Celestica Inc (CLS) 2019 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Celestica Fourth Quarter 2019 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Mr. Craig Oberg, Vice President of Investor Relations and Corporate Development. Thank you. Please go ahead, sir.

女士們、先生們，感謝大家的支持，歡迎參加 Celestica 2019 年第四季財報電話會議。（操作員指示）請注意，今天的會議正在錄音。（操作員指示）現在，我想將會議交給今天的發言人、投資者關係和企業發展副總裁 Craig Oberg 先生。謝謝。先生，請繼續。

Good afternoon, and thank you for joining us on Celestica's fourth quarter 2019 earnings conference call. On the call today are Rob Mionis, President and Chief Executive Officer; and Mandeep Chawla, Chief Financial Officer. As a reminder, during this call, we will make forward-looking statements within the meanings of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Such forward-looking statements are based on management's current expectations, forecasts and assumptions, which are subject to risks, uncertainties and other factors that could cause actual outcomes and results to differ materially from conclusions, forecasts or projections expressed in such statements. For identification and discussion of such factors and assumptions as well as further information concerning financial guidance, please refer to today's press release including the cautionary note regarding forward-looking statements therein and our annual report on Form 20-F and other public filings, which can be accessed at sec.gov and sedar.com. We assume no obligation to update any forward-looking statement, except as required by law. In addition, during this call, we will refer to various non-IFRS measures, including operating earnings operating margin, adjusted gross margin, adjusted return on invested capital or adjusted ROIC, free cash flow, gross debt to non-IFRS trailing 12-month adjusted EBITDA leverage ratio, adjusted net earnings, adjusted EPS, adjusted SG&A expense and adjusted effective tax rate. Listeners should be cautioned that the references to any of the foregoing measures during the call to note non-IFRS measures, whether or not specifically designated as such. These non-IFRS measures do not have any standard -- standardized meanings prescribed by IFRS and may not be comparable to similar measures presented by other public companies that use IFRS or who report under U.S. GAAP and use non-GAAP measures to describe similar operating metrics.

下午好，感謝您參加 Celestica 2019 年第四季財報電話會議。今天參加電話會議的有總裁兼執行長 Rob Mionis；以及財務長 Mandeep Chawla。提醒一下，在本次電話會議中，我們將根據 1995 年美國私人證券訴訟改革法案和適用的加拿大證券法做出前瞻性陳述。此類前瞻性陳述是基於管理階層目前的預期、預測和假設，受風險、不確定性和其他因素的影響，可能導致實際結果與此類陳述中表達的結論、預測或預期有重大差異。有關這些因素和假設的識別和討論以及有關財務指導的更多信息，請參閱今天的新聞稿，包括其中關於前瞻性陳述的警告說明和我們的 20-F 表年度報告和其他公開文件，可在 sec.gov 和 sedar.com 上查閱。除非法律要求，我們不承擔更新任何前瞻性聲明的義務。此外，在本次電話會議中，我們將參考各種非國際財務報告準則指標，包括營業利潤、營業利潤率、調整後毛利率、調整後投資資本回報率或調整後的 ROIC、自由現金流、總債務與非國際財務報告準則過去 12 個月調整後 EBITDA 槓桿率、調整後淨收益、調整後每股收益、調整後每股收益、調整後。聽眾應注意，通話過程中對任何上述措施的引用均應注意非國際財務報告準則的措施，無論是否特別指定。這些非國際財務報告準則指標不具備國際財務報告準則規定的任何標準——標準化含義，並且可能無法與使用國際財務報告準則或根據美國公認會計準則報告並使用非公認會計準則指標描述類似運營指標的其他上市公司提出的類似指標進行比較。

We refer you to today's press release and our fourth quarter earnings presentation, which are available at celestica.com under the Investor Relations tab. For more information about these and certain other non-IFRS measures, including a reconciliation of historical non-IFRS measures to the most directly comparable IFRS measures from our financial statements.

請您參閱今天的新聞稿和我們的第四季度收益報告，您可以在 celestica.com 的「投資者關係」標籤下找到。有關這些和某些其他非國際財務報告準則指標的更多信息，包括將歷史非國際財務報告準則指標與我們財務報表中最直接可比的國際財務報告準則指標進行調節。

Unless otherwise specified, all references to dollars on this call are to U.S. dollars. Let me now turn the call over to Rob.

除非另有說明，本次電話會議中所有提及的美元均指美元。現在讓我把電話轉給羅布。

Thank you, Craig. Good afternoon, and thank you for joining today's conference call. Our fourth quarter results reflect solid execution across our business with revenue above the midpoint of our guidance range and non-IFRS adjusted EPS at the high end of our guidance range. We remain focused on cost productivity initiatives, executing our portfolio actions and ramping new programs to deliver another quarter of sequential operating margin improvement, while generating strong free cash flow. In addition, our efforts to diversify our end markets and customers continue to progress with ATS now representing 39% of our revenues, up from 33% a year ago. Within the ATS segment, we posted improved profitability sequentially, delivered improved performance in our capital equipment business and executed new program ramps across our industrial and health tech businesses. Our CCS segment performance continued to benefit from our portfolio actions, delivering sequential margin improvement for a third consecutive quarter and operating at the high end of our 2% to 3% target range.

謝謝你，克雷格。下午好，感謝您參加今天的電話會議。我們的第四季業績反映了我們整個業務的穩健執行，收入高於我們指導範圍的中點，非國際財務報告準則調整後的每股收益處於我們指導範圍的高端。我們將繼續專注於成本生產力舉措，執行我們的投資組合行動並推出新計劃，以實現另一個季度的連續營業利潤率改善，同時產生強勁的自由現金流。此外，我們為實現終端市場和客戶多元化所做的努力也在不斷取得進展，ATS 目前占我們收入的 39%，高於一年前的 33%。在 ATS 部門內，我們的獲利能力連續提高，資本設備業務績效改善，並在工業和健康技術業務中實施了新的計劃。我們的CCS部門業績持續受惠於我們的投資組合行動，連續第三個季度實現利潤率環比改善，並達到我們2%至3%目標區間的高端。

I will provide some additional color on our end markets and outlook shortly. But first, I will turn the call over to Mandeep to give you some details on the fourth quarter and our first quarter of 2020 guidance.

我將很快提供有關我們的終端市場和前景的更多詳細資訊。但首先，我將把電話轉給 Mandeep，向您提供有關第四季度和 2020 年第一季指引的一些詳細資訊。

Thank you, Rob, and good afternoon, everyone. For the fourth quarter of 2019, Celestica reported revenue of $1.49 billion, above the midpoint of our guidance range, primarily driven by program-specific demand strength in enterprise. Revenue decreased 2% sequentially and was down 14% year-over-year. Our non-IFRS operating margin was 2.9%, above our guidance midpoint of 2.8% and down 60 basis points year-over-year. Non-IFRS adjusted earnings per share were $0.18, at the high end of our guidance primarily due to favorable mix and $0.01 per share of favorable taxable FX.

謝謝你，羅布，大家下午好。2019 年第四季度，Celestica 報告營收為 14.9 億美元，高於我們預期範圍的中點，這主要得益於企業對特定專案的需求強勁。營收季減 2%，年減 14%。我們的非國際財務報告準則營業利益率為 2.9%，高於我們的預期中位數 2.8%，較去年同期下降 60 個基點。非國際財務報告準則調整後每股收益為 0.18 美元，處於我們預期的高位，主要歸因於有利的產品組合和每股 0.01 美元的有利應稅外匯。

Our ATS segment represented 39% of our consolidated revenue, up from 33% compared to the fourth quarter of last year. ATS revenue was up 5% sequentially, up 3% compared to last year and was in line within our expectations.

我們的 ATS 部門占我們綜合收入的 39%，高於去年第四季的 33%。ATS 營收季增 5%，比去年同期成長 3%，符合我們的預期。

On a year-over-year basis, growth in our capital equipment business and new programs in our Industrial and HealthTech businesses were partially offset by planned disengagement of nonstrategic programs in our energy business. The

與去年同期相比，我們的資本設備業務以及工業和健康科技業務的新項目的成長被我們能源業務中非戰略性項目的計劃退出部分抵消。這

[Audio Gap]

[音頻間隙]

growth was primarily the result of stronger demand

成長主要是需求強勁的結果

Audio Gap

音頻間隙

and our CCS segment revenue was down 22% year-over-year, but was above our expectations due to demand strength in our enterprise end market. Sequentially, CCS segment revenue was down 6%.

我們的CCS部門營收年減22％，但由於企業端市場需求強勁，超出了我們的預期。CCS部門營收季減6%。

Within our CCS segment, the communications end market represented 39% of our consolidated fourth quarter revenue, consistent with the fourth quarter of last year. Communications revenue in the quarter was below our expectations and down 15% year-over-year due to continuing program-specific weakness.

在我們的CCS部門中，通訊終端市場占我們第四季綜合營收的39%，與去年第四季持平。由於專案持續疲軟，本季通訊收入低於我們的預期，年減 15%。

Our enterprise end market represented 22% of consolidated revenue in the fourth quarter, down from 28% in the same period last year. Enterprise revenue in the quarter was above our expectations, driven by demand strength, but was down 32% year-over-year, largely due to planned disengagements in connection with our CCS segment portfolio actions.

我們企業端市場在第四季的綜合營收中佔 22%，低於去年同期的 28%。受需求強勁推動，本季企業收入超出我們的預期，但同比下降 32%，這主要是由於與 CCS 部門投資組合行動相關的計劃脫離所致。

Our top 10 customers represented 68% of revenue for the quarter, up 1% sequentially and down 1% relative to last year. In the fourth quarter, we had 2 customers representing greater than 10% of revenue compared to 1 customer in the third quarter and 3 customers in the fourth quarter of last year.

我們前十大客戶佔本季營收的 68%，季增 1%，年減 1%。第四季度，我們有 2 個客戶貢獻了超過 10% 的收入，而第三季有 1 個客戶，去年第四季有 3 個客戶。

Turning to segment margins. ATS segment margin of 3.0% was up 20 basis points relative to last quarter, primarily due to improved performance in our capital equipment business. Although capital equipment lost money in the low single-digit millions, the business improved relative to last quarter due to higher demand and the positive impact of our cost reduction initiatives. The remainder of ATS continue to perform relatively well, albeit we continue to have inefficiencies in A&D due to supply chain constraints and volatility.

轉向段邊距。ATS 部門利潤率為 3.0%，較上一季度上升了 20 個基點，主要歸功於我們資本設備業務業績的改善。儘管資本設備損失了數百萬美元，但由於需求增加和成本削減措施的正面影響，業務較上一季有所改善。儘管由於供應鏈的限制和波動性，A&D 部門的效率仍然較低，但 ATS 的其餘部分仍然表現相對良好。

Year-over-year, ATS segment margin was down 70 basis points, primarily driven by A&D, partially offset by improvements in capital equipment.

與去年同期相比，ATS 部門利潤率下降了 70 個基點，主要原因是 A&D 業務下降，但資本設備的改善部分抵消了這一影響。

CCS segment margin of 2.9% was up 10 basis points sequentially due to better mix, including strong results in JDM and productivity. Year-over-year, CCS segment margins was down 40 basis points as a result of very strong performance in the fourth quarter of last year.

CCS 部門利潤率為 2.9%，環比上升 10 個基點，得益於更好的產品組合，包括 JDM 和生產率的強勁表現。由於去年第四季業績表現非常強勁，CCS 部門利潤率較去年同期下降 40 個基點。

Despite lower volume in the quarter, CCS delivered segment margin at the high end of our CCS target range of 2% to 3%, which reflects the benefits of our portfolio actions and continuing productivity efforts.

儘管本季銷量較低，但 CCS 的分部利潤率仍達到我們 CCS 目標範圍 2% 至 3% 的高端，這反映了我們的投資組合行動和持續提高生產力的努力所帶來的好處。

Moving to some other financial highlights for the quarter.

轉向本季度的一些其他財務亮點。

IFRS net loss for the quarter was negative $7 million or negative $0.05 per share compared to net earnings of $60 million or positive $0.44 per share in the same quarter of last year.

本季 IFRS 淨虧損為負 700 萬美元或每股負 0.05 美元，而去年同期的淨利為 6,000 萬美元或每股正 0.44 美元。

Fourth quarter 2018 included a tax benefit of $0.36 per share and the remainder of the year-over-year decrease was mainly due to lower gross profit. Adjusted gross margin of 7.0% was up 40 basis points sequentially, largely due to improved performance in capital equipment, program mix and lower variable spending.

2018 年第四季的稅收優惠為每股 0.36 美元，其餘年減主要由於毛利下降。調整後毛利率為 7.0%，比上一季上升了 40 個基點，主要得益於資本設備、項目組合表現的改善以及可變支出的降低。

Year-over-year, adjusted gross margin was down 20 basis points as lower profit in CCS and A&D more than offset improved performance in capital equipment.

與去年同期相比，調整後的毛利率下降了 20 個基點，因為 CCS 和 A&D 的利潤下降超過了資本設備績效的提升。

Our adjusted SG&A of $52 million was slightly higher than expected and up $4 million sequentially, primarily due to foreign exchange.

我們的調整後銷售、一般及行政開支為 5,200 萬美元，略高於預期，比上一季增加 400 萬美元，主要由於外匯影響。

Adjusted SG&A decreased $3 million year-over-year, primarily as a result of lower variable spend.

調整後的銷售、一般及行政開支年減 300 萬美元，主要由於可變支出減少。

Non-IFRS operating earnings were $43.7 million, up approximately $1.0 million sequentially and down $16 million from the same quarter of last year. Our non-IFRS adjusted effective tax rate for the fourth quarter was 27%, better than expected, primarily due to favorable FX impacts. Excluding FX impacts, our effective tax rate for the fourth quarter would have been 33%. For the full year of 2019, our adjusted effective tax rate was 34%, higher than our beginning of the year anticipated range of 19% to 21%, mainly due to lower levels of income, including losses in certain low-tax geographies.

非國際財務報告準則下的營業利潤為 4,370 萬美元，比上一季增加約 100 萬美元，比去年同期減少 1,600 萬美元。我們第四季的非國際財務報告準則調整後有效稅率為 27%，優於預期，主要由於有利的外匯影響。除去外匯影響，我們第四季的有效稅率為 33%。2019年全年，我們的調整後有效稅率為34%，高於年初預期的19%至21%，主要由於所得水準較低，包括某些低稅地區的損失。

For the fourth quarter, adjusted net earnings were $23.7 million compared to $39.7 million for the prior year period. Non-IFRs adjusted earnings per share of $0.18 were at the high end of our guidance range of $0.12 to $0.18 per share and down $0.11 per share year-over-year, mainly due to lower non-IFRS operating earnings. Non-IFRS adjusted ROIC of 10.6% was up 0.5% sequentially and down 4.4% compared to the same quarter of last year.

第四季調整後淨利為 2,370 萬美元，去年同期為 3,970 萬美元。非國際財務報告準則調整後每股收益為 0.18 美元，處於我們每股 0.12 美元至 0.18 美元的指導範圍高端，同比下降 0.11 美元，主要由於非國際財務報告準則營業收入下降。非國際財務報告準則調整後的資本報酬率為 10.6%，較上一季成長 0.5%，比去年同期下降 4.4%。

Moving on to working capital. Our inventory at the end of the quarter was $1.0 billion, a decrease of $41 million sequentially and down $98 million relative to last year. Inventory turns were 5.5, relatively flat sequentially and down 0.5 turns year-over-year.

轉向營運資金。我們本季末的庫存為 10 億美元，比上一季減少 4,100 萬美元，比去年同期減少 9,800 萬美元。庫存週轉率為 5.5，與上一季基本持平，年減 0.5 個。

Capital expenditures for the fourth quarter were $16 million or 1.1% of revenue. Our capital expenditures for 2019 were $81 million or 1.4% of revenue, slightly lower than our expected range of 1.5% to 2.0% of revenue. In 2020, we expect our capital expenditures to be in the range of 1.5% to 2.0% of revenue. Non-IFRS free cash flow was positive $44 million in the fourth quarter compared to negative $30 million for the same period last year, primarily driven by improved working capital.

第四季的資本支出為 1,600 萬美元，佔營收的 1.1%。我們 2019 年的資本支出為 8,100 萬美元，佔營收的 1.4%，略低於我們預期的 1.5% 至 2.0% 的收入範圍。2020 年，我們預計資本支出將佔收入的 1.5% 至 2.0%。第四季非國際財務報告準則下的自由現金流為正 4,400 萬美元，而去年同期為負 3,000 萬美元，主要由於營運資本改善。

We are encouraged by the improvements we have made in our working capital performance, which have contributed to very strong free cash flow generation in 2019. We generated non-IFRS free cash flow of $301 million in 2019. And as we look towards 2020, strong working capital performance remains a priority. Cash cycle days in the fourth quarter were 62 days, up 1 day sequentially. Our cash deposits increased to $122 million, up $14 million from last quarter as we continue to work with our customers on working capital improvements.

我們的營運資本績效的改善令我們感到鼓舞，這有助於我們在 2019 年產生非常強勁的自由現金流。2019 年，我們產生了 3.01 億美元的非國際財務報告準則自由現金流。展望 2020 年，強勁的營運資本表現仍是我們的首要任務。第四季現金週期天數為62天，季增1天。由於我們繼續與客戶合作改善營運資金，我們的現金存款增加至 1.22 億美元，比上一季增加了 1,400 萬美元。

Moving on to our balance sheet and other key measures. Celestica continues to maintain a strong balance sheet. Our cash balance at the end of the fourth quarter was $480 million, up $31 million sequentially and up $58 million year-over-year. Our gross debt position was $592 million at the end of December, down $2 million sequentially, while our net debt was approximately $112 million, down $33 million sequentially and down $223 million from the fourth quarter of last year. We incurred $11 million in restructuring charges this quarter and have concluded our cost efficiency initiative. Total program spend of $81 million was higher than our originally estimated range of $50 million to $75 million as we accelerated other cost actions, including those with Cisco.

繼續討論我們的資產負債表和其他關鍵指標。Celestica 繼續保持強勁的資產負債表。我們第四季末的現金餘額為 4.8 億美元，比上一季增加 3,100 萬美元，比去年同期增加 5,800 萬美元。截至 12 月底，我們的總債務為 5.92 億美元，比上一季減少 200 萬美元，而我們的淨債務約為 1.12 億美元，比上一季減少 3,300 萬美元，比去年第四季減少 2.23 億美元。本季我們發生了 1,100 萬美元的重組費用，並已完成成本效率計劃。由於我們加快了包括與思科合作在內的其他成本行動，該項目總支出為 8,100 萬美元，高於我們最初估計的 5,000 萬至 7,500 萬美元的範圍。

Now turning to our guidance for the first quarter of 2020. We are projecting first quarter revenue to be in the range of $1.325 billion to $1.425 billion. At the midpoint of this range, revenue would be down 4% year-over-year. First quarter non-IFRS adjusted earnings are expected to be in the range of $0.13 to $0.19 per share. At the midpoint of our revenue and adjusted EPS guidance ranges, non-IFRS operating margin would be approximately 2.9% and would represent an increase of 50 basis points over the same period of last year. Non-IFRS adjusted SG&A expense for the first quarter is expected to be in the range of $51 million to $53 million.

現在來談談我們對 2020 年第一季的指導。我們預計第一季的營收將在 13.25 億美元至 14.25 億美元之間。在這個範圍的中間值，收入將比去年同期下降 4%。預計第一季非國際財務報告準則調整後每股收益在 0.13 美元至 0.19 美元之間。在我們的收入和調整後的每股盈餘指引範圍的中間點，非國際財務報告準則下的營業利潤率約為 2.9%，比去年同期增加 50 個基點。第一季非國際財務報告準則調整後的銷售、一般及行政開支預計在 5,100 萬美元至 5,300 萬美元之間。

Finally, we estimate our non-IFRS adjusted effective tax rate for the first quarter to be approximately 30%, excluding any impacts from taxable foreign exchange. Our full year non-IFRS adjusted effective tax rate expectations are in the mid-20% range, with an elevated adjusted effective tax rate in the first half due to anticipated geographical mix and closer to historical rates expected in the second half of the year.

最後，我們估計第一季的非國際財務報告準則調整後有效稅率約為 30%，不包括應稅外匯的影響。我們對全年非國際財務報告準則調整後有效稅率的預期在 20% 左右，由於預期的地理組合，上半年調整後有效稅率將有所上升，預計下半年將更接近歷史稅率。

Turning to our end market outlook for the first quarter. In our ATS end market, we anticipate revenue to be up in the low single-digit percentage range year-over-year as growth across most of our ATS businesses, including in capital equipment, is expected to be partly offset by the impact of planned program disengagements in our energy business and program-specific demand softness in our A&D business.

談談我們對第一季的終端市場展望。在我們的 ATS 終端市場，我們預計收入將比去年同期增長低個位數百分比範圍，因為我們大多數 ATS 業務（包括資本設備）的增長預計將被我們能源業務中計劃的項目脫離和 A&D 業務中特定項目需求疲軟的影響部分抵消。

In our communications end market, we anticipate revenue to be flat year-over-year as continued end market demand softness is offset by program ramps in support of service provider growth, including JDM.

在我們的通訊終端市場，我們預計收入將與去年同期持平，因為持續的終端市場需求疲軟被支援服務提供者（包括 JDM）成長的計畫增加所抵消。

In our enterprise end market, we anticipate revenue to decrease in the mid-20% range year-over-year, mainly due to planned program disengagements as part of our CCS portfolio review, in addition to weaker end market demand. I'll now turn the call over to Rob for additional color and an update on our priorities.

在我們的企業端市場，我們預計營收將年減 20% 左右，這主要是由於我們在 CCS 產品組合審查中計劃取消某些項目，此外終端市場需求較弱。現在我將把電話轉給羅布，讓他進一步介紹情況並更新我們的優先事項。

Thank you, Mandeep. 2019 was a challenging year given the difficult demand environment. In response, we took a number of aggressive measures, including proactively shaping our portfolio, driving cost reduction initiatives and executing program ramps. We continue to focus on providing higher value-add solutions to our customers, enabled by diversified and more resilient portfolio. The actions we took this past year drove improved operating margin and non-IFRS adjusted EPS throughout 2019. As we exit the year, we believe our lower cost base and stronger portfolio position us for improved performance in 2020.

謝謝你，Mandeep。由於需求環境艱難，2019 年是充滿挑戰的一年。作為回應，我們採取了一系列積極措施，包括積極塑造我們的投資組合，推動成本削減計劃和執行計劃提升。我們將繼續專注於透過多樣化和更具彈性的產品組合為客戶提供更高附加價值的解決方案。我們去年採取的行動推動了2019年全年營業利潤率和非國際財務報告準則調整後每股收益的提高。在即將結束的這一年中，我們相信較低的成本基礎和更強大的產品組合將使我們在 2020 年獲得更好的表現。

Within ATS, our capital equipment business was presented with a number of challenges as semiconductor and display markets dipped to severe lows. However, our productivity initiatives and new program ramps and capital equipment continued to yield results. In the fourth quarter, we improved our performance and reduced our loss to the low single-digit millions. As we look to 2020, we anticipate improvement in the semiconductor equipment demand through the first half of the year and are encouraged by the anticipated market trends for the second half of 2020. The display market remains depressed. And while volumes are improving, we continue to expect near-term softness with modest recovery late in the year, driven by increased demand for next-generation smartphones and next-generation large form factor displays.

在 ATS 內部，由於半導體和顯示器市場跌至低谷，我們的資本設備業務面臨許多挑戰。然而，我們的生產力措施、新專案提升和資本設備繼續產生成果。第四季度，我們的業績有所改善，虧損減少至數百萬美元以下。展望 2020 年，我們預計上半年半導體設備需求將會改善，並對 2020 年下半年預期的市場趨勢感到鼓舞。顯示器市場依然低迷。儘管銷量正在改善，但我們預計短期內銷量仍將保持疲軟，但受下一代智慧型手機和下一代大尺寸顯示器需求成長的推動，年底銷量將出現小幅回升。

As the industry shifts from LCD to OLED, we believe that we are well positioned to support our customers growth and are already planning new program ramps in 2020. We continue to take a long-term view of this market. And as a market leader, we continue to partner with our industry's leading brands. We expect capital equipment to be generating a profit in the single-digit million dollar range in the first quarter of 2020, driven by our cost productivity initiatives and volume leverage. With our specialized vertical capabilities, we believe we are well positioned to capitalize on the long-term demand drivers for the business. In A&D, we are experiencing headwinds as a result of continued material constraints and anticipate that the halt of the Boeing 737 Max program will also put some downward pressure on our A&D revenues in 2020, which we have already factored into our first quarter guidance. That being said, anticipated improvements in other parts of ATS should more than offset the 737 Max impact from 2020.

隨著業界從 LCD 轉向 OLED，我們相信我們已做好準備來支持客戶的成長，並且已在規劃 2020 年新的專案升級。我們繼續以長遠的眼光看待這個市場。作為市場領導者，我們繼續與行業領先品牌合作。我們預計，在成本生產力措施和產量槓桿的推動下，資本設備將在 2020 年第一季產生數億美元左右的利潤。憑藉我們專業的垂直能力，我們相信我們能夠充分利用業務的長期需求驅動因素。在航空航太和國防領域，由於持續的材料限制，我們正面臨阻力，預計波音 737 Max 專案的停止也將對我們 2020 年的航空航太和國防收入造成一些下行壓力，我們已將此考慮在第一季度的業績指引中。話雖如此，ATS 其他部分的預期改進應該足以抵消 2020 年 737 Max 的影響。

Due to strong demand in our defense business, we are expanding one of our Atrenne facilities to accommodate additional ITAR capacity as well as a new licensing business, which is an emerging area for us in A&D. In 2019, we had strong revenue growth in our industrial and health tech businesses, led by new program ramps, which more than offset revenue weakness in the energy business due to program disengagements. We are encouraged by our strong bookings momentum in our ATS segment, particularly in our health tech and industrial businesses, which is leading to increased scale, additional proof points and a stronger and more diverse ATS portfolio.

由於我們的國防業務需求強勁，我們正在擴大我們的一個 Atrenne 設施，以容納額外的 ITAR 容量以及新的許可業務，這是我們 A&D 領域的一個新興領域。2019年，在新專案成長的帶動下，我們的工業和健康科技業務收入強勁成長，足以抵消因專案退出而導致的能源業務收入疲軟。ATS 部門的強勁預訂勢頭令我們感到鼓舞，尤其是健康科技和工業業務，這將帶來規模的擴大、額外的證明點以及更強大和更多樣化的 ATS 產品組合。

Looking ahead, we expect to experience near-term challenges in our A&D business due to material constraints in 737 Max demand uncertainty. However, we are seeing strengthening demand in our capital equipment business, coupled with growth in our industrial and health tech markets and the benefits of our productivity initiatives. As a result, we expect to see margin expansion on our ATS segment in 2020, and we continue to focus on returning to a 5% to 6% target margin range.

展望未來，由於 737 Max 需求不確定性帶來的材料限制，我們預期 A&D 業務將在短期內面臨挑戰。然而，我們看到資本設備業務的需求正在增強，同時也伴隨著工業和健康科技市場的成長以及生產力措施帶來的好處。因此，我們預計 2020 年 ATS 部門的利潤率將擴大，並且我們將繼續致力於恢復到 5% 至 6% 的目標利潤率範圍。

Turning to CCS. In 2019, our CCS segment revenue was impacted by communications demand softness and planned enterprise disengagements, partially offset by new program ramps. CCS did, however, benefit from our portfolio review and cost productivity initiatives with segment margins at the higher end of our target range. Despite lower revenues, we are pleased that the actions we are taking in CCS have helped CCS operate in its target range for the last 7 quarters.

轉向 CCS。2019年，我們的CCS部門收入受到通訊需求疲軟和計劃中的企業脫離的影響，但新項目的增加部分抵消了這一影響。然而，CCS 確實受益於我們的投資組合審查和成本生產力舉措，其分部利潤率處於我們目標範圍的較高水平。儘管收入較低，但我們很高興看到我們在 CCS 採取的行動幫助 CCS 在過去 7 個季度中保持了目標營運範圍。

As we look to 2020, we will continue to invest in our JDM business and evolve our product offerings so we are well positioned to serve our customers, including our growing service provider engagements while providing further stability and diversification to our overall CCS business. We experienced strong bookings in 2019 and anticipate ramping several new JDM programs in coming year. Cisco transition planning is underway and we expect the transition will largely be completed by the end of 2020. We continue to work with Cisco to ensure an efficient, seamless and successful transition. Given the phased exit of the Cisco program, we do not expect any revenue impact in the first quarter of 2020 and this has already been factored into our guidance. We are also encouraged by the inquiries we have received regarding our available capacity since the announcement of the Cisco disengagement and we are working to selectively secure new business. We believe that our CCS bookings pipeline is robust and is focused on growing higher value-add opportunities in JDM and the growing service provider and emerging enterprise markets.

展望2020年，我們將繼續投資於我們的JDM業務並改進我們的產品供應，以便我們能夠更好地服務我們的客戶，包括我們日益增長的服務提供者合作，同時為我們的整體CCS業務提供進一步的穩定性和多樣化。2019 年我們的預訂量非常強勁，預計來年將推出幾個新的 JDM 專案。思科過渡計畫正在進行中，我們預計過渡將在 2020 年底基本完成。我們將繼續與思科合作，以確保高效、無縫和成功的過渡。鑑於思科計劃分階段退出，我們預計 2020 年第一季不會對收入產生任何影響，並且這已計入我們的預期。自從思科宣布退出以來，我們收到的有關我們可用容量的詢問也令我們感到鼓舞，我們正在努力有選擇地獲得新業務。我們相信，我們的 CCS 預訂管道非常強大，並且專注於在 JDM 和不斷增長的服務提供者和新興企業市場中創造更高的附加價值機會。

As I look back on our performance in 2019, although we generated very strong cash flow, I am disappointed with our full year financial results. Executing a transformation during a challenging demand environment was very difficult. However, I am encouraged that we made solid progress on our transformational strategy while navigating market headwinds. First, we were able to increase diversification across our business. We reduced our top 10 customer concentration to 65%, down from 70% in 2018 and increased our ATS segment concentration to 39% of the total revenues, up from 33% last year. We have only 1 customer with revenue greater than 10%, down from 2 last year. Second, we navigated challenging market dynamics in our capital equipment and communications businesses, taking actions that we believe will lead to a stronger portfolio in the long term. This included significant cost actions in our capital equipment business to lower its breakeven point, which we believe will drive stronger profitability as we ramp new programs and when the demand environment improves. Third, we successfully executed on our CCS portfolio optimization review and we were firmly within our target segment margin range for CCS throughout the year. We ended the year with a smaller but what we believe to be a more consistent and resilient business with high value-added programs. Fourth, we successfully executed on a number of new program ramps, and delivered strong growth in our industrial, health tech and A&D businesses. And lastly, we continued our balanced approach to capital allocation, utilizing the strength of our balance sheet to execute on approximately $70 million of share buybacks, while also reducing our net leverage.

回顧我們 2019 年的表現，儘管我們產生了非常強勁的現金流，但我對全年財務表現感到失望。在充滿挑戰的需求環境下實施轉型非常困難。然而，我很高興看到，我們在克服市場逆風的同時，在轉型策略方面取得了紮實的進展。首先，我們能夠提高業務的多樣化。我們將前十大客戶集中度從 2018 年的 70% 降低至 65%，並將 ATS 分部集中度從去年的 33% 提高至總收入的 39%。我們只有 1 個客戶的收入超過 10%，比去年的 2 個有所下降。其次，我們應對了資本設備和通訊業務中充滿挑戰的市場動態，並採取了我們認為將在長期內帶來更強大投資組合的行動。這包括我們對資本設備業務採取重大成本行動以降低其損益平衡點，我們相信，隨著我們推出新項目以及需求環境改善，這將帶來更強的獲利能力。第三，我們成功執行了CCS投資組合最佳化審查，且全年CCS的分部利潤率始終穩居目標範圍內。儘管今年我們的業務規模較小，但我們相信我們的業務更加穩定、更具彈性，並且擁有高附加價值的項目。第四，我們成功執行了一系列新的項目，並在工業、健康技術和航空航天與國防業務方面實現了強勁增長。最後，我們繼續採取平衡的資本配置方法，利用資產負債表的優勢執行約 7,000 萬美元的股票回購，同時降低我們的淨槓桿率。

As we enter 2020, we remain focused on several initiatives that we believe will drive improved operating margins and expand our adjusted earnings per share. Within our ATS segment, we are focused on restoring margins to the targeted 5% to 6% range. Achieving this margin range requires a recovery in the capital equipment and the A&D supply and demand environment and the successful ramp of new ATS programs, specifically in industrial and health tech. Within our CCS segment, we are focused on completing our portfolio review actions and intend to continue to invest in areas we believe are key to the long-term success of our CCS segment, including through our JDM offering. While we are not providing revenue guidance for 2020, we anticipate revenue growth in certain areas of our CCS and ATS segments to help partially offset the revenue decline from our portfolio actions. Our capital allocation priorities remain consistent. Our goal is to generate between $100 million to $200 million in free cash flow in 2020. And over the long term, we intend to invest half of our available free cash flow into the business and return half to shareholders.

進入 2020 年，我們仍將重點關注多項舉措，我們相信這些舉措將提高營業利潤率並擴大我們的調整後每股收益。在我們的 ATS 部門內，我們專注於將利潤率恢復到目標 5% 至 6% 的範圍。要實現這一利潤範圍，需要資本設備和 A&D 供需環境的復甦，以及新 ATS 專案的成功推廣，特別是在工業和健康技術領域。在我們的 CCS 部門內，我們專注於完成我們的投資組合審查行動，並打算繼續投資於我們認為對 CCS 部門的長期成功至關重要的領域，包括透過我們的 JDM 產品。雖然我們沒有提供 2020 年的收入指引，但我們預期 CCS 和 ATS 部門某些領域的收入將會成長，以幫助部分抵消我們投資組合行動造成的收入下降。我們的資本配置重點保持一致。我們的目標是在 2020 年產生 1 億至 2 億美元的自由現金流。長遠來看，我們打算將一半的可用自由現金流投資於業務，另一半則回饋給股東。

In summary, we are executing on our strategy in order to drive long-term sustainable profitable growth and add value to our shareholders. I would like to take this opportunity to thank our employees for their hard work and dedication, our customers for their support and loyalty and our shareholders for their continued support of Celestica. We look forward to updating you on our progress over the coming quarters.

總而言之，我們正在執行我們的策略，以推動長期可持續的獲利成長並為我們的股東增加價值。我想藉此機會感謝我們員工的辛勤工作和奉獻精神、客戶的支持和忠誠以及股東對 Celestica 的持續支持。我們期待在未來幾季向您通報我們的進展。

With that, I would now like to turn the call over to the operator to begin our Q&A.

說完這些，我現在想將電話轉給接線生，開始我們的問答環節。

(Operator Instructions)

（操作員指令）

And your first question comes from the line of Robert Young from Canaccord.

您的第一個問題來自 Canaccord 的羅伯特楊 (Robert Young)。

Maybe the first question I'll ask is around margins. I think you reiterated the 5% to 6% target. I don't know if I missed it, but did you also reiterate 2%, 3% operating margins for the CCS business? Or would you think that could go higher given where

也許我要問的第一個問題是關於利潤的問題。我認為您重申了 5% 到 6% 的目標。我不知道我是否錯過了，但您是否也重申了 CCS 業務的 2%、3% 的營業利潤率？或者你認為考慮到什麼因素，這個數字可能會更高

The recent margin performance has been? And then I think the overall operating margin target of 3.75% to 4.5%, is that still something that you're driving towards?

最近的保證金表現如何？然後我認為 3.75％ 至 4.5％ 的整體營業利潤率目標仍然是你們所追求的目標嗎？

Yes. It's Mandeep here. So yes, I'll take that in pieces. So on the CCS side, we're very pleased with the margin performance that the business has been having. They're performing very well strategically and operationally. That being said, we have seen some favorable mix over the last 1 or 2 quarters. And so we still think that the 2% to 3% range is the right range, but we're very pleased that they've been operating at the higher end of that range. On the ATS side, 5% to 6% continues to be the right target range. We're pleased that we saw some sequential improvement in the fourth quarter. We're expecting further improvement as we go into 2020. And I think that there's some positive momentum happening in different areas. There's a few things that are going to be required to get there, primarily improvements in the capital equipment space, but we've highlighted some other things as well, which are working through some of the challenges and the churn in A&D and ramping some programs. The 3.75% to 4.5% continues to be the target range that we are moving towards. Just to reiterate what needs to be true for that to happen, we expect CCS to be firmly within there, 2% to 3% range, and we are looking to grow ATS to the upper end of their range in order for us to get into the 3.75% to 4.5%.

是的。我是 Mandeep。是的，我會把它分成幾個部分。因此，就 CCS 方面而言，我們對業務的利潤表現非常滿意。他們在策略和營運方面都表現非常出色。話雖如此，我們在過去一兩個季度中看到了一些有利的組合。因此，我們仍然認為 2% 到 3% 的範圍是正確的，但我們非常高興他們一直在該範圍的高端運作。在 ATS 方面，5% 到 6% 仍然是正確的目標範圍。我們很高興看到第四季度取得了一些連續的改善。我們預計 2020 年將會有進一步的改善。我認為不同領域正在出現一些正面的動力。要達到這個目標，需要做一些事情，主要是資本設備領域的改進，但我們也強調了其他一些事情，即解決 A&D 中的一些挑戰和流失並推進一些專案。3.75%至4.5%仍然是我們正在努力實現的目標範圍。為了重申實現這一目標需要滿足的條件，我們預計 CCS 將穩固地保持在 2% 到 3% 的範圍內，並且我們希望將 ATS 增長到其範圍的上限，以便我們進入 3.75% 到 4.5% 的範圍。

Okay, great. And then maybe just digging into the semi-cap demand environment, I think you said that you saw improvement in the first half or see improvement in the first half of 2020 and encouraged potentially by H2, is that what I heard? Display would still be depressed. I think that's consistent with what you had said last quarter around customers saying that there's a moderate level of demand in the first half of 2020. And so it feels to me like the demand environment is similar to what you saw last quarter. Is that right?

好的，太好了。然後也許只是深入研究半導體需求環境，我認為您說過您看到了上半年的改善，或者看到了 2020 年上半年的改善，並且可能受到下半年的鼓舞，這是我聽到的嗎？顯示幕仍會處於凹陷狀態。我認為這與您上個季度所說的一致，客戶表示 2020 年上半年的需求水準適中。因此，我覺得需求環境與上季的情況類似。是嗎？

Yes, Rob, that's right. We're probably a little bit more optimistic, I would say, in the second half. The market seems to feel like memory might come back in the second half of next year. We're seeing pricing increases on memory. We're seeing inventories reduced a little bit. We don't necessarily have the order book to support that yet. That's why we're not calling a back half uptick, but the indicators are putting in a favorable direction for continuing strong semi cap in the back half of the year. And on display, it's pretty much the same as last year. For us, revenues are improving on a year-over-year basis. So we're getting improved volume leverage, if you will. But as the 5G OLED phones get introduced and the next-generation OLED TVs get introduced and we anticipate that really towards the end of 2020 into 2021, that's when we think volume will really pick up.

是的，羅布，沒錯。我想說，我們對下半年可能會更樂觀一點。市場似乎感覺到記憶體可能會在明年下半年復甦。我們看到記憶體價格上漲。我們看到庫存減少。目前我們還沒有足夠訂單來支持這一點。這就是為什麼我們不稱之為下半年上漲，但指標朝著有利於下半年繼續保持強勁的半導體市場的方向發展。從展出的內容來看，它與去年幾乎相同。對我們來說，收入逐年增加。因此，如果你願意的話，我們正在提高銷售槓桿。但隨著 5G OLED 手機和下一代 OLED 電視的推出，我們預計到 2020 年底到 2021 年，當時銷量才會真正回升。

Okay. And perhaps it's a bit early, but any of the China events recently, is there any impact that you see on your business? I know that Wuhan is a bit of a semi hub. Is it too early to understand if there's an impact there?

好的。也許現在說這個有點早，但最近在中國發生的任何事件，您認為對您的業務有影響嗎？我知道武漢是一個半樞紐。現在了解這是否會產生影響還為時過早嗎？

No, we've been working very hard over the last several days to understand it. First and foremost, we reached out to many of our employees. And as far as we know, they're safe and sound and taking the right actions. In terms of our China exposure, it's fairly limited relative to all the Celestica and our peers. We do about $1 billion a year of revenue China across 2 large manufacturing facilities in Suzhou and Songshan Lake. A lot of the work

不，過去幾天我們一直在努力去理解這一點。首先，我們聯繫了許多員工。據我們所知，他們平安無事，並採取了正確的行動。就我們在中國的業務而言，與 Celestica 和我們的同行相比，我們的業務相當有限。我們在蘇州和松山湖的兩家大型製造工廠每年在中國的收入約為 10 億美元。很多工作

[Audio Gap]

[音頻間隙]

they do is dual source within the Celestica network and also our revenues are largely back and, of course, it skewed in terms of how to go out inside of a quarter.

他們所做的是在 Celestica 網路內進行雙重來源，而且我們的收入基本上已經回升，當然，就如何在一個季度內出去而言，它有所偏差。

As you probably read, the China government extended back to workday to February 10. And given everything that's going on, it's a prudent move. But given the February 10 date and checking with our employees and checking with our suppliers, at this time, I don't think it's going to be a huge impact, but it's a very dynamic situation, as you can imagine and we have contingency plans in place, and we're monitoring the situation very closely.

您可能已經讀到，中國政府將復工時間延長至 2 月 10 日。考慮到正在發生的一切，這是一個謹慎的舉動。但考慮到 2 月 10 日的日期，並且經過與我們員工和供應商的核實，我認為目前不會產生巨大的影響，但正如你所想像的，這是一個非常動態的情況，我們已經制定了應急計劃，我們正在密切監視情況。

Okay. 2 other questions, if I could. The Cisco disengagement. I just wanted to understand the cadence of that. I think you said that it wouldn't have an impact in Q1. Has any of it started and if it's complete by the end of 2020, is there any way to understand if the size of that, if you could remind us what that is and how it might play out through the year or based on how you understand it now?

好的。如果可以的話，我還有另外 2 個問題。思科撤軍。我只是想了解它的節奏。我認為您說過它不會對第一季產生影響。這一切是否已經開始，如果到 2020 年底能夠完成，有沒有辦法了解它的規模，您能否提醒我們它的具體規模以及它將如何貫穿全年，或者基於您現在的理解？

Sure. I'll answer the first part and Mandeep will take the second part. So we started transition planning, but the transition itself has not started. So we're still working through that process. In terms of the -- our anticipation right now is still that the majority of it will be transitioned out by the end of the year and in terms of magnitude, I'll let Mandeep to address that.

當然。我來回答第一部分，Mandeep 來回答第二部分。因此我們開始了過渡規劃，但過渡本身尚未開始。因此我們仍在努力完成這項流程。就目前而言，我們仍然預計大部分工作將在今年年底前完成，至於規模，我將讓 Mandeep 解決這個問題。

Yes. So both for Cisco as well as the previous program disengagements, our outlook for 2020 remains relatively consistent. And participating from the prior program disengagements that were announced to have about $100 million impact in 2020. And on the Cisco piece, $300 million to $500 million. It is dynamic. And so we'll keep you updated if that changes. But our outlook right now remains consistent.

是的。因此，無論是對於思科還是先前的計畫脫離，我們對 2020 年的展望仍然相對一致。並參與先前宣布的撤資計劃，這些計劃將在 2020 年產生約 1 億美元的影響。思科的份額為 3 億至 5 億美元。它是動態的。如果情況有變，我們會及時通知您。但我們目前的觀點保持不變。

Great. And then you mentioned ITAR in the comments. Maybe if you could talk a little bit about how big that business is for you now. And I think you said you're going to expand a facility, it wouldn't require M&A to expand that business. How -- maybe if you could talk about the margin impact of ITAR, I mean, what you're going after there? And then I'll pass the line.

偉大的。然後您在評論中提到了 ITAR。也許您可以稍微談談這項業務對您來說現在有多大。我認為您說過要擴建工廠，擴大業務並不需要透過併購來實現。您能否談談 ITAR 對利潤的影響，我的意思是，您在那裡追求的是什麼？然後我就通過了這條線。

Sure. So the -- we purchased Atrenne a couple of years ago. And 1 of the facilities, they do business out of 3 main facilities. And 1 of the facilities in New Hope, Minnesota, which is about 50,000 square feet is actually running out of capacity. So we've taken the opportunity to at least a brand new building, state of the art facility in right down the street, if you will. And based on the pipeline of work that we have, which is largely defense related, it will be our new center of excellence with circuit cards and a new set of excellence for our licensing business within aerospace and defense. It will largely cater towards the defense market. And we're doubling the size of the facility and we think we have a strong growth pipeline to support that expansion. The Atrenne acquisition continues to exceed all of our expectations. It really has a wonderful management team. It's winning awards from our customers and it's performing quite well.

當然。所以——我們幾年前收購了 Atrenne。其中 1 個設施透過 3 個主要設施開展業務。位於明尼蘇達州新希望 (New Hope) 的其中一處佔地約 50,000 平方英尺的設施實際上已經沒有足夠的容量了。因此，如果你願意的話，我們抓住機會在街道盡頭至少擁有一座全新的建築和最先進的設施。根據我們現有的工作管道（主要與國防相關），它將成為我們新的卓越中心，提供電路卡，並為我們在航空航太和國防領域的授權業務提供一套新的卓越服務。它將主要滿足國防市場的需求。我們正在將工廠規模擴大一倍，我們認為我們擁有強大的成長管道來支持這項擴張。Atrenne 的收購繼續超出我們所有人的預期。它確實擁有一支出色的管理團隊。它贏得了我們客戶的獎項並且表現得非常出色。

And your next question comes from the line of Gus Papageorgiou from PI Financial.

您的下一個問題來自 PI Financial 的 Gus Papageorgiou。

Sorry, just on the ATS margin goal of 5% to 6%, I don't recall you saying anything about display markets recovering to reach that goal. So can you just talk a little bit about what would have to require for -- from the display business to kind of reach those goals. And you said part of it would require -- would depend on new program ramps. Can you give us an idea of how big the new program ramps are for this and next year and how influential that will be on getting ATS back to reach those margin goals?

抱歉，僅關於 ATS 利潤率目標 5% 至 6%，我不記得您說過展示市場會復甦以達到該目標。那麼，您能否稍微談一下，從顯示業務角度來看，需要做些什麼才能實現這些目標？您說過，其中一部分將需要—將取決於新的計劃進度。您能否告訴我們今年和明年新計畫的規模有多大，以及這對 ATS 實現利潤目標有多大影響？

Yes, Gus. Mandeep here. Maybe let me break it down into 2 pieces. One is to get back into the 5% to 6% range, we're really looking for capital equipment to get back to its target levels. Those target levels are north of 6% when we are in a strong demand cycle. Primarily in the semiconductor space, we can operate above 6%. Right now, we are starting to see that demand cycle come back and so even if display was not to come in incredibly strong, but was to come in at levels that are higher than where it is today. We believe that, that would be enough contribution from capital equipment to get us back into the 5% to 6% range. To move upward into that range, then there's a few other things that we're looking for contribution from. One is for the headwinds in E&D to subside. And there's some good opportunity there, but there's always going to be some unknowns and then on the ramping of the

是的，格斯。這裡是 Mandeep。也許讓我把它分成兩個部分。一是回到5%到6%的範圍，我們真正希望的是資本設備回到目標水準。當我們處於強勁需求週期時，這些目標水準將在 6% 以上。主要在半導體領域，我們可以實現 6% 以上的營運。目前，我們開始看到需求週期回升，因此即使展示廣告的需求不是特別強勁，但也達到了比現在更高的水平。我們相信，資本設備的貢獻足以使我們回到 5% 到 6% 的範圍。為了進入這個範圍，我們還在尋求其他一些事物的貢獻。一是推動勘探與開發領域逆風消退。那裡有一些好的機會，但總是會有一些未知數，然後隨著

[Audio Gap]

[音頻間隙]

the numbers on it, but as we've shared in the past, we have seen significant wins in both industrial and in health tech. Both of those businesses are growing at double-digit rates right now. The ramps are well underway. The ramps are going as expected. And so we don't expect at this point any adverse impacts from that. But we do need to see a little bit more contribution from those ramping programs in order to keep moving. And then when we talk about the display contribution, when we purchased the Impakt business, as we had mentioned, it has a very strong margin profile. And so as we see the display market really return, which is more in '21, we would expect to see a good level of volume leverage. And that's just because of, number 1, the margin profile of that business. But number 2 is we have taken the opportunity over the last year to reduce the cost profile of that business. And so we would just expect better contribution as the demand really returns strong in '21.

雖然上面沒有數字，但正如我們過去所分享的，我們在工業和健康技術領域都取得了重大勝利。目前，這兩項業務均以兩位數的速度成長。坡道工程正在順利進行中。坡道一切如預期。因此我們目前預計這不會產生任何不利影響。但我們確實需要看到這些提升計畫做出更多貢獻，才能繼續前進。然後，當我們談論顯示器貢獻時，正如我們所提到的，當我們購買 Impakt 業務時，它具有非常強勁的利潤率。因此，當我們看到顯示器市場真正回歸時，也就是在21年，我們預計會看到良好的銷售槓桿水平。這只是因為，第一，該業務的利潤狀況。但第二點是，我們在過去的一年裡抓住了機會，降低了這項業務的成本。因此，隨著需求在21年真正強勁復甦，我們預期貢獻會更好。

That's great. And on the A&D. So basically, Boeing's facing some challenges, but defense seems to be doing well. Is that about right?

那太棒了。以及 A&D 上。因此，從根本上講，波音公司面臨一些挑戰，但防禦似乎表現良好。那是對的嗎？

Yes, correct. Boeing is facing some challenges. But to put it into context, we're the leader in A&D for the MS space. So what we do across many platforms, the 737 inclusive is we do everything from circuit cards to complete line replaceable units of boxes that go in the aircraft. And about 10% of our A&D portfolio supports the 737 Max. So right now, we're working with our customer to balance production, while preserving the long term. So A&D, historically speaking, has grown in the mid- to high single digits as a result of the 737 downward pressure, and we don't view that as being a long period of time,

是的，正確。波音公司正面臨一些挑戰。但具體來說，我們是 MS 領域 A&D 領域的領導者。因此，我們在許多平台上所做的工作，包括 737，都是從電路卡到飛機內可更換的整機盒單元。我們的 A&D 產品組合中約有 10% 支援 737 Max。因此現在，我們正在與客戶合作，平衡生產，同時保持長期利益。因此，從歷史上看，由於 737 的下行壓力，A&D 的營收一直保持在中高個位數成長，而且我們認為這不會持續很長時間。

[Audio Gap]

[音頻間隙]

based on what we're hearing and what we're reading, we're seeing ranges of 3 to 6 months.

根據我們所聽到的和讀到的內容，我們認為這個範圍是3到6個月。

So the growth of A&D is going to be muted until production turns on. And then depending on the rate it turns on, we'll kind of determine how quickly it grows thereon. But again, it's -- from a magnitude perspective, it's only about 10% of our overall R&D portfolio, which is also the largest portion of our ATS business.

因此，在開始生產之前，A&D 的成長將會受到抑制。然後根據它開啟的速率，我們就可以確定它生長的速度。但從規模來看，它僅占我們整體研發組合的 10% 左右，而這也是我們 ATS 業務中最大的一部分。

(Operator Instructions) Your next question comes from the line of Thanos Moschopoulos from BMO Capital Markets.

（操作員指示）您的下一個問題來自 BMO 資本市場的 Thanos Moschopoulos。

You mentioned the year-over-year improvement in inventory turns, how would you expect that to trend for the course of the year? And what kind of impact should we see on turns from the Cisco disengagement?

您提到庫存週轉率較去年同期有所改善，您預計今年的趨勢會如何？思科的撤軍將帶給我們什麼樣的影響呢？

Yes. I'll put it into the context of overall cash flow. We're pleased right now with the performance that we saw in 2019. Part of it was, of course, because of the declining revenue that we had, but we saw improvement in our overall working capital turns and a lot of that was driven by inventory. And we look at inventory right now in combination with customer deposits because some customers who are unable to unwind their inventory in lieu of that have been providing us with deposits. And so overall, some very good benefit. As we go into 2020, we're expecting another year of strong free cash flow generation. We're targeting $100 million to $200 million. And inventory turns improvement is part of that as well. And so we feel right now that we have some pretty good momentum on the cash generation side.

是的。我將把它放在整體現金流的背景下。我們對 2019 年的表現感到非常滿意。當然，部分原因是我們的收入下降，但我們看到整體營運資金周轉率有所改善，其中很大一部分是由庫存推動的。我們現在將庫存與客戶存款結合起來看待，因為一些無法清空庫存的客戶一直在向我們提供存款。整體來說，好處非常多。隨著 2020 年的到來，我們預計今年將是另一個強勁的自由現金流產生年。我們的目標是 1 億到 2 億美元。庫存週轉率的改善也是其中的一部分。因此，我們現在感覺，我們在現金創造方面擁有相當良好的勢頭。

Great. And then, Rob, can you update us on M&A. Will you continue to have an active pipeline? Or is the focus this year more on just managing the CCS disengagements and some of the other moving parts of the business?

偉大的。然後，Rob，您能向我們介紹一下併購方面的情況嗎？您將繼續擁有活躍的管道嗎？或者今年的重點是否更多地放在管理 CCS 脫離和業務的其他一些活動部分？

Yes, primary focus right now is on delevering. That being said, we do have active M&A pipeline, I would say we're looking for niche capability. So pipeline is largely focused on aerospace and defense and health tech. So we're still evaluating M&A with a very focused lens and opportunistic, and we're looking really for a capability place.

是的，目前的主要重點是去槓桿。話雖如此，我們確實有活躍的併購管道，我想說我們正在尋找利基能力。因此，管道主要集中在航空航太、國防和健康技術領域。因此，我們仍在以非常集中的眼光和機會主義的態度評估併購，我們正在尋找真正有能力的地方。

Your next question comes from the line of Paul Treiber from RBC Capital Markets.

您的下一個問題來自 RBC Capital Markets 的 Paul Treiber。

Could you speak to capital equipment revenue on a sequential and year-over-year basis in terms of Q4 and then also, in terms of your expectation for capital equipment in Q1 in regards to revenue?

您能否談談第四季度資本設備收入的環比和同比情況，以及您對第一季資本設備收入的預期？

It's Mandeep here, of course. And we have been seeing some strong growth. Overall, the demands for capital equipment, I would say, dipped to the low in 2019 in the second quarter. We saw a nominal growth into the third quarter and the growth has started to really pick up as we moved into the fourth quarter. We had a lot of wins early in the year, many of them as market share gain, so competitive takeaways. And so we are in the process of not only seeing some demand uptick right now, but we're seeing the ramping of many of those programs. As we go into the first quarter, we're expecting some additional volume growth over the fourth quarter, but albeit not as maybe big of sequential growth as we just saw in the fourth quarter. And again, that's a combination of both demand strength as well as ramping of new programs.

當然是 Mandeep 啦。我們已經看到了一些強勁的成長。總體而言，我認為資本設備的需求在 2019 年第二季降至低點。我們看到第三季出現了名目成長，進入第四季後，成長開始真正回升。我們在今年年初取得了許多勝利，其中許多是市場份額的增加，因此具有競爭力。因此，我們目前不僅看到一些需求上升，而且看到許多此類專案正在加速推進。進入第一季度，我們預計第四季度的銷量會有所增長，但環比增長可能不如第四季度那麼大。再次強調，這是需求強勁和新項目不斷增加的結合。

Great. And then secondly, could you just elaborate on your comment just in regards to the inquiries in the pipeline that you're seeing for the CCS capacity that you'll free up towards the end of the year? And then how should or what's your sort of expectation on the profitability of any new contracts that you bring in on the CCS side in comparison against the average, the 2% to 3% target?

偉大的。其次，您能否就您看到的有關您將在年底前釋放的 CCS 容量的調查詳細闡述一下您的評論？那麼，與平均水平（2% 到 3% 的目標）相比，您對 CCS 方面簽訂的任何新合約的盈利能力的預期應該如何？

Yes. So we've been very pleased at the level of interest that we're getting on consuming the available capacity in Thailand has been pretty high. As I mentioned on the call, the funnel is very robust. And our intention really is not to backfill the revenue on a dollar-for-dollar basis. We're really focusing on revenue that has high value-added content. So looking at expanding our customer base within our service provider business, we're looking at expanding our JDM business. We're looking at new enterprise logos. In fact, within our service provider space, we're now doing business with the majority of the top 10 service providers. And within that, we provide a full suite of product solutions across all the technologies in the data center. Our JDM business is actually growing in the double digits, it's expected to grow in double digits in 2020. In terms of the margin profile, I would say, the JDM business operates on the higher end of target margin ranges and would be accretive. That being said, we are counting on a higher mix of JDM business to keep the overall portfolio within the target margin range.

是的。因此，我們非常高興看到，人們對泰國可用產能的利用興趣相當高。正如我在電話中提到的，這個漏斗非常強大。我們的目的實際上並不是以一美元對一美元的方式填補收入。我們真正關注的是具有高附加價值內容的收入。因此，為了擴大我們服務提供者業務中的客戶群，我們正在考慮擴大我們的 JDM 業務。我們正在尋找新的企業識別。事實上，在我們的服務提供者領域，我們現在與大多數排名前 10 名的服務提供者有業務往來。在此範圍內，我們提供涵蓋資料中心所有技術的全套產品解決方案。我們的 JDM 業務實際上正在以兩位數成長，預計 2020 年將實現兩位數成長。從利潤率狀況來看，我想說，JDM 業務的利潤率處於目標範圍的高端，而且會增加價值。話雖如此，我們仍指望 JDM 業務的更高組合能夠將整體投資組合保持在目標利潤範圍內。

And your next question comes from the line of Ruplu Bhattacharya from Bank of America.

您的下一個問題來自美國銀行的 Ruplu Bhattacharya。

So you're guiding the first quarter up low single digits year-on-year. Do you expect, as we go through the year, an acceleration in revenue growth? And do you think that exiting this year, you can be back at the 10% or double-digit kind of growth rate in that segment? So any kind of color of what you expect to see as you go through this year in the ATS segment?

所以你預計第一季的銷售額將年增 10%。您是否預計，隨著今年的到來，營收成長將會加速？您認為今年退出後，該領域能夠重回 10% 或兩位數的成長率嗎？那麼您預計今年 ATS 領域會出現什麼情況呢？

Yes. We're pleased with the growth that we're seeing overall in ATS. 2019 was impacted by some market dynamics, specifically in capital equipment. And then, as you know, we did take some disengagement actions on some nonstrategic customer programs. When you back those out, we actually, in 2019, saw low double-digit growth. We saw 13% growth in the rest of our ATS business. And that's actually after doing 13% growth in 2018 as well. We are anticipating growth in 2020. We always caution people to remember that the 10% growth rate is a long-term growth rate. There are going to be some years where we're above it and some years where we're below it. And so while we're not giving guidance for 2020, we continue to think that the 10% growth rate is the right target over the long term.

是的。我們對 ATS 整體的成長感到非常滿意。2019 年受到一些市場動態的影響，尤其是資本設備。然後，如您所知，我們確實對一些非策略性客戶計劃採取了一些脫離行動。如果將這些因素排除在外，我們實際上在 2019 年實現了低兩位數的成長。我們的其餘 ATS 業務成長了 13%。這實際上也是在 2018 年實現 13% 成長之後實現的。我們預計 2020 年將實現成長。我們總是提醒人們記住10%的成長率是一個長期成長率。有些年份我們會高於這個數字，有些年份我們會低於這個數字。因此，雖然我們沒有給出 2020 年的預測，但我們仍然認為 10% 的成長率是長期的正確目標。

Okay, that's helpful, Mandeep. And maybe just for my follow-up, on the communications end market, I think you guys had guided for a decrease of low-teens year-on-year, but you saw a little bit worse, down 15%. And it looks like for the first quarter, you're guiding flat, which suggests some improvement. So maybe if you can just touch on the different end markets, what you saw in optical? What you saw in networking and is there a sense of things getting better? Or is inventory correction you've talked about in the past, is that still continuing? So any kind of color on that end market, both in 4Q as well as what you're expecting for 1Q?

好的，這很有幫助，Mandeep。也許只是為了我的後續問題，在通訊終端市場，我認為你們已經預測了同比下降的低十幾歲，但你們看到的情況更糟，下降了 15%。看起來，對於第一季而言，預期是持平的，這表明有所改善。那麼，您能否談談不同的終端市場，您在光學領域看到了什麼？您在網路中看到了什麼？或者您過去談到的庫存調整仍在繼續？那麼，您對第四季以及第一季的終端市場有何預期？

Sure. So within 4Q, what we saw was demand weakness with some of our traditional OEMs. We saw some product and technology transitions with some of our customers and also for us, we had some tough comps in networking. At this time last year, people were building buffers due to the tariffs and those buffers were in our revenue numbers last year. This was partially offset with some new program growth that we've been talking about in our service provider space. For Q1, we're guiding flat. What we're seeing is new program ramps in networking. We're seeing demand strength in some of our existing programs. And that's also being offset with some demand weakness that we're seeing with the technology transitions. In terms of inventory buffering, we're not experiencing any of that right now. I think the buffers, at least for us have largely burnt off. And for us, it's just about supply mix and product transitions and demand dynamics.

當然。因此，在第四季度，我們發現一些傳統 OEM 的需求疲軟。我們看到一些客戶正在進行產品和技術的轉型，同時我們在網路方面也遇到了一些困難。去年此時，人們因關稅而建立緩衝，這些緩衝已計入我們去年的收入數字。這在一定程度上被我們在服務提供者領域談論的一些新項目的成長所抵消。對於第一季度，我們預期持平。我們看到的是網路領域新程式的蓬勃發展。我們發現一些現有的專案需求強勁。這也被我們在技術轉型過程中看到的一些需求疲軟所抵消。就庫存緩衝而言，我們目前還沒有遇到任何此類情況。我認為緩衝區，至少對我們來說已經基本上被燒毀了。對我們來說，這只是關於供應組合、產品轉型和需求動態。

Your next question comes from the line of Todd Coupland from CIBC.

您的下一個問題來自加拿大帝國商業銀行 (CIBC) 的 Todd Coupland。

I just wanted to confirm one point, and then I'll ask a question. So on the transitions, you called out other in Cisco of about $600 million off of 2020 versus 2019? Is that -- did I hear that correctly?

我只是想確認一點，然後我會問一個問題。那麼在轉型問題上，您是否指出思科的其他部門在 2020 年的支出將比 2019 年減少約 6 億美元？那是──我沒聽錯吧？

That's right, Todd. So we are expecting $400 million to $600 million of revenue impact year-over-year as a combination of both the Cisco disengagement as well as the tail end of the portfolio review. On the ATS side, we are targeting growth. We're not providing full year guidance, but we are targeting growth off of the base portfolio. And then for the rest of CCS, we are expecting flat to some level of growth as well.

沒錯，托德。因此，我們預計，由於思科的退出以及投資組合審查的結束，收入影響將比去年同期增加 4 億至 6 億美元。在 ATS 方面，我們的目標是成長。我們不提供全年指導，但我們的目標是基於基礎投資組合來實現成長。對於 CCS 的其他部分，我們預計也會保持平穩或一定程度的成長。

Okay. And then my question had to do on the carrier space. I know you do some 5G programs. It's been sort of lumpy so far as the market is trying to figure out when actually to get going. Kinds of indications are you getting for 5G technology for 2020? Any color on that would be appreciated.

好的。然後我的問題與航母空間有關。我知道你做了一些 5G 專案。到目前為止，市場還處於不穩定狀態，試圖確定何時才能真正開始行動。您獲得有關 2020 年 5G 技術的各種跡象嗎？任何顏色都可以，謝謝。

Sure. We've seen some strength in 5G technology regional demand strength that's expected to continue through the first half of the year, but broad deployment for 5G, we still think is pushing out a little bit to 2021 and beyond. Again, for the 5G stuff, we play on the wired side and support the wired players well. So hopefully, that gives you a little bit color. But regionally, we're seeing pockets of growth.

當然。我們看到 5G 技術的區域需求有所增強，預計這種勢頭將持續到今年上半年，但我們仍認為 5G 的廣泛部署將推遲到 2021 年及以後。再次，對於 5G 產品，我們在有線方面開展業務並很好地支援有線播放器。希望這能帶給你一些啟發。但從地區來看，我們看到了一些成長跡象。

Your next question comes from the line of Jim Suva from Citigroup.

您的下一個問題來自花旗集團的吉姆蘇瓦。

I have 2 questions, and I'll ask them at the same time so you can take them in either order, which is fine. If I add up the proactive disengagements that are happening, I believe, in total, it would be $400 million to $600 million, which I think is 100-plus range of 3% to 5% for the other one, is that for the full calendar year 2020? Or do we need to kind of prorate it? And the reason why I ask is, it seems like Q1 will be down about 4% in revenues, but just to set expectations fair without guiding 2020, it seems like that the future quarter would need to decelerate or degrade a little bit based upon the disengagements, unless, of course, you're winning more to offset that. So I'm just trying to get my hands around the disengagements, the timing of kind of in the full year impact. And then my second question is on aerospace. You mentioned you're seeing some material shortages. Unfortunately, I'm not a pilot or know much about this sector, but other companies who supply to the aerospace indeed concurred that Boeing has issues with the 737 Max, but they haven't really cited material shortages. So can you help us understand what those material shortages are? Why you're seeing it and maybe others aren't?

我有兩個問題，我會同時提問，所以您可以按任何順序回答，都可以。如果我把正在發生的主動撤軍加起來，我相信總額將達到 4 億至 6 億美元，我認為對於另一個人來說，這是 3% 到 5% 之間的 100 多倍，這是 2020 年全年的嗎？或者我們需要按比例分配嗎？我之所以問這個問題，是因為看起來第一季的收入將下降約 4%，但只是為了在不指導 2020 年的情況下設定公平的預期，似乎未來一個季度的收入將需要根據脫離情況減速或略有下降，當然，除非你贏得更多來抵消這一點。所以，我只是想了解撤軍的時間以及對全年的影響。我的第二個問題是關於航空航天的。您之前提到過，您發現了一些材料短缺的情況。不幸的是，我不是飛行員，對這個行業也不太了解，但其他為航空航天業提供供應的公司確實同意波音公司的 737 Max 存在問題，但他們並沒有真正提到材料短缺。那你能幫助我們了解這些材料短缺是什麼嗎？為什麼您能看到而其他人卻看不見？

I'll take the first question. So you're correct on the revenue impact and it is for the calendar 2020 and the $400 million to $600 million is the combination of the 2 pieces is the right way to think about it. You're right, on a year-over-year basis relative, we are -- to last year, we're showing being down about $60 million. So it is a more rear weighted impact. And the reason for that is because we expect that the Cisco impact is going to be much more second half of the year. We are continuing to have discussions with them. They are continuing to go through their own transition process of identifying suppliers and developing their own transition programs. And so we haven't seen a material impact from the Cisco disengagement in the first quarter and we will expect it to be much more material in the back half of the year. On the A&D side, Rob can talk about the material side?

我來回答第一個問題。因此，您對收入影響的看法是正確的，它是針對 2020 年而言的，而 4 億到 6 億美元是兩部分的組合，這是正確的思考方式。您說得對，與去年同期相比，我們的收入下降了約 6,000 萬美元。因此，這是一種更後重的衝擊。原因是我們預期思科的影響在今年下半年會更大。我們正在繼續與他們進行討論。他們正在繼續進行自己的過渡過程，確定供應商並制定自己的過渡計劃。因此，我們在第一季尚未看到思科撤資帶來實質影響，而我們預計，今年下半年的影響將更為重大。在 A&D 方面，Rob 可以談談材料方面嗎？

Yes, Jim, I would say it's 2 main factors. One is we're seeing a fair amount of insight to lead time orders, as our customers are working to rebalance their schedules and looking to accelerate some orders and pushing others out largely 737 Max related. So a lot of the material constraints we're working through was really as a result of trying to expedite things that are well inside of lead time. And the other portion, so while our backlog is turning over, it's not necessarily coming down because of the -- we're adding to it. And the other thing I would also say is that in 1 of our operating places, with the processes we take over our customer supply chain and the constraints that we're seeing are not overly prolific, but there are spot constraints with some suppliers that we're working with to transition to Celestica's preferred suppliers, and that's taking a little bit of time to transition over to our preferred supply base and get them up to speed. So I wouldn't necessarily call it a holistic issue versus a couple of critical folks that are just kind of pacing the line, and that's what we're working through.

是的，吉姆，我認為有兩個主要因素。一是我們看到了大量有關交付週期訂單的洞察，因為我們的客戶正在努力重新平衡他們的日程安排，並希望加速一些訂單，並將其他訂單推遲，這些訂單主要與 737 Max 有關。因此，我們正在努力解決的許多材料限制實際上都是為了加快交貨時間內完成的事情。至於另一部分，雖然我們的積壓訂單正在周轉，但不一定會減少，因為我們正在增加訂單。我想說的另一件事是，在我們的一個營運地點，我們接管了客戶供應鏈，我們看到的限制並不是過多，但有些供應商存在一些局部限制，我們正在與他們合作，以過渡到 Celestica 的首選供應商，這需要一點時間才能過渡到我們的首選供應基地並讓他們快速跟上。因此，我不會將其稱為整體問題，而只是一些批評人士在控制節奏，這就是我們正在努力解決的問題。

There are no further questions at this time. Mr. Rob Mionis, I turn the call back over to you for some closing remarks.

目前沒有其他問題。羅布·米奧尼斯先生，我將電話轉回給您，請您發表一些結束語。

Thank you, Rob. So while our full year 2019 results were disappointed, I am encouraged that the actions we're taking to execute our transformation are gaining traction. I'm also pleased with the sequential margin improvement we saw in the fourth quarter, along with the strong free cash flow generation we experienced throughout 2019. Within ATS, I'm pleased that we're seeing early signs of a broader semi cap recovery. And within CCS, our portfolio is performing well with margins firmly within their target range amidst our portfolio shaping actions. Thank you all for joining, and I look forward to updating you as we progress throughout the year.

謝謝你，羅布。因此，儘管我們的 2019 年全年業績令人失望，但我很高興看到，我們為實施轉型而採取的行動正在取得進展。我還對我們在第四季度看到的連續利潤率改善以及我們在 2019 年全年經歷的強勁自由現金流產生感到滿意。在 ATS 內部，我很高興我們看到了更廣泛的半導體復甦的早期跡象。在 CCS 內部，在我們的投資組合塑造行動中，我們的投資組合表現良好，利潤率穩固地處於目標範圍內。感謝大家的加入，我期待今年向大家通報我們的進展。

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。