Current wording

See "Operating Results —Finance Costs" above for a description of Finance Costs incurred in Q2 2025, 1H 2025 and the respective prior year periods.

Previous wording

During Q1 2025, we paid $2.6 million (Q1 2024 — $2.5 million) in principal payment of finance leases.

Current wording

During 1H 2025, we paid $5.2 million (1H 2024 — $4.8 million) in principal payment of finance leases.

Previous wording

In Q1 2025, we made a cash payment of $156.0 million for withholding taxes in connection with the SBC awards that vested during such period (Q1 2024 — $69.0 million).

Current wording

In 1H 2025, we made a cash payment of $156.0 million for withholding taxes in connection with the SBC awards that vested during such period (1H 2024 — $69.0 million).

Previous wording

Our working capital requirements can vary significantly from month-to-month due to a range of business factors, including the ramping of new programs, expansion of our services and business operations, timing of purchases, higher levels of inventory for new programs and anticipated customer demand, timing of payments and A/R collections, and customer forecasting variations. The international scope of our operations may also create working capital requirements in certain countries while other countries generate cash in excess of working capital needs. Moving cash between countries on a short-term basis to fund working capital is not always expedient due to local currency regulations, tax considerations, and other factors. As a result, we make intra-quarter borrowings and repayments under the Revolver (Intra-Quarter B/Rs) (see "Financing and Finance Costs —Credit Agreement" above for Intra-Quarter B/Rs we made in Q1 2025), sell A/R through our A/R sales program, and/or participate in available customer SFPs when deemed necessary or desirable to effectively manage our short-term liquidity and working capital requirements. The timing and the amounts we borrow or repay under these facilities can vary significantly from month-to-month depending upon our cash requirements.

Current wording

Our working capital requirements can vary significantly from month-to-month due to a range of business factors, including the ramping of new programs, expansion of our services and business operations, timing of purchases, higher levels of inventory for new programs and anticipated customer demand, timing of payments and A/R collections, and customer forecasting variations. The international scope of our operations may also create working capital requirements in certain countries while other countries generate cash in excess of working capital needs. Moving cash between countries on a short-term basis to fund working capital is not always expedient due to local currency regulations, tax considerations, and other factors. As a result, we make intra-quarter borrowings and repayments under the Revolver (Intra-Quarter B/Rs) (see "Financing and Finance Costs —Credit Agreement" above for Intra-Quarter B/Rs we made in 1H 2025), sell A/R through our A/R sales program, and/or participate in available customer SFPs when deemed necessary or desirable to effectively manage our short-term liquidity and working capital requirements. The timing and the amounts we borrow or repay under these facilities can vary significantly from month-to-month depending upon our cash requirements.

Previous wording

Based on our current cash flow budgets and forecasts of our short-term and long-term liquidity needs, we continue to believe that our current and projected sources of liquidity will be sufficient to fund our anticipated liquidity needs for the next twelve months and beyond. Specifically, we believe that cash flow from operating activities, together with cash on hand, availability under the Revolver ($588.9 million at March 31, 2025), potential availability under uncommitted intraday and overnight bank overdraft facilities, and cash from accepted sales of A/R, will be sufficient to fund our anticipated working capital needs, planned capital spending, contractual obligations and other cash requirements (including any required SBC share repurchases and SBC cash settlements, debt repayments and Finance Costs). See "Capital Resources" below. Notwithstanding the foregoing, although we anticipate that we will be able to repay or refinance outstanding obligations under our Credit Facility when they mature (our primary current long-term cash liquidity requirement), there can be no assurance we will be able to do so, or that the terms of any refinancing will be favorable. In addition, we may require additional capital in the future to fund capital expenditures, acquisitions (including contingent consideration payments), strategic transactions or other investments. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our objectives, operating performance, economic and capital market conditions and other relevant circumstances. Our operating performance may also be affected by matters discussed under Item 1A, Risk Factors in our 2024 10-K. These risks and uncertainties may adversely affect our long-term liquidity.

Current wording

Based on our current cash flow budgets and forecasts of our short-term and long-term liquidity needs, we continue to believe that our current and projected sources of liquidity will be sufficient to fund our anticipated liquidity needs for the next twelve months and beyond. Specifically, we believe that cash flow from operating activities, together with cash on hand, availability under the Revolver ($648.9 million at June 30, 2025), potential availability under uncommitted intraday and overnight bank overdraft facilities, and cash from accepted sales of A/R, will be sufficient to fund our anticipated working capital needs, planned capital spending, contractual obligations and other cash requirements (including any required SBC share repurchases and SBC cash settlements, debt repayments and Finance Costs). See "Capital Resources" below. Notwithstanding the foregoing, although we anticipate that we will be able to repay or refinance outstanding obligations under our Credit Facility when they mature (our primary current long-term cash liquidity requirement), there can be no assurance we will be able to do so, or that the terms of any refinancing will be favorable. In addition, we may require additional capital in the future to fund capital expenditures, acquisitions (including contingent consideration payments), strategic transactions or other investments. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our objectives, operating performance, economic and capital market conditions and other relevant circumstances. Our operating performance may also be affected by matters discussed under Item 1A, Risk Factors in our 2024 10-K. These risks and uncertainties may adversely affect our long-term liquidity.

Previous wording

See "Liquidity —Cash provided by and used in financing activities— Financing and Finance Costs" above for interest and commitment fees paid under our Credit Facility in Q1 2025 and Q1 2024, as well as a description of Intra-Quarter B/Rs. Annual interest expense and fees under the Credit Facility, including the impact of our interest rate swap agreements, based on amounts and swap agreements outstanding as March 31, 2025 are approximately $48 million. Interest rates applicable to borrowings under the Credit Facility are described under "Capital Resources" below. We expect to fund our Finance Costs with cash on hand.

Current wording

See "Liquidity —Cash provided by and used in financing activities— Financing and Finance Costs" above for interest and commitment fees paid under our Credit Facility in 1H 2025. Annual interest expense and fees under the Credit Facility, including the impact of our interest rate swap agreements, based on amounts and swap agreements outstanding as June 30, 2025 are approximately $48 million. Interest rates applicable to borrowings under the Credit Facility are described under "Capital Resources" below. We expect to fund our Finance Costs with cash on hand.

Previous wording

We do not believe that the aggregate amounts outstanding under our Credit Facility as at March 31, 2025 ($736.8 million under the Term Loans, $150.0 million under the Revolver and $11.1 million in ordinary course L/Cs), had or will have a material adverse impact on our liquidity, our results of operations or financial condition. In addition, we do not believe that Intra-Quarter B/Rs have had (or future Intra-Quarter B/Rs will have) a material adverse impact on our liquidity, results of operations or financial condition. See "Capital Resources" below for a description of our available sources of liquidity. See the Credit Facility activity table under "Financing and Finance Costs —Credit Agreement" above for Intra-Quarter B/Rs during Q1 2025.

Current wording

We do not believe that the aggregate amounts outstanding under our Credit Facility as at June 30, 2025 ($732.5 million under the Term Loans, $90.0 million under the Revolver and $11.1 million in ordinary course L/Cs), had or will have a material adverse impact on our liquidity, our results of operations or financial condition. In addition, we do not believe that Intra-Quarter B/Rs have had (or future Intra-Quarter B/Rs will have) a material adverse impact on our liquidity, results of operations or financial condition. See "Capital Resources" below for a description of our available sources of liquidity. See the Credit Facility activity table under "Financing and Finance Costs —Credit Agreement" above for Intra-Quarter B/Rs during 1H 2025.

Previous wording

A portion of our cash and cash equivalents are held by foreign subsidiaries outside of Canada, a large part of which may be subject to withholding taxes upon repatriation under current tax laws. We currently expect to repatriate an aggregate of approximately $125 million of cash in the foreseeable future from various foreign subsidiaries, and have recorded anticipated related withholding taxes as deferred income tax liabilities (approximately $11 million).

Current wording

A portion of our cash and cash equivalents are held by foreign subsidiaries outside of Canada, a large part of which may be subject to withholding taxes upon repatriation under current tax laws. We currently expect to repatriate an aggregate of approximately $115 million of cash in the foreseeable future from various foreign subsidiaries, and have recorded anticipated related withholding taxes as deferred income tax liabilities (approximately $14 million).