How CLS (Celestica) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a technology manufacturing services company like Celestica makes money is essential for investors and anyone interested in the business of electronics manufacturing. In this post, we break down Celestica's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Celestica Overview

Celestica operates as a global leader in design, manufacturing, and supply chain solutions for electronics, serving industries like aerospace, healthcare, communications, and industrial sectors. Revenue comes primarily from its Connectivity & Cloud Solutions (CCS) and Advanced Technology Solutions (ATS) segments, with CCS dominating as the high-growth engine. The company focuses on end-to-end services including electronics manufacturing services (EMS), hardware platform solutions, and after-market services.

Revenue Breakdown

• Total Revenue (Q4 2025): $3.71B (+45.8% YoY)
  • CCS Revenue: $2.86B (77.1% of total, +64.4% YoY)
  • ATS Revenue: $0.80B (21.6% of total, -1.2% YoY)
  • Other Revenue by Product: $0.05B (1.4% of total)
  • Growth is powered by surging demand in CCS, driven by cloud computing, hyperscale data centers, and AI-related hardware manufacturing.

Gross Profit and Margins

• Gross Profit: $0.43B (11.5% gross margin)
  • Cost of Revenue: $3.28B (+45.5% YoY)
  • Celestica maintains moderate margins due to its scalable manufacturing model, efficient supply chain management, and a favorable product mix shifting toward higher-margin CCS offerings.
• Most costs come from materials, labor, and overhead in manufacturing facilities worldwide.

Operating Income and Expenses

• Operating Income: $0.33B (+60.8% YoY, 8.8% margin)
• Operating Expenses: $0.10B (+7.5% YoY)
  • R&D: $0.03B (+31.0% YoY, 0.8% of revenue) — focused on advanced manufacturing technologies, AI integration, and custom hardware platforms for cloud and connectivity.
  • SG&A: $0.07B (+23.6% YoY, 1.9% of revenue) — covering sales, marketing, and administrative functions to support global expansion and customer acquisition.
  • Celestica continues to prioritize innovation while maintaining efficiency in operating costs amid rapid revenue scaling.

Net Income

• Pre-Tax Income: $0.31B (+61.4% YoY, 8.2% margin)
• Income Tax: $0.03B (11.2% effective tax rate)
• Net Income: $0.27B (+101.2% YoY, 7.3% net margin)
• Celestica converts a significant portion of sales into profit due to operational leverage, pricing power in high-demand segments, and controlled expense growth.

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What Drives Celestica's Money Machine?

• CCS Revenue: 77.1%+ of revenue, fueled by hyperscalers' demand for servers, storage, and networking gear in the AI and cloud boom.
• Revenue Growth Rate: 45.8% YoY overall, with CCS at 64.4% YoY highlighting segment leadership in high-growth tech infrastructure.
• R&D Investment: Strategic focus on next-gen manufacturing for edge computing and sustainable electronics.
• Future growth areas: ATS expansion into industrial and aerospace, though challenged by cyclical demand and not yet matching CCS profitability.

Visualizing Celestica's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant manufacturing costs, 7.3% of revenue drops to the bottom line.

Key Takeaways

• Celestica's money comes overwhelmingly from CCS segment
• High gross and net margins illustrate the power of Celestica's scalable EMS business model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by AI/cloud demand and CCS expansion

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FAQ About Celestica's Income Statement

1. What is the main source of Celestica's revenue in 2025?

Celestica generates over 77% of its revenue from CCS Revenue. Additional revenue sources include ATS 21.6% and other product revenue 1.4%.

2. How profitable is Celestica in Q4 2025?

Celestica reported net income of $0.27B in Q4 2025, with a net margin of approximately 7.3%, reflecting strong profitability driven by revenue growth and operating leverage.

3. What are the largest expense categories for Celestica?

The biggest expenses on Celestica's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $0.03B in Q4 2025, as Celestica prioritizes advanced manufacturing and AI hardware.

4. Why does ATS operate at a loss?

ATS, despite generating $0.80B in revenue, faces margin pressure in Q4 2025. This is because Celestica aggressively invests in diversification into aerospace and industrial markets, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does Celestica's effective tax rate compare to previous years?

Celestica's effective tax rate in Q4 2025 was 11.2%, consistent with previous years. This low rate is primarily due to international operations, tax credits, and efficient global structuring.