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 27, 2023.

女士們、先生們，早安，歡迎參加 Celestica 2023 年第二季財報電話會議。 (操作員指示) 此通話於 2023 年 7 月 27 日星期四錄音。

I will now like to turn the conference over to Craig Oberg. Please go ahead.

現在我想將會議交給 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.

早安，感謝您參加 Celestica 2023 年第二季財報電話會議。今天參加電話會議的有總裁兼執行長 Rob Mionis 和財務長 Mandeep Chawla。

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 sedar.com.

作為本次電話會議的提醒，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，這些預期、預測和假設受風險、不確定性和其他因素的影響，可能導致實際結果與此類陳述中表達的結論、預測或預期有重大差異。有關這些因素和假設的識別和討論，以及有關前瞻性陳述的更多信息，請參閱昨天的新聞稿，包括其中關於前瞻性陳述的警告說明、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。

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 12month adjusted EBITDA leverage ratio, adjusted earnings per share or adjusted EPS, adjusted SG&A expense 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.

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 (IFRS) 財務指標，包括基於非國際財務報告準則 (IFRS) 財務指標的比率，包括非國際財務報告準則 (IFRS) 營業利潤率、調整後毛利率、調整後投資資本回報率或調整後投資回報率、調整後自由現金流量、總負債率、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、調整後自由現金流量、總負債率與非國際財務準則 (12999767797979979年）一般及行政費用及調整後有效稅率。聽眾請注意，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。

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. 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 U.S. dollars and per share information is based on diluted shares outstanding.

這些非國際財務報告準則財務指標不具有國際財務報告準則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或根據美國公認會計準則報告並使用非公認會計準則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指標進行比較。請您參閱昨天的新聞稿和我們 2023 年第二季度的收益報告，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 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 財務數據的修改版本以及對 202020 年 2020202 年的財務說明。會議中對美元的所有引用均為美元，每股資訊基於稀釋的流通股。

Let me now turn the call over to Rob.

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 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.

謝謝你，克雷格。大家早安，感謝大家參加今天的電話會議。我們非常高興第二季度取得了穩健的財務表現。我們的營收為 19.4 億美元，非國際財務報告準則調整後每股收益為 0.55 美元，兩者都超出了我們預期範圍的高端。我們的非國際財務報告準則營業利潤率為 5.5%，為公司歷史上最高水平，且過去連續 4 個季度非國際財務報告準則營業利潤率一直穩定在 5% 以上，體現了 Celestica 的全新面貌。最後，我們的非國際財務報告準則調整後自由現金流為 6,700 萬美元，創下了 3 年來的最高季度業績。我們強勁的業績反映了我們投資組合的策略多元化以及我們在許多極具吸引力的市場中的投資優勢。在我們的 CCS 領域，我們繼續看到超大規模業務的穩健成長，因為我們相信他們在人工智慧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順風。

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.

在我們的 ATS 部門，新綠色能源計畫的不斷推進，加上商業航空需求的回升，繼續支撐著兩位數的同比增長。我們繼續為客戶提供良好的服務，我們對卓越營運的關注促進了我們的成長和利潤表現。此外，物料供應環境持續逐步正常化，使我們能夠進一步提高營運效率。

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.

在我提供有關我們每個終端市場前景的最新資訊之前，我想將電話轉給 Mandeep，他將討論我們第二季的財務業績以及我們對 2023 年第三季的指導。

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，大家早安。第二季營收為 19.4 億美元，超出了我們預期的最高水準。營收年增 13%，這得益於 ATS 部門超過 20% 的成長和 CCS 部門收入的增加。我們第二季的非國際財務報告準則下的營業利潤率為 5.5%，比去年同期高出 70 個基點，這主要得益於兩個部門的銷售槓桿率提高，包括我們 CCS 部門的強勁盈利能力。第二季非國際財務報告準則調整後每股收益為 0.55 美元，超過了我們預期範圍的高位，較去年同期成長 0.11 美元，這得益於營業利潤增加和流通股減少。

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.

第二季 ATS 部門營收為 8.65 億美元，年增 24%，高於我們預期的中等百分比增幅。 ATS 部門營收年增得益於我們工業業務的持續強勁成長，以及商用航空需求和 A&D 需求的回升，這足以抵消我們資本設備業務需求疲軟的影響。 ATS 部門收入佔第二季總收入的 45%。

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.

我們的CCS部門營收為10.7億美元，比去年同期成長了5%。這一成長主要得益於我們企業端市場非常強勁的收入成長，以及人工智慧和機器學習應用推動的專有運算的強勁需求，但被預期的通訊需求疲軟部分抵消。

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業務本季的營收為3.54億美元，年減23%。 HPS 收入與去年同期相比有所放緩，原因是競爭激烈，而超大規模資本支出預計將從網路產品轉向支援 AI 應用的運算能力。 HPS 營收佔第二季公司總營收的 18%，去年同期為 27%。我們確實預計 HPS 收入將在未來幾季連續成長。

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. Enterprise end 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.

第二季的通訊和市場收入年減 15％，符合我們預期的 15％ 左右的降幅。儘管我們透過其他 Celestica 解決方案為這些客戶提供支持，但下滑的主要原因是競爭激烈以及超大規模客戶減少 HPS 網路購買。受專有運算需求強勁的推動，本季企業端市場營收年增 42%，遠高於我們預期的 20% 的高增幅。

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. CCS 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.

轉向段邊距。 ATS 部門利潤率第二季為 4.8%。 30（技術難度）是由於我們的工業綠色能源計劃繼續推進、商業航空航天復甦以及強勁的生產效率而產生的更大成交量槓桿。 CCS部門利潤率為6.0%，比去年同期上升了100個基點，創歷史新高。成長的動力來自於更高的銷售槓桿率，尤其是在我們的企業端市場，以及強勁的生產力和有利的產品組合。

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.

接下來討論一些額外的財務指標。本季的 IFRS 淨收益為 5,600 萬美元或每股 0.46 美元，而去年同期的淨收益為 3,600 萬美元或每股 0.29 美元。第二季調整後毛利率為 9.7%，較去年同期上升 70 個基點，主要得益於銷售槓桿和成本生產力的提高。

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.

我們第二季的非國際財務報告準則調整後有效稅率為 21%，去年同期為 22%。第二季非國際財務報告準則調整後的ROIC為20.0％，較去年同期增加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.

轉向營運資金。我們第二季末的庫存為 23 億美元，比上一季減少 5,800 萬美元，比去年同期增加 2.38 億美元。第二季末的現金存款為 8.1 億美元，與上一季基本持平，比去年同期高出 2.84 億美元。

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 win.

第二季現金週期天數為 73 天，較上一季減少 2 天，比去年同期增加 4 天。第二季的資本支出為 3,200 萬美元，約佔收入的 1.7%，而 2022 年第二季為 1.3%。

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.

第二季非國際財務報告準則調整後自由現金流為 6,700 萬美元，去年同期為 4,300 萬美元。鑑於我們今年迄今的穩健表現，我們預計 2023 年非國際財務報告準則調整後的自由現金流將達到 1.25 億美元。我們第二季末的現金餘額為 3.61 億美元，年減 500 萬美元，季增 4,200 萬美元。我們的現金餘額加上循環信貸下約 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。

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 30, 2023, we were compliant with all financial covenants under our credit agreement.

截至第二季末，我們的總債務為 6.18 億美元，比上一季減少 500 萬美元，淨債務為 2.57 億美元。我們第二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 1.2 倍，比上一季下降 0.1 倍，比去年同期下降 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.

第二季度，我們回購了約 140 萬股股票以供註銷，成本為 1,500 萬美元。我們打算在今年剩餘時間內繼續抓住機會，在 NCIB 框架下進行股票回購。

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.

現在談談我們對 2023 年第三季的指引。預計第三季非國際財務報告準則調整後每股收益在 0.56 美元至 0.62 美元之間。

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盈餘指引範圍的中點達到，非國際財務報告準則營業利益率將為 5.6%。這意味著比去年同期增加 50 個基點，比上一季增加 10 個基點。第三季非國際財務報告準則調整後的銷售、一般及行政支出預計在 6,600 萬至 6,800 萬美元之間。我們預計第三季的非國際財務報告準則調整後有效稅率約為 19%，不包括應稅外匯的影響。

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.

現在談談我們對 2023 年第三季的終端市場展望。在我們的 CCS 部門，我們預計第三季的營收將與去年同期基本持平，因為預計較低的通訊收入將被較高的企業收入所抵銷。我們預計，通訊終端市場的營收將比去年同期下降高個位數百分比，原因是同店銷售業績不佳，且包括 HPS 業務在內的某些網路項目預期需求下降。我們預計，與第二季相比，本季的業績將顯著改善。

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.

最後，在我們的企業端市場，我們預期營收將比去年同期成長兩位數的百分比，這得益於我們超大規模客戶對專有運算的持續強勁需求。

I'll now turn the call back over to Rob to discuss the outlook for our end markets and business overall.

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.

謝謝你，Mandeep。繼第二季強勁的財務表現後，我們很高興上調了 2023 年的年度預期。如果實現，這將比上年增長 18%。

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 wins. 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.

我們預計 2023 年非國際財務報告準則下的營業利潤率為 5.5%，比 2022 年增加 60 個基點。我們相信，這種成長加上持續的利潤率將使 2024 年非國際財務報告準則調整後每股盈餘相對於我們 2023 年的預期成長 10% 或更多。

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.

現在我想詳細介紹一下我們每個業務的前景。我們繼續預計，與 2022 年相比，2023 年 ATS 部門的收入將增長百分之十幾。我們預計，上半年工業業務年增率的動能將在下半年延續。

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 wins in the space.

我們對長期前景也非常樂觀，因為我們相信一系列結構性利多因素支撐需求，尤其是綠色能源、電動車充電和車載專案。我們也相信，隨著我們在該領域贏得一系列新項目，我們的業務已做好準備，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 wins.

由於晶圓廠設備市場需求持續減少，我們對資本設備的前景仍不樂觀。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，我們預計該業務在經濟低迷時期仍將保持盈利，並且由於我們的產品組合、市場份額增長和新項目勝利等優勢，其表現將優於更廣泛的晶圓廠設備市場。

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.

我們預計我們的資本設備業務將在 2024 年恢復成長，與晶圓廠設備市場的最新前景一致。我們也很高興能夠啟動一些新項目，其中包括一位新的光刻客戶。我們看到商業航空需求強勁復甦，商業空中交通的正常化預計將持續下去。我們看到這一趨勢為我們商用航空業務的所有子市場帶來了好處，包括單通道、雙通道飛機和商務航空。

Additionally, we are benefiting from a number of new defense program ramps in 2023. The outlook for our overall R&D business remains positive. 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.

此外，我們也受惠於 2023 年多項新的國防計畫的推進。在手術器械和影像設備領域新專案的推動下，我們的健康科技業務正經歷穩定的兩位數年成長。我們對健康科技業務的前景仍然積極且穩定，預計與其他市場相比，需求波動較小。

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.

現在讓我們轉到 CCS 部分。到 2023 年，CCS 收入預計將比 2022 年成長中等個位數，預計企業的成長將超過通訊領域的疲軟。我們預計，近期分部利潤率的強勁勢頭將持續下去，並在 2023 年繼續促進我們整體業務的成長。

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.

我們預計，專有運算的需求將在 2023 年繼續支持企業實現兩位數的營收成長率。與 2022 年相比，我們的 HPS 業務需求持續放緩。

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. 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% CAGR since 2018.

由於超大規模客戶繼續對其人工智慧和機器學習能力和能力進行大量投資，因此我們的整體業務組合仍然非常健康。在超大規模客戶致力於建立其資料中心基礎設施的過程中，我們一直是他們的重要合作夥伴。超大規模資料中心在過去 12 個月為 Celestica 帶來了約 25 億美元的收入，自 2018 年以來複合年增長率約為 50%。

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.

最近超大規模的需求偏向專有運算產品。展望未來，我們預期超大規模企業持續部署人工智慧和機器學習基礎設施將加速其網路更新周期。因為他們預計需要更先進的網路基礎設施來支持其對運算能力的投資。因此，我們預計未來對我們的 HPS 產品和服務的需求將會增加。

We are market leaders in the 400G switches and are pleased that we are continuing to win engagements in 800G 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.

我們是 400G 交換器市場的領導者，並且很高興能夠憑藉對下一代應用的持續投資，繼續贏得 800G 交換器市場的青睞。我們的策略產品和獨特的能力及網路預計將長期支持我們的超大規模客戶的收入成長。

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.

我對我們在 2023 年上半年的強勁表現感到滿意。我們對未來幾個月以及 2024 年的業務前景仍然充滿信心。

With that, I would now like to turn the call over to the operator for questions. Thank you.

說完這些，我現在想將電話轉給接線生來回答問題。謝謝。

(Operator Instructions) Your first question comes from Rob Young from Canaccord.

（操作員指示）您的第一個問題來自 Canaccord 的 Rob Young。

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.

也許只是關於企業專有計算元素的一點資訊。我認為您在 CCS 有 [110%] 的客戶。我認為這是專有運算，也許您可以更詳細地說明這個領域有多少客戶，是一個客戶推動這一切還是有多個客戶，您是否是企業和超大規模者，或者是否只是由超大規模者推動？也許只需多一點顏色就可以擴大範圍。

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-10 concentration right now is 61% down 7% year-over-year.

當然，羅布。是的。在專有運算領域，我們支援多位超大規模客戶並持續推出這些類型的產品。在這些客戶中，我們不僅僅進行專有計算，實際上我們還在進行許多不同的合作。這意味著高硬體平台解決方案、服務、專有運算和其他高價值的 EMS 業務。還要指出的是，我要補充一點，你知道，我們目前前 10 名的集中度是 61%，比去年同期下降 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，在伴隨收益的簡報中，您知道，它表明存在 AI 部署，這將加速您的網路刷新週期。我認為這是對 HPS 中的 400Gb 交換器的引用。因此，如果您可以更詳細地解釋一下這到底意味著什麼，那麼為什麼會出現由此驅動的網路刷新週期？您是如何參與其中的？

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 20x. So this is actually creating pull through demand for our core networking products where we have a commanding share.

是的，隨著人工智慧和機器學習產品的普及，出現了一些有趣的大趨勢。在網路方面，人工智慧正在推動對更多網路能力的需求。因此，GPU 和 TPU 等加速器顯著增加了對頻寬的需求，從而使功耗增加了 20 倍以上。因此，這實際上為我們佔據主導地位的核心網路產品創造了拉動需求。

The other important networking -- mega trend I should say, is 400G to 800G 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 400G and also building of 800G volumes. Again, we're a market leader in 400G, and we also have several new engagements on 800G based on our strong heritage and the 400G. So we expect those volumes to continue as AI and ML proliferate and create this pull through demand.

我應該說，另一個重要的網路大趨勢是 400G 到 800G 的遷移。所以，在未來幾年裡，這種遷移將會促進更高速的網路設備的發展。我們預計 400G 將得到更廣泛應用，並且 800G 容量也將建造。再次，我們是 400G 市場的領導者，並且憑藉我們雄厚的傳統和 400G，我們在 800G 方面也有幾項新的合作。因此，我們預計，隨著人工智慧和機器學習的普及並產生這種拉動需求，這些數量將持續增長。

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

Rob，我要補充一點，400G 到 800G 的遷移主要是 HPS 產品。因此，當我們談論 HPS 在未來時期恢復成長時，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。這是我的最後一個問題，與 HPS 展望有關。我記得你上個季度說過，是你的一些大客戶在減少緩衝庫存，現在我明白了，也許這更多的是由向這種專有計算的支出轉移所驅動。你知道，如果你展望2024年，當HPS的需求回升時，你是否有能力在目前的需求水準上管理這兩項業務？如果我可以做出這個假設。

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成長。我們已經開始擴大這一產能。該產能將於今年下半年投入使用。但我們確實有能力生產 HPS 產品和專有運算產品。這些都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，在整個疫情期間一直保持著良好的運轉，現在，它的效率達到了高峰。

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.

如果您的某些客戶正在處理緩衝庫存，如果需求促使他們選擇再次增加庫存，或者如果他們的庫存快速消耗，那麼能否比 2024 年更快地恢復？然後我就通過了這條線。

Yes. On the AI/ML 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-COVID levels. That being said, lead times are still extended on several commodities.

是的。對於 AI/ML 產品而言，如果我們能夠更快地獲得部分矽片，那麼這肯定是有需求的——積壓肯定存在。我們應該能夠真正滿足這項需求。但目前，從廣義上講，人工智慧和機器學習產品的發展步伐是由材料決定的。除此之外，除了航空航太和國防之外，材料環境已基本恢復到疫情前的水準。話雖如此，多種商品的交貨時間仍然延長。

Congrats on the quarter.

恭喜本季取得佳績。

Thanks, Rob.

謝謝，羅布。

Your next question comes from Thanos Moschopoulos from BMO.

您的下一個問題來自 BMO 的 Thanos Moschopoulos。

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?

鑑於自由現金流的加速，您在考慮回購、去槓桿和併購時對資本配置有何想法？

Yes. Dennis, 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, 1.2x 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.

是的。丹尼斯，我們對現金流的產生感到非常滿意。如您所知，我們已經連續四年產生正自由現金流。所以我認為現在已經是連續 18 個季度了。我們很高興能夠提高我們的整體前景。我們的資產負債表非常健康，槓桿比率為 1.2 倍。具體回答您的問題，我們在回購方面一直很活躍，但我們也抓住機會，如您所知，當然，股價在本季度大幅加速，但我們在本季度初進行了一些回購，我們能夠以每股 11 美元多一點的價格回購價值約 1500 萬美元的股票，這是非常划算的。

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.

如果我們認為我們的業績沒有正確反映在股價中，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火藥。我們繼續擁有非常強勁的併購管道。我們面前並沒有大宗的商品，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可選性，但我們能夠根據市場的情況迅速做出調整。

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.

偉大的。然後 Rob 在 A&D 就做那項業務。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 集團平均。隨著銷售量持續成長，經營槓桿是否還有更大的空間？然後，只要您提供該企業大致規模的信息，就會很有幫助。

Thanos, I'll start off and 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 past dues, 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.

薩諾斯，我先開始，讓 Mandy 把話說完。因此，我們相信 A&D 業務肯定會成長，並在 2024 年恢復到疫情前的水平。所以這對利潤產生了影響，我們仍然有大量積壓訂單和逾期款項，這也影響了我們的效率。所以，你知道，在現階段，它還沒有恢復到疫情前的水準。

Yes. What I would say overall, if I take a step back and talk about ATS margins, 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.

是的。總體而言，如果我退一步來談論 ATS 利潤率，我們現在對工業領域的表現非常滿意。許多綠色能源新項目正在加速推進。我們對健康科技領域的表現感到非常滿意。我們仍然相信 A&D 領域存在盈利機會，也許不是馬上就在我們面前，但隨著進入 2024 年，隨著材料可用性變得更好，我們可以提高效率。我們將繼續評估長期合約的定價機會。因此我們認為 A&D 領域仍存在一些機會。當然，我們相信資本設備領域存在機會。你知道，這與上次經濟衰退期間的資本設備業務截然不同。我們現在已經獲利了。我們採取了成本措施，但並沒有放棄能力。因此，我們繼續看到機會，儘管我們認為這已經是一項盈利的業務，但隨著需求的回升，我們將能夠繼續成長。

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.

就 A&D 的規模而言，我已經提到過幾次了，我們的工業產品組合是我們最大的業務，而我們的 A&D 業務和資本設備業務通常被認為大致相同。這是一筆價值約8億美元的生意。但我們確實相信，進入 2024 年，仍然有機會實現成長。

Your next question comes from Todd Coupland from CIBC.

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

I 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 have a follow-up question.

我希望了解過去幾年人工智慧部署的進展。據我了解，初始容量和建模是由超大規模企業在 2020 年制定的。 那麼您能否向我們介紹一下 Celestica 的情況——如果您確實從中受益，那麼您做得怎麼樣？然後我有一個後續問題。

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% CAGR. 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 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.

是的，我們一直—謝謝，托德。正如您在我們的演示中看到的，我們已經與超大規模企業共同成長了相當長一段時間。今年超大規模的成長超過 30%，複合年增長率為 51%。我相信我們在通話中提到過。隨著超大規模運算的發展，我們向他們提供的產品之一，即人工智慧和機器學習等運算產品已經不斷激增。客製化矽片的使用也已激增，並且由於實際製造這些產品所需的冷卻要求和複雜性，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。

So when this trend kicked off, so did our growth with them 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.

因此，當這種趨勢開始時，我們也隨之成長，並且能夠提供這些產品，而不僅僅是大規模地提供，我想說，托德，因為我們的傳統、實力和我們實際擴大這些東西的能力，以及可靠和可觀地提供它們的能力，確實導致了我們在這些產品方面的增長。此外，我想說，就更新周期而言，我們現在看到的是 x86 計算模組正在被這些專有計算模組所取代，並且隨著時間的推移，我們看到這個更新周期持續相當長一段時間。因此，這預示著進一步的成長。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?

這很有幫助。那麼，如果我們考慮可見性以及業務的波動性，您能否提供一些背景信息，例如 NVIDIA 等晶片供應商對 AI 需求的 GPU 增長等外部指標是否也是衡量您業務實力的良好指標？

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。我們對這條業務線尤其有良好的了解。我們的客戶要求我們出去下訂單，你知道，他們的訂製矽片的交貨週期很長，甚至不到一年。因此，如果你願意的話，我們已經向我們的客戶下了多年的訂單。對這些類型產品的投資，資本支出預測也十分強勁。所以我們非常有信心這種成長將會持續下去。因此，就我們在該領域為客戶提供支援的工作而言，GPU 和 TPU 實際上是良好的領先指標。

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 datacenter or a cloud provider just given the very heavy compute requirements.

是的。也許我只是想補充一點，正如您在演示中看到的，我們的超大規模業務現在接近 25 億美元。這佔整個 CCS 業務的 50% 以上，反映了過去 5 到 7 年間整個市場的狀況，即從 OEM 向超大規模企業的大量轉移。至於人工智慧和生成式人工智慧，您知道，由於運算需求非常大，許多應用程式都需要透過資料中心或雲端供應商來運作。

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.

因此，這是一個集中的行業。話雖如此，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，我們非常注重透過多種計劃為他們提供服務。對於我們的一些最大的產品，我們同時生產 HPS 和非 HPS 產品，我們生產網路和運算產品，這是我們關注的領域，即客戶的真正多樣化。

Mandy, 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?

曼迪，我可以在這裡最後跟進嗎？該業務似乎主要集中在超大規模。您是否看到任何特定的大型企業、大型金融機構或政府進入並引領對人工智慧應用的興趣需求？或者這一切都是因為超大規模企業是那些最終客戶的管道？

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 400G to 800G switches, those 400G 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，Rob 可以根據需要進行補充。但我想說的是，我們現在看到主要的需求驅動因素是來自超大規模企業。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，最終會進入其他應用領域。舉個例子，即使超大規模企業正在從 400G 轉向 800G 交換機，但超大規模企業以外對 400G 交換機的需求仍然強勁。因此我們設想在計算方面也會有類似的情況。

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.

我唯一想補充的是，我們也預計，由於人工智慧的普及和資料中心流量的快速成長，我們的企業通訊客戶將從資料中心互連的成長中受益。因此，如果你願意的話，人工智慧的普及確實影響了我們的許多終端市場和許多服務產品。

Your next question comes from Maxim Matushansky from RBC Capital Markets.

您的下一個問題來自 RBC Capital Markets 的 Maxim Matushansky。

Yes. 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。我只是想回顧一下強大的專有電腦成果。就超大規模需求而言，過去 90 天的趨勢是否基本保持不變，或者就您預計今年超大規模業務的成長速度而言，有什麼變化嗎？

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.

馬克西姆，我想說，在過去的 90 天裡，需求增加了，我們滿足需求的能力也提高了。這是第二季業績超出預期以及全年前景看好的原因之一。您知道，我們的泰國工廠繼續高效運轉，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?

那麼，就您預計 2023 年 CCS 將實現中等個位數成長這一情況而言，考慮到更強勁的需求，這是否反映了通訊部門的疲軟，還是更多的是時間問題？或者我想，我們應該如何看待 CCS 的中位數個位數收入？

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.

所以我想說的是——馬克西姆斯，曼迪普，我們在 CCS 業務中確實面臨著極其艱難的競爭。您知道，去年第三季和第四季的CCS業務年增了30％至40％。所以，我們正處於應對嚴峻競爭的時期。網路需求發生了轉變，這是您看到 HPS 降至專有運算的原因之一。但隨著我們進入 2024 年，我們現在從客戶那裡得到的需求訊號是，我們將能夠在多個服務領域實現發展。因此，今年下半年的競爭確實很激烈。

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 and 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 perhaps are stronger in that technology that's needed for AI driven data centers as opposed to the traditional?

好的。知道了。這是我的最後一個問題。就人工智慧驅動的資料中心建置而言，與更傳統的資料中心建置相比，您是否看到競爭優勢或市場定位發生了任何變化，因為它與超大規模企業正在尋找的交換器和設備類型有關？您知道嗎，與傳統資料中心相比，是否存在其他參與者或競爭對手在人工智慧驅動資料中心所需的技術方面更強大？

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，人工智慧的需求確實轉向這種客製化矽片，它具有更高的功耗和更高的冷卻要求。因此，真正能夠大規模生產這些產品的人才是該領域的勝利者，坦白說，這很好地描述了我們。我們在工程領域擁有非常深厚的傳統，我們生產的所有 HPS 產品都擁有非常深厚的傳統，這些傳統支持了我們大規模生產這些類型的非常複雜的產品的能力。

(Operator Instructions) Your next question comes from Daniel Chan from TD Cowen.

（操作員指示）您的下一個問題來自 TD Cowen 的 Daniel Chan。

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 estimated $500 million. So just any color around that volatility they are expecting for the next quarter would be helpful.

只是想深入了解下個季度的企業指南。下個季度你的得分將會低於兩位數。我猜這意味著大約 4 億美元，低於我們估計的 5 億美元。因此，他們預計下一季度的波動性的任何情況都會有所幫助。

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，會下降一點。其中有些是有一定的季節性的。再說一次，我們剛剛經歷了一些非常艱難的競爭，但與去年同期相比，仍然保持了強勁的兩位數成長。我想再次強調的是，成長還將持續到第三季之後，部分成長取決於需求的增加，部分成長則取決於材料供應情況。正如羅伯特所提到的，我們也一直在投資產能。因此，即使我們剛走出第三季度，我們仍看到業務繼續成長。

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對人工智慧的投資，網路帶來了一些拉動需求。他們是否參與了傳統資料中心硬體以外的專案？舉例來說，您多次提到冷卻問題。他們是否與您一起研究不同的冷卻解決方案或典型的網路運算和儲存解決方案之外的任何解決方案？

Most of the solutions we provide them are completed products. So we're deploying our cooling solutions in our HPS designs. We're also deploying them in proprietary computers. So we tend not to do 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.

我們為他們提供的解決方案大多是完整的產品。因此我們在 HPS 設計中部署了冷卻解決方案。我們也將它們部署在專有電腦中。因此我們傾向於不把工程當作一項服務。我們傾向於提供完整的解決方案，但我們也在與這些供應商一起擴大我們的售後服務業務，特別是在 iPad 和相關領域，這將是我們未來巨大的成長業務。

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 Rob Mionis 來做結束語。

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。我對我們在第二季度繼續保持的強勁表現感到高興，並對我們在進入下半年時繼續保持的勢頭感到鼓舞。由於我們的大多數終端市場都有望在 2023 年實現成長。

Ladies and gentlemen, that concludes your conference.

女士們、先生們，你們的會議到此結束。