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，早安，歡迎參加 Celestica 2022 年第三季財報電話會議。演講結束後，我們將進行問答環節。如果在通話過程中的任何時間您需要立即協助，請按「Star Zero」聯絡接線員。本次通話將於今天（2022 年 10 月 25 日，星期二）進行錄音。現在我想將會議交給 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.

早安，感謝您參加 Celestica 2022 年第三季財報電話會議。今天參加電話會議的有總裁兼執行長 Robert 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。有關此類因素和假設的識別和討論以及有關前瞻性陳述的更多信息，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 表年度報告和我們的其他公開文件，可在 sec.gov 和 sedar.com 上查閱。除非法律要求，否則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財務指標，包括基於非國際財務報告準則財務指標的比率（由非國際財務報告準則營業收入組​​成）；非國際財務報告準則下的營業利潤率、調整後毛利率、調整後投資資本回報率或調整後投資資本回報率、調整後自由現金流、總債務與非國際財務報告後每股收益、調整後銷售、一般及行政費用、生命週期解決方案收入及調整後有效稅率。聽眾應注意，本次電話會議中提到的任何上述指標均表示非國際財務報告準則的財務指標，無論是否特別指定。這些非國際財務報告準則 (IFRS) 財務指標不具有國際財務報告準則 (IFRS) 規定的任何標準化含義，並且可能無法與根據國際財務報告準則 (IFRS) 或根據美國公認會計準則 (US GAAP) 報告並使用非公認會計準則 (non-GAAP) 財務指標描述類似運營指標的其他上市公司所提供的類似運營指標進行比較。請您參閱昨天的新聞稿和我們的 2022 年第三季度收益報告，這些報告可在 celestica.com 的“投資者關係”選項卡下找到，以獲取有關這些和某些其他非國際財務報告準則財務指標的更多信息，包括歷史非國際財務報告準則財務指標與我們財務報表中最直接可比的國際財務報告準則財務的財務報告準則。除非另有說明，本次電話會議中所有提及的美元均指美元，每股資訊均基於稀釋的流通股。現在讓我把電話轉給羅布。

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。大家早安，感謝大家參加今天的電話會議。第三季度，由於我們大部分業務的強勁需求以及我們團隊的穩健執行，Celestica 實現了 19.2 億美元的營收，高於我們預期範圍的高端。面對持續的宏觀經濟挑戰，我們能夠滿足這項需求，從而實現歷史最高的非國際財務報告準則營業利益率 5.1%。我們的季度非國際財務報告準則調整後每股收益為 0.52 美元，是 20 多年來的最高業績。我們強勁的第三季業績反映了 Celestica 持續執行我們的長期策略計畫。由於我們強勁的業績以及我們看到的持續到第四季度的勢頭，我們很高興提高 2022 年全年收入和非國際財務報告準則調整後每股收益指導範圍。以中間值計算，如果實現，我們的營收預期為 71.6 億美元，將比去年同期成長 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位數為 1.86 美元，如果實現，將比去年同期成長 43%。新的 Celestica 的特色是其近 70% 的收入集中在高價值市場，這為我們應對持續的宏觀經濟挑戰提供了基礎。我們將繼續抓住眼前的眾多成長機會，並藉助強勁的預訂量、客戶積壓訂單和多元化的投資組合實現這些機會。在 2022 年強勁成長的背景下，我們也藉此機會提供 2023 年全年展望。對於即將到來的財政年度，我們預計收入將至少達到 75 億美元，非國際財務報告準則調整後每股收益預期為 1.95 美元至 2.05 美元，如果實現這一目標，將創下公司的另一個歷史新高。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益率範圍提高 50 個基點，至 4.5% 至 5.5%。在我進一步闡述我們每個業務的前景之前，我想先將電話轉給 Mandeep，他將詳細概述我們第三季的財務業績以及我們對第四季的指導。

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，羅布，大家早安。 2022 年第三季的營收達到 19.2 億美元，超過了我們預期範圍的高端。營收年增 31%，環比成長 12%，這得益於我們大部分業務的收入均實現兩位數成長。我們實現了 5.1% 的非國際財務報告準則營業利潤率，比我們的指導範圍中點高出 30 個基點，這得益於 ATS 和 CCS 部門的強勁盈利能力。非國際財務報告準則營業利益率較去年同期成長 90 個基點，較上季成長 30 個基點。這是 Celestica 首次實現非國際財務報告準則下的營業利益率超過 5%。非國際財務報告準則調整後每股收益為 0.52 美元，遠高於我們預期範圍的高端，年增 0.17 美元，環比增長 0.08 美元。 ATS 部門營收在第三季年增 30%，遠高於我們預期的年成長率。 ATS 部門營收年增得益於我們的資本設備、工業和 A&D 業務的持續強勁表現，以及強勁的需求、新項目的增加和材料供應的改善。與上一季相比，ATS 部門收入成長了 10%。 ATS部門收入佔第三季總收入的40%。我們的 CCS 部門本季再次實現強勁成長，營收年增 32%，這主要得益於我們通訊終端市場的強勁成長，這主要歸功於我們 HPS 業務的強勁表現。 CCS部門營收季增13%。我們的HPS業務持續呈現強勁成長，第三季營收5.17億美元，年增72%。 HPS 的成長是由服務供應商的強勁需求推動的，因為他們繼續投資於資料中心的擴展。我們很高興看到我們的 HPS 業務繼續獲得市場份額，幫助我們超越預期的潛在市場成長率。 HPS 營收佔第三季公司總營收的 27%。通訊收入較去年同期成長 42%，高於我們預期的中等百分比增幅，且較上季成長 22%。如上所述，同比和環比增長是由我們的 HPS 業務和材料可用性的提高所推動的。受客戶需求增加和新項目增加的推動，本季企業營收年增 13%，接近我們預期的 15% 左右百分比。企業營收季減 3%。轉向段邊距。第三季 ATS 部門利潤率為 5.0%，年成長 70 個基點，較上季成長 50 個基點。利潤率同比增長是由於整個部門盈利能力的提高，這歸因於需求增強和專案成熟度提升。 CCS部門利潤率為5.2%，為有史以來最高的CCS部門利潤率，年增110個基點，環比增長20個基點。利潤率年增得益於銷售槓桿和 HPS 業務組合的改善。接下來討論一些額外的財務指標。本季 IFRS 淨收益為 4,600 萬美元或每股 0.37 美元，而去年同期淨收益為 3,500 萬美元或每股 0.28 美元，上季淨收益為 3,600 萬美元或每股 0.29 美元。調整後毛利率為8.9%，較去年同期上升10個基點，較上季下降10個基點。年比成長是由於 ATS 和 CCS 銷售增加所帶來的營運槓桿效益。非國際財務報告準則下的營業利潤為 9,800 萬美元，比去年同期增加 3,700 萬美元，比上一季增加 1,550 萬美元。我們第三季的非國際財務報告準則調整後有效稅率為 21%，較去年同期成長 2%，較上季下降 1%。第三季度，非國際財務報告準則調整後淨利為 6,400 萬美元，年增 2,000 萬美元，季增 900 萬美元。第三季非國際財務報告準則調整後的 ROIC 為 19.2%，為五年來最高水平，年成長 4%，較上季成長 3%。在第三季度，我們的前十大客戶占我們總收入的 67%，而第二季為 68%，2021 年第三季為 66%。我們有 2 個客戶單獨占我們總收入的 10% 或以上，而 2022 年第二季和 2021 年第三季都只有 1 個客戶。這兩位客戶單獨占我們收入的 10% 以上，他們屬於我們的 CCS 部門，總共經營 20 個不同的項目，證明了我們產品範圍的廣度。轉向營運資金。我們第三季末的庫存為 23 億美元，比上一季增加 2.18 億美元，比去年同期增加 9.2 億美元。受供應鏈環境持續挑戰的影響，近幾個季度以來，更高的庫存餘額一直是我們行業的焦點。 Celestica 的庫存水準較高，這是由於較長的交貨時間和強勁的需求所致，而客戶現金預付款又部分緩解了這一影響，這使我們能夠以超常的速度增長，同時產生強勁的非國際財務報告準則調整後的 ROIC。隨著物質環境的改善，我們預計庫存餘額將隨著時間的推移而減少。第三季現金週期天數為 63%，比去年同期減少 9 天，為 2020 年第三季以來的最低水準。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。第三季的資本支出為 3,900 萬美元，約佔營收的 2%。正如我們在上次收益電話會議上所指出的，我們預計 2022 年上半年資本支出水準較低之後，下半年的資本支出將會更高。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專案成長，包括擴大我們在東南亞和墨西哥的業務範圍，以支持一些新的專案勝利。第三季非國際財務報告準則調整後的自由現金流為 700 萬美元，去年同期為 2,700 萬美元，上季為 4,300 萬美元。截至 9 月 30 日，非國際財務報告準則調整後的自由現金流為 5,100 萬美元，由於我們將在 2022 年進行策略營運資本投資，我們的財年預期仍為 7,500 萬美元。接下來介紹一些其他關鍵指標。我們第三季末的現金餘額為 3.63 億美元，年減 1.14 億美元，季減 200 萬美元。我們的現金餘額加上循環信貸額度下約 6 億美元的借貸能力為我們提供了約 10 億美元的流動資金，我們相信這足以滿足我們預期的業務需求。本季末，我們的總債務為 6.47 億美元，比上一季減少了 400 萬美元，淨債務為 2.84 億美元。我們第三季的總負債與非國際財務報告準則過去 12 個月調整後的 EBITDA 槓桿比率為 1.5 倍，季減 0.2 倍，與去年同期相比上升 0.1 倍。截至 2022 年 9 月 30 日，我們遵守了信貸協議下的所有財務契約。第三季度，我們回購了約 50 萬股股票並註銷，成本約為 500 萬美元。本季末，我們的流通股為 1.226 億股，比去年同期減少約 2%。在第四季度，我們打算在當前計劃於 12 月初到期後，在獲得必要的批准後啟動新的 NCIB 計劃。在我們的資本配置策略中，向股東返還資本仍然是首要任務。我們持續致力於將 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% 長期再投資於業務。然而，正如在先前的收益電話會議上所指出的，我們的短期優先事項是集中精力減少淨債務，同時繼續抓住機會，在 NCIB 下回購股票。考慮到我們強勁的經營業績，我們目前認為我們的股價處於大幅折扣狀態。因此，我們最近在市場上非常活躍。現在談談我們對 2022 年第四季的指導。我們預計第四季的營收將在 18.75 億美元至 20.25 億美元之間。如果達到該範圍的中點，營收將年增 29%，季增 1%。預計第四季非國際財務報告準則調整後每股收益在 0.49 美元至 0.55 美元之間。如果達到該範圍的中點，非國際財務報告準則調整後每股盈餘將年增 18%。如果我們的收入和非國際財務報告準則調整後每股收益指引範圍的中點得以實現，非國際財務報告準則營業利潤率將約為 5.1%，這將比去年​​同期增加 20 個基點，與上一季持平。預計第四季非國際財務報告準則調整後的銷售、一般及行政費用將在 6,400 萬美元至 6,600 萬美元之間。我們預計第四季非國際財務報告準則調整後有效稅率約為 21%。現在談談我們對 2022 年第四季的終端市場展望。在我們的 ATS 終端市場，我們預計營收將年增 25% 左右，這得益於我們所有 ATS 業務的兩位數成長。在我們的 CCS 部門，我們預計通訊終端市場的營收將比去年同期成長 30% 左右，這得益於新的成長點和服務供應商客戶持續強勁的需求，以及我們 HPS 產品的支援。在我們的企業端市場，我們預期營收成長率將達到 25% 左右，這得益於儲存領域新專案的增加和運算領域的強勁需求。現在我將把電話轉回給 Rob，讓他進一步介紹我們的終端市場和整體業務前景

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，Mandeep。在談到我們的終端市場前景之前，我想先回顧一下，在當前的宏觀經濟背景下，對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公司歷史上首次超過 5%，這是我們連續第 11 個季度實現非國際財務報告準則營業利潤率同比增長。我們也有望在 2022 年實現非國際財務報告準則調整後每股盈餘的新高。如果我們提供的預期得以實現，那麼在 2023 年我們將突破這一目標。儘管 Celestica 絕不會免受需求週期性變化的影響。我們相信，我們對公司進行了一些重要的結構性變革以及關鍵的策略決策，這些變革和決策幫助我們發展成為一家更加多元化、更具韌性和盈利能力的企業。目前，我們的 67% 收入來自更多元化、進入門檻更高的市場，也就是我們所說的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產品組合中獲益，為我們本已強勁的利潤率提供額外支援。此外，我們對消費市場的接觸很少，我們的固定成本結構精簡，不需要大量投資。因此，我們相信，憑藉終端市場曝光度、新項目勝利和市場份額增長，我們的成長速度將在 2023 年超越大盤。現在我想談談我們業務的展望。從我們的 ATS 部分開始。在長期需求、新項目增加和市場份額成長的推動下，我們的資本設備業務持續呈現強勁成長。我們預計這種強勁勢頭將持續到第四季度，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。過去3年，晶圓製造設備市場經歷了顯著成長。市場估計 2023 年的支出將放緩。然而，我們的業務主要集中在晶圓廠設備市場的部分領域，我們預計這些領域的需求仍將保持強勁，例如對支持在岸生產的新產能投資，以及我們對小於 7 奈米的尖端技術的關注。基於我們強勁的訂單積壓、新訂單和市場份額的成長，我們預計下一季的表現將繼續超越更廣泛的晶圓廠設備市場預期。我們的工業業務的新項目成長和強勁需求繼續受到長期良好趨勢、對能源儲存和發電等綠色技術的投資以及電動車市場的成長的支持，對電動車充電項目的支持需求預計將在未來幾年維持需求成長。我們的工業業務在今年前 9 個月實現了 18% 的有機成長，我們預計這些趨勢將支持 2023 年實現兩位數的有機收入成長。現在轉向 A&D。我們繼續看到商業航空航太領域的進步，新專案的勝利尤其突出。預計到 2023 年，公務機和單通道飛機推動的商用航空航太需求將持續增強。目前的市場估計表明，商用空中交通量應在 2023 年恢復到接近新冠疫情之前的水平，我們認為這應該會支持對新交付的進一步需求。隨著各國政府（尤其是歐盟）不斷加強軍事實力，我們的國防業務也有望繼續保持穩健的成長動能。在我們的健康科技業務中，手術設備和運動醫學領域的新項目預計將推動收入的連續和同比增長。我們也看到對影像和病人監測設備的強勁需求，並預計明年開始的新計畫將帶來貢獻。預計強勁的需求和成像和患者監測領域的新勝利將遠遠抵消與 COVID 相關的診斷設備需求預期的疲軟。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 個月的營收為 13.4 億美元，與去年同期相比成長率為 67%。我們的 HPS 業務取得了顯著成長，這得益於我們的服務供應商客戶在擴大其資料中心容量時進行的大量資本投資，以及我們從 ODM 獲得的市場份額的成長。正如我們在先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，儘管我們預計成長率將在 2023 年放緩，因為隨後每季的競爭都會變得更加激烈。新的成長點和現有專案的強勁需求持續支持我們通訊終端市場的成長，其中很大一部分需求來自我們 HPS 產品的超大規模客戶。隨著我們不斷取得新的勝利，我們預計需求將在 2023 年保持健康。最後，在我們的企業端市場，儲存需求的持續成長受到新計畫的支持，我們預計這種成長將持續到今年年底。預計到今年年底，計算需求仍將保持強勁。在整個企業領域，儘管 2022 年實現了兩位數的同比增長，但我們對前景仍持謹慎態度，因為整體經濟中需求放緩的潛在跡象通常會對企業客戶的需求產生更明顯的影響。我對 Celestica 在 2022 年迄今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可控因素方面做得非常出色。這反映在我們本季的業績和對未來一年的強勁展望中。我們相信，我們對戰略計劃的關注和持續執行將在長期內為股東帶來價值。說完這些，我現在想將電話轉給接線生來回答問題。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

謝謝您，先生。女士們、先生們，我們現在開始問答環節。 （操作員指示）您的第一個問題來自 BMO 資本市場的 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，羅布，如果你看一下本季相對於你之前預期的上升趨勢，你會發現這是更強勁的需求和更好的零件供應的結合。僅從品質上講，如果我們考慮這兩個因素的相對權重，那麼它是否更傾向於需求上升，還是更傾向於供應鏈表現得比以前更好？

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

你好，Thanos，我想說的是，這更多的是供應鏈限制的改善。我們的建設進​​度比最初的預期要好。因此，如果您願意的話，它使我們能夠轉換積壓訂單並滿足我們的強烈需求。本季需求確實沒有放緩，但我們的供應率和轉換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。現在就 2023 年而言，您將推出 23 財年指導，而 22 年的指導甚至已經結束。想必，這是否說明您目前積壓的工作具有很強的可見度？

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，我們將繼續看到許多垂直領域實現強勁成長。我們確實看到一些地區的需求略有下降，例如中國和我們的企業業務。但總體而言，我們有信心，考慮到宏觀經濟背景，我們能夠實現良好的成長，到 2023 年也將實現良好的成長。

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 來說，我們該如何考慮明年的現金流和資本支出？我們確實看到庫存減少，聽起來您認為這種情況可能會持續下去。因此，大概你會推動一些現金產生（聽不清楚）

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。早安，Thanos，我想說的是，我們對今年迄今為止的現金產生感到滿意，但我們始終希望做得更多。正如您所強調的，我們今年的預期收入是 7500 萬美元，因為我們決定對營運資金進行一些投資。隨著我們進入 2023 年，我們確實預計材料方面的建設將得到改善。這應該有助於我們釋放部分營運資金。因此，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，謝謝你對上季的參考（聽不清楚）

Thanks, Thanos.

謝謝，薩諾斯。

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?

嗨，早安。您已經談到了半資本空間的可見性。所以我想深入挖掘一下。您強調了您對領先工藝節點的接觸可能更安全一些，但我只是好奇您是否可以談談未來 12 個月的可見性。其中有多少是由已興建中的坡道覆蓋的？或者說其中有多少業務被鎖定了？也許只是給出那裡可見度水平的感受？

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，羅布。因此，讓我們回顧一下 22 年的情況。我們的成長速度將遠超市場平均。我們的成長率應該會達到 20% 左右。就您的評論而言，這是在贏得新項目和擴大市場份額的背景下實現的。我們在北美、馬來西亞和韓國擁有非常有競爭力的市場地位，我們也擁有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，大盤肯定會面臨一些阻力。一些較悲觀的分析師預測晶圓廠設備支出將下降 15% 至 20%。除此之外，我們都看到了有關中國出口管制的新聞，如果這個問題沒有解決，可能會產生高達 8% 的額外影響。綜上所述，由於以下幾個原因，我們的表現相對於市場而言應該相當不錯。第一個原因是混合，從混合的角度來看，我們專注於高階節點。因此，小於 7 奈米的製程占我們業務的 80%。那裡的需求更為強勁。對中國的接觸通常有限。其次，我們對記憶的關注較少，從成長的角度來看，記憶目前面臨壓力。最後，我們的成長很大一部分來自於支持售後市場和利用我們的機械能力的垂直整合能力。我們有信心我們的表現會優於市場，第二個原因是新項目的成長。許多項目今年開始加速推進，並將延續到明年。因此，我們非常有信心，我們的業績將優於市場，到 2022 年，我們的業績應該會持平或上升。

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?

非常感謝羅伯特的顏色，並且邊距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，為了達到 5% 以上的成長率，就需要商業航空航太業的復甦。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？或者您能否向我們介紹一下 A&D 的利潤貢獻情況以及明年的可能變化趨勢？

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，早安，羅布。因此，從利潤率的角度來看，我們對公司目前的走勢感到滿意，我們強調的一些事情是，本季的利潤率為 5.1%，這是我們對第四季度的預測，也是公司歷史上的最高利潤率。如果採用第四季指引的中點，則意味著今年的成長率為 4.9%。這是該公司歷史上的最高紀錄。我們現在正在做的是將明年的利率範圍提高 50 個基點，至 4.5% 至 5.5% 之間。事實上，有兩個主要因素推動了這個進程。第一是持續受益於混合。因此，隨著生命週期解決方案收入（占公司收入的 2/3）的持續增長，生命週期解決方案的綜合利潤率將為公司帶來增值。從混合角度來看，您會看到好處。第二，我們開始看到數量槓桿的好處。在我們多年前經歷轉型的同時，我們做出了策略決策，維持對功能和工廠的投資。我們並沒有在所有可能被要求的地方進行削減。因為我們知道，在發展過程中，我們可以維持這個結構。因此，我們目前的銷售、一般及行政開支的成長速度遠不及營業收入的成長速度。因此我們也看到了數量上的優勢。關於您的觀點，特別是關於 A&D。因此，市場本身存在一些利弊。如您所見，CCS 的表現非常出色。目前出現了一些混合效益，這些效益可能會減弱，但我們預計 CCS 利潤率在明年仍將保持強勁。然後 ATS 又回到了 5%。因此，我們對幾項業務的利潤率狀況感到滿意，資本設備表現非常好。健康科技表現非常出色。但 A&D 的需求仍未達到新冠疫情前的水準。我們看到獲利能力正在連續提高，但隨著銷量的回升，A&D 領域仍有更多機會。我們在工業領域也看到了同樣的事情。我們的營業收入成長很大一部分來自工業，但這些項目尚未完全獲利。最後，正如您從上個季度所了解的，PCI 業務對我們來說是一項非常出色的業務，儘管遭遇了危機，但它仍然是一項盈利業務，但其運營水平也沒有達到巔峰。因此，如果你願意的話，ATS 內部仍然有一些順風因素可以幫助我們提高明年的利潤率。

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

偉大的。這超出了 4.5%、4.5% 至 5.5% 的營業利潤率嗎？

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，我們已經考慮到了所有這些因素。因此，儘管 CCS 明年可能會有所緩和，但 ATS 有機會迎來任何緩和。再說一次，隨著我們生命週期解決方案的不斷完善，它將幫助我們在明年達到這一範圍的高端

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

這只是最後一個。 EPS 指導的中點低於您去年給出的兩位數長期指導。我注意到我在任何地方都找不到對此的重申。這仍然是我們的期望嗎？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，我們非常滿意的是，正如您所知，我們今年顯示的每股收益成長，第四季度指引的中點是 1.86 美元。我認為，我們公司的最高每股盈餘是 2000 年的 1.44 美元。因此，整體每股收益顯著增加。我認為，與去年同期相比，這一數字成長了 43%。當你看明年的 1.95 美元到 2.05 美元時，1.95 美元意味著 5%，而 2.05 美元意味著 10%。因此，我們當然正在努力實現更高的目標。我們確實相信，從中長期來看，10% 的每股盈餘成長率仍然是正確的數字。顯然，有些年份會高一些，有些年份會低一些，但考慮到我們目前的狀況，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

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?

感謝您回答我的問題，並祝賀本季的強勁業績。我的第一個問題是關於利潤的。您預計營業利潤率將從 23% 降至 4.5% 至 5.5%。您需要做什麼才能達到範圍的頂端、中間點和底端？具體來說，您說 CCS 部門的表現顯然遠高於長期範圍。那麼，我們該如何看待 23 財年該部門的利潤率呢？

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，我認為 4.5% 到 5% 的利潤率也與收入狀況有關。我們再次表示至少 75 億美元。如果我們的投入僅為 75 億美元，那麼我們就不會處於該範圍的高端。我們的比例大概在 5% 左右。但是，由於我們現有的大量積壓訂單導致收入繼續增長，我們確實希望看到一些額外的銷售槓桿，這將幫助我們達到該範圍的高端。當你具體看一下這個細分市場時，你會發現，自從我們從 2018 年初開始發布細分市場利潤率以來，我們剛剛為 CCS 發布的利潤率是他們有史以來最高的。我們預計明年 CCS 不一定會超過 5%。但同時，我們也不認為它們會回到歷史利率水平，因為 HPS 和 ATS 方面的組合非常不同，我們確實有機會繼續擴大這一利潤率。上個季度的成長率為 5.0%，但仍有機會。我們已經討論了一些有關 A&D 的事情。經濟持續復甦，這為我們提供了成本槓桿，因為這是一項固定成本很高的業務。從營收和利潤率來看，本季 PCI 均未達到預期。但隨著生產在年底前恢復到全部設備投入使用，我們預期 PCI 也會受益。整體而言，這就是我們現有的提升計畫的成熟度。因此，我們正在大力拓展業務，特別是工業業務。隨著這些項目的不斷成熟，獲利能力將會提高，這也是我們預期的。

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，謝謝您提供的詳細資訊。我的下一個問題是關於收入成長。 PCI 預計對 22 財年營收成長的貢獻為何？您說前 9 個月 HPS 的貢獻年增了 67%。我們該如何看待 HPS 在 23 財年的貢獻？我認為您預測的 23 財年收入中位數年增率為 5%。那麼其中有多少是來自 HPS 營收成長呢？

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，我們不會具體列出 PCI，但我將回顧我們收購該業務時的一些公開言論，當時的業務價值約為 3 億美元。該業務一直在成長。我們也看到了良好的商業綜效。與 2022 年相比，PCI 業務明年可能會帶來高達 1 億美元的額外收入貢獻。具體到 HPS 方面，我的意思是，這是一個超大的增長，第三季度同比增長 72%，年初至今增長 67%。顯然，這是不可持續的。根據目前業務的發展軌跡，2022 財年該業務的營收可能年增 7 億美元至 8 億美元。進入明年，我們預期成長率可能會恢復正常，甚至回落至市場水準。因此，HPS 的整體成長將會放緩，但我們預計利潤率將繼續保持強勁，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。也許這是我的最後一個問題，我可以問您關於 23 財年的資本配置優先事項嗎？具體來說，當您考慮將現金用於併購與將現金返還給股東時，您如何優先考慮這一項而不是減少這一項？

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，我們現在的首要任務是強勁的現金創造。我的意思是我們對資產負債表的強勁狀況感到非常滿意。如您所知，整體流動性為 10 億美元，但整體總槓桿率僅為 1.5 倍。所以，我們的資產負債表確實很健康。我們將繼續在資本支出等領域對業務進行投資。本季的資本支出表現強勁，因為我們直接投資於我們已獲得的新項目勝利。所以我們對此也感到高興。但是，當你超越強勁的自由現金流創造並繼續投資於業務時，我想說短期內我們將繼續減少淨債務。可能透過增加一點現金餘額，我們可以在季度內稍微減少一點信用額度，從而減少我們的利息支出。我們將開放 NCIB 計劃直至 12 月 5 日。然後，正如我們所提到的，我們的目的是開放一個新的計劃，這樣我們就可以一直有一個開放。當股價嚴重低迷時，我們會趁機買進股票。舉個例子，我們已經表示上個季度回購了價值 500 萬美元的股票。我可以告訴你，由於股價嚴重低迷，我們實際上在 10 月已經回購了價值 500 萬美元的股票。就目前的價格而言，現金的利用方式可能確實更好。這是向股東回報價值的好方法。話雖如此，我們仍然對策略性業務成長抱持著長遠的眼光。如果併購是正確的，它既可以增加我們加速策略路線圖所需的能力，也可以增加我們的產能，以便我們能夠與現有客戶群產生協同效應。我們會毫不猶豫地投資。我們擁有強大的併購管道。我們非常自律。如你所知，我們將專注於許多目標，但其中絕大多數我們都不會採取行動。但我們確實相信，憑藉我們現有的資產負債表、明年的現金前景以及健康的資產負債表，我們可以進行調整，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，並再次祝賀本季度取得的成績。

Thank you Ruplu

謝謝你，Ruplu

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 James Suva，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?

謝謝您，您的前景和當前的成長軌跡在利潤率方面非常令人印象深刻。只是好奇其影響以及我們應該如何考慮資本支出以及庫存等營運資本。您提到就零件供應而言，供應鏈正在變得更好。但我認為你的庫存增加了，但我確信這與業務成長有關。但是您能否幫助我們了解資本支出和庫存，以及您對未來的期望？

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 So，在資本支出方面，我們傳統上說我們的目標範圍是收入的 1.5% 到 2% 之間。上半年我們的投入比較少，坦白說大概在1%左右。但現在我們看到世界正在恢復正常，各國的限制正在解除。在取得一系列新勝利的背景下，我們看到資本支出投資水準有所提高。第三季我們的營收佔比為 2%，第四季可能仍會維持在 2% 左右，甚至略高一些。但展望 2023 年，我認為 1.5% 到 2% 的範圍仍然是正確的範圍。我們的營運成本可能處於該範圍的高端，但我們在資本支出投資方面有著非常嚴格的紀律，有著良好的記錄。總的來說，我想說，2023 年我們有營運資金機會。正如我們所討論的，當施工準備開始改善時，這意味著我們獲得的材料可能比過去更多。這使我們有機會減少庫存。正如您所說，庫存不斷增加的主要原因可能是我們的收入年增近 30%。但根據我們明年提供的收入指導，收入將回到個位數，庫存水準不再像以前那麼需要了。隨著材料限制的不斷改善，也有機會開始減少庫存。因此，我們確實預計 2023 年將有一些營運資金釋放，這將為我們提供自由現金流的良好機會。

Thank you and congratulations to your teams

謝謝你們，並恭喜你們的團隊

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 RBC Capital Markets 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，我只是想問幾個關於您對 23 年前景的問題，這顯然比華爾街預期的要強勁得多。就宏觀經濟環境而言，您在多大程度上考慮了環境放緩的影響？或者換句話說，如果發生這種情況，您認為什麼會對您的指導產生正面影響？那麼反過來說，什麼因素會導致您的前景下滑呢？

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，我們在製定策略計畫時有一個相當深入的規劃過程，但更重要的是，我們的年度營運計畫。我們與所有站點和所有主要客戶建立自下而上的聯鎖關係。因此，對於我們提供的指導和展望，我們感到非常滿意。直接回答你的問題，什麼會為前景帶來好處，那就是我們的 HPS 業務或資料中心擴展成長將繼續保持強勁，略高於我們的預期，也許不像我們目前預期的那樣像晶圓廠設備支出的下行週期那麼嚴重，我們的航空航太市場復甦更快，但也有助於給我們帶來提振。我們的工業業務正在經歷一系列的成長，如果這些業務能夠在最終市場對我們正在成長的產品的採用方面更快地成長，那麼這也會為我們帶來更多的上行空間。關於下行壓力，我會說出我剛才提到的所有內容，但顯然，反過來說就會用到「壓力」這個詞。但話雖如此，我們對 2023 年的看法還是比較平衡的，我們吸收了優點和缺點，並希望隨著時間的推移，能夠改進我們提供的數字，就像我們在 2022 年所做的那樣

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鏈是 23 年的變數。看起來這裡的情況正在好轉。您對 23 年的展望是，從供應鏈的角度來看，消費方面的潛在放緩是否會對 23 年的供應鏈產生淨利好或強勁的淨利好？

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。保羅，你的觀點很正確。我或許應該提到這一點。這是淨正面結果。我們假設復甦是逐步的，不是立即的，而是逐步的復甦。現在，我們的建設情況已經變得更好了，供應商的取消承諾也減少了。話雖如此，半導體和特定產品的交貨時間仍然很長。我們需要讓它們變得更短。這肯定會改善情況。我認為，某些技術和某些供應商在整個 2023 年仍將受到限制，因為在較舊的節點技術上，許多供應商並未建造產能。因此，我們預計進入 2023 年，前景將逐步改善，但目前還沒有任何跡象表明會出現重大改善

Thank you and Congrats on the quarter and the outlook

謝謝，恭喜本季和前景

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，提醒一下（操作員指示），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?

早上好，您提到組件供應有助於提高效能。改善零件供應商會對您的利潤產生影響嗎？或者，考慮到您有能力將這些成本轉嫁給您的客戶，這是否是中性的？

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.

從某種程度上來說，零件供應的改善提高了我們工廠的效率。所以它確實有助於提高我們的利潤。在定價方面，對於絕大多數產品，在價格上漲週期中，我們一直以預付定價的方式將這些價格上漲轉嫁給我們的客戶。因此，我們將順應潮流而起，也順應潮流而收縮。

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。在供應問題期間，您的客戶訂購的數量超過其所需的風險有多大，就像我們在零售業看到的那樣。隨著零件供應恢復正常，你們正在處理積壓訂單，不久的將來通路中會出現過剩庫存嗎？

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，只要你處在一個受限的環境中，顧客就會開始想要囤積產品，這總是一種風險。我想說的是，這種事情總是存在的，但我們相信整體上是可以解決的。如您所知，其中一件事就是，為了建立庫存，我們一直在從客戶那裡累積大量存款。我們的資產負債表上有近6億美元。因此，當客戶要求我們根據現有的預測建立庫存時，他們通常會投入資金來確認需求是真實的。另一件事，我知道您了解我們的業務，我們庫存的絕大部分營運資金都是客戶的責任。因此，我們是根據預測來下訂單的，但客戶也知道，如果他們超額訂購或提供的預測沒有真正實現，那麼庫存就會被推遲給他們，這將成為他們的負擔。所以我想說，目前整個市場是合理的。我們注意到可能正在發生的一些緩衝現象，但目前我們預計它不會變得太嚴重

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，我們要嘛看到需求緩和，要嘛看到成長需求下降或成長緩和。但我們還沒有看到客戶取消或延後訂單。客戶一直要求我們完成積壓訂單，並可能稍微降低預期，無論是成長放緩還是需求下降。但我們一直在轉換積壓訂單。所以到目前為止這還不是一個實質問題。

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.

電話裡沒有其他問題。現在我想請 Rob Mionis 致閉幕詞。

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。我們延續了今年強勁的開局，再次取得了穩健的季度業績，並且在艱難的供應鏈和宏觀環境下繼續表現良好。我很高興我們能夠提高全年財務前景，並對客戶的需求和狀況充滿信心。鑑於當前的宏觀經濟背景，我很高興我們能夠提供 2023 年的初步展望，並且我們將繼續努力在全年推進過程中不斷提高我們的預測。最後，我們非常善於在經濟週期中管理我們的業務，並且有信心我們有能力繼續渡過未來可能出現的任何波濤洶湧的水域。感謝大家參加今天的電話會議，我期待著向大家通報我們全年的進展。

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，今天早上的電話會議到此結束。我們感謝大家的參與。現在您可以斷開線路