EX-99.1 2 cls-20240930x6kprfs.htm EX-99.1 CLS-2024.09.30-6K (PR&FS)
展示99.1

即時発表　　　　　2024年10月23日
（全セクターの金額は米ドル。株価情報は希薄化後に基づいています。                         
（特記なき限り、すべての株は発行済み）

セレスティカは2024年第3四半期の財務結果を発表
そして、バーチャル投資家ミーティングを開催します

2024年第3四半期の売上高とIFRS非調整後のeps*は、ガイダンス範囲の上限を上回りました；
2024年の通期見通しを引き上げ、2025年の見通しを提供しました

カナダ・トロント - セレスティカ・インク（tsx: cls）（nyse: cls）は、世界で最も革新的な企業向けに設計、製造、ハードウェアプラットフォーム、サプライチェーンソリューションのリーダーである。2024年9月30日（2024年第3四半期）の四半期決算を発表しました。†.

2024年第3四半期に非常に強い財務業績を達成できたことを嬉しく思っており、売上高は前年比22%増、非IFRS調整後のeps*は前年比60%増となりました。2024年第4四半期のガイダンスに基づき、Celestica の社長兼CEOであるRob Mionisは、「2024年も成功裏に締めくくる強い年になると期待しています」と述べました。

「来年に向けて、多くの大口顧客から堅調な需要のシグナルが続いており、継続的な成長に向けた見通しを提供しています。2025年の見通しでは、年間売上高と非IFRS営業利益率が向上すると予想され、達成されれば非IFRS調整後のEPSの年間成長率が15%を表すことになります。」

2024年第3四半期のハイライト

・主要指標:
•売上高：$25億、2023年第3四半期（Q3 2023）の$20.4億に比べて22％増加しました。
•非IFRS基準の営業利益率*: 6.7%、2023年第3四半期の5.7%と比較して。
•CCSセグメントの売上高が増加しました 2023年第3四半期に比べて売上高は42%増加し、CCSセグメントの利益率は2023年第3四半期の6.2%に比べて7.6%でした
•ATSセグメントの売上高は減少しました 2023年第3四半期と比較して5%減のATSセグメントの利益率は4.8%で、2023年第3四半期の4.9%と比較しています。
•調整後の1株当たり利益（EPS）（非IFRS）：$1.04、2023年第3四半期の$0.65に比べています。
•投下資本利益率（調整後ROIC）（非IFRS）*：28.6％、Q3 2023の21.5％と比較して。
•調整後のフリーキャッシュフロー（非IFRS）：74.5百万ドル、2023年第3四半期の3410万ドルに比べて。
・非IFRS措置に関するIFRS財務指標（上記の非IFRS措置に最も直接関連する財務調整措置）
•売上高に対する営業利益の割合は、2023年第3四半期の5.7％に対して5.5％でした。
•第3四半期の2023年には、$0.67に対してEPSが$0.77でした。
•投下資本利益率（IFRS ROIC）は、2023年第3四半期の21.8％に比べて23.3％です。
•営業活動による現金は、2023年第3四半期には8840万ドルに対して、1億4480万ドルでした。
・2.2百万株の普通株式を10億ドルで取得し、取り消しました。

セレスティカは、2つの運用部門と報告可能なセグメントを有しています。Advanced Technology Solutions（ATS）とConnectivity＆Cloud Solutions（CCS）です。当社のATSセグメントは、ATSエンドマーケットで構成され、航空宇宙と防衛（A＆D）、産業、ヘルステック、および資本機器ビジネスを含んでいます。当社のCCSセグメントは、通信とエンタープライズ（サーバーとストレージ）エンドマーケットで構成されています。セグメントのパフォーマンスは、セグメントの売上高、セグメント収益、およびセグメントマージン（セグメント収益をセグメント売上高の割合で表したもの）に基づいて評価されています。詳細については、2024年9月30日付けの未監査中間連結財務諸表（2024年第3四半期中間財務諸表）のノート3を参照してください。
* 国際財務報告基準（IFRS）に基づかない財務指標（非IFRS財務指標に基づく比率を含む）には、IFRSによって規定された標準化された定義がないため、同様の財務指標と比較できない場合があります。


IFRSまたは米国一般受入会計原則（GAAP）に基づき報告する他の公開企業。 非IFRS財務指標の使用に関する理由については、以下の「非IFRS補足情報」を参照してください。 このプレスリリースに含まれる非IFRS財務指標、それらの定義、使用法、および歴史的な非IFRS財務指標をIFRS財務指標に最も直接対応するものへの調整に関する情報については、スケジュール1を参照してください。 スケジュール1には、2024年の最初の9か月（YTD 2024）における非IFRS調整後純利益、非IFRS調整後のEPS、非IFRS調整後の税費用、および非IFRS調整後の法的な最低税率（グローバル最低税率）の「Pillar Two」の制定と、当社の信用取引の最近の修正と新契約によって生じた変更の説明も含まれています。 非IFRS営業利益率、非IFRS調整後のEPS、非IFRS調整後のROIC、および非IFRS調整後のフリーキャッシュフローに対応する最も直接的なIFRS財務指標は、収益に対する運営収入の割合、eps、IFRS ROIC、および運用から提供される現金です。


2024年第4四半期（Q4 2024）のガイダンス
Q4 2024ガイダンス
売上（10億ドル単位）$2.425から$2.575
非IFRS営業利益率*中間点で6.7%
売上高と非IFRS調整済み
EPSのガイダンス範囲
調整済みSG&A（非IFRS）（百万ドル単位）78ドルから80ドル
調整後のEPS（非IFRS）*0.99ドルから1.09ドル

2024年第4四半期について、従業員株式報酬費用、無形資産の償却（コンピューターソフトウェアを除く）、およびリストラの費用によるIFRSベースの純利益に対する株あたり$0.17から$0.23のマイナス影響を予想しています。2024年第4四半期には、非IFRS調整後の効果的税率は約21％を予想しています。

2024年度見通しの更新

上記の四半期の売上高目標と調整後の eps ガイダンスの中間点を達成した場合を想定する
2024年、当社の更新された2024年の展望は以下の通りです：

•売上高は96億ドルです（前回の見通しは94.5億ドルでした）;
•非IFRS営業利益率は6.5％です（前回の見通しは6.3％でした）;
•調整後のEPS*は3.85ドルで、前回の見通しは3.62ドルでした。
•27500万ドルの非IFRS調整後フリーキャッシュフロー*（前回の見通しは25000万ドルでした）。

2025年の年間展望

•売上高は104億ドルです;
•6.7%の非IFRS営業利益率*;
•調整後のeps*は$4.42です; か
•フリーキャッシュフローの調整後額は3億2500万ドルです。

2025年の見通しでは、年次の非IFRS調整後実効税率は約20％と想定されています。

* これらの非IFRS財務指標の定義については、YTD 2024年の非調整後EPSの計算方法に変更が加えられていることを含め、スケジュール1を参照してください。 カナダでのPillar Two法の制定と最近の当社のクレジット施設の修正および再発行によるものです 有効な当社は、将来に関する非IFRS財務指標については調整項目や情報の算出が意味があり正確にならず、理不尽な努力なしに利用できないため、和解を提供していません。これは、まだ発生していない、当社の管理範囲外であるか合理的に予測することができないさまざまなイベントのタイミングや金額を予測する難しさによるものであり、最も直接的に比較可能な将来のIFRS財務指標に影響を及ぼす可能性のあるさまざまなイベントを予測する難しさによるものです。同じ理由で、提供できない情報の重要性にも言及することができません。将来の非IFRS財務指標は、対応するIFRS財務指標と大幅に異なる場合があります。


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その他の更新

新規顧客とプログラムの獲得に関連する次の進展についてお知らせすることを喜んでお知らせします:

Groq, Inc.（Groq）

セレスティカは、加速推論を専門とする新しいプロプライエタリシリコンプラットフォームである言語処理ユニット（LPU）を開発した人工知能（AI）会社Groqとの新しい戦略的関係を築きました。

セレスティカの協力により、Groqは人工知能/機械学習サーバーの製造業やフルラックソリューションのサポートを受けます。初期プログラムは2025年初頭に段階的に開始される予定です。

新しい1.6兆プログラムの勝利

セレスティカは、主要なハイパースケーラー顧客との1.6テラバイトのスイッチングに関するプログラムの勝利を確保し、高バンドウィドゥスネットワーキングソリューションにおける市場のリーダーシップと革新性を示しました。2026年には収益が増加し始めると予想しています。

2024年第3四半期の選択結果の概要
 
2024年第3四半期の実績
2024年第3四半期のガイダンス (2)
主要指標:
売上高（十億ドル）
$2.500$2.325から$2.475
非IFRS営業利益率*6.7%中間地点で6.3%
売上高と非IFRS調整済み
EPSのガイダンス範囲
調整済みSG&A（非IFRS）（百万ドル単位）$79.8$73から$75
調整後のEPS（非IFRS）*$1.04$0.86から$0.96
最も直接的に比較可能なIFRS財務指標：
売上高に対する営業利益の割合5.5%該当なし
SG&A（百万単位）$91.9該当なし
EPS (1)
$0.77該当なし

*スケジュール1を参照してください。その他の事項として、非IFRS財務指標の定義、2024年のYTDにおける非IFRS調整後EPSの計算の修正を含み、これはカナダにおけるピラー2法の施行と、当社の信用枠の最近の改正および再表示に起因するものです 、 これらの非IFRS財務指標と最も直接的に比較可能なIFRS財務指標との調整についても述べています。

(1) 2024年第3四半期のIFRSベースのEPSは0.77ドルで、従業員のSBC経費、無形資産（コンピューターソフトウェアを除く）の償却、およびリストラ費用に対する1株あたり合計0.20ドル（税引前）の費用が含まれていました。項目ごとの詳細は、2024年第3四半期の中間財務諸表のスケジュール1と注記9の表を参照してください大げさです。thですこれらの項目の合計請求額は、2024年第3四半期の予想範囲である1株あたり0.16ドルから0.22ドルの間でした。

2024年第3四半期のIFRS EPSには以下が含まれています： (i) a $0.06 株式1株あたりの負の影響は、当社の総リターンスワップ契約（TRS契約）に対する公正価値の損失に起因するもので、（ii）カナダにおけるピラー2（グローバル最低税）法の施行の影響を最小限に抑えるために発生した源泉徴収税費用に起因する株式1株あたり$0.02の負の影響、（iii）特定のアジア子会社から未配分の利益を repatriation する予定に関連する課税される一時差異から生じる株式1株あたり$0.02の負の影響です。2024年第3四半期の財務諸表における注記8、9および10を参照してください。

IFRS EPSは $2.46 2024年のYTDには以下が含まれます: (i) TRS契約に基づく公正価値の上昇（TRSの利益）による1株あたり$0.33のプラス影響、 影響(ii) NCS Global Services LLC（NCS）を取得した結果、米国子会社グループにおいて未認識の繰延税金資産を認識したことに起因する1株あたり$0.06のプラスの税影響、(iii) アジアの子会社の一つに関連する税的不確実性の逆転（逆転）による1株あたり$0.05のプラスの税影響、及び(iv) 法的回収に起因する1株あたり$0.01のプラス影響、 部分的に相殺されるのは: (a) $0.16のマイナスのピラー2控除費用、(b) リストラ費用に起因する1株あたり$0.09のマイナス影響、
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(c) トランジションコスト（スケジュール1で定義）に起因する1株あたり$0.03のネガティブインパクト、(d) 取得コストに起因する1株あたり$0.02のネガティブインパクト、(e) 1株あたり$0.02のネガティブインパクト 送金費用. 2024年第3四半期の中間財務諸表に関する注記8、9、10を参照してください。

2023年第3四半期のIFRS EPSは$0.67でした1株あたりのTRS利益を含み、部分的に相殺されました： $0.25 (i) ネットその他の費用に起因する1株あたりの悪影響があり（主に次のことが含まれます： $0.05 スケジュール1で定義された移行コストに起因する1株あたり$0.03の悪影響、スケジュール1で定義された二次公募コストに起因するほぼすべての1株あたり$0.01の悪影響、及び再構築費用に起因する1株あたり$0.01の悪影響があり、部分的に 再構築回収に起因する1株あたり$0.01の良影響で相殺されました）；および (ii) 1株あたり$0.03の再国籍費用があります。2024年第3四半期の中間財務諸表の注記8、9、10を参照してください。

2023年の最初の9か月間のIFRSベースのEPSは1.33ドルです（YTD 2023) 含まれています：(ia) $0.28 1株あたりのTRS?$#@$ンと（ii） あるアジア子会社の取消に起因する0.05ドルの有利な税制上の影響。一部は以下によって相殺されます。 (x) a その他の純費用に起因する1株あたり0.11ドルのマイナスの影響（主に、リストラ費用に起因する1株あたり0.09ドルのマイナスの影響、移行費用に起因する1株あたり0.03ドルのマイナスの影響（スケジュール1で定義）、および1株あたり0.01ドルのマイナスの影響。これらは実質的にすべて二次募集費用（スケジュール1で定義）に起因し、1株あたり0.02ドルのプラスの影響によって一部相殺されました法定回収および1株あたり0.01ドルのプラスの影響（リストラによる回収による）、および（y）0ドル1株あたり0.06ドルの本国送還費用。2024年第3四半期の中間財務諸表の注記8、9、10を参照してください。

(2) ために Q3 2024顧客の需要が予想以上に高かったため、売上高はガイダンスの上限を超えました。非IFRSの営業利益率は Q3 2024 売上高と非IFRSの調整後EPSのガイダンス範囲の中央値を超えました。 Q3 2024 非IFRSの調整後EPSはガイダンス範囲の上限を超え、主にCCSセグメントにおける予期しない営業レバレッジによるものでした。非IFRSの調整後SG&Aは Q3 2024 ガイダンスの上限を超えました。主に外国為替の影響によるものです。 Q3 2024 IFRSの実効税率は 27%でした。非IFRSの調整後実効税率は Q3 2024 21%であり、約20%の予想を上回りました。主に管轄地の利益の組成によるものです。

通常のコース発行者の買気配（NCIB）の早期更新の意図

2024年第4四半期に新しいNCIbを開始するために、トロント証券取引所（TSX）に意向通知を提出する予定です。現在のNCIbが2024年12月に期限切れになる前に、です。この通知がTSXによって受理されれば、受理された日から12ヶ月の間にその裁量で、発行済みの普通株式の「公的フロート」の最大10％（TSXの規則に従って計算）を、現在のNCIbの下で購入されキャンセルされた普通株式の数を差し引いた上で、取消のために再購入することが認められると期待しています。新しいNCIbの下での購入は、受理されれば、適用条件および制限に従って、オープンマーケットまたはその他の許可された方法で行われ、TSXおよびニューヨーク証券取引所の施設を通じて行われます。また、当社はNCIbの早期更新がセレスティカと株主にとって最善の利益になると考えています。

外国私発行者ステータスの変更

以前に開示した通り、2024年の第2四半期末時点で、当社は米国連邦証券規則における「外国民間発行者」の定義をもはや満たしていません。それに伴い、2025年1月1日より、当社は国内の米国発行者に適用されるのと同じ報告および開示要件の対象となり、米国で一般に認められた会計原則に従って統合財務諸表を作成する必要があります。

Q3 2024年度の財務結果とバーチャル投資家ミーティングのウェブキャスト

経営陣は2024年10月23日午後5時（東部夏時間）に、2024年第3四半期の決算コールとバーチャル投資家会議を開催します。2024年第3四半期の財務結果についての議論に加え、セレスティカの経営陣はセレスティカのビジネス、成長機会、財務見通しについての概要を提供します。ウェブキャストは以下でアクセスできます。 www.celestica.com.

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非IFRS補足情報

IFRSに従って詳細な業績を開示することに加えて、セレスティカは企業の業績を評価する際に考慮すべき補足的な非IFRS財務指標を提供しています。経営陣は、調整後の純利益およびその他の非IFRS財務指標を使用して、業績を評価し、資源の効果的な使用と配分を判断し、業績の期間ごとの比較をより意義のあるものにし、セレスティカのビジネスのコア業績について投資家の理解を深め、経営陣のインセンティブ目標を設定しています。私たちは、投資家が私たちの優先事項や資本の配分に関連する経営陣の過去、現在、未来に関する決定を評価するために、IFRSおよび非IFRS財務指標の両方を使用していると考えています。また、ビジネスが経済サイクルやコア業務に影響を与えるその他のイベントの変動にどのように対応しているかを分析するためにも使用されています。以下のスケジュール1を参照してください。

セレスティカについて

セレスティカは世界のトップブランドを支えています。当社の顧客中心のアプローチを通じて、航空宇宙と防衛、通信、企業、ヘルステック、産業、資本財の分野におけるリーディングカンパニーと提携し、最も複雑な課題に対する解決策を提供しています。設計、製造業、ハードウェアプラットフォーム、供給チェーンソリューションのリーダーとして、セレスティカは製品開発のあらゆる段階でグローバルな専門知識と洞察を提供します。 — 設計図からフルスケール生産、アフターマーケットサービスまで、北米、ヨーロッパ、アジアに talented teamsを有し、私たちは顧客とともにより良い未来を想像し、開発し、提供します。セレスティカに関する詳細は、 www.celestica.com当社の証券報告書は、ここでアクセスできます。 www.sedarplus.ca および www.sec.gov.

将来の見通しに関する注意事項

このプレスリリースには、次の内容を含む将来予測に関する記述が含まれています。多くの大口顧客からの需要のシグナル、予想される財務および/または業務結果、ガイダンスおよび見通し、"2024年第4四半期ガイダンス"、"2024年年度見通し更新"、"2025年年度見通し"の見出しの下にある記述; 現在のNCIbを早期に終了し、新しいNCIBを同時に開始する意図; 新しいNCIBの期待される条件; 新しい顧客関係と関連プログラム及び売上高の増加の期待されるタイミング; 信用リスク; 流動性; 予想される費用と経費、構造改革費用を含む; NCS取得に関連した購入価格の配分と無形資産の償却の最終化; 税金および訴訟結果の潜在的影響; および私たちの信用ファシリティの下での義務的な前払い。これらの将来予測に関する記述は、"信じる"、"期待する"、"予想する"、"推定する"、"意図する"、"計画する"、"続ける"、"プロジェクト"、"目標"、"見通し"、"目標"、"ガイダンス"、"潜在的な"、"可能な"、"検討する"、"求める"または類似の表現によって先行される、または続けられる、あるいは含まれる場合があり、または"かもしれない"、"だろう"、"するだろう"、"できるだろう"、"すべき"、"するだろう"などの将来形または条件形の動詞を使用することがあります。または、文法構造、フレーズまたは文脈によって将来予測に関する記述として示される場合もあります。これらの記述に関しては、必要に応じて1995年の米国私的証券訴訟改革法に含まれる将来予測に関する記述のためのセーフハーバーの保護を主張し、適用されるカナダの証券法の下での将来予測情報についても保護を主張します。

前向きな声明は、読者が経営陣の現在の期待と将来に関する計画を理解するのを支援するために提供されています。前向きな声明は、経営陣の歴史的トレンド、現在の状況および予測される将来の発展に関する認識に基づく現在の推定、信念、および仮定を反映しています。これには、期待されるCCSおよびATSの売上高成長、私たちのビジネスにおける期待される需要レベル、持続的な操業レバレッジと改善されるミックス、私たちのビジネスに対する市場条件の影響、人工知能技術とクラウドコンピューティングの進展と商業化の継続的な成長、主要なハイパースケーラー、人工知能、IDC関連の顧客による高水準の投資支出を維持すること、経済、顧客、サプライヤー、戦略目標を達成する能力、発行済み株式数、その他の市場、財務および操業上の仮定が含まれています。読者には、そのような情報が他の目的には適さない可能性があることに注意していただきたいと思います。読者は、そのような前向きな情報に過度に依存しないことが求められます。

将来の見通しに関する声明は将来の業績を保証するものではなく、実際の結果がこれらの将来の見通しにおいて表明または暗示されたものと大きく異なる原因となるリスクにさらされています。これには、顧客およびセグメントの集中、顧客の売上高の減少、顧客の市場競争力の低下、収益の構成や利益率の変化、不確実な市場、政治および経済状況、在庫管理や材料およびサプライチェーンの制約といった運用上の課題、特定の事業の周期的な性質および/または変動、タレントマネジメントや非効率的な従業員活用、当社の事業の拡張または統合に関連するリスク、キャッシュフロー、売上高および営業成果の変動、テクノロジーとITの混乱、法的、税務および規制の複雑化と不確実性の増加（当社または顧客の事業に関連するものを含む）、買収からの統合および期待される利益の達成、そして当社の管理の及ばない出来事の潜在的な悪影響が含まれます。
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前述の内容およびその他の重要なリスク、不確実性、仮定についての詳細な情報は、当社の公開書類を www.sedarplus.ca と www.sec.gov で参照する必要があります。これには、最も最近の財務状況と業績の管理に関する討論および分析、米国証券取引委員会に提出された20-Fフォームの年次報告書、ならびに適用される場合はカナダ証券管理者に提出された6-Kフォームのその後の報告書が含まれます。

将来の見通しに関する記述は、作成された日付にのみ言及されるものであり、新しい情報、将来の出来事、またはその他の理由によってそれらの更新や修正を行う意図や義務を放棄します。ただし、適用法に明示的に要求されている場合を除きます。
私たちに起因するすべての将来に関する見通しの声明は、これらの注意喚起の声明によって明示的に限定されています。

お問い合わせ:
セレスティカ グローバル 通信             セレスティカ 投資家向け情報
(416) 448-2200                        (416) 448-2211
media@celestica.com                     clsir@celestica.com
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スケジュール 1
補足的非IFRS財務指標

The non-IFRS financial measures (including ratios based on non-IFRS financial measures) included in this press release are: adjusted gross profit, adjusted gross margin (adjusted gross profit as a percentage of revenue), adjusted selling, general and administrative expenses (SG&A), adjusted SG&A as a percentage of revenue, non-IFRS operating earnings (or adjusted EBIAT), non-IFRS operating margin (non-IFRS operating earnings or adjusted EBIAT as a percentage of revenue), adjusted net earnings, adjusted EPS, adjusted return on invested capital (adjusted ROIC), adjusted free cash flow, adjusted tax expense and adjusted effective tax rate. Adjusted EBIAT, adjusted ROIC, adjusted free cash flow, adjusted tax expense and adjusted effective tax rate are further described in the tables below. As used herein, "Q1," "Q2," "Q3," and "Q4" followed by a year refers to the first quarter, second quarter, third quarter and fourth quarter of such year, respectively.

We believe the non-IFRS financial measures we present herein are useful to investors, as they enable investors to evaluate and compare our results from operations in a more consistent manner (by excluding specific items that we do not consider to be reflective of our core operations), to evaluate cash resources that we generate from our business each period, and to provide an analysis of operating results using the same measures our chief operating decision makers use to measure performance. In addition, management believes that the use of a non-IFRS adjusted tax expense and a non-IFRS adjusted effective tax rate provide improved insight into the tax effects of our core operations, and are useful to management and investors for historical comparisons and forecasting. These non-IFRS financial measures result largely from management’s determination that the facts and circumstances surrounding the excluded charges or recoveries are not indicative of our core operations.

Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies that report under IFRS, or who report under U.S. GAAP and use non-GAAP financial measures to describe similar financial metrics. Non-IFRS financial measures are not measures of performance under IFRS and should not be considered in isolation or as a substitute for any IFRS financial measure.
The most significant limitation to management’s use of non-IFRS financial measures is that the charges or credits excluded from the non-IFRS financial measures are nonetheless recognized under IFRS and have an economic impact on us. Management compensates for these limitations primarily by issuing IFRS results to show a complete picture of our performance, and reconciling non-IFRS financial measures back to the most directly comparable financial measures determined under IFRS.
In calculating the following non-IFRS financial measures: adjusted gross profit, adjusted gross margin, adjusted SG&A, adjusted SG&A as a percentage of revenue, non-IFRS operating earnings, non-IFRS operating margin, adjusted net earnings, adjusted EPS, adjusted tax expense and adjusted effective tax rate, management excludes the following items (where indicated): employee SBC expense, fair value adjustments on our TRS Agreement (TRS FVAs), amortization of intangible assets (excluding computer software), and Other Charges (Recoveries) (defined below), all net of the associated tax adjustments (quantified in the table below), and any non-core tax impacts (tax adjustments related to acquisitions, and certain other tax costs or recoveries related to restructuring actions or restructured sites). The economic substance of these exclusions (where applicable to the periods presented) and management’s rationale for excluding them from non-IFRS financial measures is provided below. In addition, in calculating adjusted net earnings, adjusted EPS, adjusted tax expense and adjusted effective tax rate for YTD 2024, (i) management also excluded the one-time Q1 2024 portion of the negative tax impact arising from the enactment of Pillar Two (global minimum tax) legislation in Canada recorded in Q2 2024 and incremental withholding tax accrued in such quarter to minimize its impact (Pillar Two Tax Adjustments), as such portion is not attributable to our on-going operations for subsequent periods; and (ii) commencing in Q2 2024, management excludes Refinancing Charges (Gains) (defined below). The determination of our non-IFRS adjusted effective tax rate, adjusted free cash flow, and adjusted ROIC is described in footnote 2, 3 and 4 to the table below, respectively.
Employee SBC expense, which represents the estimated fair value of stock options, restricted share units and performance share units granted to employees, is excluded because grant activities vary significantly from quarter-to-quarter in both quantity and fair value. In addition, excluding this expense allows us to better compare core operating results with those of our competitors who also generally exclude employee SBC expense in assessing operating performance, who may have different granting patterns and types of equity awards, and who may use different valuation assumptions than we do.
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TRS FVAs represent mark-to-market adjustments to our TRS, as the TRS is recorded at fair value at each quarter end. We exclude the impact of these non-cash fair value adjustments (both positive and negative), as they reflect fluctuations in the market price of our Common Shares from period to period, and not our ongoing operating performance. In addition, we believe that excluding these non-cash adjustments permits a better comparison of our core operating results to those of our competitors.
Amortization charges (excluding computer software) consist of non-cash charges against intangible assets that are impacted by the timing and magnitude of acquired businesses. Amortization of intangible assets varies among our competitors, and we believe that excluding these charges permits a better comparison of core operating results with those of our competitors who also generally exclude amortization charges in assessing operating performance.
Other Charges (Recoveries) consist of, when applicable: Restructuring Charges, net of recoveries (defined below); Transition Costs (Recoveries) (defined below); net Impairment charges (defined below); consulting, transaction and integration costs related to potential and completed acquisitions, and charges or releases related to the subsequent re-measurement of indemnification assets or the release of indemnification or other liabilities recorded in connection with acquisitions; legal settlements (recoveries); post-employment benefit plan losses; in Q2 2023 and Q3 2023, Secondary Offering Costs (defined below), and commencing in Q2 2023, related costs pertaining to certain accounting considerations. We exclude these charges and recoveries because we believe that they are not directly related to ongoing operating results and do not reflect expected future operating expenses after completion of these activities or incurrence of the relevant costs or recoveries. Our competitors may record similar charges and recoveries at different times, and we believe these exclusions permit a better comparison of our core operating results with those of our competitors who also generally exclude these types of charges and recoveries in assessing operating performance.

Restructuring Charges, net of recoveries, consist of costs relating to: employee severance, lease terminations, site closings and consolidations, accelerated depreciation of owned property and equipment which are no longer used and are available for sale and reductions in infrastructure.
Transition Costs consist of costs recorded in connection with: (i) the transfer of manufacturing lines from closed sites to other sites within our global network; (ii) the sale of real properties unrelated to restructuring actions (Property Dispositions); and (iii) specified charges related to the Purchaser Lease (defined below). Transition Costs consist of direct relocation and duplicate costs (such as rent expense, utility costs, depreciation charges, and personnel costs) incurred during the transition periods, as well as cease-use and other costs incurred in connection with idle or vacated portions of the relevant premises that we would not have incurred but for these relocations, transfers and dispositions. As part of our 2019 Toronto real property sale, we entered into a related 10-year lease for our then-anticipated headquarters (Purchaser Lease). Consistent with our prior treatment of duplicate and idle premises costs incurred as a result of such property sale, the excess of rental expenses attributable to space subleased in Q3 2023 under the Purchaser Lease over anticipated sublease rental recoveries were recorded as Transition Costs ($3.9 million charge) in Q3 2023, as we previously extended (on a long-term basis) the lease on our current corporate headquarters due to several Purchaser Lease commencement date delays. Similarly, as the Purchaser Lease commenced in June 2024, we recorded a $3.4 million charge in Q2 2024 as Transition Costs, representing the write-down of right-of-use (ROU) assets under the Purchaser Lease with respect to non-subleased space. Transition Recoveries consist of any gains recorded in connection with Property Dispositions. We believe that excluding these costs and recoveries permits a better comparison of our core operating results from period-to-period, as these costs or recoveries do not reflect our ongoing operations once these specified events are complete.

Impairment charges, which consist of non-cash charges against goodwill, intangible assets, property, plant and equipment, and ROU assets, result primarily when the carrying value of these assets exceeds their recoverable amount.
Secondary Offering Costs consisted of costs associated with the conversion and underwritten public sale of our shares by Onex Corporation (Onex), our then-controlling shareholder, in Q2 2023 and Q3 2023. We believe that excluding Secondary Offering Costs permits a better comparison of our core operating results from period-to-period, as they did not reflect our ongoing operations, and are no longer applicable as such conversions and sales are complete.
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Refinancing Charges (Gains) consist of costs (gains) recorded as finance costs (income) in our statement of operations in connection with refinancings of our credit facility. In Q2 2024, we amended and restated our credit facility agreement. In connection therewith, our two then-existing term loans were repaid in full, terminated and replaced with two new term loans. Refinancing Charges for YTD 2024 consist of the $5.2 million in fees and costs incurred in connection with such amendment and restatement, and the $0.8 million in accelerated amortization of unamortized deferred financing costs recorded as a result of the related termination of one of the prior term loans. Notwithstanding the termination of the second prior term loan and its replacement with a new term loan, for accounting purposes, this portion of the transaction was treated as a modification of the second terminated term loan, resulting in a $5.5 million modification gain. Refinancing Gains for YTD 2024 consist of this modification gain. Refinancing Charges (Gains) are excluded in our determination of adjusted net earnings, adjusted EPS, adjusted tax expense and adjusted effective tax rate, as management believes that such exclusions (both positive and negative) permit a better comparison of our core operating results from period-to-period, as these costs and gains are not directly related to ongoing operating results and do not reflect expected future operating expenses after completion of the applicable refinancing transaction.
Non-core tax impacts are excluded, as we believe that these costs or recoveries do not reflect core operating performance and vary significantly among those of our competitors who also generally exclude these costs or recoveries in assessing operating performance.
The following table (which is unaudited) sets forth, for the periods indicated, the various non-IFRS financial measures discussed above, and a reconciliation of such non-IFRS financial measures to the most directly comparable financial measures determined under IFRS (in millions, except percentages and per share amounts):
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Three months ended September 30Nine months ended September 30
2023202420232024
% of revenue% of revenue% of revenue% of revenue
IFRS revenue$2,043.3 $2,499.5 $5,820.5 $7,100.3 
IFRS gross profit$206.7 10.1 %$259.1 10.4 %$555.3 9.5 %$744.0 10.5 %
Employee SBC expense5.1 5.6 18.4 20.2  
TRS FVAs: losses (gains)(11.8)2.7 (13.8)(17.2)
Non-IFRS adjusted gross profit$200.0 9.8 %$267.4 10.7 %$559.9 9.6 %$747.0 10.5 %
IFRS SG&A$56.9 2.8 %$91.9 3.7 %$203.9 3.5 %$237.2 3.3 %
Employee SBC expense(7.8)(7.1)(27.4)(27.1) 
TRS FVAs: (losses) gains17.6 (5.0)20.4 22.3 
Non-IFRS adjusted SG&A$66.7 3.3 %$79.8 3.2 %$196.9 3.4 %$232.4 3.3 %
IFRS earnings from operations$117.4 5.7 %$136.4 5.5 %$264.6 4.5 %$404.3 5.7 %
Employee SBC expense12.9  12.7 45.8 47.3  
TRS FVAs: losses (gains)(29.4)7.7 (34.2)(39.5)
Amortization of intangible assets (excluding computer software)9.2  9.9 27.6 28.9  
Other Charges, net of Recoveries5.6  1.0 13.7 15.9  
Non-IFRS operating earnings (adjusted EBIAT)(1)
$115.7 5.7 %$167.7 6.7 %$317.5 5.5 %$456.9 6.4 %
IFRS net earnings$80.2 3.9 %$91.7 3.7 %$160.4 2.8 %$293.0 4.1 %
Employee SBC expense12.9 12.7 45.8 47.3 
TRS FVAs: losses (gains)(29.4)7.7 (34.2)(39.5)
Amortization of intangible assets (excluding computer software)9.2 9.9 27.6 28.9 
Other Charges, net of Recoveries5.6 1.0  13.7 15.9 
Refinancing Charges, net of Refinancing Gains— — — 0.5 
Adjustments for taxes(2)
(0.3)0.8  (11.3)(11.3)
Non-IFRS adjusted net earnings$78.2 $123.8 $202.0 $334.8 
Diluted EPS  
Weighted average # of shares (in millions) 119.6 118.9 120.5 119.1 
IFRS earnings per share $0.67 $0.77 $1.33 $2.46 
Non-IFRS adjusted earnings per share$0.65 $1.04 $1.68 $2.81 
# of shares outstanding at period end (in millions)119.4 116.4 119.4 116.4 
IFRS cash provided by operations$88.4 $144.8 $290.9 $399.0 
Purchase of property, plant and equipment, net of sales proceeds(26.2)(46.0)(90.5)(120.4)
Lease payments(12.8)(13.0)(36.9)(37.6)
Finance Costs Paid (defined below)
(15.3)(11.3)(53.4)(38.0)
Non-IFRS adjusted free cash flow (3)
$34.1 $74.5 $110.1 $203.0 
IFRS ROIC % (4)
21.8 %23.3 %16.5 %23.6 %
Non-IFRS adjusted ROIC % (4)
21.5 %28.6 %19.8 %26.7 %

(1)    Management uses non-IFRS operating earnings (adjusted EBIAT) as a measure to assess performance related to our core operations. Non-IFRS operating earnings is defined as earnings from operations before employee SBC expense, TRS FVAs (defined above), amortization of intangible assets (excluding computer software), and Other Charges
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(Recoveries) (defined above). See note 9 to our Q3 2024 Interim Financial Statements for separate quantification and discussion of the components of Other Charges (Recoveries). Non-IFRS operating margin is non-IFRS operating earnings as a percentage of revenue.

(2)    The adjustments for taxes, as applicable, represent the tax effects of our non-IFRS adjustments (see below).

The following table sets forth a reconciliation of our non-IFRS adjusted tax expense and our non-IFRS adjusted effective tax rate to our IFRS tax expense and IFRS effective tax rate, respectively, for the periods indicated, in each case determined by excluding the tax benefits or costs associated with the listed items (in millions, except percentages) from our IFRS tax expense for such periods. Our IFRS effective tax rate is determined by dividing (i) IFRS tax expense by (ii) earnings from operations minus finance costs, net of finance income recorded on our statement of operations (Finance Costs and Finance Income, respectively); our non-IFRS adjusted effective tax rate is determined by dividing (i) non-IFRS adjusted tax expense by (ii) non-IFRS operating earnings minus Finance Costs, net of Finance Income.
Three months ended September 30Nine months ended September 30
2023202420232024
IFRS tax expense$18.9$33.7 $42.1 $68.1 
Add-backs to (deductions from) IFRS tax expense representing the tax benefits or costs associated with the following items*:
Employee SBC expense and TRS FVAs(1.1)(1.4)7.6 9.0 
Amortization of intangible assets (excluding computer software)0.7 0.7 2.2 2.3 
Other Charges, net of Recoveries0.7 (0.1)1.5 0.6 
Non-core tax adjustment for NCS acquisition— — — 7.5 
Pillar Two Tax Adjustments
— — — (8.1)
Non-IFRS adjusted tax expense$19.2 $32.9 $53.4 $79.4 
IFRS tax expense
$18.9 $33.7 $42.1 $68.1 
Earnings from operations$117.4 $136.4 $264.6 $404.3 
   Finance Costs, net of Finance Income
(18.3)(11.0)(62.1)(43.2)
$99.1 $125.4 $202.5 $361.1 
IFRS effective tax rate
19 %27 %21 %19 %
Non-IFRS adjusted tax expense
$19.2 $32.9 $53.4 $79.4 
Non-IFRS operating earnings
$115.7 $167.7 $317.5 $456.9 
   Finance Costs, net of Finance Income
(18.3)(11.0)(62.1)(43.2)

$97.4 $156.7 $255.4 $413.7 
Non-IFRS adjusted effective tax rate
20 %21 %21 %19 %
* Tax impact associated with Refinancing Charges, net of Refinancing Gains in YTD 2024 was insignificant, and was inapplicable to the other periods presented above.

(3)    Management uses non-IFRS adjusted free cash flow as a measure, in addition to IFRS cash provided by (used in) operations, to assess our operational cash flow performance. We believe non-IFRS adjusted free cash flow provides another level of transparency to our liquidity. Non-IFRS adjusted free cash flow is defined as cash provided by (used in) operations after the purchase of property, plant and equipment (net of proceeds from the sale of certain surplus equipment and property, when applicable), lease payments, and Finance Costs Paid. Finance Costs Paid is defined as interest expense and fees paid related to our credit facility (excluding, when applicable, any debt issuance costs and credit facility waiver fees paid), our interest rate swap agreements, our TRS Agreement, our accounts receivable sales program and customers' supplier financing programs, and interest expense on our lease obligations. We do not consider debt issuance costs paid ($0.6 million in Q3 2024 and $9.6 million in YTD 2024; $0.4 million in Q3 2023 and YTD 2023) or credit facility waiver fees paid (when applicable) to be part of our ongoing financing expenses. As a result, these costs are excluded from our definition of Finance Costs Paid for our determination of non-IFRS adjusted free cash flow. We believe that excluding Finance Costs Paid from cash provided by operations in the determination of non-IFRS adjusted free cash flow provides useful insight for assessing the performance of our core operations. Note, however, that non-IFRS adjusted free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures.

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(4)    Management uses non-IFRS adjusted ROIC as a measure to assess the effectiveness of the invested capital we use to build products or provide services to our customers, by quantifying how well we generate earnings relative to the capital we have invested in our business. Non-IFRS adjusted ROIC is calculated by dividing annualized non-IFRS adjusted EBIAT by average net invested capital for the period. Net invested capital (calculated in the tables below) is derived from IFRS financial measures, and is defined as total assets less: cash, ROU assets, accounts payable, accrued and other current liabilities, provisions, and income taxes payable. We use a two-point average to calculate average net invested capital for the quarter and a four-point average to calculate average net invested capital for the nine-month period. Average net invested capital for Q3 2024 is the average of net invested capital as at June 30, 2024 and September 30, 2024, and average net invested capital for YTD 2024 is the average of net invested capital as at December 31, 2023, March 31, 2024, June 30, 2024 and September 30, 2024. A comparable financial measure to non-IFRS adjusted ROIC determined using IFRS measures would be calculated by dividing annualized IFRS earnings from operations by average net invested capital for the period.

The following table sets forth, for the periods indicated, our calculation of IFRS ROIC % and non-IFRS adjusted ROIC % (in millions, except IFRS ROIC % and non-IFRS adjusted ROIC %).
Three months endedNine months ended
September 30September 30
2023202420232024
IFRS earnings from operations$117.4 $136.4 $264.6 $404.3 
Multiplier to annualize earnings
4 4 1.333 1.333 
Annualized IFRS earnings from operations$469.6 $545.6 $352.7 $538.9 
Average net invested capital for the period
$2,155.9 $2,346.0 $2,141.5 $2,281.7 
IFRS ROIC % (1)
21.8 %23.3 %16.5 %23.6 %
Three months endedNine months ended
September 30September 30
 2023202420232024
Non-IFRS operating earnings (adjusted EBIAT)
$115.7 $167.7 $317.5 $456.9 
Multiplier to annualize earnings
4 4 1.333 1.333 
Annualized non-IFRS adjusted EBIAT
$462.8 $670.8 $423.2 $609.0 
Average net invested capital for the period
$2,155.9 $2,346.0 $2,141.5 $2,281.7 
Non-IFRS adjusted ROIC % (1)
21.5 %28.6 %19.8 %26.7 %
December 31 2023March 31 2024June 30 2024
September 30 2024
Net invested capital consists of:
Total assets$5,890.7 $5,717.1 $5,882.4 $5,926.8 
Less: cash370.4 308.1 434.0 398.5 
Less: ROU assets154.0 180.1 188.6 167.8 
Less: accounts payable, accrued and other current liabilities, provisions and income taxes payable3,167.9 2,992.6 2,949.3 2,979.1 
Net invested capital at period end (1)
$2,198.4 $2,236.3 $2,310.5 $2,381.4 
 December 31
2022		March 31 2023June 30 2023
September 30 2023
Net invested capital consists of:
Total assets$5,628.0 $5,468.1 $5,500.5 $5,745.3 
Less: cash374.5 318.7 360.7 353.1 
Less: ROU assets138.8 133.1 146.5 157.8 
Less: accounts payable, accrued and other current liabilities, provisions and income taxes payable3,003.0 2,873.9 2,870.6 3,045.4 
Net invested capital at period end (1)
$2,111.7 $2,142.4 $2,122.7 $2,189.0 
(1)    See footnote 4 on the previous page.
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CELESTICA INC. 
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions of U.S. dollars)
(unaudited)
NoteDecember 31
2023		September 30
2024
Assets  
Current assets:  
     Cash and cash equivalents$370.4 $398.5 
Accounts receivable51,795.7 2,007.7 
Inventories62,106.1 1,827.4 
Income taxes receivable11.9 14.8 
Other current assets11228.5 220.3 
Total current assets4,512.6 4,468.7 
Property, plant and equipment472.7 478.2 
Right-of-use assets154.0 167.8 
Goodwill4321.7 341.0 
Intangible assets318.3 320.0 
Deferred income taxes62.5 74.3 
Other non-current assets1148.9 76.8 
Total assets$5,890.7 $5,926.8 
Liabilities and Equity  
Current liabilities:  
Current portion of borrowings under credit facility and lease obligations
7$51.6 $57.7 
Accounts payable
1,298.2 1,392.5 
Accrued and other current liabilities
6&11
1,781.3 1,481.3 
Income taxes payable
64.8 85.7 
Current portion of provisions
23.6 19.6 
Total current liabilities3,219.5 3,036.8 
Long-term portion of borrowings under credit facility and lease obligations7731.2 883.4 
Pension and non-pension post-employment benefit obligations88.1 90.3 
Provisions and other non-current liabilities41.2 54.7 
Deferred income taxes42.2 41.9 
Total liabilities4,122.2 4,107.1 
Equity:  
Capital stock81,672.5 1,637.0 
Treasury stock8(80.1)(87.5)
Contributed surplus
1,030.6 836.9 
Deficit
(839.6)(546.6)
Accumulated other comprehensive loss
(14.9)(20.1)
Total equity1,768.5 1,819.7 
Total liabilities and equity$5,890.7 $5,926.8 
     
Commitments and Contingencies (note 12).

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
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CELESTICA INC. 
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions of U.S. dollars, except per share amounts)
(unaudited)
 
Three months endedNine months ended
September 30September 30
 
Note2023202420232024
Revenue
3$2,043.3 $2,499.5 $5,820.5 $7,100.3 
Cost of sales61,836.6 2,240.4 5,265.2 6,356.3 
Gross profit
206.7 259.1 555.3 744.0 
Selling, general and administrative expenses56.9 91.9 203.9 237.2 
Research and development
16.9 18.7 43.3 54.6 
Amortization of intangible assets
9.9 11.1 29.8 32.0 
Other charges, net of recoveries95.6 1.0 13.7 15.9 
Earnings from operations117.4 136.4 264.6 404.3 
Finance income
70.3 1.9 0.9 8.5 
Finance costs
718.6 12.9 63.0 51.7 
Earnings before income taxes99.1 125.4 202.5 361.1 
Income tax expense (recovery)10  
Current
16.9 40.4 46.7 90.2 
Deferred
2.0 (6.7)(4.6)(22.1)
 
18.9 33.7 42.1 68.1 
Net earnings for the period$80.2 $91.7 $160.4 $293.0 
Basic earnings per share$0.67 $0.78 $1.33 $2.47 
Diluted earnings per share$0.67 $0.77 $1.33 $2.46 
Shares used in computing per share amounts (in millions):
  
Basic
119.3 118.2 120.4 118.7 
Diluted
119.6 118.9 120.5 119.1 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
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CELESTICA INC.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions of U.S. dollars)
(unaudited)
 
Three months endedNine months ended
September 30September 30
 2023202420232024
Net earnings for the period$80.2 $91.7 $160.4 $293.0 
Other comprehensive income (loss), net of tax:   
Items that may be reclassified to net earnings:
  Currency translation differences for foreign operations
(1.6)4.7 (6.2)(0.7)
  Changes from currency forward derivative hedges(9.8)15.3 (15.2)2.4 
  Changes from interest rate swap derivative hedges0.2 (6.3)1.1 (6.9)
Total comprehensive income for the period$69.0 $105.4 $140.1 $287.8 

 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.




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CELESTICA INC. 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in millions of U.S. dollars)
(unaudited)
 Note
Capital stock
(note 8)
Treasury stock
 (note 8)
Contributed
surplus		Deficit
Accumulated other comprehensive
loss (a)
Total 
equity
Balance -- January 1, 2023$1,714.9 $(18.5)$1,063.6 $(1,076.6)$(5.7)$1,677.7 
Capital transactions:8      
Issuance of capital stock (b)
0.5 — (0.2)— — 0.3 
Repurchase of capital stock for cancellation(37.3)1.8 9.9 — — (25.6)
Purchase of treasury stock for stock-based compensation (SBC) plans (c)
— (53.7)— — — (53.7)
SBC cash settlement— — (49.8)— — (49.8)
Equity-settled SBC— 15.6 31.7 — — 47.3 
Total comprehensive income (loss):     
Net earnings for the period— — — 160.4 — 160.4 
  Other comprehensive income (loss), net of tax:     
Currency translation differences for foreign operations
— — — — (6.2)(6.2)
Changes from currency forward derivative hedges— — — — (15.2)(15.2)
Changes from interest rate swap derivative hedges— — — — 1.1 1.1 
Balance -- September 30, 2023$1,678.1 $(54.8)$1,055.2 $(916.2)$(26.0)$1,736.3 
Balance -- January 1, 2024$1,672.5 $(80.1)$1,030.6 $(839.6)$(14.9)$1,768.5 
Capital transactions:8      
Issuance of capital stock5.6 — (1.7)— — 3.9 
Repurchase of capital stock for cancellation(d)
(41.1)— (85.0)— — (126.1)
Purchase of treasury stock for SBC plans (e)
— (94.1)— — — (94.1)
SBC cash settlement— — (69.0)— — (69.0)
Equity-settled SBC— 86.7 (38.0)— — 48.7 
Total comprehensive income (loss):      
Net earnings for the period— — — 293.0 — 293.0 
Other comprehensive income (loss), net of tax:
      
Currency translation differences for foreign operations
— — — — (0.7)(0.7)
Changes from currency forward derivative hedges— — — — 2.4 2.4 
Changes from interest rate swap derivative hedges— — — — (6.9)(6.9)
Balance -- September 30, 2024$1,637.0 $(87.5)$836.9 $(546.6)$(20.1)$1,819.7 
(a)Accumulated other comprehensive loss is net of tax.
(b)In June and August 2023, we issued 11.8 million and 6.8 million of our common shares (previously named subordinate voting shares), respectively, in each case upon conversion of an equivalent number of our then-outstanding multiple voting shares with nil impact (individually or in the aggregate) on our aggregate capital stock amount (see note 8).
(c)Consists of $47.2 paid to repurchase common shares for delivery obligations under our SBC plans during the first nine months of 2023 and $6.5 accrued at September 30, 2023 for the estimated contractual maximum number of permitted common share repurchases (Contractual Maximum Quantity) under an automatic share purchase plan (ASPP) executed in September 2023 for such purpose (see note 8).
(d)Consists of $126.5 paid to repurchase common shares for cancellation during the first nine months of 2024 and $2.3 accrued at September 30, 2024 for share buyback taxes, offset in part by the reversal of $2.7 accrued at December 31, 2023 for the estimated Contractual Maximum Quantity under an ASPP executed in December 2023 for such purpose (see note 8).
(e)Consists of $101.6 paid to repurchase common shares for delivery obligations under our SBC plans during the first nine months of 2024, offset in part by the reversal of $7.5 accrued at December 31, 2023 for the estimated Contractual Maximum Quantity under an ASPP executed in September 2023 for such purpose (see note 8).

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
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CELESTICA INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions of U.S. dollars)
(unaudited)
Three months endedNine months ended
September 30September 30
 Note2023202420232024
Cash provided by (used in):  
Operating activities:  
Net earnings for the period$80.2 $91.7 $160.4 $293.0 
Adjustments to net earnings for items not affecting cash:  
Depreciation and amortization
39.4 47.8 117.1 136.4 
Equity-settled employee SBC expense 812.9 12.7 45.8 47.3 
Total return swap fair value adjustments: losses (gains)
(29.4)7.7 (34.2)(39.5)
Other charges, net of recoveries
93.4 0.4 6.3 4.5 
Finance costs, net of finance income
18.3 11.0 62.1 43.2 
Income tax expense
18.9 33.7 42.1 68.1 
Other
(3.2)0.5 3.7 1.3 
Changes in non-cash working capital items:
  
Accounts receivable
(295.3)(111.7)(205.5)(209.4)
Inventories
84.5 25.5 89.2 278.6 
Other current assets
(6.6)37.7 22.7 37.1 
Accounts payable, accrued and other current liabilities and provisions
186.3 21.0 53.0 (189.7)
Non-cash working capital changes
(31.1)(27.5)(40.6)(83.4)
Net income tax paid
(21.0)(33.2)(71.8)(71.9)
Net cash provided by operating activities88.4 144.8 290.9 399.0 
Investing activities:  
Acquisition of NCS Global Services LLC, net of cash acquired
4— — — (36.1)
Purchase of computer software and property, plant and equipment
(27.0)(46.0)(92.2)(123.3)
Proceeds related to the sale of assets
0.8 — 1.7 2.9 
Other
— (5.0)— (5.0)
Net cash used in investing activities(26.2)(51.0)(90.5)(161.5)
Financing activities:  
Revolving loan borrowings
7— 20.0 — 485.0 
Revolving loan repayments
7— (20.0)— (485.0)
Term loan borrowings
7— — — 750.0 
Term loan repayments
7(4.6)(4.4)(13.8)(613.3)
Lease payments(12.8)(13.0)(36.9)(37.6)
Issuance of capital stock80.3 — 0.3 3.9 
Repurchase of capital stock for cancellation8— (100.0)(25.6)(126.5)
Purchase of treasury stock for stock-based plans8(42.0)— (47.2)(101.6)
Proceeds from partial total return swap settlement
115.0 — 5.0 32.3 
SBC cash settlement8— — (49.8)(69.0)
Finance costs paid (a)
7(15.7)(11.9)(53.8)(47.6)
Net cash used in financing activities
(69.8)(129.3)(221.8)(209.4)
Net increase (decrease) in cash and cash equivalents
(7.6)(35.5)(21.4)28.1 
Cash and cash equivalents, beginning of period
360.7 434.0 374.5 370.4 
Cash and cash equivalents, end of period
$353.1 $398.5 $353.1 $398.5 
(a)    Finance costs paid in the three and nine months ended September 30, 2024 include $0.6 and $9.6 of debt issuance costs paid, respectively (three and nine months ended September 30, 2023 — $0.4).
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)

1.             REPORTING ENTITY
 
Celestica Inc. (referred to herein as Celestica, the Company, we, us, or our) is incorporated in Ontario with its corporate headquarters located in Toronto, Ontario, Canada. Celestica’s subordinate voting shares were re-designated as common shares (Common Shares) effective April 25, 2024 (see note 8), and are listed as such on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). We refer to our common equity as Common Shares for all periods presented herein.

2.             BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICIES
 
Statement of compliance:
 
These unaudited interim condensed consolidated financial statements for the period ended September 30, 2024 (Q3 2024 Interim Financial Statements) have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, and the accounting policies we have adopted in accordance with International Financial Reporting Standards (IFRS), in each case as issued by the International Accounting Standards Board (IASB), and reflect all adjustments that are, in the opinion of management, necessary to present fairly our financial position at September 30, 2024 and our financial performance, comprehensive income and cash flows for the three and nine months ended September 30, 2024 (referred to herein as Q3 2024 and YTD 2024, respectively). The Q3 2024 Interim Financial Statements should be read in conjunction with our 2023 audited consolidated financial statements (2023 AFS), which are included in our Annual Report on Form 20-F for the year ended December 31, 2023. The Q3 2024 Interim Financial Statements are presented in United States (U.S.) dollars, which is also our functional currency. Unless otherwise noted, all financial information is presented in millions of U.S. dollars (except percentages and per share/per unit amounts).
 
The Q3 2024 Interim Financial Statements were authorized for issuance by our Board of Directors (Board) on October 23, 2024.
 
Use of estimates and judgments:
 
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets, liabilities, revenue and expenses, and related disclosures with respect to contingent assets and liabilities. We base our judgments, estimates and assumptions on current facts, historical experience and various other factors that we believe are reasonable under the circumstances. The economic environment also impacts certain estimates and discount rates necessary to prepare our consolidated financial statements, including significant estimates and discount rates applicable to the determination of the recoverable amounts used in the impairment testing of our non-financial assets. Our assessment of these factors forms the basis for our judgments on the carrying values of our assets and liabilities, and the accrual of our costs and expenses. Actual results could differ materially from our estimates and assumptions. We review our estimates and underlying assumptions on an ongoing basis and make revisions as determined necessary by management. Revisions are recognized in the period in which the estimates are revised and may also impact future periods.

Our review of the estimates, judgments and assumptions used in the preparation of the Q3 2024 Interim Financial Statements included those relating to, among others: our determination of the timing of revenue recognition, the determination of whether indicators of impairment existed for our assets and/or cash generating units (CGUs1), our measurement of deferred tax assets and liabilities, our estimated inventory write-downs and expected credit losses, customer creditworthiness, and the determination of the fair value of assets acquired, liabilities assumed, and contingent consideration in connection with a business combination. Any revisions to estimates, judgments or assumptions may result in, among other things, write-downs, accelerated depreciation or amortization, or impairments to our assets or CGUs, and/or adjustments to the carrying amount of our accounts receivable and/or inventories, or to the valuation of our deferred tax assets, any of which could have a material impact on our financial performance and financial condition.
1 CGUs are the smallest identifiable group of assets that cannot be tested individually and generate cash inflows that are largely independent of those of other assets or groups of assets, and can be comprised of a single site, a group of sites, or a line of business.
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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)

Accounting policies:

Except for Amendments to IAS 1, adopted as of January 1, 2024 as described below, the Q3 2024 Interim Financial Statements are based on accounting policies consistent with those described in note 2 to our 2023 AFS.

Recently adopted accounting standards and amendments:

Classification of liabilities as current or non-current (Amendments to IAS 1)

In January 2020, the IASB issued Classification of liabilities as current or non-current (Amendments to IAS 1) to clarify how to classify debt and other liabilities as current or non-current. The amendments are effective for reporting periods beginning on or after January 1, 2024. This standard, which we adopted as of January 1, 2024, did not have a material impact on our consolidated financial statements.

Recently issued but not yet effective standards:

IFRS 18 Presentation and Disclosure in Financial Statements

In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements. IFRS 18 replaces IAS 1 Presentation of Financial Statements and sets out requirements for the presentation and disclosure of information in general purpose financial statements. The standard applies to annual reporting periods beginning on or after January 1, 2027 and is to be applied retrospectively, with early adoption permitted. We have not yet adopted such standard and are currently assessing the impact on our consolidated financial statements.

3.           SEGMENT AND CUSTOMER REPORTING
 
Segments:

Celestica delivers innovative supply chain solutions globally to customers in two operating and reportable segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). Our ATS segment consists of our ATS end market, and is comprised of our Aerospace and Defense (A&D), Industrial, HealthTech and Capital Equipment businesses. Our CCS segment consists of our Communications and Enterprise (servers and storage) end markets. Segment performance is evaluated based on segment revenue, segment income and segment margin (segment income as a percentage of segment revenue). See note 25 to our 2023 AFS for a description of the businesses that comprise our segments, how segment revenue is attributed, how costs are allocated to our segments, and how segment income and segment margin are determined.

Information regarding the performance of our reportable segments is set forth below:
Revenue by segment:Three months ended September 30Nine months ended September 30
2023202420232024
% of total% of total% of total% of total
ATS$859.4 42 %$814.1 33 %$2,516.9 43 %$2,349.7 33 %
CCS1,183.9 58 %1,685.4 67 %3,303.6 57 %4,750.6 67 %
Communications end market revenue as a % of total revenue36 %42 %34 %39 %
Enterprise end market revenue as a % of total revenue22 %25 %23 %28 %
Total$2,043.3 $2,499.5 $5,820.5 $7,100.3 

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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
Segment income, segment margin, and reconciliation of segment income to IFRS earnings before income taxes:Three months ended September 30Nine months ended September 30
Note2023202420232024
Segment MarginSegment MarginSegment MarginSegment Margin
ATS segment income and margin$42.1 4.9 %$39.0 4.8 %$118.6 4.7 %$110.5 4.7 %
CCS segment income and margin73.6 6.2 %128.7 7.6 %198.9 6.0 %346.4 7.3 %
Total segment income115.7 167.7 317.5 456.9 
Reconciling items:
Finance costs, net of finance income
718.3 11.0 62.1 43.2 
Employee stock-based compensation (SBC) expense12.9 12.7 45.8 47.3 
Total return swap (TRS) fair value adjustments: losses (gains)
8&11(29.4)7.7 (34.2)(39.5)
Amortization of intangible assets (excluding computer software)9.2 9.9 27.6 28.9 
Other charges, net of recoveries95.6 1.0 13.7 15.9 
IFRS earnings before income taxes$99.1 $125.4 $202.5 $361.1 

Customers:

Two customers (both in our CCS segment) individually represented 10% or more of total revenue in Q3 2024 (25% and 12%) and YTD 2024 (30% and 11%). One such customer also individually represented 10% or more of total revenue in the third quarter of 2023 (Q3 2023) (23%) and in the first nine months of 2023 (YTD 2023) (19%).

4.    ACQUISITION

On April 26, 2024, we completed the acquisition of 100% of the interests of NCS Global Services LLC (NCS), a U.S.-based IT infrastructure and asset management business, for a purchase price of $39.6, including a net working capital adjustment finalized in Q3 2024. The purchase price was funded with the revolving portion of our credit facility (see note 7). The NCS acquisition agreement also includes a potential earn-out of up to $20 if certain adjusted earnings before interest, taxes, depreciation and amortization targets are achieved during the period from May 2024 to April 2025. We estimated the fair value of such potential earn-out to be $6.6 at the date of acquisition. We recorded purchase consideration of $46.2 for the fair value of the acquired assets (including $3.5 of cash) and liabilities at the date of acquisition on our consolidated balance sheet. Our preliminary purchase price allocation for the NCS acquisition is as follows:

Cash and cash equivalents
$3.5 
Accounts receivable and other current assets3.0 
Right-of-use (ROU) assets
5.2 
Property, plant and equipment0.4 
Computer software assets and intellectual property1.3 
Customer and brand intangible assets
28.6 
Goodwill19.4 
Accounts payable and accrued liabilities(2.5)
Lease liabilities(5.2)
Deferred income tax liabilities
(7.5)
$46.2 

We engaged third-party consultants to assist in the estimation of the fair value of acquired intangible assets and the potential earn-out. We expect to finalize our purchase price allocation in the fourth quarter of 2024, once the work of our third-party consultants has been completed.

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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
The preliminary valuation of the intangible assets and the potential earn-out was primarily based on the income approach using a discounted cash flow model and forecasts based on management's subjective estimates and assumptions. Various Level 2 and 3 data inputs of the fair value measurement hierarchy (described in note 20 to the 2023 AFS) were used in such valuation.

Newly-recognized customer and brand intangible assets from the acquisition will be amortized on a straight line basis over an estimated useful life of 10 years. As a result, our amortization of customer and brand intangible assets will increase by approximately $3 annually. Goodwill from the acquisition arose primarily from expected synergies from the combination of our operations. Such goodwill is attributable to our CCS segment and is not tax deductible.

Had the acquisition occurred on January 1, 2024, the operations of NCS would have contributed less than 10% to our consolidated revenue and net earnings for YTD 2024.

In connection with our acquisition of NCS, we recorded Acquisition Costs (defined in note 9) of nil in Q3 2024 and $1.6 in YTD 2024. See note 9 for all Acquisition Costs incurred in Q3 2024, YTD 2024, and the respective prior year periods.

5.             ACCOUNTS RECEIVABLE
 
Accounts receivable (A/R) sales program and supplier financing programs (SFPs):
We are party to an A/R sales program agreement with a third-party bank to sell up to $450.0 in A/R on an uncommitted, revolving basis, subject to pre-determined limits by customer. This agreement provides for automatic annual one-year extensions, and may be terminated at any time by the bank or by us upon 3 months’ prior notice, or by the bank upon specified defaults. Under our A/R sales program, we continue to collect cash from our customers and remit amounts collected to the bank weekly.

At September 30, 2024, we participate in three customer SFPs, pursuant to which we sell A/R from the relevant customer to third-party banks on an uncommitted basis. The SFPs have an indefinite term and may be terminated at any time by the customer or by us upon specified prior notice. Under our SFPs, the third-party banks collect the relevant A/R directly from these customers.

At September 30, 2024, we sold nil of A/R (December 31, 2023 — nil) under our A/R sales program and nil of A/R (December 31, 2023 — $18.6) under the SFPs. The A/R sold under each of these programs are de-recognized from our A/R balance at the time of sale, and the proceeds are reflected as cash provided by operating activities in our consolidated statement of cash flows. Upon sale, we assign the rights to the A/R to the banks. A/R are sold net of discount charges, which are recorded as finance costs in our consolidated statement of operations.

Contract assets:

At September 30, 2024, our A/R balance included $269.6 (December 31, 2023 — $250.8) of contract assets recognized as revenue in accordance with our revenue recognition accounting policy.

6.             INVENTORIES

We record inventory write-downs, net of valuation recoveries, in cost of sales. Inventories are valued at the lower of cost and net realizable value. Inventory write-downs reflect the write-down of inventory to its net realizable value. Valuation recoveries reflect gains on the disposition of previously written-down inventory and favorable adjustments reflecting current and forecasted usage. We recorded net inventory write-downs of $16.8 and $27.1 for Q3 2024 and YTD 2024, respectively (Q3 2023 — $17.1; YTD 2023 — $40.4).

We receive cash deposits from certain of our customers primarily to help reduce risks related to excess and/or obsolete inventory. Such deposits as of September 30, 2024 totaled $521.1 (December 31, 2023 — $904.8), and were recorded in accrued and other current liabilities on our consolidated balance sheet.

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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
7.          CREDIT FACILITIES AND LEASE OBLIGATIONS

We are party to a credit agreement (Credit Facility) with Bank of America, N.A., as Administrative Agent, and the other lenders party thereto, which as of a June 2024 amendment and restatement (June 2024 Amendment), includes a new term loan in the original principal amount of $250.0 (Term A Loan), a new term loan in the original principal amount of $500.0 (Term B Loan, and collectively with the Term A Loan, the New Term Loans), and a $750.0 revolving credit facility (Revolver). Prior to the June 2024 Amendment, the Credit Facility included a term loan in the original principal amount of $350.0 (Initial Term Loan) and a term loan in the original principal amount of $365.0 (Incremental Term Loan), the outstanding borrowings under each of which were fully repaid with a substantial portion of the proceeds of the New Term Loans, and commitments of $600.0 under the Revolver. The terms of the Credit Facility prior to the June 2024 Amendment are described in detail in note 11 to the 2023 AFS. Notwithstanding the repayment of the Incremental Term Loan in full and its replacement with the Term A Loan, for accounting purposes, this portion of the transaction was treated as a non-substantial modification of the Incremental Term Loan, resulting in a $5.5 gain (Modification Gain) recorded in YTD 2024 as finance income in our consolidated statement of operations. The repayment of the Initial Term Loan in full was treated, for accounting purposes, as an extinguishment of such loan.

The Term A Loan and the Revolver each mature in June 2029. The Term B Loan matures in June 2031. The Term A Loan and the Term B Loan require quarterly principal repayments of $3.125 and $1.250, respectively (which commenced in September 2024), and each of the New Term Loans requires a lump sum repayment of the remainder outstanding at maturity. We are also required to make annual prepayments of outstanding obligations under the Credit Facility (applied first to the New Term Loans, then to the Revolver, in the manner set forth in the Credit Facility) ranging from 0% — 50% (based on a defined leverage ratio) of specified excess cash flow for the prior fiscal year. No prepayments based on excess cash flow were required in 2023, or will be required in 2024. In addition, prepayments of outstanding obligations under the Credit Facility (applied as described above) may also be required in the amount of specified net cash proceeds received above a specified annual threshold (including proceeds from the disposal of certain assets). No prepayments based on net cash proceeds were required in 2023, or will be required in 2024. Any outstanding amounts under the Revolver are due at maturity. Except under specified circumstances, and subject to the payment of breakage costs (if any), we are generally permitted to make voluntary prepayments of outstanding amounts under the Revolver and the New Term Loans without any other premium or penalty. Repaid amounts on the New Term Loans may not be re-borrowed.

The Credit Facility has an accordion feature that allows us to increase the New Term Loans and/or commitments under the Revolver by $200.0, plus an unlimited amount to the extent that a defined leverage ratio on a pro forma basis does not exceed specified limits, in each case on an uncommitted basis and subject to the satisfaction of certain terms and conditions. The Revolver also includes a $50.0 sub-limit for swingline loans, providing for short-term borrowings up to a maximum of ten business days, as well as a $150.0 sub-limit for letters of credit (L/Cs), in each case subject to the overall Revolver credit limit. The Revolver permits us and certain designated subsidiaries to borrow funds (subject to specified conditions) for general corporate purposes, including for capital expenditures, certain acquisitions, and working capital needs.

Borrowings under the Revolver bear interest, depending on the currency of the borrowing and our election for such currency, at: (i) term Secured Overnight Financing Rate (Term SOFR) plus 0.10% (Adjusted Term SOFR), (ii) Base Rate, (iii) Canadian Prime, (iv) an Alternative Currency Daily Rate, or (v) an Alternative Currency Term Rate (each as defined in the Credit Facility) plus a specified margin. The margin for borrowings under the Revolver ranges from 1.50% to 2.25% for Adjusted Term SOFR, Alternative Currency Daily Rate or Alternative Currency Term Rate borrowings, and from 0.50% to 1.25% for Base Rate and Canadian Prime borrowings, in each case depending on the rate we select and a defined net leverage ratio (NLR). Commitment fees range from 0.30% to 0.45%, depending on our NLR. Outstanding amounts under the Term A Loan bear interest at Adjusted Term SOFR or Base Rate, plus a margin ranging from 1.50% — 2.25% for Adjusted Term SOFR borrowings and from 0.50% — 1.25% for Base Rate borrowings, in each case depending on the rate we select and our NLR. Outstanding amounts under the Term B Loan bear interest at Term SOFR plus 1.75% or the Base Rate plus 0.75%, depending on the rate we select. At September 30, 2024, outstanding amounts under the Term A Loan bore interest at Adjusted Term SOFR plus 1.75%; outstanding amounts under the Term B Loan bore interest at Term SOFR plus 1.75%; and no amounts were outstanding under the Revolver. We have entered into interest rate swap agreements to hedge against our exposures to the interest rate variability on a portion of the New Term Loans. See note 11 for further detail.

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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
We are required to comply with certain restrictive covenants under the Credit Facility, including those relating to the incurrence of certain indebtedness, the existence of certain liens, the sale of certain assets, specified investments and payments, sale and leaseback transactions, and certain financial covenants relating to a defined interest coverage ratio and leverage ratio that are tested on a quarterly basis. Our Credit Facility also limits share repurchases for cancellation if our consolidated secured leverage ratio (as defined in such facility) exceeds a specified amount (Repurchase Restriction). The Repurchase Restriction did not prohibit share repurchases during Q3 2024 or at September 30, 2024. At September 30, 2024 and December 31, 2023, we were in compliance with all restrictive and financial covenants under the Credit Facility.

The obligations under the Credit Facility are guaranteed by us and certain specified subsidiaries. Subject to specified exemptions and limitations, all assets of the guarantors are pledged as security for the obligations under the Credit Facility. The Credit Facility contains customary events of default. If an event of default occurs and is continuing (and is not waived), the Administrative Agent may declare all amounts outstanding under the Credit Facility to be immediately due and payable, and may cancel the lenders’ commitments to make further advances thereunder. In the event of a payment or other specified defaults, outstanding obligations accrue interest at a specified default rate.

Activity under our Credit Facility during 2023 and YTD 2024 is set forth below:
Revolver
Term loans
Outstanding balances as of December 31, 2022
$— $627.2 
Amount repaid in Q1 2023— 
(1)
(4.5625)
(2)
Amount repaid in Q2 2023— 
(1)
(4.5625)
(2)
Amount repaid in Q3 2023— 
(1)
(4.5625)
(2)
Amount repaid in Q4 2023— 
(1)
(4.5625)
(2)
Outstanding balances as of December 31, 2023
$— $608.9 
Amount borrowed in Q1 2024
285.0 — 
Amount repaid in Q1 2024
(257.0)(4.5625)
(2)
Amount borrowed in Q2 2024180.0
(3)
750.0
(4)
Amount repaid in Q2 2024
(208.0)(604.3)
(5)
Amount borrowed in Q3 2024
20.0 — 
Amount repaid in Q3 2024(20.0)(4.375)
(6)
Outstanding balances as of September 30, 2024$— $745.6 
(1)    During each quarter in 2023, we made intra-quarter borrowings under the Revolver and repaid such borrowings in full within the quarter borrowed, with no impact to the amounts outstanding at the relevant quarter-end. Such intra-quarter borrowings and repayments are excluded from this table. Intra-quarter borrowings (and repayments in equivalent amounts) were a cumulative aggregate of $270, $140, $200 and $281 in Q4 2023, Q3 2023, Q2 2023 and Q1 2023, respectively.
(2)    Represents scheduled quarterly principal repayments under the Incremental Term Loan prior to the June 2024 Amendment.
(3)    A portion of this amount was used to fund the NCS purchase price (see note 4).
(4)    Represents borrowings under the New Term Loans.
(5)    Represents the repayment and termination of the Initial Term Loan and Incremental Term Loan.
(6)    Represents scheduled quarterly principal repayments under the New Term Loans.

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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
The following table sets forth, at the dates shown: outstanding borrowings under the Credit Facility, excluding ordinary course L/Cs; notional amounts under our interest rate swap agreements; and outstanding lease obligations:
Outstanding borrowings
Notional amounts under interest rate swaps (note 11)
December 31
2023		September 30
2024		December 31
2023		September 30
2024
Borrowings under the Revolver $— $— $— $— 
Borrowings under term loans:
     Initial Term Loan$280.4 $— $100.0 $— 
     Incremental Term Loan328.5 — 230.0 — 
     Term A Loan— 246.9 — 130.0
     Term B Loan— 498.7 — 200.0 
     Total$608.9 $745.6 $330.0 $330.0 
Total borrowings under Credit Facility$608.9 $745.6 
Unamortized debt issuance costs and modification adjustment related to our term loans(1)
(2.6)(11.7)
Lease obligations(2)
176.5 207.2 
$782.8 $941.1 
Total Credit Facility and lease obligations:
Current portion$51.6 $57.7 
Long-term portion731.2 883.4 
$782.8 $941.1 
(1)We incur debt issuance costs upon execution of, subsequent security arrangements under, and amendments to the Credit Facility. We incurred nil debt issuance costs in either Q3 2024 or Q3 2023. Debt issuance costs incurred in YTD 2024 in connection with our Revolver totaling $3.9 (YTD 2023 — $0.2) were deferred as other assets on our consolidated balance sheet and are amortized on a straight line basis over the remaining term of the Revolver. Debt issuance costs incurred in YTD 2024 in connection with our New Term Loans totaling $2.2 (YTD 2023 — $0.2, in connection with prior term loans) and a modification adjustment of $5.5 in YTD 2024 in connection with the termination of the Incremental Term Loan and its replacement with the Term A Loan, were deferred as long-term debt on our consolidated balance sheet and are amortized over their respective terms using the effective interest rate method. In YTD 2024, the Modification Gain and the accelerated amortization of $0.8 of unamortized deferred financing costs related to the termination of the Initial Term Loan, were recorded in finance income and finance costs, respectively.
(2)These lease obligations represent the present value of unpaid lease payment obligations recognized as liabilities as of December 31, 2023 and September 30, 2024, respectively, which have been discounted using our incremental borrowing rate on the lease commencement dates. In addition to the lease obligations as of September 30, 2024, we have commitments under a real property lease in Richardson, Texas not recognized as liabilities as of September 30, 2024 because such lease had not yet commenced as of such date. A description of such lease and minimum lease obligations thereunder are disclosed in note 24 to the 2023 AFS.

The following table sets forth, at the dates shown, information regarding outstanding L/Cs, guarantees, surety bonds and overdraft facilities:

December 31
2023		September 30
2024
Outstanding L/Cs under the Revolver$10.5 $11.5 
Outstanding bank guarantees and surety bonds outside the Revolver
16.5 23.9 
Total$27.0 $35.4 
Available uncommitted bank overdraft facilities$198.5 $198.5 
Amounts outstanding under available uncommitted bank overdraft facilities$— $— 

Finance costs consist of interest expense and fees related to our Credit Facility (including debt issuance and related amortization costs), our interest rate swap agreements, our TRS agreement (TRS Agreement), our A/R sales program and the SFPs, and interest expense on our lease obligations. In YTD 2024, finance costs included $5.2 in fees and costs incurred in connection
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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
with the June 2024 Amendment and $0.8 in accelerated amortization of unamortized deferred financing costs in connection with the related termination of the Initial Term Loan. Finance income consists of interest income earned and additionally, in YTD 2024, the Modification Gain.

8.            CAPITAL STOCK AND RELATED PARTY TRANSACTIONS
 
Secondary Offerings by Onex Corporation (Onex):
In connection with underwritten secondary public offerings by Onex, our then-controlling shareholder, completed in June 2023 (June Secondary Offering) and August 2023 (August Secondary Offering), we issued approximately 11.8 million and 6.8 million Common Shares, respectively, in each case upon conversion of an equivalent number of our then-existing multiple voting shares (MVS). Such transactions had nil impact (individually or in the aggregate) on our aggregate capital stock amount. As a result of the August Secondary Offering, we had no MVS outstanding and Onex is no longer our controlling shareholder.

Prior to September 2023, we were party to a services agreement with Onex for the services of an Onex officer as a member of our Board, pursuant to which Onex received compensation. This agreement terminated automatically in September 2023, and in accordance with its provisions, we paid Onex approximately $9.2 in cash in October 2023 to settle Onex's outstanding deferred share units (DSUs). The Onex officer resigned from our Board in September 2023.

Removing provisions of MVS and re-designating our subordinate voting shares
At our April 25, 2024 Annual and Special Meeting of Shareholders, our shareholders approved Articles of Amendment to our Articles of Incorporation to remove the provisions relating to our MVS (as such shares were no longer outstanding) and to re-designate our subordinate voting shares as Common Shares, effective as of such date. See note 1.
Common Share repurchase plans:
In recent years, we have repurchased Common Shares in the open market, or as otherwise permitted, for cancellation through normal course issuer bids (NCIBs), which allow us to repurchase a limited number of Common Shares during a specified period. The maximum number of Common Shares we are permitted to repurchase for cancellation under each NCIB is reduced by the number of Common Shares we arrange to be purchased by any non-independent broker in the open market during the term of such NCIB to satisfy delivery obligations under our SBC plans. We from time-to-time enter into automatic share purchase plans (ASPPs) with a broker, instructing the broker to purchase our Common Shares in the open market on our behalf, either for cancellation under an NCIB (NCIB ASPPs) or for delivery obligations under our SBC plans (SBC ASPPs), including during any applicable trading blackout periods, up to specified maximums (and subject to certain pricing and other conditions) through the term of each ASPP.

On December 8, 2022, the TSX accepted our notice to launch an NCIB (2022 NCIB), which allowed us to repurchase, at our discretion, from December 13, 2022 until the earlier of December 12, 2023 or the completion of purchases thereunder, up to approximately 8.8 million of our Common Shares in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids. Several NCIB ASPPs and SBC ASPPs (all of which have since expired) were in effect during YTD 2023. At September 30, 2023, we recorded an accrual of $6.5 (September 2023 SBC Accrual), representing the contractual maximum number of permitted Common Share repurchases (Contractual Maximum Quantity) under an SBC ASPP (0.3 million Common Shares) executed in September 2023.

On December 12, 2023, the TSX accepted our notice to launch a new NCIB (2023 NCIB), which allows us to repurchase, at our discretion, from December 14, 2023 until the earlier of December 13, 2024 (unless terminated earlier) or the completion of purchases thereunder, up to approximately 11.8 million of our Common Shares in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids. At September 30, 2024, approximately 8.9 million Common Shares remained available for repurchase under the 2023 NCIB either for cancellation or SBC delivery purposes. At December 31, 2023, we recorded an accrual of: (i) $2.7, representing the estimated Contractual Maximum Quantity (0.1 million Common Shares) under an NCIB ASPP we entered into in December 2023; and (ii) $7.5, representing the estimated Contractual Maximum Quantity (0.3 million Common Shares) under an SBC ASPP we entered into in September 2023, each of which were
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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
reversed in YTD 2024. One NCIB ASPP and two SBC ASPPs were in effect during YTD 2024, all of which have since expired, and no ASPP accruals were recorded at September 30, 2024.

Common Shares repurchased in Q3 2024, YTD 2024, and the respective prior year periods, for cancellation and for SBC plan delivery obligations (including under ASPPs) are set forth in the chart below.

Common Share repurchases:
Three months ended September 30Nine months ended September 30
2023202420232024
Aggregate cost(1) of Common Shares repurchased for cancellation
$— $100.0 $25.6 $126.5 
Number of Common Shares repurchased for cancellation (in millions)(2)
— 2.2 2.2 2.9 
Weighted average price per share for repurchases$— $44.44 $11.80 $43.28 
Aggregate cost(1) of Common Shares repurchased for delivery under SBC plans (3) (see below)
$42.0 $— $47.2 $101.6 
Number of Common Shares repurchased for delivery under SBC plans (in millions)(4)
2.0 — 2.4 2.8 
(1)Includes transaction fees. For Q3 2024 and YTD 2024, aggregate cost of Common Shares repurchased for cancellation excludes $2.3 accrued at September 30, 2024 for share buyback taxes.
(2)For Q3 2024 and YTD 2024, includes nil and 0.5 million Common Shares, respectively, purchased for cancellation under NCIB ASPPs (Q3 2023 — nil; YTD 2023 — 0.9 million).
(3)For Q3 2023 and YTD 2023, excludes the $6.5 September 2023 SBC Accrual.
(4)For each applicable period, consists entirely of SBC ASPP purchases through an independent broker.

SBC:

From time to time, we pay cash to a broker to purchase Common Shares in the open market to satisfy delivery requirements under our SBC plans. At September 30, 2024, the broker held 2.6 million Common Shares with a value of $87.5 (December 31, 2023 — 3.3 million Common Shares with a value of $72.6) for this purpose, which we report as treasury stock on our consolidated balance sheet. 3.5 million Common Shares held by the broker (including additional Common Shares purchased during YTD 2024) were used to settle SBC awards during YTD 2024.

We grant restricted share units (RSUs) and performance share units (PSUs), and occasionally, stock options, to employees under our SBC plans. The majority of RSUs vest one-third per year over a three-year period. Stock options generally vest 25% per year over a four-year period. The number of outstanding PSUs that will actually vest varies from 0% to 200% of a target amount granted. For PSUs granted in 2021 and 2022, the number of PSUs that vested (or will vest) are based on the level of achievement of a pre-determined non-market performance measurement in the final year of the relevant three-year performance period, subject to modification by each of a separate pre-determined non-market financial target, and our relative total shareholder return (TSR), a market performance condition, compared to a pre-defined group of companies, in each case over the relevant three-year performance period. Commencing in 2023, the number of PSUs that will vest are based on the level of achievement of a different predetermined non-market performance measurement, subject to modification by our relative TSR compared to a pre-defined group of companies, in each case over the relevant three-year performance period. We also grant DSUs and RSUs (under specified circumstances) to directors as compensation under our Directors' Share Compensation Plan. See note 2(l) to the 2023 AFS for further detail.

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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
Information regarding RSU, PSU and DSU grants to employees and directors, as applicable, for the periods indicated is set forth below (no stock options were granted in the periods below):
Three months ended September 30Nine months ended September 30
 2023202420232024
RSUs Granted:
Number of awards (in millions)0.1 0.03 2.0 0.7 
Weighted average grant date fair value per unit$22.11 $47.08 $13.03 $37.36 
PSUs Granted:
Number of awards (in millions, representing 100% of target)0.01 0.01 1.3 0.5 
Weighted average grant date fair value per unit$24.89 $55.89 $15.06 $43.47 
DSUs Granted:
Number of awards (in millions)0.01 0.01 0.07 0.02 
Weighted average grant date fair value per unit$24.52 $51.32 $15.84 $50.10 

In YTD 2023, we settled a portion of RSUs and PSUs that vested during such period with a cash payment of $49.8. In YTD 2024, we made a cash payment of $69.0 for withholding taxes in connection with the RSUs and PSUs that vested during such period.

In YTD 2024, our Chief Executive Officer exercised 0.3 million stock options with an exercise price per option of $17.52 Canadian dollars.
We use the TRS Agreement to manage cash flow requirements and our exposure to fluctuations in the share price of our Common Shares in connection with the settlement of certain outstanding equity awards under our SBC plans. See note 11 for further detail.

Information regarding employee and director SBC expense and TRS fair value adjustments (TRS FVAs) for the periods indicated is set forth below:
Three months ended September 30Nine months ended September 30
 2023202420232024
Employee SBC expense in cost of sales$5.1 $5.6 $18.4 $20.2 
Employee SBC expense in SG&A7.8 7.1 27.4 27.1 
Total employee SBC expense$12.9 $12.7 $45.8 $47.3 
TRS FVAs: losses (gains) in cost of sales$(11.8)$2.7 $(13.8)$(17.2)
TRS FVAs: losses (gains) in SG&A(17.6)5.0 (20.4)(22.3)
Total TRS FVAs: losses (gains)$(29.4)$7.7 $(34.2)$(39.5)
Combined effect of employee SBC expense and TRS FVAs: expenses (recoveries)$(16.5)$20.4 $11.6 $7.8 
Director SBC expense in SG&A(1)
$0.6 $0.6 $1.8 $1.8 
(1) Expense consists of director compensation to be settled with Common Shares, or Common Shares and cash.

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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
9.             OTHER CHARGES, NET OF RECOVERIES
Three months ended September 30Nine months ended September 30
2023202420232024
Restructuring charges, net of recoveries (a)
$0.3 $0.6 $9.8 $11.3 
Transition Costs (b)3.9 — 3.9 3.4 
Acquisition Costs (c)
0.6 0.4 0.9 2.5 
Other costs (recoveries) (d)
0.8 — (0.9)(1.3)
 $5.6 $1.0 $13.7 $15.9 
(a)    Restructuring charges, net of recoveries:

Our restructuring activities for Q3 2024 and YTD 2024 consisted primarily of actions to adjust our cost base to address reduced levels of demand in certain of our businesses and geographies.

We recorded cash restructuring charges of $0.2 and $10.2 in Q3 2024 and YTD 2024, respectively (Q3 2023 — $1.3; YTD 2023 — $7.9), primarily for employee termination costs. We recorded $0.4 and $1.1 of non-cash restructuring charges in Q3 2024 and YTD 2024, respectively, consisting primarily of accelerated depreciation of equipment related to disengaging programs (Q3 2023 — nil; YTD 2023 — $2.9, consisting primarily of the accelerated depreciation of equipment, building improvements and ROU assets related to disengaging programs and vacated properties). In Q3 2023 and YTD 2023, we also recorded non-cash restructuring recoveries of $1.0, related to sublet recoveries in excess of the carrying value of the related leases and sales of surplus equipment. At September 30, 2024, our restructuring provision was $2.4 (December 31, 2023 — $3.6), which we recorded in the current portion of provisions on our consolidated balance sheet.

(b)    Transition Costs:

Transition Costs consist of costs recorded in connection with: (i) the transfer of manufacturing lines from closed sites to other sites within our global network; (ii) the sale of real properties unrelated to restructuring actions; and (iii) specified charges related to the Purchaser Lease (defined below). Transition Costs consist of direct relocation and duplicate costs (such as rent expense, utility costs, depreciation charges, and personnel costs) incurred during the transition periods, as well as cease-use and other costs incurred in connection with idle or vacated portions of the relevant premises that we would not have incurred but for these relocations, transfers and dispositions.
In March 2019, as part of our Toronto real property sale, we entered into a 10-year lease with the purchaser of such property for our then-anticipated headquarters, to be built by such purchaser on the site of our former location (Purchaser Lease). Due to a number of construction-related commencement date delays, in November 2022, we extended (on a long-term basis) the lease on our current corporate headquarters, and in Q3 2023, we executed a sublease for a portion of the leased space under the Purchaser Lease (Sublease). The Purchaser Lease commenced in June 2024 and related ROU assets and lease liabilities were recognized in our consolidated financial statements. Consistent with our prior treatment as Transition Costs of duplicate and idle premises costs incurred as a result of our 2019 Toronto real property sale, the excess of rental expenses under the Purchaser Lease (with respect to the subleased space) over anticipated rental recoveries under the Sublease were recorded as Transition Costs in Q3 2023 and YTD 2023 ($3.9). Similarly, we recorded Transition Costs of $3.4 in YTD 2024, representing the write-down of ROU assets under the Purchaser Lease with respect to the space not subleased. We incurred no Transition Costs in Q3 2024.
(c)    Acquisition Costs:

We incur consulting, transaction and integration costs relating to potential and completed acquisitions. We also incur charges or releases related to the subsequent re-measurement of indemnification assets or the release of indemnification or other liabilities recorded in connection with acquisitions, when applicable. Collectively, these costs, charges and releases are referred to as Acquisition Costs (Recoveries).

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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
We recorded Acquisition Costs of $0.4 in Q3 2024 related to potential acquisitions and $2.5 in YTD 2024 related to the acquisition of NCS (see note 4) and potential acquisitions (Q3 2023 and YTD 2023 — $0.6 and $0.9, respectively, related to potential acquisitions).

(d)    Other costs (recoveries)

We recorded nil other costs or recoveries in Q3 2024. In YTD 2024, we recorded nil other costs, and $1.3 of other recoveries, consisting of legal recoveries in connection with the settlement of class action lawsuits (for component parts purchased in prior periods) in which we were a plaintiff (Parts Recoveries). In Q3 2023, we recorded $0.8 of other costs, substantially all of which consisted of fees and expenses of the August Secondary Offering, and nil other recoveries. In YTD 2023, we recorded $2.7 in Parts Recoveries, offset in part by $1.8 of other costs, substantially all of which consisted of fees and expenses of both the June Secondary Offering and the August Secondary Offering. See note 8.

10.         INCOME TAXES
 
Our income tax expense or recovery for each quarter is determined by multiplying the earnings or losses before tax for such quarter by management’s best estimate of the weighted-average annual income tax rate expected for the full year, taking into account the tax effect of certain items recognized in the interim period. As a result, the effective income tax rates used in our interim financial statements may differ from management’s estimate of the annual effective tax rate for the annual financial statements. Our estimated annual effective income tax rate varies as the quarters progress, for various reasons, including as a result of the mix and volume of business in various tax jurisdictions within the Americas, Europe and Asia, in jurisdictions with tax holidays and tax incentives, and in jurisdictions for which no net deferred income tax assets have been recognized because management believes it is not probable that future taxable profit will be available against which tax losses and deductible temporary differences could be utilized. Our annual effective income tax rate can also vary due to the impact of restructuring charges, foreign exchange fluctuations, operating losses, cash repatriations, and changes in our provisions related to tax uncertainties.
Our Q3 2024 net income tax expense of $33.7 included a $2.6 withholding tax expense incurred to minimize the impact of the enactment of Pillar Two (global minimum tax) legislation in Canada, and a $2.0 tax expense arising from taxable temporary differences associated with the anticipated repatriation of undistributed earnings from certain of our Asian subsidiaries (Repatriation Expense). Our YTD 2024 net income tax expense of $68.1 included an $18.8 withholding tax expense incurred to minimize the impact of the enactment of Pillar Two legislation in Canada, and a $2.0 Repatriation Expense, offset in part by the recognition of $7.5 of previously unrecognized deferred tax assets in our U.S. group of subsidiaries as a result of our NCS acquisition, and $5.6 of reversals of tax uncertainties (Reversals) relating to one of our Asian subsidiaries. Taxable foreign exchange impacts were not significant in Q3 2024 or YTD 2024.

Our Q3 2023 net income tax expense of $18.9 included a $3.5 Repatriation Expense. Our YTD 2023 net income tax expense of $42.1 included a $6.8 Repatriation Expense, partially offset by the favorable impact of $5.5 in Reversals relating to one of our Asian subsidiaries. Taxable foreign exchange impacts were not significant in Q3 2023 or YTD 2023.

11.          FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Our financial assets are comprised primarily of cash and cash equivalents, A/R, and derivatives used for hedging purposes. Our financial liabilities are comprised primarily of accounts payable, certain accrued and other liabilities, the New Term Loans, borrowings under the Revolver, lease obligations, and derivatives used for hedging purposes. 

Equity price risk:

We are party to the TRS Agreement with a third-party bank with respect to an original notional amount of 3.0 million of our Common Shares (Original Notional Amount) to manage our cash flow requirements and exposure to fluctuations in the price of our Common Shares in connection with the settlement of certain outstanding equity awards under our SBC plans. The counterparty under the TRS Agreement is obligated to make a payment to us upon its termination (in whole or in part) or expiration (Settlement) based on the increase (if any) in the value of the TRS (as defined in the TRS Agreement) over the agreement’s term, in exchange for periodic payments made by us based on the counterparty’s Common Share purchase costs
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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
and SOFR plus a specified margin. Similarly, if the value of the TRS (as defined in the TRS Agreement) decreases over the term of the TRS Agreement, we are obligated to pay the counterparty the amount of such decrease upon Settlement. The change in value of the TRS is determined by comparing the average amount realized by the counterparty upon the disposition of purchased Common Shares to the average amount paid for such shares. By the end of the first quarter of 2023, the counterparty had acquired the entire Original Notional Amount at a weighted average price of $12.73 per share. The TRS Agreement provides for automatic annual one-year extensions (subject to specified conditions), and may be terminated (in whole or in part) by either party at any time. In each of September 2023 and February 2024, we terminated a portion of the TRS Agreement by reducing the Original Notional Amount by 0.5 million Common Shares and 1.25 million Common Shares, respectively, and received $5.0 and $32.3, respectively, from the counterparty in connection therewith, which we recorded in cash provided by financing activities in our consolidated statement of cash flows. The TRS does not qualify for hedge accounting. As of September 30, 2024, the fair value of the TRS Agreement was an unrealized gain of $47.8 (December 31, 2023 — an unrealized gain of $40.6), which we recorded in other current assets on our consolidated balance sheet. TRS FVAs (representing the change of fair value of TRS) are recognized in our consolidated statement of operations each quarter. See note 8 for TRS FVAs in Q3 2024, YTD 2024, and the respective prior year periods.

Interest rate risk:

Borrowings under the Credit Facility expose us to interest rate risk due to the potential variability of market interest rates (see note 7). In order to partially hedge against our exposure to interest rate variability on our New Term Loans, we are party to various agreements with third-party banks to swap the variable interest rate with a fixed rate of interest for a portion of the borrowings thereunder. At September 30, 2024, we had interest rate swaps hedging the interest rate risk associated with $130.0 of our Term A Loan borrowings and $200.0 of our Term B Loan borrowings, each of which expire in December 2025. Prior to the June 2024 Amendment, these interest rate swaps were used to hedge $100.0 of our Initial Term Loan borrowings and $230.0 of our Incremental Term Loan borrowings. We continue to apply hedge accounting to our interest rate swaps, as the term loan borrowings prior and subsequent to the June 2024 Amendment share the same floating interest rate risk. The option to cancel up to $50.0 of the notional amount of the interest rate swaps on the Incremental Term Loan from January 2024 through October 2025 was terminated in January 2024.

At September 30, 2024, the interest rate risk related to $415.6 of borrowings under the Credit Facility was unhedged, consisting of unhedged amounts outstanding under the New Term Loans ($298.7 under the Term B Loan and $116.9 under the Term A Loan). See note 7.

At September 30, 2024, the fair value of our interest rate swap agreements was an unrealized gain of $6.3 (December 31, 2023 — an unrealized gain of $13.2), which we recorded in other non-current assets on our consolidated balance sheet. The unrealized portion of the change in fair value of the swaps is recorded in other comprehensive income (loss) (OCI). The realized portion of the change in fair value of the swaps is released from accumulated OCI and recognized under finance costs in our consolidated statement of operations when the hedged interest expense is recognized.

Currency risk:

The majority of our currency risk is driven by operational costs, including income tax expense, incurred in local currencies by our subsidiaries. We cannot predict changes in currency exchange rates, the impact of exchange rate changes on our operating results, nor the degree to which we will be able to manage the impact of currency exchange rate changes. Such changes could have a material effect on our business, financial performance and financial condition.

Our major currency exposures at September 30, 2024 are summarized in U.S. dollar equivalents in the following table. The local currency amounts have been converted to U.S. dollar equivalents using spot rates at September 30, 2024.
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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
 Canadian dollarEuroThai bahtChinese renminbiMexican pesoMalaysian ringgit
Cash and cash equivalents
$2.0 $13.3 $2.2 $11.2 $11.8 $8.7 
Accounts receivable
0.2 56.7 — 13.0 — 10.7 
Income taxes and value-added taxes receivable
14.8 0.7 3.7 3.1 52.6 12.7 
Other financial assets
— 8.3 0.3 0.4 0.8 9.0 
Pension and non-pension post-employment liabilities
(52.0)(0.9)(23.3)(0.7)(6.0)(0.1)
Income taxes and value-added taxes payable
(21.6)(2.2)— (12.1)(13.9)— 
Accounts payable and certain accrued and other liabilities and provisions(73.9)(49.9)(64.4)(42.3)(17.9)(51.6)
Net financial assets (liabilities)
$(130.5)$26.0 $(81.5)$(27.4)$27.4 $(10.6)

We enter into foreign currency forward contracts to hedge our cash flow exposures and foreign currency swaps to hedge the exposures of our monetary assets and liabilities denominated in foreign currencies. While these contracts are intended to reduce the effects of fluctuations in foreign currency exchange rates, our hedging strategy does not mitigate the longer-term impacts of changes to foreign exchange rates.

At September 30, 2024, we had foreign currency forwards and swaps to trade U.S. dollars in exchange for the following currencies:
CurrencyContract amount in
U.S. dollars
Weighted average
exchange rate in
U.S. dollars (1)
Maximum
period in
months		Fair value
gain (loss)
Canadian dollar$221.3 $0.74 12$1.2 
Thai baht199.5 0.03 1216.3 
Malaysian ringgit69.7 0.22 126.5 
Mexican peso113.7 0.05 11(4.5)
British pound3.8 1.32 4(0.2)
Chinese renminbi33.1 0.14 120.2 
Euro56.8 1.11 11(1.3)
Romanian leu43.0 0.22 121.1 
Singapore dollar26.6 0.76 120.6 
Japanese yen4.9 0.0067 4(0.4)
Korean won2.7 0.0007 4(0.1)
Total$775.1 $19.4 
Fair values of outstanding foreign currency forward and swap contracts related to effective cash flow hedges where we applied hedge accounting9.8 
Fair values of outstanding foreign currency forward and swap contracts related to economic hedges where we record the changes in the fair values of such contracts through our consolidated statement of operations 9.6 
$19.4 
(1)Represents the U.S. dollar equivalent (not in millions) of one unit of the foreign currency, weighted based on the notional amounts of the underlying foreign currency forward and swap contracts outstanding as at September 30, 2024.
At September 30, 2024, the aggregate fair value of our outstanding contracts was a net unrealized gain of $19.4 (December 31, 2023 — net unrealized gain of $6.5), resulting from fluctuations in foreign exchange rates between the contract execution and the period-end date. At September 30, 2024, we recorded $33.9 of derivative assets in other current assets and an aggregate of $14.5 of derivative liabilities in other current liabilities (December 31, 2023 — $15.8 of derivative assets in other current assets and $9.3 of derivative liabilities in other current liabilities).

Credit risk:

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss to us. We believe our credit risk of counterparty non-performance continues to be relatively low. We are in regular contact with our customers, suppliers and logistics providers, and have not experienced significant counterparty credit-related non-performance
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CELESTICA INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions of U.S. dollars, except percentages and per share amounts)
(unaudited)
in 2023 or YTD 2024. However, if a key supplier (or any company within such supplier's supply chain) or customer fails to comply with their contractual obligations, this could result in a significant financial loss to us. We would also suffer a significant financial loss if an institution from which we purchased foreign currency exchange contracts and swaps, interest rate swaps, or annuities for our pension plans, or the counterparty to our TRS Agreement, defaults on their contractual obligations. With respect to our financial market activities, we have adopted a policy of dealing only with counterparties we deem to be creditworthy. No material adjustments were made to our allowance for doubtful accounts during Q3 2024 or YTD 2024 in connection with our ongoing credit risk assessments.

Liquidity risk:

Liquidity risk is the risk that we may not have cash available to satisfy our financial obligations as they come due. The majority of our financial liabilities recorded in accounts payable, accrued and other current liabilities and provisions are due within 90 days. We manage liquidity risk through maintenance of cash on hand and access to the various financing arrangements described in notes 5 and 7. We believe that cash flow from operating activities, together with cash on hand, cash from accepted sales of A/R, and borrowings available under the Revolver and potentially available under uncommitted intraday and overnight bank overdraft facilities, are sufficient to fund our currently anticipated financial obligations, and will remain available in the current environment. As our A/R sales program and SFPs are each uncommitted, however, there can be no assurance that any participant bank will purchase any of the A/R that we wish to sell.

12.         COMMITMENTS AND CONTINGENCIES

Litigation:

We are party to litigation, investigations and other claims that arise from time to time in the ordinary course of our operations, including legal, regulatory and tax proceedings. Management believes that adequate provisions have been recorded where required. Although it is not always possible to estimate the extent of potential costs, if any, we believe that the ultimate resolution of all such pending matters will not have a material adverse impact on our financial performance, financial position or liquidity.

Taxes and Other Matters:

In 2021, the Romanian tax authorities issued a final assessment in the aggregate amount of approximately 31 million Romanian leu (approximately $7 at Q3 2024 period-end exchange rates), for additional income and value-added taxes for one of our Romanian subsidiaries for the 2014 to 2018 tax years. In order to advance our case to the appeals phase and reduce or eliminate potential interest and penalties, we paid the Romanian tax authorities the full amount assessed in 2021 (without agreement to all or any portion of such assessment). We believe that our originally-filed tax return positions are in compliance with applicable Romanian tax laws and regulations, and intend to vigorously defend our position through all necessary appeals or other judicial processes.

The successful pursuit of assertions made by any government authority, including tax authorities, could result in our owing significant amounts of tax or other reimbursements, interest and possibly penalties. We believe we adequately accrue for any probable potential adverse ruling. However, there can be no assurance as to the final resolution of any claims and any resulting proceedings. If any claims and any ensuing proceedings are determined adversely to us, the amounts we may be required to pay could be material, and in excess of amounts accrued.



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