Celestica Inc (CLS) 2023 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Celestica Q2 2023 Earnings Conference Call. (Operator Instructions). This call is being recorded on Thursday, July 27th, 2023. I will now like to turn the conference over to Craig Oberg. Please go ahead.

早上好，女士們、先生們，歡迎參加天弘 2023 年第二季度收益電話會議。 （操作員說明）。本次電話會議於 2023 年 7 月 27 日星期四進行錄音。我現在將會議轉交給 Craig Oberg。請繼續。

Good morning and thank you for joining us on Celestica second quarter 2023 Earnings Conference Call. On the call today are Rob Mionis, President and Chief Executive Officer, and Mandeep Chawla Chief Financial Officer. As a reminder during this call, we will make forward-looking statements within the meaning 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 celestica.com. We assume no obligation to update any forward-looking statement except as required by law. In addition, during this call, we will refer to various non-IFRS financial measures, including ratios based on non-IFRS financial measures consisting of 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 earnings per share or adjusted EPS, adjusted SG&A expense and adjusted effective tax rate.

早上好，感謝您參加天弘集團 2023 年第二季度收益電話會議。今天參加電話會議的有總裁兼首席執行官 Rob Mionis 和首席財務官 Mandeep Chawla。在此電話會議期間提醒您，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聲明。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、不確定性和其他因素的影響，這些因素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。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性說明。我們最新的 20-F 表格年度報告和其他公開文件，可在 sec.gov 和 celestica.com 上訪問。除法律要求外，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，包括非國際財務報告準則營業利潤率、調整後毛利率、調整後投資資本回報率或調整後投資回報率、調整自由現金流量、過去 12 個月調整後 EBITDA 槓桿率、調整後每股收益或調整後 EPS、調整後 SG&A 費用和調整後有效稅率。

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 meaning 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.

應提醒聽眾，本次電話會議中提及的任何上述措施均表示非 IFRS 財務措施，無論是否明確指定為此類措施。這些非 IFRS 財務指標不具有 IFRS 規定的任何標準化含義，並且可能無法與根據 IFRS 報告或根據美國 GAAP 報告並使用非 GAAP 財務指標描述類似運營指標的其他上市公司提出的類似指標進行比較。 。

We refer you to yesterday's press release and our Q2 2023 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 and a description of modifications to specified non-IFRS financial measures during 2022 and 2023. Unless otherwise specified all references to dollars on this call are to US dollars and per-share information is based on diluted shares outstanding. Let me now turn the call over to Rob.

我們建議您參閱昨天的新聞稿和我們的 2023 年第二季度收益報告，這些內容可在 celestica.com 的“投資者關係”選項卡下查看。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 財務指標與我們財務報表中最直接可比的 IFRS 財務指標的調節表，以及 2022 年期間對特定非 IFRS 財務指標的修改說明2023 年和 2023 年。除非另有說明，本次電話會議中所有提及的美元均指美元，每股信息基於稀釋後的已發行股票。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. We are very pleased to have delivered solid financial results in the second quarter. Our revenue of $1.94 billion and our non-IFRS adjusted EPS of $0.55 each exceeded the high end of our guidance range. Our non-IFRS operating margin of 5.5% was the highest in the company's history, with non-IF (sic) [non-IFRS] operating margin firmly above 5% for the past 4 consecutive quarters reflecting the new celestica. Finally, our non-IFRS adjusted free cash flow of $67 million marked our highest quarterly result in over 3 years. The strength of our results reflect the benefits of our portfolio's strategic diversification and our exposure to a number of very attractive markets in our CCS segment. We continue to see solid growth in our Hyperscaler business as we believe their investments in artificial intelligence and machine learning will provide long-term secular tailwinds in a number of our served markets. In our ATS segment, ramping of new green energy programs, coupled with returning commercial aerospace demand, have continued to support double-digit year-over-year growth. We continue to execute well for our customers and our focus on operational excellence has enabled our growth and margin performance. Additionally, the material supply environment continues to gradually normalize, allowing us to further improve operational efficiencies. Before I provide an update on the outlook for each of our end markets, I would like to turn the call over to Mandeep, who will discuss our financial performance in the second quarter and our guidance for the third quarter of 2023. Mandeep, over to you.

謝謝你，克雷格。大家早上好，感謝您參加今天的電話會議。我們很高興在第二季度取得了穩健的財務業績。我們的收入為 19.4 億美元，非 IFRS 調整後每股收益為 0.55 美元，均超出了我們指導範圍的上限。我們的非 IFRS 營業利潤率為 5.5%，是公司歷史上最高的，非 IF（原文如此）[非 IFRS] 營業利潤率在過去連續 4 個季度穩定在 5% 以上，這反映了新的天弘。最後，我們的非 IFRS 調整後自由現金流為 6,700 萬美元，這是我們 3 年來最高的季度業績。我們業績的強勁反映了我們投資組合戰略多元化的好處以及我們在 CCS 領域的許多非常有吸引力的市場的敞口。我們繼續看到超大規模業務的穩健增長，因為我們相信他們在人工智能和機器學習方面的投資將為我們服務的許多市場提供長期的長期推動力。在我們的 ATS 領域，新綠色能源計劃的增加，加上商業航空航天需求的回升，繼續支持兩位數的同比增長。我們繼續為客戶提供良好的服務，我們對卓越運營的關注促進了我們的增長和利潤表現。此外，物資供應環境繼續逐步正常化，使我們能夠進一步提高運營效率。在介紹我們每個終端市場的最新前景之前，我想將電話轉給 Mandeep，他將討論我們第二季度的財務業績以及我們對 2023 年第三季度的指導。Mandeep，請轉至你。

Thank you, Rob. And good morning, everyone. Second quarter revenue came in at $1.94 billion, exceeding the high end of our guidance range. Revenue was 13% higher year over year, supported by over 20% growth in our ATS segment and higher revenues in our CCS segment. Our second quarter non-IFRS operating margin of 5.5% was 70 basis points higher year over year and driven primarily by improved volume leverage in both segments, including strong profitability in our CCS segment. Non-IFRS adjusted earnings per share were $0.55 for the second quarter, exceeding the high end of our guidance range and were $0.11 higher year over year, driven by higher operating profit and lower shares outstanding.

謝謝你，羅布。大家早上好。第二季度收入為 19.4 億美元，超出了我們指導範圍的上限。得益於 ATS 部門超過 20% 的增長以及 CCS 部門收入的增加，收入同比增長 13%。我們第二季度的非國際財務報告準則營業利潤率為 5.5%，同比增長 70 個基點，這主要是由於兩個部門的銷量槓桿率提高，包括 CCS 部門的強勁盈利能力。第二季度非國際財務報告準則調整後每股收益為 0.55 美元，超出了我們指導範圍的上限，並且由於營業利潤增加和流通股減少，同比增加 0.11 美元。

In the second quarter ATS segment, revenue was $865 million, up 24% year over year and higher than our expectations of a mid-teens percentage increase. The year-over-year increase in ATS segment revenue was driven by continuing strength in our industrial business, supported by returning commercial aerospace demand and A&D, which more than offset demand softness in our capital equipment business. ATS Segment revenue accounted for 45% of total revenues in the second quarter. Our CCS segment revenue of $1.07 billion were up 5% compared to the prior year period. The increase was driven by very strong revenue growth in our enterprise end market, supported by strong demand for proprietary compute driven by AI and machine learning applications, and was partially offset by anticipated softness in communications demand.

第二季度 ATS 業務收入為 8.65 億美元，同比增長 24%，高於我們預期的中雙位數增長百分比。 ATS 部門收入的同比增長是由我們工業業務的持續強勁推動的，並得到商業航空航天需求和 A&D 回升的支持，這足以抵消我們資本設備業務的需求疲軟。 ATS部門收入佔第二季度總收入的45%。我們的 CCS 部門收入為 10.7 億美元，比去年同期增長 5%。這一增長是由我們的企業終端市場非常強勁的收入增長推動的，以及人工智能和機器學習應用程序驅動的對專有計算的強勁需求的支持，但部分被預期的通信需求疲軟所抵消。

Our HPS business generated revenue of $354 million in the quarter lower by 23% year over year. HPS revenues have moderated compared to the prior year period, driven by tough comps and anticipated shifts in Hyperscaler CapEx spend from networking products towards compute capacity in support of AI applications. HPS revenues were 18% of total company revenues in the second quarter, compared to 27% in the prior year period. We do expect HPS revenues to grow sequentially in the coming quarters.

我們的 HPS 業務本季度收入為 3.54 億美元，同比下降 23%。與去年同期相比，HPS 收入有所放緩，原因是嚴峻的競爭以及超大規模資本支出預期從網絡產品轉向支持人工智能應用的計算能力的轉變。第二季度 HPS 收入占公司總收入的 18%，而去年同期為 27%。我們確實預計 HPS 收入在未來幾個季度將連續增長。

Communications and market revenue for the second quarter was lower by 15% year over year in line with our expectation of a mid-teens percentage decrease. The decline was driven by tough comps and reduced HPS networking purchases from Hyperscaler customers, although we support these customers with other Celestica solutions.

第二季度通信和市場收入同比下降 15%，符合我們對下降百分比的預期。儘管我們通過其他 Celestica 解決方案為這些客戶提供支持，但這一下降是由於競爭激烈以及 Hyperscaler 客戶的 HPS 網絡採購減少所致。

Enterprise and market revenue in the quarter was up 42% year over year, well above our expectations of a high 20% increase, driven by the strong demand for proprietary compute.

在對專有計算的強勁需求的推動下，本季度企業和市場收入同比增長 42%，遠高於我們預期的 20% 高增長。

Turning to segment margins. ATS segment margin was 4.8% in the second quarter. 30 (technical difficulty) was driven by greater volume leverage as our industrial green energy programs continue to ramp and commercial aerospace recovery as well as strong productivity. CCA segment margin of 6.0% was up 100 basis points year over year and was the highest on record. The increase was driven by higher volume leverage, particularly in our enterprise end market as well as strong productivity and favorable mix.

轉向細分市場利潤。第二季度 ATS 部門利潤率為 4.8%。 30（技術難度）是由更大的銷量槓桿推動的，因為我們的工業綠色能源計劃不斷擴大，商業航空航天復蘇以及強勁的生產力。 CCA 業務利潤率為 6.0%，同比增長 100 個基點，創歷史最高水平。這一增長是由較高的銷量槓桿（尤其是在我們的企業終端市場）以及強勁的生產力和有利的組合推動的。

Moving on to some additional financial metrics. IFRS net earnings for the quarter were $56 million or $0.46 per share compared to net earnings of $36 million or $0.29 per share in the prior year period. Adjusted gross margin for the second quarter was 9.7%, up 70 basis points year over year, primarily due to volume leverage and cost productivity improvements. Our second quarter non-IFRS adjusted effective tax rate was 21% compared to 22% in the prior year period. Non-IFRS adjusted ROIC for the second quarter was 20.0%, an improvement of 3.8% compared to the prior-year quarter.

接下來討論一些額外的財務指標。根據國際財務報告準則，本季度淨利潤為 5600 萬美元，即每股 0.46 美元，而上年同期淨利潤為 3600 萬美元，即每股 0.29 美元。第二季度調整後毛利率為 9.7%，同比增長 70 個基點，主要得益於銷量槓桿和成本生產率的提高。我們第二季度非 IFRS 調整後的有效稅率為 21%，而上年同期為 22%。第二季度非 IFRS 調整後的 ROIC 為 20.0%，比去年同期提高 3.8%。

Moving on to working capital. Our inventory at the end of the second quarter was $2.3 billion, down $58 million sequentially and up $238 million year over year. Cash deposits were $810 million at the end of the second quarter, which was nearly flat sequentially and higher by $284 million compared to the prior year period. Cash cycle days were 73 during the second quarter, 2 days lower sequentially and 4 days higher than the prior year period. Capital expenditures for the second quarter were $32 million, or approximately 1.7% of revenue, compared with 1.3% in the second quarter of 2022. The increase in our capital expenditures aligns with our previously communicated expectations for increased investments in support of new program [winds].

轉向營運資金。第二季度末我們的庫存為 23 億美元，環比減少 5800 萬美元，同比增加 2.38 億美元。第二季度末現金存款為 8.1 億美元，與上一季度基本持平，比去年同期增加 2.84 億美元。第二季度現金周期天數為 73 天，比上一季度減少 2 天，比去年同期增加 4 天。第二季度的資本支出為 3200 萬美元，約佔收入的 1.7%，而 2022 年第二季度為 1.3%。我們資本支出的增加符合我們之前傳達的增加投資以支持新計劃的預期 [winds] ]。

Non-IFRS adjusted free cash flow in the second quarter was $67 million compared to $43 million in the prior year period. Given our solid year-to-date performance, we are now expecting $125 million in non-IFRS adjusted free cash flow for 2023. Moving on to some additional key metrics. Our cash balance at the end of the second quarter was $361 million, down $5 million year over year and up $42 million sequentially. Our cash balance in combination with the 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. At the end of the second quarter, our gross debt was $618 million, down $5 million from the previous quarter, leaving us with a net debt position of $257 million. Our second quarter gross debt to non-IFRS trailing 12-month adjusted EBITDA leverage ratio was 1.2 turns down 0.1 turns sequentially and down 0.5 turns compared to the same quarter of last year. At June 30th, 2023, we were compliant with all financial covenants under our credit agreement.

第二季度非 IFRS 調整後自由現金流為 6700 萬美元，而上年同期為 4300 萬美元。鑑於我們年初至今的穩健業績，我們目前預計 2023 年的非 IFRS 調整後自由現金流為 1.25 億美元。接下來討論一些其他關鍵指標。第二季度末我們的現金餘額為 3.61 億美元，同比減少 500 萬美元，環比增加 4200 萬美元。我們的現金餘額加上我們循環貸款下約 6 億美元的借款能力，為我們提供了約 10 億美元的流動性，我們相信這足以滿足我們預期的業務需求。第二季度末，我們的總債務為 6.18 億美元，比上一季度減少 500 萬美元，淨債務頭寸為 2.57 億美元。我們第二季度的總債務與非國際財務報告準則的過去 12 個月調整後 EBITDA 槓桿率為 1.2 倍，比上一季度下降 0.1 倍，與去年同期相比下降 0.5 倍。截至 2023 年 6 月 30 日，我們遵守了信貸協議項下的所有財務契約。

During the second quarter, we purchased approximately 1.4 million shares for cancellation at a cost of $15 million. We intend to continue to be opportunistic on share repurchases under our NCIB for the remainder of the year. Now turning to our guidance for the third quarter of 2023. Third-quarter revenues are expected to be in the range of $1.90 billion to $2.05 billion, which would represent an increase of 3% year over year if the midpoint of this range is achieved. Third quarter non-IFRS adjusted earnings per share are expected to be in the range of $0.56 to $0.62 per share.

第二季度，我們購買了大約 140 萬股股票並註銷，成本為 1500 萬美元。我們打算在今年剩餘時間內繼續根據 NCIB 進行股票回購。現在轉向我們對 2023 年第三季度的指導。第三季度收入預計在 19 億美元至 20.5 億美元之間，如果達到該範圍的中點，則同比增長 3%。第三季度非國際財務報告準則調整後每股收益預計為每股 0.56 美元至 0.62 美元。

If the midpoint of our revenue and non-IFRS adjusted EPS guidance ranges are achieved, non-IFRS operating margin would be 5.6%. This would represent an increase of 50 basis points over the prior year period and a 10 basis point increase sequentially. Non-IFRS adjusted SG&A expense for the third quarter is expected to be in the range of $66 to $68 million. We anticipate our non-IFRS adjusted effective tax rate to be approximately 19% for the third quarter, excluding any impact from taxable foreign exchange.

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導範圍的中點達到，非國際財務報告準則營業利潤率將為 5.6%。這意味著比去年同期增加 50 個基點，比上年同期增加 10 個基點。根據非 IFRS 調整後的第三季度 SG&A 費用預計在 66 至 6800 萬美元之間。我們預計第三季度非國際財務報告準則調整後的有效稅率約為 19%，不包括應稅外彙的影響。

Now turning to our end market outlook for the third quarter of 2023. And our ATS end market, we anticipate revenue to be up in the low double-digit percentage range year over year, driven by continued growth in our Industrial, Healthtech and R&D businesses, partially offset by continued market headwinds in capital equipment. In our CCS segment, we are expecting revenues to be approximately flat year over year in the third quarter as lower communications revenues are anticipated to be mostly offset by higher enterprise revenues. We anticipate revenues in our communications end market to be down in the high single-digit percentage range year over year, driven by tough comps and lower anticipated demand from certain programs in networking, including in our HPS business. We anticipate a meaningful improvement on a sequential basis when compared to the second quarter. Finally, in our enterprise end market, we anticipate revenue to be up in the low double-digit percentage range year over year, driven by anticipated continuing demand strength in proprietary compute from our Hyperscaler customers. I'll now turn the call back over to Rob to discuss the outlook for our end markets and business overall.

現在轉向我們對 2023 年第三季度的終端市場展望。在我們的 ATS 終端市場中，在我們的工業、健康科技和研發業務持續增長的推動下，我們預計收入將同比增長兩位數百分比範圍，部分被資本設備持續的市場逆風所抵消。在我們的 CCS 部門，我們預計第三季度的收入將與去年同期基本持平，因為通信收入的下降預計將被企業收入的增加所抵消。我們預計，由於競爭激烈以及某些網絡項目（包括我們的 HPS 業務）的預期需求下降，我們的通信終端市場收入將同比下降高個位數百分比。我們預計與第二季度相比將出現有意義的環比改善。最後，在我們的企業終端市場，由於我們的超大規模客戶對專有計算的預期持續需求強勁，我們預計收入將同比增長兩位數百分比。現在，我將把電話轉回給 Rob，討論我們的終端市場和整體業務的前景。

Thank you, Mandeep. Following a strong financial performance in the second quarter, we are pleased to raise our annual outlook for 2023. Our revenue outlook for the year is now at least $7.85 billion, which if achieved, would represent growth of at least 8% and our highest revenue level since 2007. Our outlook for 2023 non-IFRS adjusted EPS is now raised to $2.25. If achieved, this would represent 18% growth compared to the prior year. We anticipate non-IFRS operating margin of 5.5% for 2023, which would represent an increase of 60 basis points from 2022. As we look forward to 2024, we expect revenue growth across each of our businesses supported by anticipated strong secular tailwinds and new program winds. We believe that this growth with continuing margin strength will lead to non-IFRS adjusted EPS growth of 10% or more in 2024 relative to our 2023 outlook. Now I would like to provide some detail on the outlook for each of our businesses. We continue to expect our ATS segment revenue to grow in the mid-teens percentage range in 2023 compared to 2022. Our industrial business has been the most significant growth driver in our ATS segment so far in 2023, with revenues up more than 40% year to date compared to the prior year period. We anticipate that the year-to-year growth experienced by our industrial business in the first half of the year will continue in the second half of the year.

謝謝你，曼迪普。繼第二季度強勁的財務表現之後，我們很高興上調 2023 年的年度展望。我們對今年的收入展望目前至少為 78.5 億美元，如果實現的話，將代表至少 8% 的增長，也是我們最高的收入自 2007 年以來的水平。我們對 2023 年非 IFRS 調整後每股收益的展望現已上調至 2.25 美元。如果實現的話，這將比上一年增長 18%。我們預計 2023 年非國際財務報告準則營業利潤率為 5.5%，比 2022 年增加 60 個基點。展望 2024 年，我們預計在預期強勁的長期推動力和新計劃的支持下，我們每項業務的收入都會增長風。我們認為，這種增長加上持續的利潤率優勢，將導致 2024 年非 IFRS 調整後每股收益相對於我們 2023 年的展望增長 10% 或以上。現在我想詳細介紹一下我們每項業務的前景。我們仍然預計，與 2022 年相比，2023 年我們的 ATS 部門收入將在百分之十左右的範圍內增長。我們的工業業務是 2023 年迄今為止 ATS 部門最重要的增長動力，收入同比增長超過 40%迄今為止與去年同期相比。我們預計，下半年工業業務將延續上半年的同比增長勢頭。

Our long-term outlook is also very positive, as we believe that a number of structural tailwinds support demand, particularly for green energy, EV charging and on-vehicle projects. We also believe that our business is well-positioned to continue to capitalize on this demand as we ramp a number of new program winds in the space.

我們的長期前景也非常樂觀，因為我們相信許多結構性有利因素支持需求，特別是在綠色能源、電動汽車充電和車載項目方面。我們還相信，隨著我們在該領域推出一系列新項目，我們的業務處於有利位置，可以繼續利用這一需求。

Our outlook for capital equipment remains muted as the wafer fab equipment market continues to work through a reduction in demand. We are encouraged that due to the scale and structural adjustments made to our capital equipment business in recent years, we expect it to remain profitable during this downturn and outperform the broader wafer fab equipment market due to the benefits of our mix, market share gains and new program winds. We anticipate our capital equipment business to return to growth in 2024, in line with the most current outlook for the wafer fab equipment market. We are also pleased to be ramping a number of new programs, including a new lithography customer. We are seeing a strong recovery in demand within commercial aerospace and the normalization of commercial air traffic is expected to continue. We are seeing benefits from this trend across all submarkets of our commercial aerospace business, including single and dual-aisle aircraft and business aviation. Additionally, we are benefiting from a number of new defense program ramps in 2023. The outlook for our overall R&D business remains positive.

由於晶圓廠設備市場繼續受到需求減少的影響，我們對資本設備的前景仍然黯淡。令我們感到鼓舞的是，由於近年來我們對資本設備業務進行了規模和結構調整，我們預計該業務將在這次經濟低迷時期保持盈利，並由於我們的組合優勢、市場份額增長和表現優於更廣泛的晶圓廠設備市場。新節目風起。我們預計我們的資本設備業務將在 2024 年恢復增長，這與晶圓廠設備市場的最新前景一致。我們還很高興推出許多新計劃，包括新的光刻客戶。我們看到商業航空領域的需求強勁復甦，商業航空交通的正常化預計將繼續。我們在商業航空航天業務的所有子市場（包括單通道和雙通道飛機以及公務航空）中都看到了這一趨勢的好處。此外，我們還受益於 2023 年一系列新的國防計劃的進展。我們的整體研發業務前景仍然樂觀。

Our Healthtech business is experiencing solid double-digit year-to-year growth, driven by new program ramps in the areas of surgical instruments and imaging devices. Our outlook for our Healthtech business remains positive and stable, with less anticipated volatility in demand relative to other markets. Now let's turn to our CCS segment for 2023, CCS revenues are expected to be up in the mid-single digits compared to 2022, with anticipated growth in enterprise expected to more than offset softness in communications. We anticipate the recent strength in segment margin to continue and remain accretive to our overall business throughout 2023. Our enterprise market is experiencing very strong growth being the beneficiary of our Hyperscalers customers, demand for advanced computing capacity to support artificial intelligence and machine learning applications. We anticipate the demand for proprietary compute will continue to support double-digit revenue growth rates in enterprise throughout 2023. As mentioned, the 2023 outlook for our communications end market remains muted when compared to 2022. As a result of a moderation in customer demand and difficult comps. Our HPS business continues to experience demand moderation compared to 2022. We anticipate stronger and sequential revenues in the second half of the year, and our current outlook calls for our HPS business to resume year-to-year growth in 2024 as new programs ramp. Our total portfolio of businesses within hyperscaler customers remains very healthy as they are continuing to make significant investments in their AI and machine learning capacity and capabilities.

在手術器械和成像設備領域新項目的推動下，我們的健康科技業務正在經歷穩定的兩位數同比增長。我們對健康科技業務的前景保持積極和穩定，與其他市場相比，預期需求波動較小。現在讓我們轉向 2023 年的 CCS 部門，與 2022 年相比，CCS 收入預計將增長到中個位數，企業的預期增長預計將超過通信領域的疲軟。我們預計，近期細分市場利潤率的強勁勢頭將持續下去，並在整個 2023 年繼續為我們的整體業務帶來增值。我們的企業市場正在經歷非常強勁的增長，這得益於我們的超大規模客戶、對支持人工智能和機器學習應用的高級計算能力的需求。我們預計，到 2023 年，對專有計算的需求將繼續支持企業實現兩位數的收入增長率。如上所述，與 2022 年相比，2023 年我們的通信終端市場前景仍然黯淡。由於客戶需求的放緩和困難的比較。與 2022 年相比，我們的 HPS 業務需求繼續放緩。我們預計下半年收入將持續強勁，並且我們目前的前景表明，隨著新項目的增加，我們的 HPS 業務將在 2024 年恢復同比增長。我們在超大規模客戶中的整體業務組合仍然非常健康，因為他們繼續在人工智能和機器學習能力方面進行大量投資。

We have been a key partner for our hyperscaler customers as they have worked to build out their data center infrastructure. Hyperscalers now represent approximately $2.5 billion of revenue over the past 12 months for Celestica, having grown at approximately a 50% kegger since 2018. Recent hyperscaler demand has skewed towards proprietary compute products. Moving forward, we anticipate hyperscalers ongoing deployment of AI and machine learning infrastructure will accelerate their networking refresh cycle. As they are expected to need more advanced networking infrastructure to support their investments in computing capacity. As a result, we anticipate demand for our HPS products and services to increase in future periods.

我們一直是超大規模客戶的重要合作夥伴，因為他們致力於構建數據中心基礎設施。目前，過去 12 個月中，Celestica 的超大規模業務收入約為 25 億美元，自 2018 年以來增長了約 50%。最近的超大規模業務需求已偏向於專有計算產品。展望未來，我們預計超大規模企業持續部署人工智能和機器學習基礎設施將加快其網絡更新周期。因為他們預計需要更先進的網絡基礎設施來支持他們對計算能力的投資。因此，我們預計未來一段時間內對 HPS 產品和服務的需求將會增加。

We are market leaders in the 403 switches and are pleased that we are continuing to win engagements in 803 switches based on our continued investment in next-gen applications. Our strategic offerings and unique capabilities and networking are expected to support revenue growth with our hyperscale customers over the long term. I am pleased with our strong performance during the first half of 2023 as the latter half of the year takes shape. We look forward to continuing to execute on our long-term strategic vision, delivering on our targets and driving value for our shareholders. We remain encouraged by the prospects for our business in the months ahead and into 2024. With that, I would now like to turn the call over to the operator for questions. Thank you.

我們是 403 交換機的市場領導者，並且很高興我們基於對下一代應用的持續投資，繼續贏得 803 交換機的合作。我們的戰略產品和獨特的能力和網絡預計將長期支持我們的超大規模客戶的收入增長。我對 2023 年上半年的強勁表現感到滿意，因為下半年已初具規模。我們期待繼續執行我們的長期戰略願景，實現我們的目標並為股東創造價值。我們對未來幾個月乃至 2024 年的業務前景仍然感到鼓舞。因此，我現在想將電話轉給運營商詢問問題。謝謝。

Thank you. Ladies and gentlemen. We will now begin the question and answer session. (Operator Instructions) Your first question comes from Rob Young from Canaccord. Please go ahead.

謝謝。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 Canaccord 的 Rob Young。請繼續。

Good morning. Maybe just a little bit of information on the proprietary compute elements of the business. I think you had 110% customer in CCS. I assume that's in proprietary compute and maybe if you could give a little more color around how many customers are in this space, if it's one driving all of this or if it's multiple, if you're an enterprise and hyperscaler or if it's just driven by the Hyperscaler? Maybe just a little more color to broaden that out.

早上好。也許只是有關業務專有計算元素的一點信息。我認為你們 110% 的客戶都是 CCS。我假設這是在專有計算中，也許您可以對這個領域有多少客戶提供更多的信息，如果它是一個驅動所有這一切的人還是多個，如果您是一家企業和超大規模企業，或者它只是驅動通過超大規模？也許只是多一點顏色來擴大範圍。

Sure, Rob. Yes. In the areas of proprietary compute, we're supporting multiple hyperscaler customers and ramping these types of products. And across those customers, it's not just proprietary compute, we're actually doing a number of different engagements. That means high -- hardware platform solutions, services, proprietary compute and other high-value EMS engagements. It's also to point out, I'll add that, you know, our top ten concentration right now is 61% down 7% year over year.

當然，羅布。是的。在專有計算領域，我們支持多個超大規模客戶並擴大這些類型的產品。對於這些客戶來說，這不僅僅是專有計算，我們實際上正在進行許多不同的合作。這意味著高硬件平台解決方案、服務、專有計算和其他高價值的 EMS 業務。我還要指出的是，我要補充一點，你知道，我們目前排名前十的集中度為 61%，同比下降 7%。

Okay. And then in your deck that accompany the earnings, you know, it suggests that there's an AI deployment which would accelerate the network refresh cycle for you. I assume that's a reference to the 400 gig switch in HPS. And so if you could give maybe a little more color around what exactly that means, why would there be a network refresh cycle driven by that? And how do you participate there?

好的。然後，在你的收益報告中，你知道，它表明有一個人工智能部署可以加速你的網絡更新周期。我認為這是對 HPS 中 400 gig 交換機的引用。因此，如果您可以對這到底意味著什麼給出更多的解釋，為什麼會出現由此驅動的網絡刷新周期呢？你如何參與其中？

Yes, there's a couple of interesting mega trends associated with the proliferation of AI and ML products. On the networking AI is driving the requirement for more networking power. So these accelerators such as GPUs and TPUs significantly increase the need for bandwidth and thus power usage by more than 20 times. So this is actually creating pull through demand for our core networking products where we have a commanding share. The other important networking -- mega trend I should say, is 400 to 800 G migration. So this migration is going to enable higher speed networking equipment, you know, over the next couple of years. And we anticipate broader adoption of 400 G and also building of 800 G volumes. Again, we're a market leader in 400 G, and we also have several new engagements on 800 G based on our strong heritage and the 400 G. So we expect those volumes to continue as AI and ML proliferate and create this pull through demand.

是的，人工智能和機器學習產品的激增帶來了一些有趣的大趨勢。在網絡方面，人工智能正在推動對更多網絡能力的需求。因此，GPU 和 TPU 等加速器顯著增加了對帶寬的需求，從而使功耗增加了 20 倍以上。因此，這實際上為我們擁有主導份額的核心網絡產品創造了拉動需求。另一個重要的網絡——我應該說是大趨勢——是 400 到 800 G 的遷移。因此，這種遷移將在未來幾年內實現更高速的網絡設備。我們預計 400 G 會得到更廣泛的採用，並且還會建立 800 G 容量。同樣，我們是 400 G 的市場領導者，並且基於我們強大的傳統和 400 G，我們還在 800 G 方面進行了多項新的合作。因此，隨著人工智能和機器學習的激增，我們預計這些銷量將繼續下去，並創造這種拉動需求。

In Rob, Just to add that that 400 to 800 G migration, that's primarily HPS product. So when we talk about HPS resuming growth in forward periods, that is part of the driver.

Rob 補充說，400 到 800 G 的遷移主要是 HPS 產品。因此，當我們談論 HPS 在未來一段時間內恢復增長時，這是驅動因素的一部分。

Great. And then that's my last question is related to the HPS outlook. I think you said last quarter that it was some of your large customers working down buffer inventory and then now I understand maybe it's more driven by a spend shift towards this proprietary compute. You know, if you're looking forward into 2024, do you have the capacity to manage both of those businesses at the current level of demand when HPS, you know, demand returns? If I can make that assumption.

偉大的。我的最後一個問題與 HPS 前景有關。我想你上個季度說過，是你的一些大客戶在減少緩衝庫存，現在我明白，這可能更多是由向這種專有計算的支出轉變所驅動的。您知道，如果您展望 2024 年，當 HPS（您知道）需求回歸時，您是否有能力以當前的需求水平管理這兩項業務？如果我能做出這樣的假設的話。

Yes, we're actually expanding capacity in our Thailand facility to enable this growth. That capacity, we're already started the expansion. That capacity will come online in the second half of the year. But we do have capacity to do HPS products and also the proprietary compute products. These are, you know, highly automated lines and our Thailand facility is our flagship facility and has continued to operate fantastically through the pandemic and now coming out of it, it's at peak efficiency.

是的，我們實際上正在擴大泰國工廠的產能以實現這一增長。我們已經開始擴大產能。該產能將於今年下半年上線。但我們確實有能力生產 HPS 產品以及專有計算產品。你知道，這些是高度自動化的生產線，我們的泰國工廠是我們的旗艦工廠，在疫情期間繼續出色地運營，現在已經恢復到最高效率。

And if that buffer inventory that some of your customers are working through, if demand, you know, drives them to choose to just -- you know, to build up inventory again or if their inventory if they eat into inventory fast, could that come back faster than 2024? And then I'll pass the line.

如果你的一些客戶正在處理緩衝庫存，如果需求，你知道，驅使他們選擇再次建立庫存，或者如果他們的庫存快速消耗庫存，那麼這種情況會發生嗎？回歸速度比 2024 年還快？然後我就過線了。

Yes. On the AIML products, if we're able to get some of the silicon a little faster, it's certainly the demand -- the backlog is certainly there. We should be able to actually fulfill that demand. But right now AI and ML products are being paced by material, broadly speaking. Aside from that, and also aside from aerospace and defense, the material environment is largely back to pre-COD -- pre-COVID levels. That being said, lead times are still extended on several commodities.

是的。在 AIML 產品上，如果我們能夠更快地獲得一些芯片，那肯定是需求——積壓肯定是存在的。我們應該能夠真正滿足這個需求。但從廣義上講，目前人工智能和機器學習產品正在受到材料的影響。除此之外，除了航空航天和國防之外，物質環境基本上回到了 COD 之前——新冠疫情之前的水平。話雖如此，一些商品的交貨時間仍然延長。

Okay. Thanks for taking all my questions. Congrats on the quarter.

好的。感謝您回答我所有的問題。恭喜本季度。

Thanks, Rob.

謝謝，羅布。

Thank you. Your next question comes from Thanos Moschopoulos from BMO. Please go ahead.

謝謝。您的下一個問題來自 BMO 的 Thanos Moschopoulos。請繼續。

Hi. Good morning. Just given the acceleration in free cash flow, what are your current thoughts on capital deployment as you think about buybacks versus deleveraging versus M&A?

你好。早上好。鑑於自由現金流的加速，當您考慮回購、去槓桿化和併購時，您目前對資本部署有何看法？

Yes. Hi, Dennis. Good morning to you. We're really pleased with the cash flow generation. As you know, we've generated now positive free cash flow for over 4 years. So 18 quarters I think in a row now. We're pleased that we're able to raise our overall outlook. Our balance sheet is very healthy, 1.2 times leverage. To specifically answer your question, we've been active on the buyback front, but we have been opportunistic, as you know, the share price, of course, has materially accelerated through the quarter, but we did some buybacks early in the quarter and we were able to buy back about $15 million worth of shares at just over $11 a share, which is very good value. We'll continue to be opportunistic if we believe that our results are not being properly reflected in our share price. But other than that, I would say we would continue to build dry powder. We continue to have a very robust M&A funnel. We don't have a large ticket item that I would say is right in front of us, but we are focused on tuck in acquisitions which will help continue to expand our capabilities. And so we want to continue to maintain that optionality, but we're able to pivot pretty quickly based on what's happening in the market.

是的。嗨，丹尼斯。早上好。我們對現金流的產生非常滿意。如您所知，我們已經連續四年多產生正自由現金流。所以我想現在已經連續 18 個季度了。我們很高興能夠提升我們的整體前景。我們的資產負債表非常健康，槓桿率為 1.2 倍。為了具體回答你的問題，我們在回購方面一直很活躍，但我們一直是機會主義的，正如你所知，股價當然在整個季度大幅加速，但我們在本季度初進行了一些回購，我們能夠以每股略高於 11 美元的價格回購價值約 1500 萬美元的股票，這是非常有價值的。如果我們認為我們的業績沒有正確反映在我們的股價中，我們將繼續投機取巧。但除此之外，我想說我們將繼續製造乾粉。我們仍然擁有非常強大的併購渠道。我想說，我們面前沒有一個大項目，但我們專注於收購，這將有助於繼續擴大我們的能力。因此，我們希望繼續保持這種選擇性，但我們能夠根據市場發生的情況快速調整。

Great. And then Rob on A&D, just doing that business. I know for a while it was operating at depressed margins. So our margins kind of now at, you know, ATS group average levels. Is there more room for operating leverage as volumes continue to ramp? And then just any color you can provide in terms of just the rough size of that business would be helpful. Thanks.

偉大的。然後 Rob 在 A&D 工作，就做那件事。我知道有一段時間它的利潤率很低。所以我們的利潤率現在處於 ATS 集團的平均水平。隨著銷量持續增加，運營槓桿是否還有更多空間？然後，您可以根據該業務的粗略規模提供任何顏色都會有所幫助。謝謝。

I thought, I'll start off. I'll let Mandy finish. So the A&D business is certainly growing and getting back to pre-pandemic levels, we believe in 2024 in terms of margin performance. Material availability, as I mentioned earlier, is still a gating item. So that has been impacting margins and we still have a strong backlog and a lot of testes and that is also impacting our efficiency. So it's not yet, you know, operating at pre-pandemic margins at this stage of the game.

我想，我就開始吧。我會讓曼迪說完。因此，就利潤表現而言，我們相信 2024 年 A&D 業務肯定會增長並恢復到大流行前的水平。正如我之前提到的，材料可用性仍然是一個門控項目。因此，這一直影響著利潤率，而且我們仍然有大量的積壓和大量的測試，這也影響了我們的效率。所以，你知道，在遊戲的這個階段，它還沒有達到大流行前的利潤率。

Yes. What I would say overall, if I take a step back and talk about ATS margins, you know, we're very pleased right now with the performance that we're seeing in industrial. As many of those new programs in green energy have been ramping. We're pleased with the performance that we're seeing in Healthtech. We continue to believe that there's a margin opportunity in A&D, probably at -- maybe not immediately in front of us, but as we go into 2024, as materials availability become better, we can drive more efficiency. We continue to evaluate pricing opportunities with on our longer term contracts. So we think there's still some opportunity in A&D. And then of course, we believe there's opportunity in capital equipment. You know, this is a very different capital equipment business than what we had in the last downturn. We're profitable right now. We've taken cost actions without getting rid of capabilities. And so we continue to see an opportunity, even though we see is already a profitable business, that as that demand comes back, we'd be able to continue to grow in terms of the size of A&D. So I've mentioned this a few times, which is our industrial portfolio is our biggest business and our A&D business and our capital equipment business often are considered roughly the same. It's about an $800 million business. But we do believe that there's still an opportunity to grow it as we go into 2024.

是的。總的來說，如果我退後一步談論 ATS 利潤率，您知道，我們現在對工業領域的表現感到非常滿意。許多綠色能源新項目一直在穩步推進。我們對健康科技的表現感到滿意。我們仍然相信 A&D 領域存在利潤機會，可能不會立即出現在我們面前，但隨著我們進入 2024 年，隨著材料可用性變得更好，我們可以提高效率。我們繼續評估長期合同的定價機會。所以我們認為 A&D 領域仍然存在一些機會。當然，我們相信資本設備方面存在機會。你知道，這是一個與我們上次經濟低迷時期截然不同的資本設備業務。我們現在是盈利的。我們採取了成本行動，但沒有放棄能力。因此，我們繼續看到機會，儘管我們看到這已經是一項有利可圖的業務，但隨著需求的回升，我們將能夠繼續擴大航空航天和國防的規模。所以我已經多次提到這一點，我們的工業組合是我們最大的業務，我們的 A&D 業務和我們的資本設備業務通常被認為大致相同。這是一項價值約 8 億美元的業務。但我們確實相信，進入 2024 年，它仍然有機會增長。

Your next question comes from Todd Coupland from CIBC. Please go ahead.

您的下一個問題來自 CIBC 的托德·庫普蘭 (Todd Coupland)。請繼續。

Good morning. I was hoping to get some context on how the AI deployment has worked out over the last couple of years. My understanding is the initial capacity and modeling was put in place by the Hyperscalers back in 2020. So can you just take us through how Celestica -- if you did indeed benefit from that, how you did? And then I will follow up Question. Thanks.

早上好。我希望了解過去幾年人工智能部署的進展情況。我的理解是，超大規模企業早在 2020 年就已經建立了初始容量和建模。那麼您能否向我們介紹 Celestica 的情況——如果您確實從中受益，那麼您是如何做到的？然後我會跟進問題。謝謝。

Yes, we've been -- Thanks, Todd. We've been growing with the Hyperscalers now for, you know, quite some time, as you saw in our presentation. Hyperscaler growth this year is over 30% and it's a 51% kegger. I believe we mentioned during the call with the Hyperscalers, one of the products that we provide them, our compute products as AI and ML have proliferated and [collise] proliferated. The use of custom silicon has also proliferated and because of the cooling requirements and the complexity that's required to actually build these products, it really plays to our strengths -- our heritage and our strengths in terms of providing advanced manufacturing solutions. So when this trend kicked off, so did our growth with (inaudible) and being able to provide these products not just, you know, at scale, I would say, Todd, because, you know, our heritage and our strength and our ability to actually scale these things and provide them reliably and considerably has really led to some of our growth in these products. Furthermore, I would say in terms of the refresh cycle, what we see now is that the x86 compute modules are being replaced by these proprietary compute modules and over time we see this refresh cycle lasting for, you know, quite some time. So it bodes to further growth. Hopefully that answers your question.

是的，我們一直在——謝謝，托德。正如您在我們的演示中看到的那樣，我們已經與超大規模企業一起成長了很長一段時間。今年超大規模的增長超過 30%，增幅高達 51%。我相信我們在與超大規模企業的電話會議中提到過，我們為他們提供的產品之一，我們的人工智能和機器學習等計算產品已經激增並[碰撞]激增。定制矽的使用也在激增，並且由於實際製造這些產品所需的冷卻要求和復雜性，它真正發揮了我們的優勢——我們的傳統和我們在提供先進製造解決方案方面的優勢。因此，當這種趨勢開始時，我們的增長（聽不清）也隨之增長，並且能夠提供這些產品，而不僅僅是大規模提供這些產品，我想說，托德，因為，你知道，我們的傳統、我們的實力和我們的能力真正擴展這些東西並可靠且大量地提供它們確實導致了我們在這些產品上的一些增長。此外，我想說的是，就刷新周期而言，我們現在看到的是 x86 計算模塊正在被這些專有計算模塊所取代，隨著時間的推移，我們看到這個刷新周期持續了相當長的一段時間。因此，這預示著進一步的增長。希望這能回答你的問題。

That's helpful. Then if we think about visibility and how lumpy the business might be, could you just provide some context on that and perhaps include whether or not, you know, outside indicators like GPU growth at Chip suppliers like Nvidia for AI demand are good indicators for the strength of your business as well? Thanks a lot.

這很有幫助。然後，如果我們考慮可見性以及業務可能有多不穩定，您能否提供一些相關背景信息，也許包括諸如 Nvidia 等芯片供應商針對 AI 需求的 GPU 增長等外部指標是否是衡量 AI 需求的良好指標。您的業務實力也是如此嗎？多謝。

Yes, those are good indicators. We have good visibility on especially this line of business. Our customers are asking us to go out there and place orders for, you know, long periods of time and the lead times for their custom silicon or a little shy of a year. So we've placed our orders for multiple years, if you will, and our customers. CapEx forecasts are also robust in investing in these types of products. So we feel, you know, very confident that this growth will continue. So GPUs and TPUs are actually good leading indicators in terms of what we're doing to support our customers in this area.

是的，這些都是很好的指標。我們尤其在這一業務領域擁有良好的知名度。我們的客戶要求我們去那裡下訂單，您知道，他們的定制芯片的交貨時間很長，甚至不到一年。所以，如果你願意的話，我們和我們的客戶已經下了很多年的訂單。投資此類產品的資本支出預測也很強勁。因此，我們對這種增長將持續下去非常有信心。因此，就我們在該領域為客戶提供支持所做的工作而言，GPU 和 TPU 實際上是很好的領先指標。

Yes. Maybe I'll just add to it, which is, as you saw in the presentation, our Hyperscaler business now is close to $2.5 billion. It's well over 50% of the overall CCS business that's reflective of what's been happening in the broader market over the last 5 to 7 years, which is a significant amount of shifting from OEMs to the Hyperscalers. And as it relates to AI and generative AI, you know, a lot of those applications need to be run through a data center or a cloud provider just given the very heavy compute requirements. And so it is a concentrated industry. That being said, we're pleased that we're able to do business with most of the top hyperscalers in the world. And then within our engagement models, we've focused very much on servicing them through multiple programs. And so with some of our largest ones, we're doing both HPS and non HPS products, we're doing networking as well as compute products and so that's the area of focus for us, which is real diversification within the customer.

是的。也許我會補充一點，正如您在演示中看到的那樣，我們的 Hyperscaler 業務現在接近 25 億美元。它佔整個 CCS 業務的 50% 以上，反映了過去 5 到 7 年更廣泛市場中發生的情況，這是從 OEM 向超大規模廠商的重大轉變。由於它與人工智能和生成人工智能相關，您知道，考慮到非常繁重的計算要求，許多應用程序需要通過數據中心或云提供商運行。因此它是一個集中的行業。話雖這麼說，我們很高興能夠與世界上大多數頂級超大規模企業開展業務。然後，在我們的參與模式中，我們非常注重通過多個計劃為他們提供服務。因此，對於我們一些最大的產品，我們正在生產 HPS 和非 HPS 產品，我們正在生產網絡和計算產品，所以這是我們關注的領域，這是客戶的真正多元化。

Mandeep, if I could have one last follow up here. The business seems to be focused around Hyperscaler. Are you seeing any specific large businesses, large financial institutions or governments come in and lead the demand in terms of their own interest in AI apps? Or is it all happening as the hyperscalers are conduits for those end customers? Thanks a lot.

曼迪普，如果我能在這裡進行最後一次跟進的話。該業務似乎主要圍繞超大規模（Hyperscaler）。您是否看到任何特定的大型企業、大型金融機構或政府出於對人工智能應用程序的興趣而介入並引領需求？或者這一切都是因為超大規模企業是這些最終客戶的渠道而發生的？多謝。

I'll start off and Rob can add on as needed. But what I would say is that we're seeing the primary demand drivers coming right now from the Hyperscalers. That being said, the products that they are adopting, which are the most leading edge technologies, do eventually find their way into other applications as time goes on. And so as an example, even though the Hyperscalers are moving from 400 G to 800 G switches, those 400 G switches continue to have robust demand outside of the Hyperscalers. And so we envision that would be similar on the compute side as well.

我先開始，羅布可以根據需要添加。但我想說的是，我們現在看到主要的需求驅動因素來自超大規模企業。話雖如此，他們所採用的產品是最前沿的技術，隨著時間的推移，最終確實會進入其他應用程序。舉例來說，儘管超大規模企業正在從 400 G 交換機轉向 800 G 交換機，但這些 400 G 交換機在超大規模企業之外仍然有強勁的需求。因此，我們預計計算方面也會類似。

The only thing I would add tangentially is that we also expect our enterprise communication customers to benefit from data center interconnects growth due to the proliferation of AI and the increased growth of data center traffic. So this AI proliferation is really impacting a number of our end markets and a number of our served products, if you will.

我唯一要補充的是，由於人工智能的擴散和數據中心流量的增長，我們還期望我們的企業通信客戶受益於數據中心互連的增長。因此，如果你願意的話，這種人工智能的擴散確實影響了我們的許多終端市場和我們的許多服務產品。

Great. Thanks for the color. I appreciate it.

偉大的。謝謝你的顏色。我很感激。

Thank you. Your next question comes from Maxim Matushansky from RBC Capital Markets. Please go ahead.

謝謝。您的下一個問題來自 RBC 資本市場的 Maxim Matushansky。請繼續。

Yes. Thanks. I just wanted to circle back on the strong proprietary computer results. Have those trends stayed mostly the same over the past 90 days in terms of the hyperscaler demand, or has been any changes in terms of how fast you expect the Hyperscaler business to grow this year?

是的。謝謝。我只是想回顧一下強大的專有計算機結果。過去 90 天內，超大規模企業的需求趨勢是否基本保持不變，或者您預計今年超大規模企業的增長速度是否有任何變化？

Hi, Maxim. I would say over the last 90 days, the demand has increased and our ability to serve that demand also has risen. It's one of the reasons for the beat in Q2 and increased outlook for the year. You know, we continue to run very efficiently in our Thailand facility and we continue to be able to clear materials shorts with help from our supplier partners. So demand in that area is -- has been increasing and our ability to serve that demand has also risen to the occasion.

嗨，馬克西姆。我想說，在過去 90 天裡，需求增加了，我們滿足該需求的能力也增強了。這是第二季度表現出色並提高全年前景的原因之一。您知道，我們的泰國工廠繼續高效運行，並且在供應商合作夥伴的幫助下，我們繼續能夠解決材料短缺問題。因此，該領域的需求一直在增加，我們滿足該需求的能力也隨之提高。

So just in terms of framing that with the kind of mid-single digit increase that you expect for CCS in 2023, just given that stronger demand, is that a reflection of perhaps the weaker communications segment or is that more of a timing thing? Or I guess, how should we think about that mid-single digit revenue for CCS?

因此，就框架而言，鑑於需求強勁，您預計 2023 年 CCS 會出現中個位數的增長，這是否反映了通信領域的疲軟，或者這更多是一個時機問題？或者我猜，我們應該如何看待 CCS 的中個位數收入？

So what I would say, Maximus. Mandeep here is we're really are dealing with incredibly tough comps in the CCS business. You know, the CCS business in Q3 and Q4 last year grew between 30% and 40% year over year. And so we're in that period of dealing with tough comps. There has been a demand shift from networking, which is one of the reasons you've seen HPS be down into the proprietary compute. But as we go into 2024, the demand signals that we're getting right now from our customers is that we will be able to grow across multiple served areas. So it's really about tough comps in the second half of this year.

所以我要說的是，馬克西姆斯。 Mandeep 表示，我們確實正在應對 CCS 業務中極其艱難的競爭。要知道，去年Q3、Q4的CCS業務同比增長在30%到40%之間。所以我們正處於應對艱難競爭的時期。網絡需求發生了轉變，這也是 HPS 轉向專有計算的原因之一。但當我們進入 2024 年時，我們現在從客戶那裡得到的需求信號是我們將能夠在多個服務領域實現增長。所以今年下半年的比賽確實很艱難。

Okay. Got it. And just final question for me. Just in terms of the AI driven data center build out, are you seeing any changes in either the competitive advantage or the market positioning as it relates to the types of switches or networking equipment that the Hyperscalers are looking for, just as compared to kind of a more traditional data center build out? You know, is there any different players or competitors that, you know, perhaps are stronger in that, you know, technology that's needed for AI driven data centers as opposed to the traditional.

好的。知道了。這只是我的最後一個問題。就人工智能驅動的數據中心建設而言，您是否看到競爭優勢或市場定位有任何變化，因為它與超大規模企業正在尋找的交換機或網絡設備類型相關，就像與某種類型的數據中心相比建造更傳統的數據中心？你知道，是否有任何不同的參與者或競爭對手，你知道，也許在人工智能驅動的數據中心所需的技術方面比傳統的技術更強大。

Yes, the need for AI is really going towards this custom silicon which has higher power usage and has higher cooling requirements. So the folks that are able to actually produce these products at scale are the ones that are winning in that space and that frankly describes us very well. We have a very strong heritage in engineering, a very strong heritage with all the HPS products that we've been producing that support our ability to actually produce these types of very complex products at scale.

是的，對人工智能的需求確實是朝著這種具有更高功耗和更高冷卻要求的定制芯片發展。因此，能夠真正大規模生產這些產品的人就是在該領域獲勝的人，坦率地說，這很好地描述了我們。我們在工程方面擁有非常深厚的傳統，我們生產的所有 HPS 產品都具有非常深厚的傳統，這些產品支持我們實際大規模生產這些類型的非常複雜產品的能力。

Great. Thanks. I'll pass the line.

偉大的。謝謝。我會過線。

(Operator Instructions). Your next question comes from Daniel Chan from TD [Cowan]. Please go ahead.

（操作員說明）。您的下一個問題來自 TD [Cowan] 的 Daniel Chan。請繼續。

Good morning. I just wanted to drill into the Enterprise guide for next quarter. You're going for low double digits next quarter. I'm guessing that implies about $400 ish million, which is down from our estimate of $500. So just any color around that volatility they are expecting for the next quarter would be helpful.

早上好。我只是想深入研究下季度的企業指南。下個季度你的業績將達到兩位數。我猜測這意味著大約 400 美元左右，低於我們估計的 500 美元。因此，他們對下個季度的波動性的任何預測都會有所幫助。

Yes, it is going to be down a little bit. Some of that is there's some seasonality in there. Again, we're coming off of some very tough comps, but on a year over year basis, still strong double digit growth. What I would again say is, is that the growth is going to be continuing beyond Q3 and some of it's gated on when the demand is coming in, some of it's, you know, gated by material availability. And then as Robert also mentioned, we have been investing as well in capacity. And so we do continue to see that business growing even as we come out of Q3.

是的，它會下降一點。其中一些是那裡有一些季節性。再次，我們擺脫了一些非常艱難的競爭，但與去年同期相比，仍然強勁的兩位數增長。我要再說一遍的是，增長將持續到第三季度之後，其中一些是在需求出現時受到限制的，有些是由材料可用性決定的。正如羅伯特也提到的，我們也一直在產能方面進行投資。因此，即使在第三季度結束後，我們仍然看到該業務繼續增長。

Okay, that's helpful. And then, Rob, you talked about some pull through demand from networking as customers accelerate their AI investments. Are they engaging on programs outside of traditional data center hardware? So for example, you brought up cooling a number of times. Are they looking into different cooling solutions with you or anything outside of your typical networking compute and storage solutions?

好的，這很有幫助。然後，Rob，您談到了隨著客戶加速人工智能投資，網絡帶來的一些拉動需求。他們是否參與傳統數據中心硬件之外的項目？例如，您多次提到冷卻。他們是否正在與您一起研究不同的冷卻解決方案或典型網絡計算和存儲解決方案之外的任何解決方案？

Most of the solutions we provide them are, you know, completed products. So we're deploying our cooling solutions, you know, in our HPS designs. We're also deploying them in proprietary computers. So we tend not to do, you know, engineering as a service. We tend to provide complete solutions, but we're also growing our aftermarket services business with these providers, especially in the areas of iPad and things along those lines, which is going to be a huge growing business for us moving forward.

您知道，我們為他們提供的大多數解決方案都是已完成的產品。因此，我們正在 HPS 設計中部署我們的冷卻解決方案。我們還將它們部署在專有計算機中。所以我們傾向於不做，你知道，工程即服務。我們傾向於提供完整的解決方案，但我們也正在與這些提供商一起發展我們的售後服務業務，特別是在 iPad 和類似產品領域，這對我們來說將是一項巨大的增長業務。

Thank you. There are no further questions at this time. I'll be turning the call over to Rob Mionis for closing remarks.

謝謝。目前沒有其他問題。我將把電話轉給羅布·米奧尼斯（Rob Mionis）做總結髮言。

Thank you. I'm pleased with our continued strong performance in the second quarter and encouraged by our continued momentum as we enter the back half of the year. As a majority of our end markets are poised for growth in 2023. I'm also pleased we continue to be able to raise our 2023 Financial outlook and also pleased that this momentum is continuing into 2024. Thank you for joining us on today's call and we look forward to updating you as we progress throughout the year.

謝謝。我對我們第二季度持續強勁的表現感到高興，並為我們進入今年下半年的持續勢頭感到鼓舞。由於我們的大多數終端市場都有望在 2023 年實現增長。我也很高興我們能夠繼續提高 2023 年的財務前景，也很高興這種勢頭持續到 2024 年。感謝您參加今天的電話會議，我們期待著向您通報我們全年的進展情況。

Ladies and gentlemen, that concludes your conference.

女士們、先生們，你們的會議到此結束。