Celestica Inc (CLS) 2022 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Celestica Q3 2022 Earnings Conference Call. Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press Star Zero for the operator. This call is being recorded today, Tuesday, October 25, 2022. I would now like to turn the conference over to Craig Oberg, please go ahead

女士們，先生們，早上好，歡迎參加 Celestica 2022 年第三季度收益電話會議。演講結束後，我們將進行問答環節。如果在此通話期間的任何時候，您需要立即幫助，請按接線員的零星。此次通話將於 2022 年 10 月 25 日星期二錄製。我現在想將會議轉交給 Craig Oberg，請繼續

Good morning, and thank you for joining us on Celestica's Third Quarter 2022 Earnings Conference Call. On the call today are Robert 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 forward-looking statements, please refer to yesterday's press release, including the cautionary note regarding forward-looking statements therein, our most recent annual report on Form 20-F and our other public filings, which can be accessed at sec.gov and sedar.com. We assume no obligation to update any forward-looking statements, except as required by law. In addition, during this call, we will refer to various non-IFRS financial measures, including ratios based on non-IFRS financial measures consisting of non-IFRS operating earnings; non-IFRS operating margin, adjusted gross margin, adjusted return on invested capital or adjusted ROIC, adjusted free cash flow, gross debt to non-IFRS trailing 12-month adjusted EBITDA leverage ratio, adjusted net earnings, adjusted earnings per share or adjusted EPS, adjusted SG&A expense, life cycle solutions revenue and adjusted effective tax rate. Listeners should be cautioned that references to any of the foregoing measures during this call denote non-IFRS financial measures, whether or not specifically designated as such. These non-IFRS financial measures do not have any standardized meanings prescribed by IFRS and may not be comparable to similar measures presented by other public companies that report under IFRS or who report under U.S. GAAP and use non-GAAP financial measures to describe similar operating metrics. We refer you to yesterday's press release and our Q3 2022 earnings presentation, which are available at celestica.com under the Investor Relations tab for more information about these and certain other non-IFRS financial measures, including a reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS financial measures from our financial statements. Unless otherwise specified, all references to dollars on this call are to U.S. dollars and per share information is based on diluted shares outstanding. Let me now turn the call over to Rob.

早上好，感謝您參加 Celestica 2022 年第三季度收益電話會議。今天的電話會議是總裁兼首席執行官 Robert Mionis；和首席財務官 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作出前瞻性陳述。此類前瞻性陳述基於管理層當前的預期、預測和假設，這些預期、預測和假設受到風險、不確定性和其他可能導致實際結果和結果與此類陳述中表達的結論、預測或預測存在重大差異的因素的影響。有關此類因素和假設的識別和討論以及有關前瞻性陳述的進一步信息，請參閱昨天的新聞稿，包括其中有關前瞻性陳述的警示說明、我們最近的 20-F 表格年度報告和我們的其他公開文件，可在 sec.gov 和 sedar.com 上訪問。除法律要求外，我們不承擔更新任何前瞻性陳述的義務。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財務指標，包括基於非國際財務報告準則財務指標的比率，包括非國際財務報告準則的營業收入；非 IFRS 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 ROIC、調整後自由現金流、總債務與非 IFRS 過去 12 個月調整後 EBITDA 槓桿比率、調整後淨收益、調整後每股收益或調整後每股收益、調整後的 SG&A 費用、生命週期解決方案收入和調整後的有效稅率。聽眾應注意，本次電話會議中提及的任何上述措施均指非 IFRS 財務措施，無論是否明確指定為非國際財務報告準則財務措施。這些非國際財務報告準則財務指標沒有國際財務報告準則規定的任何標準化含義，可能無法與其他根據國際財務報告準則報告或根據美國公認會計原則報告並使用非公認會計準則財務指標描述類似經營指標的上市公司提出的類似指標相比較.我們向您推薦昨天的新聞稿和我們的 2022 年第三季度收益報告，可在 celestica.com 的“投資者關係”選項卡下獲取有關這些和某些其他非 IFRS 財務指標的更多信息，包括歷史非 IFRS 財務指標的對賬與我們財務報表中最直接可比的 IFRS 財務指標。除非另有說明，否則本次電話會議中所有提及的美元均為美元，每股信息基於已發行的攤薄股份。現在讓我把電話轉給 Rob。

Thank you, Craig. Good morning, everyone, and thank you for joining us on today's conference call. In the third quarter, Celestica achieved revenue of $1.92 billion, above the high end of our guidance range on the back of strong demand across the majority of our businesses, combined with solid execution by our team. Our ability to deliver on this demand in the face of continued macroeconomic challenges resulted in our highest ever non-IFRS operating margin of 5.1%. And our quarterly non-IFRS adjusted EPS of $0.52 was our highest result in more than 20 years. Our strong third quarter results reflect Celestica's continued execution of our long-term strategic plan. Because of our strong performance and the momentum we are seeing continue into the fourth quarter, we are pleased to raise our full year 2022 revenue and non-IFRS adjusted EPS guidance ranges. At the midpoint, our revenue guidance of $7.16 billion would represent an increase of 27% year-over-year, if achieved. Also, our non-IFRS adjusted EPS guidance of $1.86 at the midpoint, would represent an increase of 43% year-over-year, if achieved. The new Celestica marked by nearly 70% of our revenue concentrated in high-value markets is providing us with the foundation to navigate through ongoing macroeconomic challenges. We continue to execute on the many growth opportunities we see in front of us, supported by strong bookings, customer backlogs and enabled by our diversified portfolio. On the back of a strong 2022, we are also taking this opportunity to provide our full year 2023 outlook. For the coming fiscal year, we expect to achieve revenues of at least $7.5 billion, and our outlook for non-IFRS adjusted EPS is $1.95 to $2.05, which if achieved, would mark another record high for our company. Additionally, we are pleased to increase our company's target non-IFRS operating margin range by 50 basis points to 4.5% to 5.5%. Before I provide further color on the outlook for each of our businesses, I would like to turn the call over to Mandeep who will provide a detailed overview of our financial performance in the third quarter as well as our guidance for the fourth quarter.

謝謝你，克雷格。大家早上好，感謝您參加今天的電話會議。第三季度，Celestica 實現收入 19.2 億美元，高於我們指導範圍的高端，原因是我們大部分業務的強勁需求，加上我們團隊的穩健執行。面對持續的宏觀經濟挑戰，我們滿足這一需求的能力使我們的非國際財務報告準則營業利潤率達到了 5.1% 的最高水平。我們的季度非 IFRS 調整後每股收益為 0.52 美元，是我們 20 多年來的最高結果。我們強勁的第三季度業績反映了 Celestica 繼續執行我們的長期戰略計劃。由於我們的強勁表現和我們看到的勢頭持續到第四季度，我們很高興提高我們的 2022 年全年收入和非 IFRS 調整後的每股收益指導範圍。在中點，如果實現，我們 71.6 億美元的收入指導將同比增長 27%。此外，我們的非國際財務報告準則調整後每股收益指引中點為 1.86 美元，如果實現，將同比增長 43%。以我們近 70% 的收入集中在高價值市場為標誌的新 Celestica 為我們提供了應對持續宏觀經濟挑戰的基礎。在強勁的預訂、客戶積壓以及我們多元化的投資組合的支持下，我們將繼續抓住擺在我們面前的許多增長機會。在強勁的 2022 年的背景下，我們也藉此機會提供了 2023 年的全年展望。在下一個財年，我們預計收入將至少達到 75 億美元，我們對非 IFRS 調整後每股收益的展望為 1.95 至 2.05 美元，如果實現這一目標，我們公司將再創歷史新高。此外，我們很高興將公司的目標非國際財務報告準則營業利潤率範圍提高 50 個基點至 4.5% 至 5.5%。在我進一步介紹我們每項業務的前景之前，我想將電話轉給 Mandeep，他將詳細介紹我們第三季度的財務業績以及我們對第四季度的指導。

Thank you, Rob, and good morning, everyone. Third quarter 2022 revenue came in at $1.92 billion, exceeding the high end of our guidance range. Revenue was up 31% year-over-year and up 12% sequentially, fueled by double-digit revenue growth across the majority of our businesses. We achieved non-IFRS operating margin of 5.1%, 30 basis points higher than the midpoint of our guidance ranges, driven by strong profitability in both our ATS and CCS segments. Non-IFRS operating margin was up 90 basis points year-over-year and up 30 basis points sequentially. This represents the first time Celestica has achieved non-IFRS operating margin above 5%. Non-IFRS adjusted earnings per share were $0.52, well above the high end of our guidance range and up $0.17 year-over-year and up $0.08 sequentially. ATS segment revenue was up 30% year-over-year in the third quarter, meaningfully higher than our expectations of a high-teen percentage year-over-year increase. The year-over-year growth in ATS segment revenue was driven by the continued strong performance of our capital equipment, industrial and A&D businesses, supported by solid demand, new program ramps and improved material availability. Sequentially, ATS segment revenue was up 10%. ATS segment revenues accounted for 40% of total revenues in the third quarter. Our CCS segment delivered another quarter of strong growth with revenue up 32% year-over-year, driven by strength in our communications end market, primarily due to the strong performance in our HPS business. CCS segment revenue was 13% higher sequentially. Our HPS business continues to exhibit very strong growth, delivering revenue of $517 million in the third quarter, up 72% year-over-year. The growth in HPS was driven by strong demand from service providers as they continue to invest in data center expansion. We are pleased that our HPS business continues to gain market share, helping us outpace anticipated underlying market growth rates. HPS revenue were 27% of total company revenues in the third quarter. Communications revenue was up 42% year-over-year, ahead of our expectations of a mid-teen percentage increase and was up 22% sequentially. As noted, the year-over-year and sequential growth was driven by our HPS business and improved material availability. Enterprise revenue in the quarter was up 13% year-over-year, close to our mid-teens percentage expectations, driven by increased customer demand and new program ramps. Sequentially, enterprise revenue was 3% lower. Turning to segment margins. ATS segment margin was 5.0% in the third quarter, up 70 basis points year-over-year and up 50 basis points sequentially. The year-over-year margin increase was driven by improved profitability across the segment as a result of stronger demand and maturing program ramps. CCS segment margin of 5.2%, the highest CCS segment margin ever reported was up 110 basis points year-over-year and up 20 basis points sequentially. The year-over-year margin increase was driven by volume leverage and improved mix within our HPS business. Moving on to some additional financial metrics. IFRS net earnings for the quarter were $46 million or $0.37 per share compared to net earnings of $35 million or $0.28 per share in the same quarter last year and net earnings of $36 million or $0.29 per share last quarter. Adjusted gross margin was 8.9%, up 10 basis points year-over-year and down 10 basis points sequentially. The year-over-year improvement was driven by the benefit of operating leverage due to higher volumes in both ATS and CCS. Non-IFRS operating earnings were $98 million, up $37 million year-over-year and up $15.5 million sequentially. Our non-IFRS adjusted effective tax rate for the third quarter was 21%, 2% higher year-over-year and 1% lower sequentially. For the third quarter, non-IFRS adjusted net earnings were $64 million, up $20 million year-over-year and up $9 million sequentially. Third quarter non-IFRS adjusted ROIC of 19.2%, the highest in over 5 years, was up 4% year-over-year and up 3% sequentially. During the third quarter, our top 10 customers accounted for 67% of our total revenue compared compared to 68% in the second quarter and 66% in the third quarter of 2021. We had 2 customers that individually accounted for 10% or more of total revenue compared with one customer in both of the second quarter of 2022 and third quarter of 2021. Both customers individually comprising greater than 10% of our revenues are in our CCS segment and in aggregate, operate across 20 separate programs, which is a testament to the breadth of our product offering. Moving on to working capital. Our inventory at the end of the third quarter was $2.3 billion, up $218 million sequentially and up $920 million year-over-year. Higher inventory balances have been a focus within our industry in recent quarters, driven by the persistent challenges in the supply chain environment. Celestica's higher inventory levels, the result of longer lead times and strong demand, which are partially mitigated by customer cash advances have enabled us to grow at exceptional rates while generating strong non-IFRS adjusted ROIC. As the material environment improves, we expect inventory balances to reduce over time. Cash cycle days were 63% during the third quarter, 9 days lower than the prior year period and the lowest since the third quarter of 2020. Our team continues to work diligently to manage our working capital balances, including working closely with our customers and suppliers. Capital expenditures for the third quarter were $39 million or approximately 2% of revenue. As we noted in our previous earnings call, we expected capital expenditures to be higher during the second half of 2022 after having lower levels of CapEx investment during the first half of the year. The increased capital investment is primarily to support program growth in our life cycle solutions business, including expansions in our Southeast Asia and Mexico footprint to support a number of new program wins. Non-IFRS adjusted free cash flow was $7 million in the third quarter compared to $27 million in the prior year period and $43 million last quarter. As of September 30, non-IFRS adjusted free cash flow was $51 million, and our fiscal year outlook continues to be $75 million as we make strategic working capital investments in 2022. Moving on to some additional key metrics. Our cash balance at the end of the third quarter was $363 million, down $114 million year-over-year and down $2 million sequentially. Our cash balance, in combination with approximately $600 million of borrowing capacity under our revolver provide us with liquidity of approximately $1 billion, which we believe is sufficient to meet our anticipated business needs. We ended the quarter with gross debt of $647 million, down $4 million from the previous quarter, leaving us with a net debt position of $284 million. Our third quarter gross debt to non-IFRS trailing 12-month adjusted EBITDA leverage ratio was 1.5x, down 0.2 turns sequentially and up 0.1 turns compared to the same quarter of last year. At September 30, 2022, we were compliant with all financial covenants under our credit agreement. During the third quarter, we repurchased approximately 500,000 shares for cancellation at a cost of approximately $5 million. We ended the quarter with 122.6 million shares outstanding, a reduction of approximately 2% from the prior year period. During the fourth quarter, we intend to launch a new NCIB program subject to necessary approvals after our current program is set to expire in early December. Return of capital to shareholders remained a priority within our capital allocation strategy. We continue to aim to return 50% of our non-IFRS adjusted free cash flow to shareholders and reinvest 50% into the business over the long term. However, as noted in previous earnings calls, our short-term priority is to focus on reducing our net debt, while remaining opportunistic with our share repurchases under our NCIB. We currently believe our share price is trading at a material discount when considering our strong operating performance. And as such, we have recently been active in the market. Now turning to our guidance for the fourth quarter of 2022. Our fourth quarter revenue is expected to be in the range of $1.875 billion to $2.025 billion. If the midpoint of this range is achieved, revenue would be up 29% year-over-year and up 1% sequentially. Fourth quarter non-IFRS adjusted earnings per share are expected to be in the range of $0.49 to $0.55 per share. If the midpoint of this range is achieved, non-IFRS adjusted earnings per share would be up 18% year-over-year. If the midpoint of our revenue and non-IFRS adjusted EPS guidance ranges are achieved, non-IFRS operating margin would be approximately 5.1%, which would represent an increase of 20 basis points over the prior year period and flat sequentially. Non-IFRS adjusted SG&A expense for the fourth quarter is expected to be in the range of $64 million to $66 million. We anticipate our non-IFRS adjusted effective tax rate to be approximately 21% for the fourth quarter. Now turning to our end market outlook for the fourth quarter of 2022. In our ATS end market, we anticipate revenue to be up in the mid-20s percentage range year-over-year, driven by double-digit growth in all of our ATS businesses. In our CCS segment, we anticipate revenues in our communications end market to be up in the low 30s percentage range year-over-year, driven by new ramps and continued strong demand for service provider customers, supported by our HPS offering. In our enterprise end market, we anticipate revenue growth in the mid-20s percentage range year-over-year, supported by new program ramps in storage and strong demand in compute. I'll now turn the call back over to Rob to provide additional color on our end markets and overall business outlook

謝謝你，Rob，大家早上好。 2022 年第三季度的收入為 19.2 億美元，超過了我們指導範圍的高端。在我們大部分業務實現兩位數收入增長的推動下，收入同比增長 31%，環比增長 12%。由於我們的 ATS 和 CCS 部門的強勁盈利能力，我們實現了 5.1% 的非國際財務報告準則營業利潤率，比我們指導範圍的中點高 30 個基點。非國際財務報告準則營業利潤率同比增長 90 個基點，環比增長 30 個基點。這是天弘首次實現非國際財務報告準則營業利潤率超過 5%。非國際財務報告準則調整後每股收益為 0.52 美元，遠高於我們指導範圍的高端，同比增長 0.17 美元，環比增長 0.08 美元。第三季度 ATS 部門收入同比增長 30%，明顯高於我們對同比增長 10% 的預期。 ATS 部門收入的同比增長是由我們的資本設備、工業和 A&D 業務的持續強勁表現推動的，這得益於強勁的需求、新項目的增加和材料可用性的提高。隨後，ATS 部門的收入增長了 10%。 ATS 部門收入佔第三季度總收入的 40%。我們的 CCS 部門又實現了一個季度的強勁增長，收入同比增長 32%，這主要得益於我們的通信終端市場的強勁表現，這主要是由於我們 HPS 業務的強勁表現。 CCS 部門收入環比增長 13%。我們的 HPS 業務繼續表現出非常強勁的增長，第三季度實現收入 5.17 億美元，同比增長 72%。 HPS 的增長是由服務提供商的強勁需求推動的，因為他們繼續投資於數據中心擴展。我們很高興我們的 HPS 業務繼續獲得市場份額，幫助我們超過預期的潛在市場增長率。 HPS 收入占公司第三季度總收入的 27%。通信收入同比增長 42%，高於我們預期的 10% 左右增長，環比增長 22%。如前所述，我們的 HPS 業務和材料可用性的提高推動了同比和連續增長。在客戶需求增加和新計劃增加的推動下，本季度企業收入同比增長 13%，接近我們的預期百分比。隨後，企業收入下降了 3%。轉向段邊距。第三季度 ATS 部門利潤率為 5.0%，同比增長 70 個基點，環比增長 50 個基點。利潤率同比增長是由於需求強勁和計劃坡道成熟而提高了整個部門的盈利能力。 CCS 部門利潤率為 5.2%，是有史以來報告的最高 CCS 部門利潤率，同比增長 110 個基點，環比增長 20 個基點。利潤率同比增長是由我們的 HPS 業務中的數量槓桿和改進組合推動的。繼續討論一些額外的財務指標。本季度的國際財務報告準則淨收益為 4600 萬美元或每股 0.37 美元，而去年同期的淨收益為 3500 萬美元或每股 0.28 美元，上一季度的淨收益為 3600 萬美元或每股 0.29 美元。調整後的毛利率為 8.9%，同比上升 10 個基點，環比下降 10 個基點。由於 ATS 和 CCS 的銷量增加，運營槓桿的好處推動了同比增長。非國際財務報告準則營業收入為 9800 萬美元，同比增長 3700 萬美元，環比增長 1550 萬美元。我們第三季度的非 IFRS 調整後有效稅率為 21%，同比增長 2%，環比下降 1%。第三季度，非國際財務報告準則調整後的淨收益為 6400 萬美元，同比增長 2000 萬美元，環比增長 900 萬美元。第三季度非國際財務報告準則調整後的投資回報率為 19.2%，為 5 年來最高，同比增長 4%，環比增長 3%。第三季度，我們的前 10 大客戶占我們總收入的 67%，而 2021 年第二季度和第三季度分別為 68% 和 66%。我們有 2 個客戶分別佔總收入的 10% 或更多與 2022 年第二季度和 2021 年第三季度的一個客戶相比，這兩個客戶單獨占我們收入的 10% 以上都在我們的 CCS 部門，並且總體上在 20 個單獨的項目中運營，這證明了我們提供的產品的廣度。轉向營運資金。我們在第三季度末的庫存為 23 億美元，環比增長 2.18 億美元，同比增長 9.2 億美元。近幾個季度，由於供應鏈環境的持續挑戰，較高的庫存餘額一直是我們行業的焦點。 Celestica 較高的庫存水平、較長的交貨時間和強勁的需求導致了客戶現金墊款的部分緩解，這使我們能夠以非凡的速度增長，同時產生強勁的非 IFRS 調整後的投資回報率。隨著物質環境的改善，我們預計庫存餘額會隨著時間的推移而減少。第三季度的現金周期天數為 63%，比去年同期減少 9 天，是自 2020 年第三季度以來的最低水平。我們的團隊繼續努力管理我們的營運資金餘額，包括與我們的客戶和供應商密切合作.第三季度的資本支出為 3900 萬美元，約佔收入的 2%。正如我們在之前的財報電話會議中指出的那樣，在上半年資本支出投資水平較低之後，我們預計 2022 年下半年的資本支出會更高。增加的資本投資主要是為了支持我們生命週期解決方案業務的項目增長，包括擴大我們在東南亞和墨西哥的足跡，以支持一些新的項目勝利。第三季度非國際財務報告準則調整後的自由現金流為 700 萬美元，而去年同期為 2700 萬美元，上一季度為 4300 萬美元。截至 9 月 30 日，非 IFRS 調整後的自由現金流為 5100 萬美元，隨著我們在 2022 年進行戰略營運資本投資，我們的財政年度展望繼續為 7500 萬美元。繼續討論一些其他關鍵指標。第三季度末我們的現金餘額為 3.63 億美元，同比減少 1.14 億美元，環比減少 200 萬美元。我們的現金餘額加上左輪手槍下約 6 億美元的借貸能力，為我們提供了約 10 億美元的流動性，我們認為這足以滿足我們預期的業務需求。我們在本季度末的總債務為 6.47 億美元，比上一季度減少了 400 萬美元，淨債務為 2.84 億美元。我們第三季度的總債務與非 IFRS 過去 12 個月調整後的 EBITDA 槓桿比率為 1.5 倍，環比下降 0.2 倍，與去年同期相比上升 0.1 倍。 2022 年 9 月 30 日，我們遵守了信貸協議項下的所有財務契約。在第三季度，我們以約 500 萬美元的成本回購了約 500,000 股用於註銷。我們在本季度末發行了 1.226 億股流通股，比去年同期減少了約 2%。在第四季度，我們打算在我們目前的計劃將於 12 月初到期後推出一項新的 NCIB 計劃，但需要獲得必要的批准。向股東返還資本仍然是我們資本配置戰略中的優先事項。我們繼續致力於將 50% 的非國際財務報告準則調整後的自由現金流返還給股東，並將 50% 的資金長期再投資於業務。然而，正如之前的財報電話會議所指出的，我們的短期優先事項是專注於減少我們的淨債務，同時在我們的 NCIB 下對我們的股票回購保持機會主義態度。考慮到我們強勁的經營業績，我們目前認為我們的股價在大幅折讓。因此，我們最近一直活躍在市場上。現在轉向我們對 2022 年第四季度的指導。我們第四季度的收入預計在 18.75 億美元至 20.25 億美元之間。如果達到這一範圍的中點，收入將同比增長 29%，環比增長 1%。第四季度非國際財務報告準則調整後的每股收益預計在每股 0.49 美元至 0.55 美元之間。如果達到這一範圍的中點，非國際財務報告準則調整後的每股收益將同比增長 18%。如果我們的收入和非國際財務報告準則調整後的每股收益指導範圍的中點達到，非國際財務報告準則的營業利潤率將約為 5.1%，這將比去年同期增加 20 個基點，並且環比持平。第四季度非國際財務報告準則調整後的 SG&A 費用預計在 6400 萬美元至 6600 萬美元之間。我們預計第四季度我們的非國際財務報告準則調整後的有效稅率約為 21%。現在轉向我們對 2022 年第四季度的終端市場展望。在我們的 ATS 終端市場中，我們預計收入將同比增長 20% 左右，這得益於我們所有 ATS 的兩位數增長企業。在我們的 CCS 部門，我們預計我們的通信終端市場的收入將同比增長 30% 的低百分比，這得益於新的增長和對服務提供商客戶的持續強勁需求，以及我們的 HPS 產品的支持。在我們的企業終端市場中，我們預計收入將同比增長 20% 左右，這得益於存儲領域的新計劃增長和計算領域的強勁需求。我現在將電話轉回給 Rob，為我們的終端市場和整體業務前景提供更多色彩

Thank you, Mandeep. Before I move on to our end market outlook, I want to take a step back and provide some commentary on the sustainability of our ongoing success, given the current macroeconomic backdrop. As we noted, our non-IFRS operating margin in the third quarter surpassed 5% for the first time in our company's history, as we recorded our 11th consecutive quarter of year-over-year non-IFRS operating margin improvement. We are also poised to achieve a new record high in non-IFRS adjusted EPS in 2022. And if the outlook we provided is achieved, so past that mark in 2023. While Celestica is by no means immune to the impacts of cyclical changes in demand. We believe that we have made some important structural changes to our company as well as key strategic decisions, which have helped us evolve into a more diversified, resilient and profitable business. 67% of our revenues are now coming from more diversified markets with higher barriers to entry, what we call our life cycle solutions business. As we continue to grow lifecycle solutions, we expect benefits from both volume leverage and mix, providing additional support to our already strong margins. Moreover, our exposure to consumer markets is minimal, and our fixed cost structure is lean and does not require significant investments. Therefore, we believe we will outgrow the broader market in 2023 due to our end market exposure, new program wins and market share gains. Now I would like to turn to our outlook for our businesses. Starting with our ATS segment. Our capital equipment business continues to exhibit strong growth, driven by secular demand, new program ramps and market share gains. We anticipate this strength will continue through the fourth quarter as the short-term impact of China export controls are mitigated by our existing backlog. The wafer fabrication equipment market has experienced significant growth over the past 3 years. And market estimates are calling for a moderation in spending in 2023. Our business, however, is primarily focused on pockets of the wafer fab equipment market, where we anticipate demand remaining strong, such as investments in new capacity to support onshoring and our focus on leading-edge technologies of less than 7 nanometers. Based on our strong order backlog, new wins and market share gains, we expect to continue to outperform the broader wafer fab equipment market expectations in the coming quarter. New program ramps and robust demand in our industrial business continue to be supported by favorable long-term secular trends, investment in green technologies such as energy storage and generation and growth in the electrical vehicle market, supporting demand for EV charging projects are expected to sustain growth in demand for the next several years. Our industrial business has grown 18% organically in the first 9 months of the year, and we expect these trends to support double-digit organic revenue growth into 2023. Now turning to A&D. We continue to see improvements in commercial aerospace, highlighted by new program wins. Commercial aerospace demand driven by business jet and single-aisle aircraft is projected to continue to strengthen through 2023. Market estimates now suggest that commercial air traffic should return to near pre-COVID levels in 2023, which we believe should support further demand for new deliveries. Our defense business is also anticipated to continue its solid growth track as governments continue to strengthen their militaries, particularly in the EU. In our Health Tech business, new project ramps in surgical devices and sports medicine are expected to drive sequential and year-over-year revenue growth. We are also seeing solid demand for imaging and patient monitoring devices and anticipate contribution from new projects beginning next year. Strong demand and new wins in imaging and patient monitoring are expected to more than offset an anticipated softening in COVID-related demand for diagnostic equipment. Now turning to our CCS segment. Our HPS business remains a primary driver of the strong results in our CCS segment, recording $1.34 billion in revenue for the first 9 months of the year, a 67% growth rate compared to that of the prior year period. The remarkable growth we are seeing in our HPS business is supported by significant capital investments from our service provider customers as they scale their data center capacity, coupled with our gains in market share from ODMs. As we have noted in prior calls, it is our view that this trend is likely to continue for at least the near term, though we expect growth rates will moderate into 2023 as comps become tougher with each subsequent quarter. New ramps and strong demand from existing programs continue to support growth in our communications end market with a significant portion of that demand strength coming from hyperscaler customers for our HPS offering. We anticipate demand to remain healthy into 2023 as we ramp new wins. And finally, in our enterprise end market, continued growth in storage demand is supported by new program ramps, which we anticipate will continue through the end of the year. Demand for compute is also expected to remain strong into the end of the year. Across Enterprise, despite double-digit year-to-year growth during 2022, we remain cautious in our outlook as potential signs of slowing demand in the broader economy have typically had a more pronounced impact on demand from our enterprise customers. I am incredibly pleased with what Celestica has accomplished thus far in 2022. Despite a challenging environment, our team has done an admirable job of managing the factors within our control. This is reflected in our results this quarter and our strong outlook for the year ahead. We are confident that our focus on our strategic plan and consistent execution will drive value for our shareholders over the long term. With that, I would now like to turn the call over to the operator for questions. Thank you

謝謝你，曼迪普。在我繼續我們的最終市場展望之前，我想退後一步，就當前宏觀經濟背景下我們持續成功的可持續性發表一些評論。正如我們所指出的，我們第三季度的非國際財務報告準則營業利潤率在我們公司歷史上首次超過 5%，因為我們連續第 11 個季度實現了非國際財務報告準則營業利潤率的同比增長。我們還準備在 2022 年實現非 IFRS 調整後每股收益的新高。如果我們提供的前景能夠實現，那麼到 2023 年將超過這一目標。雖然 Celestica 絕不能免受需求週期性變化的影響.我們相信，我們已經對公司進行了一些重要的結構調整以及關鍵的戰略決策，這有助於我們發展成為一個更加多元化、有彈性和盈利的業務。現在，我們 67% 的收入來自更多元化的市場，進入門檻更高，我們稱之為生命週期解決方案業務。隨著我們繼續發展生命週期解決方案，我們期望從數量槓桿和組合中受益，為我們已經強勁的利潤率提供額外的支持。此外，我們對消費市場的敞口很小，我們的固定成本結構很精簡，不需要大量投資。因此，我們相信，由於我們的終端市場敞口、新項目的勝利和市場份額的增加，我們將在 2023 年超越大盤。現在我想談談我們對業務的展望。從我們的 ATS 部分開始。在長期需求、新項目增加和市場份額增長的推動下，我們的資本設備業務繼續呈現強勁增長勢頭。我們預計這種優勢將持續到第四季度，因為我們現有的積壓訂單減輕了中國出口管制的短期影響。晶圓製造設備市場在過去 3 年經歷了顯著增長。市場估計要求 2023 年支出放緩。然而，我們的業務主要集中在晶圓廠設備市場的一些領域，我們預計需求將保持強勁，例如投資新產能以支持在岸外包，以及我們專注於小於 7 納米的前沿技術。基於我們強勁的訂單積壓、新的勝利和市場份額的增長，我們預計下一季度將繼續超越更廣泛的晶圓廠設備市場預期。長期有利的長期趨勢、對儲能和發電等綠色技術的投資以及電動汽車市場的增長，預計對電動汽車充電項目的支持需求將持續支持新的計劃坡道和我們工業業務的強勁需求未來幾年的需求增長。今年前 9 個月，我們的工業業務有機增長了 18%，我們預計這些趨勢將支持到 2023 年實現兩位數的有機收入增長。現在轉向 A&D。我們繼續看到商業航空航天領域的進步，新項目的勝利突顯了這一點。預計到 2023 年，由公務機和單通道飛機推動的商業航空航天需求將繼續增強。市場估計現在表明，商業航空交通應在 2023 年恢復到接近新冠疫情之前的水平，我們認為這將支持對新交付的進一步需求.隨著各國政府繼續加強軍隊，尤其是在歐盟，我們的國防業務預計也將繼續穩健增長。在我們的健康科技業務中，手術器械和運動醫學的新項目預計將推動收入的環比和同比增長。我們還看到對成像和患者監測設備的強勁需求，並預計明年開始新項目的貢獻。預計成像和患者監測方面的強勁需求和新的勝利將抵消與 COVID 相關的診斷設備需求的預期疲軟。現在轉向我們的 CCS 部分。我們的 HPS 業務仍然是 CCS 部門強勁業績的主要推動力，今年前 9 個月的收入為 13.4 億美元，與去年同期相比增長 67%。我們在 HPS 業務中看到的顯著增長得益於我們的服務提供商客戶在擴展數據中心容量時的大量資本投資，以及我們從 ODM 獲得的市場份額。正如我們在之前的電話會議中指出的那樣，我們認為這種趨勢至少在短期內可能會持續下去，儘管我們預計隨著後續每個季度的競爭變得更加艱難，增長率將放緩到 2023 年。現有計劃的新坡道和強勁需求繼續支持我們的通信終端市場的增長，其中很大一部分需求來自超大規模客戶對我們的 HPS 產品的需求。隨著我們贏得新的勝利，我們預計到 2023 年需求將保持健康。最後，在我們的企業終端市場中，存儲需求的持續增長受到新計劃的支持，我們預計這將持續到今年年底。預計到今年年底，對計算的需求也將保持強勁。在整個企業領域，儘管 2022 年實現了兩位數的同比增長，但我們仍對前景保持謹慎，因為整體經濟中需求放緩的潛在跡象通常對我們企業客戶的需求產生更明顯的影響。我對天弘在 2022 年迄今為止所取得的成就感到非常滿意。儘管環境充滿挑戰，但我們的團隊在管理我們控制範圍內的因素方面做得非常出色。這反映在我們本季度的業績和我們對未來一年的強勁前景中。我們相信，我們對戰略計劃的關注和一致的執行將為我們的股東帶來長期價值。有了這個，我現在想把電話轉給接線員提問。謝謝

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) Your first question comes from Thanos Moschopoulos of BMO Capital Markets

謝謝你，先生。女士們，先生們，我們現在開始問答環節。 （操作員說明）您的第一個問題來自 BMO Capital Markets 的 Thanos Moschopoulos

Hi good morning, Rob, if you look at the upside in the quarter relative to your prior expectations, you said it was a combination of both stronger demand and better component availability. Just qualitatively, if we think about the relative weighting of those 2 factors, was it more weighted towards demand upside or more towards supply chain doing better than you had?

嗨，早上好，Rob，如果您看一下本季度相對於您之前的預期的上行空間，您說這是需求強勁和組件可用性更好的結合。只是定性地，如果我們考慮這兩個因素的相對權重，它是更偏向於需求上行還是更偏向於供應鏈做得比你做得更好？

Hi, Thanos, I would say it was more along the lines of supply chain constraints improving. Our clear to build was better than original expectations. So it was enabling us to convert our backlog and fulfill our strong demand, if you will. Demand did really not moderate in the quarter, but our fill rates, our ability to convert it was actually better than anticipated

嗨，滅霸，我想說這更像是供應鏈限制的改善。我們的明確建造比最初的預期要好。因此，如果您願意，它使我們能夠轉換我們的積壓訂單並滿足我們強烈的需求。本季度的需求確實沒有放緩，但我們的填充率，我們的轉化能力實際上比預期的要好

Okay. Now as far as 2023, you're introducing fiscal '23 guidance for '22 is even over. Presumably, does that speak to the strong level of visibility in the backlog that you currently have?

好的。現在到 2023 年，您正在為 '22 年引入 '23 財年指南甚至結束。據推測，這是否說明您目前擁有的積壓工作的可見度很高？

Correct. As we look forward to 2023, we continue to see strong growth coming from many of our verticals. We do see a little bit light demand in some areas as in China and in our enterprise business. But net-net, we feel confident that we're able to provide good, I think, given the macroeconomic backdrop, good growth going into 2023.

正確的。展望 2023 年，我們繼續看到許多垂直領域的強勁增長。我們確實看到中國和我們的企業業務等某些領域的需求略有下降。但是淨淨值，我們相信我們能夠提供良好的，我認為，鑑於宏觀經濟背景，到 2023 年將實現良好的增長。

Great. Finally for Mandeep how should we think about cash flow and CapEx over the next year? We did see that a reduction in inventories, sounds like you think that may continue. So presumably that you drive some cash generation (inaudible)

偉大的。最後，對於 Mandeep，我們應該如何看待明年的現金流和資本支出？我們確實看到庫存減少，聽起來你認為這種情況可能會繼續。所以大概是你推動了一些現金產生（聽不清）

Yes. Good morning Thanos, I would say that we're pleased with the cash generation we've had so far this year, but we always want to do more. Our outlook for this year is $75 million because we have decided to make a number of investments in working capital, as you've highlighted. As we go through 2023, we do anticipate that there is going to be improved clear to build on the material side. That should help us unwind some of the working capital. And so our goal continues to be over $100 million, and we think that's a safe floor for next year.

是的。早上好滅霸，我想說我們對今年迄今為止的現金產生感到滿意，但我們總是想做更多。正如您所強調的，我們今年的前景是 7500 萬美元，因為我們已決定對營運資金進行大量投資。隨著我們進入 2023 年，我們確實預計在物質方面的建設將會有所改善。這應該有助於我們釋放一些營運資金。所以我們的目標仍然是超過 1 億美元，我們認為這是明年的安全底線。

Great, thanks for reference on the lastbquarter and (inaudible)

太好了，感謝上一季度的參考和（聽不清）

Thanks, Thanos.

謝謝，滅霸。

Your next question comes from Rob Young of Canaccord Genuity, please go ahead.

您的下一個問題來自 Canaccord Genuity 的 Rob Young，請繼續。

Hi good morning. You already talked a little bit about visibility on the semi cap space. So I wanted to dig in a little deeper there. You highlighted your exposure to leading process node is probably a little safer, but I'm just curious if you could talk a little bit about the visibility over the next 12 months. How much of that is covered by ramps that are already in progress? Or how much of that is business is locked in? Maybe just give a sense of the level of visibility there?

早上好。您已經談到了半帽空間的可見性。所以我想在那裡更深入地挖掘。你強調你接觸領先的流程節點可能更安全一些，但我只是好奇你能否談談未來 12 個月的可見性。已經在進行中的坡道覆蓋了其中的多少？或者有多少業務被鎖定？也許只是讓人們了解那裡的能見度？

Sure, Rob. So just to take a step back in '22. We're on track to grow much faster than the market. We should be growing north of about 20%. And to your comment, that's on the back of new program wins and expanding market share. We have a very competitive footprint that being in North America, Malaysia and Korea and we also have some fantastic vertical integration capabilities. That's a large reason for our growth. As we look into 2023, the broad market is certainly seeing some headwinds. Some of the more pessimistic analysts are predicting as much as 15% to 20% decline in wafer fab equipment spending. And on top of that, we've all seen the news on this China export controls that could have up to an 8% additional impact of that is not resolved. That all being said, we should fare fairly well relative to the market for a couple of reasons. The first reason is mix from, from a mix perspective, we are focusing on the high-end node. So that less than 7 nanometers is 80% of our business. Demand is more robust there. exposure to China is typically limited. Second is we have less exposure to memory and memory is kind of under pressure right now from a growth perspective. And lastly, a good portion of our growth is coming from our vertical integration capabilities supporting the aftermarket and using our mechanical capabilities. And the second reason we feel confident that we'll perform better than the market is really new program growth. A lot of those programs started to ramp this year and will extend into next year. So net-net, we feel pretty confident that we'll perform better than the market, and we should be up to flat to up as we go into 2022

當然，羅伯。所以只是在 22 年退一步。我們的增長速度比市場快得多。我們應該增長約 20% 以北。根據您的評論，這是在新計劃獲勝和擴大市場份額的基礎上。我們在北美、馬來西亞和韓國擁有非常有競爭力的足跡，我們還擁有一些出色的垂直整合能力。這是我們成長的一個重要原因。展望 2023 年，大盤肯定會遇到一些不利因素。一些較為悲觀的分析師預計晶圓廠設備支出將下降 15% 至 20%。最重要的是，我們都看到了有關中國出口管制可能產生高達 8% 的額外影響的消息尚未解決。話雖如此，我們應該相對於市場表現得相當好，原因有幾個。第一個原因是mix，從mix的角度來看，我們專注於高端節點。因此，小於 7 納米是我們業務的 80%。那裡的需求更加強勁。對中國的接觸通常是有限的。其次是我們對記憶的接觸較少，從增長的角度來看，記憶現在有點壓力。最後，我們增長的很大一部分來自我們支持售後市場的垂直整合能力和使用我們的機械能力。我們相信我們會比市場表現更好的第二個原因是真正的新項目增長。其中許多計劃今年開始增加，並將延續到明年。所以 net-net，我們非常有信心我們的表現會好於市場，並且隨著我們進入 2022 年，我們應該會持平到上升

Sure thanks Robert for the colour, and the margin guidance is very impressive. If I think back to past comments, I think that you said that in order to get above 5%, it would require a recovery in commercial aerospace. I was wondering, does the guidance for 2023 anticipate that, that business becoming a contributor to operating margins? Or maybe you could just give us an update on where the margin contribution from A&D is and where it's likely to go over the next year?

當然感謝羅伯特的顏色，保證金指導非常令人印象深刻。如果我回想過去的評論，我認為您說過要達到 5% 以上，就需要商業航空航天業的複蘇。我想知道，2023 年的指導是否預計該業務將成為營業利潤率的貢獻者？或者，也許您可以向我們提供有關 A&D 的利潤率貢獻在哪里以及明年可能去哪裡的最新信息？

Yes, good morning Rob. So we're pleased with the trajectory that the company is seeing right now from a margin perspective and some of the things that we highlighted, 5.1% this quarter and that's our guide for Q4, highest margin in the company's history. If you take the midpoint of the Q4 guidance, it implies 4.9% for this year. That's the highest in the company's history. And then what we're doing now is we're raising the range for next year by 50 basis points to between 4.5% and 5.5%. Really, there's 2 main things that are driving that. Number one is continuing benefits from mix. So as Lifecycle Solutions revenue, which is 2/3 of the company's revenue continues to grow, and the margin profile for life cycle solutions combined is accretive to the company. You will see benefits from a mix perspective. The second is we are starting to see the benefits of volume leverage. While we were going through the transformation over a number of years ago, we made the strategic decision to maintain our investments functionally and in the factories. We didn't take cuts everywhere that maybe we could have been asked to do so. And because we knew that we could maintain that structure when we were growing. And so our SG&A right now is not growing nearly as fast as the top line. So we're seeing volume benefits there as well. To your point, specifically on A&D. So there's some puts and takes within the markets themselves. CCS, as you can see, is performing incredibly well. There are some mix benefits happening right now, which will probably moderate, but we expect that CCS margins will still be strong going into next year. And then ATS coming back at 5%. So we're pleased with the margin profile in a couple of the businesses, capital equipment is performing very well. HealthTech is performing very well. But A&D's demand is still not where it was pre-COVID. And we are seeing improving profitability sequentially, but it's still more opportunity to be had in A&D as volume comes back. We're seeing the same thing in industrial. A significant part of our top line growth is coming from industrial, but those programs aren't yet at full profitability. And then lastly, as you know from last quarter, the PCI business, which is an excellent business for us and is a profitable business still despite the fire that they had, is not operating at their peak levels either. So there's still some tailwinds, if you will, within ATS to help improve margins as we go into next year.

是的，早上好，羅。因此，我們對公司目前從利潤率的角度看到的軌跡以及我們強調的一些事情感到滿意，本季度為 5.1%，這是我們對第四季度的指導，這是公司歷史上最高的利潤率。如果您採用第四季度指導的中點，則意味著今年的增長率為 4.9%。這是公司歷史上最高的。然後我們現在正在做的是將明年的範圍提高 50 個基點至 4.5% 至 5.5% 之間。真的，有兩個主要因素在推動這一點。第一是從混合中持續受益。因此，隨著占公司收入 2/3 的生命週期解決方案收入持續增長，生命週期解決方案的利潤率組合對公司來說是增值的。您將從混合的角度看到好處。第二個是我們開始看到交易量槓桿的好處。幾年前，當我們經歷轉型時，我們做出了戰略決策，以維持我們在功能上和工廠中的投資。我們並沒有在可能被要求這樣做的地方削減開支。而且因為我們知道我們可以在成長過程中保持這種結構。因此，我們現在的 SG&A 的增長速度幾乎沒有收入增長那麼快。所以我們在那裡也看到了數量上的好處。就您而言，特別是在 A&D 方面。因此，市場本身存在一些看跌期權。如您所見，CCS 的表現令人難以置信。目前正在發生一些混合收益，這可能會有所緩和，但我們預計 CCS 利潤率在明年仍將保持強勁。然後 ATS 以 5% 的速度返回。因此，我們對幾項業務的利潤率狀況感到滿意，資本設備的表現非常好。 HealthTech 的表現非常好。但是 A&D 的需求仍然沒有達到新冠疫情之前的水平。我們看到盈利能力連續提高，但隨著銷量的回升，A&D 仍有更多機會。我們在工業領域也看到了同樣的情況。我們收入增長的很大一部分來自工業，但這些項目尚未完全盈利。最後，正如您從上個季度所知道的那樣，PCI 業務對我們來說是一項出色的業務，儘管他們曾經歷過大火，但它仍然是一項有利可圖的業務，但也沒有達到最高水平。因此，如果您願意的話，在 ATS 內部仍有一些順風，以幫助我們進入明年提高利潤率。

Great. And that's beyond the 4.5%, 4.5% to 5.5% operating margin?

偉大的。這是否超出了 4.5%、4.5% 到 5.5% 的營業利潤率？

No, we've taken all of that into account. So while CCS may moderate a little bit going into next year, ATS has an opportunity to probably pick up any moderation. And then again, as we grow over our life cycle solutions, it will help us hopefully get to the higher end of that range as we go through next year

不，我們已經考慮了所有這些。因此，雖然 CCS 可能會在明年有所緩和，但 ATS 有機會可能會有所緩和。再說一次，隨著我們在生命週期解決方案上的成長，它有望幫助我們在明年經歷時達到該範圍的高端

And just a last little one. The midpoint of EPS guidance is below that double-digit long-term guidance you gave last year. I noted I wasn't able to find that reiterated anywhere. Is that still the expectation? And I'll pass line

而且只是最後一個小傢伙。 EPS指導的中點低於你去年給出的兩位數長期指導。我注意到我無法在任何地方找到重申的內容。這還是期待嗎？我會通過線

Yes. I mean, so what we're very pleased with is the as you know, the EPS growth that we're showing this year, the midpoint of the Q4 guidance calls for $1.86. The highest EPS that we had as a company, I believe, is $1.44 back in 2000. So a significant increase in overall EPS. Now that's up 43%, I think, on a year-over-year basis. When you look at the $1.95 to $2.05 in next year, the $1.95 implies 5% and the 205 implies 10%. And so we are, of course, working towards the higher end of the range. We do believe that 10% EPS growth is still the right number over the medium to long term. There will be some years, obviously, that are going to be a bit higher and some years that will be a bit lower, but we are targeting 5% to 10% right now, given the visibility we have today.

是的。我的意思是，我們非常高興的是，如您所知，我們今年展示的每股收益增長，第四季度指導的中點要求為 1.86 美元。我相信，我們作為一家公司擁有的最高每股收益是 2000 年的 1.44 美元。因此，整體每股收益顯著增加。我認為現在同比增長了 43%。當您查看明年的 1.95 美元至 2.05 美元時，1.95 美元意味著 5%，205 美元意味著 10%。因此，當然，我們正在朝著該範圍的高端努力。我們確實相信 10% 的每股收益增長在中長期內仍然是正確的數字。顯然，有些年份會高一些，有些年份會低一些，但鑑於我們今天的能見度，我們現在的目標是 5% 到 10%。

Yeah thanks, Congrats on the quarter

是的，謝謝，恭喜本季度

Your next question comes from Ruplu Bhattacharya of Bank of America

您的下一個問題來自美國銀行的 Ruplu Bhattacharya

Thanks for taking my question and Congrats on the strong results in the quarter. My first question is on margins. You're guiding 23% operating margin to 4.5% to 5.5%. What needs to happen for you to get to the top end of the range versus the midpoint versus the low end? And specifically, you said that the CCS segment obviously has been performing much above the long-term range. So how should we think about margins in that segment in fiscal '23?

感謝您提出我的問題，並祝賀本季度的強勁業績。我的第一個問題是關於利潤的。您將 23% 的營業利潤率引導至 4.5% 至 5.5%。你需要做什麼才能達到範圍的高端、中點和低端？具體來說，您說 CCS 細分市場的表現顯然遠高於長期範圍。那麼我們應該如何考慮 23 財年該細分市場的利潤率呢？

Yes. So the margins of 4.5% to 5%, I would say, is also tied to how the revenue profile is going to turn out. We said again at least $7.5 billion. If we come in just at $7.5 billion, we won't be at the higher end of that range. We would be somewhere between probably around 5%. But as we continue to grow revenue because of the strong backlog that we already have, we do expect to see some additional volume leverage, which will help us get to the higher end of that range. When you look at the segment specifically, so again, since we started posting segment margins back from the beginning of 2018, what we just posted for CCS is the highest they've ever posted. We don't expect that CCS will necessarily be above 5% next year. But at the same time, we don't expect them to go back to historical rates because of just a very different mix down with HPS and on the ATS side, we do continue to have opportunities to grow that margin. It's at 5.0% this past quarter, but there are opportunities. We talked a little bit about A&D already. There continues to be a recovery, which gives us cost leverage because that's a heavy fixed cost business. PCI is not where it was expected to be this quarter based on both revenue and margin. But as that production comes back on to full equipment is on being utilized by the end of the year, we do expect benefits in PCI as well. And then just overall, it's the maturity of the ramping programs that we have. So we are ramping a significant amount of business, specifically in our Industrial business. And as those programs continue to mature, there is improved profitability that we would expect.

是的。因此，我想說，4.5% 到 5% 的利潤率也與收入狀況的結果有關。我們再次說至少 75 億美元。如果我們的收入僅為 75 億美元，我們將不會處於該範圍的高端。我們可能在大約 5% 之間。但是，由於我們已經擁有大量積壓，隨著我們繼續增加收入，我們確實希望看到一些額外的數量槓桿，這將幫助我們達到該範圍的高端。當您具體查看細分市場時，同樣，自從我們從 2018 年初開始發布細分市場利潤率以來，我們剛剛發布的 CCS 是他們發布的最高水平。我們預計明年 CCS 不一定會高於 5%。但與此同時，我們預計它們不會回到歷史利率，因為與 HPS 的組合非常不同，在 ATS 方面，我們確實繼續有機會增加利潤率。上個季度為 5.0%，但仍有機會。我們已經談了一點關於 A&D 的事情。繼續復甦，這給了我們成本槓桿，因為這是一項沉重的固定成本業務。根據收入和利潤率，PCI 並不是本季度的預期水平。但隨著該生產在年底前恢復到全部設備投入使用，我們確實預計 PCI 也將受益。然後總體而言，這是我們所擁有的爬坡計劃的成熟度。因此，我們正在擴大大量業務，特別是在我們的工業業務中。隨著這些項目的不斷成熟，我們期望的盈利能力會有所提高。

Okay, thanks for the details there. My next question is on revenue growth. What is the expected contribution from PCI to fiscal '22 revenue growth? And you said HPS in the first 9 months is contributing or it was up 67% year-on-year. How should we think about the contribution from HPS in fiscal '23? I think you're guiding 5% year-on-year growth at the midpoint of the fiscal '23 revenue guidance. So how much of that would be from this from the HPS revenue growth?

好的，謝謝那裡的詳細信息。我的下一個問題是關於收入增長。 PCI 對 22 財年收入增長的預期貢獻是什麼？你說前 9 個月的 HPS 有貢獻，或者同比增長 67%。我們應該如何看待 HPS 在 23 財年的貢獻？我認為你在 23 財年收入指導的中點指導了 5% 的同比增長。那麼這其中有多少來自 HPS 的收入增長呢？

Yes. So Ruplu, we don't break out PCI specifically, but I will go back to some previous public remarks when we bought the business, it was around $300 million business. That business has been growing. We've been seeing good commercial synergies as well. There could be up to $100 million of additional revenue contribution next year from the PCI business relative to 2022. On HPS, specifically, I mean, this is just outsized growth, 72% year-over-year in the third quarter, 67% on a year-to-date basis. Obviously, that is not sustainable. Based on the trajectory of where the business is going right now, that business may be up anywhere from $700 million to $800 million year-over-year for fiscal year 2022. As we go into next year, we're expecting that growth rates are now going to probably normalize maybe back down to market rates. So there will be a moderation in overall growth within HPS, but we do expect that the margin profile will continue to be very strong and continue to be accretive to the company

是的。因此，Ruplu，我們並沒有具體分解 PCI，但我會回到我們之前購買該業務時的一些公開言論，它是大約 3 億美元的業務。該業務一直在增長。我們也看到了良好的商業協同效應。與 2022 年相比，明年 PCI 業務可能會帶來高達 1 億美元的額外收入貢獻。具體而言，我的意思是，在 HPS 方面，這只是一個巨大的增長，第三季度同比增長 72%，上季度增長 67%以年初至今為基礎。顯然，這是不可持續的。根據當前業務的發展軌跡，該業務在 2022 財年同比增長可能在 7 億美元至 8 億美元之間。隨著我們進入明年，我們預計增長率為現在可能會正常化，可能會回到市場利率。因此，HPS 的整體增長將會放緩，但我們確實預計利潤率狀況將繼續非常強勁，並繼續為公司帶來增值

Got it. And maybe for my last question, if I can ask you on the capital allocation priorities for fiscal '23. Specifically, as you look at uses of cash for M&A versus returning cash to shareholders, how do you prioritize that versus reducing that?

知道了。也許對於我的最後一個問題，如果我可以問你關於 23 財年的資本分配優先事項。具體來說，當您研究將現金用於併購與向股東返還現金時，您如何優先考慮這一點與減少這一點？

Yes. So our #1 priority right now is strong cash generation. I mean we're very happy with the strength of the balance sheet. As you know, $1 billion in overall liquidity, only 1.5x gross leverage overall. So there is, we do have a healthy balance sheet. We're going to continue to invest in the business in areas like CapEx. You saw strong CapEx this quarter because we are directly investing in new program wins that we have. So we're pleased about that as well. But when you go beyond that strong free cash flow generation and continue to invest in the business, I would say in the immediate short term is to continue to reduce our net debt. likely by building up a little bit more of a cash balance that allows us to tap our credit lines a little bit less intra-quarter reduces our interest expense. We're going to have the NCIB program open until December 5. And then our intention, as we mentioned is to open up a new one, so we can always have one open. We will opportunistically buy shares when there is severe depression on the share price. As an example, we've already said we bought back $5 million of shares last quarter. I can tell you that we actually bought back $5 million of shares in October already because of the severely depressed share price. And with a price around where it is right now, there actually probably is in a better use of cash. It's a good way to return value to shareholders. That being said, we continue to have a long-term view on growing the business strategically. And M&A, when it's the right M&A, either adding capabilities that we need to accelerate our strategic road maps or to give us the added capacity, which we can find synergies with our existing customer base. where we won't hesitate to invest. We have a robust M&A funnel. We're very disciplined. As you know, we're going to look at a lot of targets that we don't pull the trigger on the vast majority of them. But we do believe that with the balance sheet that we have, the cash outlook that we have going into next year, the healthy balance sheet that we can pivot, whether it's on the share buyback front or on the M&A front

是的。因此，我們現在的第一要務是強勁的現金生成。我的意思是我們對資產負債表的實力感到非常滿意。如您所知，10 億美元的整體流動性，只有 1.5 倍的總槓桿。所以，我們確實有一個健康的資產負債表。我們將繼續投資於資本支出等領域的業務。您在本季度看到了強勁的資本支出，因為我們直接投資於我們擁有的新項目勝利。所以我們也很高興。但是，當您超越強大的自由現金流產生並繼續投資於業務時，我想說的是在短期內繼續減少我們的淨債務。可能通過建立更多的現金餘額，使我們能夠在季度內減少我們的信貸額度，從而減少我們的利息支出。我們將開放 NCIB 計劃，直到 12 月 5 日。然後，正如我們所提到的，我們的意圖是開放一個新計劃，這樣我們就可以隨時開放一個。當股價嚴重下跌時，我們會機會性地買入股票。例如，我們已經說過我們在上個季度回購了 500 萬美元的股票。我可以告訴你，由於股價嚴重下跌，我們實際上已經在 10 月份回購了 500 萬美元的股票。以現在的價格，實際上可能會更好地利用現金。這是向股東回報價值的好方法。話雖如此，我們仍然對戰略性地發展業務有長遠的看法。而併購，當它是正確的併購時，要么增加我們需要加速我們的戰略路線圖的能力，要么給我們增加的能力，我們可以找到與現有客戶群的協同效應。我們會毫不猶豫地投資。我們擁有強大的併購漏斗。我們非常有紀律。如您所知，我們將研究很多目標，我們不會在其中絕大多數目標上扣動扳機。但我們確實相信，憑藉我們擁有的資產負債表、明年的現金前景、我們可以調整的健康資產負債表，無論是在股票回購方面還是在併購方面

Got it, thanks for all the details and congrats again on the quarter.

明白了，感謝您提供的所有詳細信息，並再次祝賀本季度。

Thank you Ruplu

謝謝魯普魯

Your next question comes from James Suva of Citigroup, please go ahead

您的下一個問題來自花旗集團的詹姆斯蘇瓦，請繼續

Thank you and your outlook and your current growth trajectory is very impressive in margins. Just curious about the impact and how we should be thinking about CapEx and maybe working capital like inventory. You mentioned supply chain is getting better as far as component availability. But I think your inventory went up, but I'm sure it has to do with growing the business. But can you help us know about kind of CapEx and inventory, your kind of your expectations going forward a little bit?

謝謝你，你的前景和你目前的增長軌跡在利潤率方面非常令人印象深刻。只是對影響以及我們應該如何考慮資本支出以及可能的營運資金（如庫存）感到好奇。您提到供應鏈在組件可用性方面正在變得更好。但我認為你的庫存增加了，但我確信這與業務增長有關。但是你能幫助我們了解一下資本支出和庫存，你對未來的期望嗎？

Yes, absolutely, good morning Jame So on the CapEx side, we have traditionally said that our target range is between 1.5% and 2% of revenue. In the first half of the year, we were quite light, frankly, around 1%. But now that we're seeing the world come back to normal, restrictions being lifted in various countries. And on the back of a number of new wins, we are seeing a higher level of CapEx investment. In the third quarter, we did 2% of revenue in the fourth quarter will probably be again at around 2% or even slightly higher than that. But as you look into 2023, I think the 1.5% to 2% range continues to be the right range. We may operate at the higher end of that range, but we have a good track record of being very disciplined on the CapEx investments we make. Overall, I would say that the the working capital opportunity is there for us in 2023. As we had talked about, when clear to build is starting to improve, meaning we're getting more materials than maybe we would have in the past. It gives us an opportunity to build less inventory. As you talked about, probably the primary reason that inventory has been building is because we're growing revenue close to 30% year-over-year. But with the revenue guidance that we're providing next year, getting back into the single digits, the level of inventory is just not required as much as before. And as material constraints continue to improve, it causes there's an opportunity to start reducing inventory as well. And so we do expect some working capital unwind in 2023, which should provide us with a good opportunity on free cash flow.

是的，當然，早上好 Jame 所以在資本支出方面，我們傳統上說我們的目標範圍在收入的 1.5% 到 2% 之間。今年上半年，我們很輕，坦率地說，在 1% 左右。但現在我們看到世界恢復正常，各國解除了限制。在一系列新勝利的背後，我們看到了更高水平的資本支出投資。在第三季度，我們做了 2% 的收入，第四季度可能會再次在 2% 左右，甚至略高於這個水平。但是當你展望 2023 年時，我認為 1.5% 到 2% 的範圍仍然是正確的範圍。我們可能在該範圍的高端運營，但我們有良好的記錄，在我們所做的資本支出投資方面非常自律。總的來說，我會說 2023 年為我們提供了營運資金機會。正如我們所談到的，當建造的清晰開始改善時，這意味著我們獲得的材料可能比過去更多。它使我們有機會減少庫存。正如您所說，庫存一直在增加的主要原因可能是因為我們的收入同比增長接近 30%。但是隨著我們明年提供的收入指導，回到個位數，庫存水平不再像以前那樣需要。隨著材料限制的不斷改善，它也導致了開始減少庫存的機會。因此，我們確實預計 2023 年會出現一些營運資金，這應該為我們提供自由現金流的好機會。

Thank you and congratulations to your teams

謝謝並祝賀你的團隊

Thanks, Jame.

謝謝，詹姆斯。

Thanks Jame

謝謝詹姆斯

Your next question comes from Paul Treiber of RBC Capital Markets, please go ahead.

您的下一個問題來自加拿大皇家銀行資本市場的 Paul Treiber，請繼續。

Thanks very much and good morning i Just had a couple of questions on your outlook for '23, which is obviously quite a bit stronger than the Street was expecting. The in terms of the macroeconomic environment, to what degree are you factoring in a slowdown in the environment? Or maybe in other words, what do you see is driving upside to your guidance if that would occur? And then conversely, what would lead to downside to your outlook?

非常感謝，早上好，我剛剛對您對 23 年的前景提出了幾個問題，這顯然比華爾街預期的要強一些。就宏觀經濟環境而言，您在多大程度上考慮了環境放緩？或者換句話說，如果發生這種情況，您認為是什麼推動了您的指導？然後反過來說，什麼會導致你的前景下降？

Paul, we have a pretty in-depth planning process when we do our strategic plan, but more importantly, our annual operating plan. We do a bottoms-up interlock with all our sites and all our key customers. So the guidance that and the outlook we provided, we feel pretty good about it. To answer your question directly, what would provide upside to the outlook, it would be continued strength in our HPS business or data center expansion growth, a little higher than we anticipated, perhaps not as much as a down cycle in wafer fab equipment spending as we're currently anticipated, faster recovery in our aerospace markets, but also help give us a boost. And our industrial business is going through a number of ramps, and should those be able to ramp a little bit more quickly in the end market adoption for those products that we're ramping improve, that would also give us some more upside. On the downside pressure, I would say everything that I just mentioned, but obviously, the inverse of it would put that word pressure. But that being said, again, we have a pretty balanced view of 2023, and we've taken the pluses and the minuses, and we hope to be able to improve upon the numbers that we provided as the year gets long, just like what we have done in 2022

保羅，我們在製定戰略計劃時有一個非常深入的計劃流程，但更重要的是，我們的年度運營計劃。我們與所有站點和所有主要客戶進行自下而上的聯鎖。因此，我們提供的指導和展望，我們感覺很好。為了直接回答您的問題，什麼會給前景帶來上行空間，這將是我們的 HPS 業務或數據中心擴張增長的持續強勁，略高於我們的預期，也許不如晶圓廠設備支出的下降週期我們目前預計，我們的航空航天市場將更快復甦，但也有助於推動我們。我們的工業業務正在經歷一系列的爬坡，如果那些能夠在終端市場對我們正在加速改進的產品的採用中更快一點，這也將給我們帶來更多的上行空間。關於下行壓力，我會說我剛才提到的所有內容，但顯然，它的反面會施加壓力。但話雖如此，我們對 2023 年的看法非常平衡，我們已經採取了有利和不利的態度，我們希望隨著時間的推移能夠改進我們提供的數字，就像什麼我們在 2022 年完成了

That's helpful. A couple of follow-on questions. Just you didn't mention supply chain as a variable for '23. It looks like things are improving here. Is your outlook for '23, does it, in terms of supply chain, does the potential slowdown in the consumer side does that become a net positive or a strong net positive for you in '23 in regards to supply chain?

這很有幫助。幾個後續問題。只是你沒有提到供應鍊是 23 年的一個變量。看起來這裡的情況正在好轉。您對 23 年的展望是，就供應鏈而言，消費者方面的潛在放緩是否會成為 23 年供應鏈方面的淨正面或強勁的淨正面？

Yes. It's a good point, Paul. I probably should have mentioned that. It is a net positive. We're assuming a gradual recovery, nothing instant but a gradual recovery. Right now, our clear to builds have gotten better, the decommits from our suppliers are less frequent. That being said, lead times for semiconductors and specific are still long. We need them to get shorter. That would certainly improve things. And there are still certain technologies and certain suppliers that are will remain constrained, I think, all through '23 because on the older node technologies where a lot of the suppliers are not building capacity out there. So we're assuming all gradual improvement in our outlook as we get into 2023, but nothing demonstrate in terms of major improvements

是的。這是一個很好的觀點，保羅。我可能應該提到這一點。這是一個淨積極因素。我們假設逐漸恢復，不是即時的，而是逐漸恢復。現在，我們的明確構建變得更好，我們的供應商取消承諾的頻率降低了。話雖如此，半導體和特定的交貨時間仍然很長。我們需要它們變得更短。那肯定會改善情況。我認為，在整個 23 年之前，仍然有某些技術和某些供應商將受到限制，因為在舊節點技術上，許多供應商沒有在那裡建設能力。因此，我們假設隨著我們進入 2023 年，我們的前景將逐步改善，但在重大改善方面沒有任何跡象表明

Thank you and Congrats on the quarter and the outlook

謝謝並祝賀本季度和前景

Thank you

謝謝

Ladies and gentlemen, as a reminder (Operator Instructions) your next question comes from Daniel Chan of TD Securities.

女士們，先生們，作為提醒（操作員說明），您的下一個問題來自道明證券的 Daniel Chan。

Hi good morning, So you mentioned that the component supplies are helping with the performance. Does improving component suppliers have an impact on your margins? Or is it neutral given your ability to pass those costs through to your customers?

嗨早上好，所以您提到組件供應有助於提高性能。改進組件供應商是否會影響您的利潤？還是考慮到您將這些成本轉嫁給客戶的能力，它是中性的？

To some extent, improved component supply improves the efficiency of our factories. So it does help our margins. In terms of pricing through the cycle of price increases for the overwhelming majority, we've been passing on those price increases in terms of forward pricing to our customers. So we'll rise and contract with the tide on that.

在某種程度上，改進的零部件供應提高了我們工廠的效率。所以它確實有助於我們的利潤。就絕大多數價格上漲週期的定價而言，我們一直將這些價格上漲以遠期定價的形式傳遞給我們的客戶。因此，我們將在這方面奮起反抗。

Okay, thanks for that and to what extent is there a risk that your customers ordered more than they needed during supply issues, much like we saw in the retail sector. And with component supplies normalizing and you working through the backlog that there'll be excess inventory in the channel in the near future?

好的，謝謝您，您的客戶在供應問題期間訂購的數量超過他們需要的風險在多大程度上存在，就像我們在零售行業看到的那樣。隨著組件供應正常化並且您正在處理積壓，在不久的將來渠道中會出現過剩庫存？

Yes, good morning Dan, it's always a risk anytime you have a constrained environment where customers are going to start wanting to hoard products. I would say that, that is always something that's out there, but it is something that we believe has been manageable overall. One of the things that, as you know, is we've been building a lot of deposits from our customers in order to build inventory. We have almost $600 million on the balance sheet. And so when we are being asked by customers to build inventory relative to a forecast that's there, often, they're putting their money down to confirm that the demand is real. The other thing, and I know you know this about our business, the vast majority of the working capital that we have our inventory specifically is the liability of the customer. And so we are doing orders relative to a forecast, but customers also know that if they overorder or provide a forecast that doesn't really materialize, that inventory is going to get pushed back to them and it's going to become their liability. So I'd say that there's a rationality right now in the overall marketplace. We are mindful of pockets of maybe buffering that's been happening, but we don't expect right now that it's going to be overly material

是的，早上好，丹，只要您有一個客戶開始想要囤積產品的受限環境，這始終是一種風險。我會說，這總是存在的，但我們認為總體上是可以管理的。如您所知，其中一件事是我們一直在從客戶那裡積累大量存款以建立庫存。我們的資產負債表上有近 6 億美元。因此，當客戶要求我們建立與現有預測相關的庫存時，他們通常會投入資金以確認需求是真實的。另一件事，我知道您對我們的業務了解這一點，我們擁有庫存的絕大多數營運資金是客戶的責任。因此，我們正在根據預測進行訂單，但客戶也知道，如果他們超額訂購或提供沒有真正實現的預測，庫存將被推回給他們，這將成為他們的責任。所以我想說，現在整個市場是有理性的。我們注意到可能正在發生緩衝的口袋，但我們現在不認為它會過於重要

And I would also add, Dan, today, we've either seen demand tempering or growth demand decreasing or growth tempering. But we haven't seen customers cancel or push things out. Customers have been asking us to fulfill the backlog and maybe reducing the outlook a little bit, whether it's lower growth or lower demand. but we've been converting our backlog. So it hasn't been a material issue to date.

我還要補充一點，丹，今天，我們要么看到需求緩和，要么看到增長需求下降或增長緩和。但我們還沒有看到客戶取消或推遲。客戶一直要求我們完成積壓的工作，並可能會稍微降低前景，無論是增長放緩還是需求下降。但我們一直在轉換我們的積壓工作。因此，到目前為止，這不是一個重大問題。

Alright Thank you

好的 謝謝

Thanks

謝謝

There are no further questions on the phone lines. I would now like to turn the conference back to Rob Mionis for closing remarks.

電話線上沒有其他問題。我現在想把會議轉回給 Rob Mionis 做閉幕詞。

Thank you. We continued our strong start to the year by posting another solid quarter of results, and we continue to execute well through a difficult supply chain and macro environment. I'm pleased that we're able to raise our financial outlook for the full year and feel confident in our customers' demand and profile in order to do so. And given the current macroeconomic backdrop, I'm also pleased we're able to provide our initial outlook for 2023, and we will continue to work to diligently raise our projections as we progress throughout the year. Lastly, we are well skilled at managing our business through economic cycles and feel confident in our ability to continue to navigate through any potential choppy waters that may lay ahead. Thank you all for joining today's call, and I look forward to updating you as we progress throughout the year.

謝謝你。我們通過發布又一個穩健的季度業績來繼續我們今年的強勁開局，並且我們繼續在艱難的供應鍊和宏觀環境中表現良好。我很高興我們能夠提高全年的財務前景，並對我們客戶的需求和概況充滿信心，以便這樣做。鑑於當前的宏觀經濟背景，我也很高興我們能夠提供我們對 2023 年的初步展望，隨著我們全年的進展，我們將繼續努力提高我們的預測。最後，我們非常擅長在經濟周期中管理我們的業務，並且對我們繼續在可能出現的任何潛在波濤洶湧的水域中航行的能力充滿信心。感謝大家參加今天的電話會議，我期待著在我們全年的進展中為您提供最新信息。

Ladies and gentlemen, this concludes your conference call for this morning. We would like to thank you all for participating. You may now disconnect your lines

女士們，先生們，今天上午的電話會議到此結束。我們要感謝大家的參與。您現在可以斷開線路