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CELESTICA INC

CELESTICA INCCLSEarnings & Financial Report

NYSE · Information Technology · Printed Circuit Boards

Celestica Inc. is a Canadian multinational design, manufacturing, hardware platform, and supply chain electronics manufacturing services (EMS) company, which is headquartered in Toronto, Ontario. The company operates in 50 sites across 15 countries.

What changed in CELESTICA INC's 10-K — 2024 vs 2025

Top changes in CELESTICA INC's 2025 10-K

771 paragraphs added · 940 removed · 595 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

99 edited+26 added−63 removed43 unchanged
Generally, the agreements governing such technology grant to us non-exclusive, worldwide licenses with respect to the subject technologies, are typically provided without charge, and terminate upon a material breach by us of the terms of such agreements, or termination of the program to which such licenses relate.
Generally, the agreements governing such technology grant us non-exclusive, worldwide licenses with respect to the subject technologies, are typically provided without charge, and terminate upon a material breach by us of the terms of such agreements, or termination of the program to which such licenses relate.
Government Regulation As a global company, our operations are subject to a variety of governmental and regulatory requirements related to, among other things, environmental matters, waste management, trade compliance, anti-corruption, health and safety matters, employment laws and regulations, A&D regulations and regulations governing the manufacture and sale of healthcare products, and disclosure obligations.
Government Regulation As a global company, our operations are subject to a variety of governmental and regulatory requirements related to, among other things, A&D regulations and regulations governing the manufacture and sale of healthcare products, trade compliance, anti-corruption, health and safety matters, employment laws and regulations, environmental matters, waste management, and disclosure obligations.
In addition, our ongoing cost reductions initiatives, which are intended to further streamline our business, increase operational efficiencies and improve our productivity, have had a favorable impact on our profitability. Develop and Grow Trusted Relationships with Leading Customers. We continue to pursue profitable, strategic relationships with industry leaders that we believe can benefit from our services and solutions.
In addition, our ongoing cost reductions initiatives, which are intended to further streamline our business, increase operational efficiencies and improve our productivity, have had a favorable impact on our profitability. Develop and Grow Trusted Relationships with Customers. We continue to pursue profitable, strategic relationships with industry leaders that we believe can benefit from our services and solutions.
Past environmental assessments have not revealed any environmental liability that we believe will have a material adverse effect on our operating results or financial condition, in part because of contractual retention of liability by landlords and former owners at certain sites. However, any such contractual retention of liability may not provide sufficient protection to reduce or eliminate our liability.
Past environmental assessments have not revealed any environmental liability that we believe will have a material adverse effect on our operating results or financial condition, in part because of contractual retention of liability by landlords and former owners at certain sites. However, any such contractual retention of liability may not provide sufficient protection to reduce or 13 eliminate our liability.
If more stringent compliance or cleanup standards under environmental laws 15 or regulations are imposed, or the results of future testing and analyses at our current or former sites indicate that we are responsible for the release of hazardous substances into the air, ground and/or water, we may be subject to additional liability.
If more stringent compliance or cleanup standards under environmental laws or regulations are imposed, or the results of future testing and analyses at our current or former sites indicate that we are responsible for the release of hazardous substances into the air, ground and/or water, we may be subject to additional liability.
Inclusion Celestica is committed to fostering an inclusive and collaborative workplace where all employees feel valued, respected, and empowered to reach their full potential. We believe that embracing a broad range of perspectives drives innovation, strengthens our culture, and enhances our ability to serve customers worldwide.
Celestica is committed to fostering an inclusive and collaborative workplace where all employees feel valued, respected, and empowered to reach their full potential. We believe that embracing a broad range of perspectives drives innovation, strengthens our culture, and enhances our ability to serve customers worldwide.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov. Our public filings with the Canadian Securities Administrators are available under our profile on SEDAR+ at www.sedarplus.ca. 18
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov. Our public filings with the Canadian Securities Administrators are available under our profile on SEDAR+ at www.sedarplus.ca.
In order to be successful, we employ advanced statistical engineering techniques and other tools designed to enhance production and service quality. Our principal sites are ISO 9001 and ISO 14001 certified, adhering to international quality management standards and equipped with necessary industry specific certifications.
In order to be successful, we employ advanced statistical engineering techniques and other tools 10 designed to enhance production and service quality. Our principal sites are ISO 9001 and ISO 14001 certified, adhering to international quality management standards and equipped with necessary industry specific certifications.
Investment in our design and engineering capabilities and products roadmaps is required in order to maintain our technology leadership throughout upgrade cycles and to support our customers in their deployments of their critical IT products and infrastructure. We also invest in software engineering capabilities in order to support our customers on enablement of open-sourced solutions.
Investment in our design and engineering capabilities and product roadmaps is required in order to maintain our technology leadership throughout upgrade cycles and to support our customers in their deployments of their critical IT products and infrastructure. We also invest in software engineering capabilities in order to support our customers on enablement of open-sourced solutions.
Systems Assembly and Testing We use sophisticated technologies in the assembly and testing of our products. We continue to make investments in the development of automated solutions, as well as new assembly and test process techniques intended to enhance product quality, reduce cost and improve delivery time to customers.
Systems assembly and testing We use sophisticated technologies in the assembly and testing of our products. We continue to make investments in the development of automated solutions, as well as new assembly and test process techniques intended to enhance product quality, 9 reduce cost and improve delivery time to customers.
We view the size and scale of our procurement activities, including our IT systems, as an important competitive advantage, as they enhance our ability to obtain better pricing, influence component packaging and designs, and obtain a supply of components, especially in constrained markets.
We view the size and scale of 8 our procurement activities, including our IT systems, as an important competitive advantage, as they enhance our ability to obtain better pricing, influence component packaging and designs, and obtain a supply of components, especially in constrained markets.
Our returns processing and prevention 11 offering provides our customers with product screening and testing and product design and process analysis. Our reclamation offering includes product disassembly, reassembly and re-use, as well as certified scrap disposition processing.
Our returns processing and prevention offering provides our customers with product screening and testing and product design and process analysis. Our reclamation offering includes product disassembly, reassembly and re-use, as well as certified scrap disposition processing.
Item 1. Business Background We were incorporated in Ontario, Canada on September 27, 1996. We are a corporation domiciled in the Province of Ontario, Canada and operate under the Business Corporations Act (Ontario) (OBCA). Our principal executive offices are located at 5140 Yonge Street, Suite 1900, Toronto, Ontario, Canada M2N 6L7.
Item 1. Business Background We were incorporated in Ontario, Canada on September 27, 1996. We are a corporation domiciled in the Province of Ontario, Canada and operate under the Business Corporations Act (Ontario) (OBCA). Our principal executive offices and global headquarters are located at 5140 Yonge Street, Suite 1900, Toronto, Ontario, Canada M2N 6L7.
Information regarding material effects of government regulations on our business is provided in Section 1A, Risk Factors, under " We are subject to the risk of increasing income and other taxes, tax audits and the challenges of successfully defending our tax positions, and obtaining, renewing or meeting the conditions of tax incentives and credits, any of which may adversely affect our financial performance ," " Compliance with governmental laws, regulations, and obligations could be costly and may negatively impact our financial performance; any failure to comply may negatively impact our financial performance ," " Compliance or the failure to comply with employment laws and regulations may negatively impact our financial performance, " " U.S. policies or legislation could have a material adverse effect on our business, results of operations and financial condition, " and " Our business and operations could be adversely impacted by ESG initiatives.
Information regarding material effects of government regulations on our business is provided in Item 1A, Risk Factors, under " We are subject to the risk of increasing income and other taxes, tax audits and the challenges of successfully defending our tax positions, and obtaining, renewing or meeting the conditions of tax incentives and credits, any of which may adversely affect our financial performance, " " Compliance or the failure to comply with governmental laws, regulations, and obligations could be costly and may negatively impact our financial performance ," " Compliance or the failure to comply with employment laws and regulations may negatively impact our financial performance, " " U.S. policies or legislation could have a material adverse effect on our business, results of operations and financial condition, " and " Our business and operations could be adversely impacted by sustainability initiatives.
We have hardware and software patents that are integral to our HPS business. We anticipate that such growth (and importance) will continue as we expand this business. In addition, we currently have a limited number of other patents and patent applications pending to protect our IP.
We have hardware and software patents that are integral to our HPS business. We anticipate that such growth (and importance) will continue as we expand this business. In addition, we currently have a number of patent applications pending to protect our IP.
We strive to respond to our customers' needs with speed, flexibility and predictability. We have established and maintain strong relationships with a diverse mix of leading OEMs, cloud-based and other service providers and other companies across our end markets.
We strive to respond to our customers' needs with speed, flexibility and predictability. We have established and maintain strong relationships with a diverse mix of cloud-based and other service providers (primarily hyperscalers), leading OEMs and other companies across our end markets.
We will continue to selectively seek acquisition opportunities and strategic transactions in order to (i) profitably grow our revenue, (ii) further develop strategic relationships with customers in our end markets; (iii) enhance the scope of our capabilities and service offerings, (iv) enhance our IP portfolio, and (v) expand our capabilities and offerings to include further after-market services and product licensing opportunities.
We will continue to selectively seek acquisition opportunities and strategic transactions in order to (i) profitably grow our revenue, (ii) further develop strategic relationships with customers in our end markets; (iii) enhance the scope of our capabilities and service offerings, (iv) advance our R&D capabilities and enhance our IP portfolio, and (v) expand our capabilities and offerings to include further after-market services and product licensing opportunities.
Our current CCS segment customers include Amazon Fulfillment Services, Inc., Ciena Corporation, Dell Technologies, Google Inc., Hewlett-Packard Enterprise, IBM Corporation, Juniper Networks, Inc. and Meta Platforms, Inc. Our current ATS segment customers include Applied Materials, Inc., LAM Research and Honeywell Inc. We are focused on strengthening our relationships with strategic customers through the delivery of new and expanding end-to-end solutions.
Our CCS segment customers include Amazon Fulfillment Services, Inc., Meta Platforms, Inc., Google Inc., Ciena Corporation, Dell Technologies, Hewlett-Packard Enterprise, and IBM Corporation, Inc. Our ATS segment customers include Applied Materials, Inc., LAM Research and Honeywell Inc. We are focused on strengthening our relationships with strategic customers through the delivery of new and expanding end-to-end solutions.
In order to help us streamline our processes, we continue to invest in our "digital factory," which automates and connects our equipment, people and systems throughout our global network, including our customers and suppliers. Our mix of programs, and operating leverage across several of our businesses had a favorable impact on our gross margin in 2024.
In order to help us streamline our processes, we continue to invest in our "digital factory," which automates and connects our equipment, people and systems throughout our global network, including our customers and suppliers. Our mix of programs, and operating leverage across several of our businesses had a favorable impact on our gross margin in recent years.
" Products and services in our ATS segment are extensive and are often more regulated than in our CCS segment, and can include the following: government-certified and highly-specialized manufacturing, electronic and enclosure-related services for A&D customers; high-precision semiconductor and display equipment and integrated subsystems; a wide range of industrial automation, controls, test and measurement devices; engineering-focused engagements, including in the areas of telematics, human machine interface, Internet-of-Things and embedded systems; advanced solutions for surgical instruments, diagnostic imaging and patient monitoring; and efficiency products to help manage and monitor the energy and power industries.
Products and services in our ATS segment are extensive, serving a broader customer base and are often more regulated than those in our CCS segment, and can include: government-certified and highly-specialized manufacturing, electronic and enclosure-related services for A&D customers; high-precision semiconductor equipment and integrated subsystems; a wide range of industrial automation, controls, test and measurement devices; engineering-focused engagements, including in the areas of telematics, human machine interface, Internet-of-Things and embedded systems; advanced solutions for surgical instruments, diagnostic imaging and patient monitoring; and efficiency products to help manage and monitor the energy and power industries.
Where contamination is suspected at sites being acquired or leased, Phase II intrusive environmental assessments (that can include soil and/or groundwater testing) are usually performed. We expect to conduct Phase I or similar environmental assessments in respect of future property acquisitions or leases and intend to perform Phase II assessments where we deem it appropriate.
Where contamination is suspected at sites being acquired or leased, Phase II intrusive environmental assessments (that can include soil and/or groundwater testing) may be performed. We expect to conduct Phase I or similar environmental assessments in respect of future property acquisitions or leases and intend to perform Phase II assessments where we deem it appropriate.
Supply Chain Management We share data electronically with our key suppliers, and help ensure speed of supply through strong relationships with our component suppliers and logistics partners.
We share data electronically with our key suppliers, and help ensure speed of supply through strong relationships with our component suppliers and logistics partners.
Although we take steps to protect our trade secrets and other IP, we cannot assure that misappropriation will not occur. See Item 1A, Risk Factors, " We may not adequately protect our IP or the IP of others. " Our increased research and design activities have resulted in the growth of our dependence on our patent portfolio.
Although we take steps to protect our trade secrets and other IP, we cannot assure that misappropriation will not occur. See Item 1A, Risk Factors, " We may not adequately protect our IP or the IP of others. " Our increased R&D activities have resulted in the growth of our dependence on our patent portfolio.
A listing of our principal locations is included in Item 2, "Properties." Certain geographic information for countries with 10% or more of our external revenue and PP&E and operating lease ROU assets is set forth in note 22 to the 2024 AFS included herein.
A listing of our principal locations is included in Item 2, "Properties." Certain geographic information for countries with 10% or more of our external revenue and PP&E and operating lease ROU assets is set forth in note 21 to the 2025 AFS included herein.
Our HPS offering is an engineering-led, IP-based offering that allows us to drive hardware innovation and solutions for our customers and further broaden our value proposition by leveraging our ecosystem partners and broad range of capabilities across the product lifecycle.
Design and engineering services Our HPS offering is an engineering-led, IP-based offering that allows us to drive innovation in hardware and software solutions for our customers and further broaden our value proposition by leveraging our ecosystem partners and broad range of capabilities across the product lifecycle.
We also license some technology from third parties that we use in providing electronics manufacturing services to our customers.
We also license certain technology from third parties that we use in providing electronics manufacturing services to our customers.
We believe that our customer base is a strong potential source of growth for us as we seek to strengthen these relationships through the delivery of additional services. Expand Range of Service Offerings and Continue to Invest in Engineering and Supply Chain Solutions and Services.
We believe that our customer base is a strong potential source of growth for us as we seek to strengthen these relationships through adding to the breadth and scale of our solutions. Expand Range of Service Offerings and Continue to Invest in Engineering and Supply Chain Solutions and Services.
We will continue to focus on: (i) managing our mix and volume of business and service offerings to improve our overall margins, (ii) leveraging our supply chain practices globally to lower materials costs, minimize lead times and improve our planning cycle to better meet volatility in customer demand and improve asset utilization and inventory levels, (iii) successfully ramping new programs, and (iv) improving operating efficiencies to reduce costs and improve margins.
We will continue to focus on: (i) managing our mix and volume of business to improve our overall margins, (ii) leveraging our supply chain practices globally to effectively manage materials costs, minimize lead times and improve our planning cycle to better meet volatility in customer demand and improve asset utilization and inventory levels, (iii) successfully ramping new programs, and (iv) improving operating efficiencies to effectively manage production costs and improve margins.
Environmental matters may arise at sites where no problem is currently known or at sites that we may acquire in the future. See Item 1A, Risk Factors, " Compliance with governmental laws, regulations, and obligations could be costly and may negatively impact our financial performance; any failure to comply may negatively impact our financial performance.
Environmental matters may arise at sites where no problem is currently known or at sites that we may acquire in the future. See Item 1A, Risk Factors, " Compliance or the failure to comply with governmental laws, regulations, and obligations could be costly and may negatively impact our financial performance. " Environmental legislation also occurs at the product level.
Our Sustainability Report, which is published annually, outlines our sustainability strategy, the progress we have made as a socially responsible organization, and the key activities and milestones we are working to achieve for each of our focus areas: our planet, our products and services, our people and our communities.
Our Sustainability Report, which is published annually, outlines our sustainability strategy, the progress we have made as a socially responsible organization, and the key activities and milestones we are working on with respect to each of our focus areas: our planet, our products and services, our people and our communities.
Generally, the agreements governing such technology grant to us non-exclusive, worldwide licenses with respect to the subject technologies and terminate upon expiration, or a material breach by us of the terms, of such agreements. 14 Competition The EMS industry is highly competitive with multiple global EMS providers competing for customers and programs.
Generally, the agreements governing such technology grant us non-exclusive, worldwide licenses with respect to the subject technologies and terminate upon expiration, or a material breach by us of the terms, of such agreements. 12 Competition The contract design and manufacturing industry is highly competitive with multiple global EMS and ODM providers competing for customers and programs.
Financial Information Regarding Geographic Areas Details of our financial information regarding geographic areas are disclosed in note 22 to 2024 AFS included herein, in "Information on the Company — Business Overview — Geographies," above and in Item 2, Properties.
Financial Information Regarding Geographic Areas Details of our financial information regarding geographic areas are disclosed in note 21 to the 2025 AFS included herein, in "Information on the Company — Business Overview — Geographies," above and in Item 2, Properties.
Complex mechanical systems integration consists of multiple interconnected subsystems that interact with various materials, e.g., fluids, solids, particles and rigid bodies. Such systems are often used in advanced manufacturing applications such as semiconductor manufacturing, display manufacturing (including LCD, OLED, QLED and other displays), medical applications using robotics, and other applications where precise standards are required.
Complex mechanical systems integration consists of multiple interconnected subsystems that interact with various materials, e.g., fluids, solids, particles and rigid bodies. Such systems are often used in advanced manufacturing applications such as semiconductor manufacturing, medical applications using robotics, and other applications where precise standards are required.
To achieve this, our approach has been to employ a skilled temporary labor force, as required. At December 31, 2024, 4,951 temporary (contract) employees were engaged by us worldwide. Employee Engagement We believe employee engagement is crucial for employee performance and productivity, and strong business outcomes.
To achieve this, our approach has been to employ a skilled temporary labor force, as required. At December 31, 2025, 5,788 temporary (contract) employees were engaged by us worldwide. Employee Engagement We believe employee engagement is crucial for employee performance and productivity, and strong business outcomes.
Our reports that are filed or furnished with the SEC, including our Management Information Circulars (Proxy Statements), Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Specialized Disclosure Reports on Form SD, previous Annual Reports on Form 20-F and previous Reports on Form 6-K, and any amendments to such reports, are available on our website as soon as reasonably practicable after the reports are electronically filed with or furnished to the SEC.
Our reports that are filed or furnished with the SEC, including our Proxy Statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Specialized Disclosure Reports on Form SD, and any amendments to such reports, are available on our website as soon as reasonably practicable after the reports are electronically filed with or furnished to the SEC.
Significant reductions in, or the loss of, revenue from these or any of our major customers may have a material adverse effect on us. See Item 1A, Risk Factors — " We are dependent on a limited number of customers and end markets.
Significant reductions in, or the loss of, revenue from these or any of our major customers may have a material adverse effect on us. See Item 1A, Risk Factors — " We are dependent on a limited number of customers and end markets and are sensitive to their investment cycles and operating conditions.
Our customers, which include OEMs, cloud-based and other service providers (including hyperscalers), and other companies in a wide range of industries, outsource these services to address challenges related to cost, asset utilization, quality, time-to-market, demand volatility, customer support, and rapidly changing technologies.
This business is primarily within our HPS business. Our customers, which include cloud-based and other service providers (including hyperscalers), OEMs and enterprise customers in a wide range of industries, outsource these services to address challenges related to cost, asset utilization, quality, time-to-market, demand volatility, customer support, and rapidly changing technologies.
We believe that our customer-focused factories are flexible and can be reconfigured as needed to meet customer-specific product requirements and fluctuations in volumes (although we do incur increased production costs from time to time in 12 connection with unexpected demand changes).
We believe that our manufacturing sites are flexible and can be reconfigured as needed to support customer-specific product requirements and fluctuations in production volumes, although we do incur increased production costs from time to time, in connection with unexpected demand changes.
Our capabilities span across various categories of IT hardware including networking (including optical modules and Ethernet switches, amongst other products), servers (including AI/ML compute), storage, and data center racks.
Our capabilities span across various categories of IT hardware including networking (including Ethernet switches and optical systems, amongst other products), servers (including AI/machine learning (ML) compute), storage, data center racks and software solutions.
In addition to these standards, we deploy Lean initiatives to help drive manufacturing efficiencies, cycle times velocities and improved product quality, and use Six Sigma extensively in an effort to reduce process variation and to drive root cause problem-solving. Lean and Six Sigma methods are also used in non-production areas to streamline our processes and eliminate waste.
We deploy Lean initiatives to help drive manufacturing efficiencies, excess inventory elimination throughout the supply chain, cycle times velocities and improved product quality, and use Six Sigma extensively in an effort to reduce process variation and to drive root cause problem-solving. Lean and Six Sigma methods are also used in non-production areas to streamline our processes and eliminate waste.
In 2023, one customer (in our CCS segment) individually represented 10% or more of total revenue (22%). In 2022, two customers (each in our CCS segment) individually represented 10% or more of total revenue (11% for each customer).
In 2024, two customers (each in our CCS segment) individually represented 10% or more of total revenue (28% and 11%). In 2023, one customer (in our CCS segment) individually represented 10% or more of total revenue (22%).
Our Hardware Platform Solutions (HPS) offering, within our CCS segment, includes the development of infrastructure platforms, hardware and software design solutions, including open-source software that complements our hardware offerings, and services that can be used as-is, or customized for specific applications in collaboration with our customers, and management of program design and aspects of the supply chain, manufacturing, and after-market support, including ITAM/ITAD.
Our Hardware Platform Solutions (HPS) offering within our CCS segment enables the development of customized technology platforms, including hardware and systems-level design, software solutions (including open-source software that complements our hardware offerings, and that can be used as-is or customized for specific applications in collaboration with our customers), management of program design and aspects of the supply chain, manufacturing, and services.
The following table sets forth information concerning our employees (permanent and temporary) by geographic location: Number of Employees Date Americas Europe Asia Total December 31, 2024 6,141 2,570 18,154 26,865 Given the variable nature of our manufacturing processes and the quick response time required by our customers, it is critical that we are able to adjust our production up or down to maximize efficiency.
The following table sets forth information concerning our employees (permanent and temporary) by geographic location: Number of Employees Date Americas Europe Asia Total December 31, 2025 6,485 2,714 20,392 29,591 Given the variable nature of our manufacturing processes and the quick response time required by our customers, it is critical that we are able to adjust our production up or down to maximize efficiency.
Marketing and Customer Experience We structure our business development teams by end market, with a focus on offering market insight and expertise, and complete manufacturing, HPS (in the case of our CCS segment) and supply chain solutions to our customers. We have customer-focused teams, each headed by a group general manager who oversees the global relationship with our key customers.
Marketing and Customer Experience We structure our business development teams by end market, with a focus on offering market insight and expertise, and complete product lifecycle solutions to our customers. We have customer-focused teams, each headed by a group general manager who oversees the global relationship with our key customers.
See Item 1A, Risk Factors, " We are dependent on third parties to supply certain materials, and our results were negatively affected by the availability of such materials in the past and may be negatively affected by the quality, availability and cost of such materials in the future.
Also see Item 1A, Risk Factors, " We are dependent on third parties to supply certain materials, and our results were negatively affected by the availability of such materials in the past and may be negatively affected by the quality, availability and cost of such materials in the future ." We work with our suppliers and customers to attempt to ensure continuity in the supply of these components.
R&D and IT Hardware for the Data Center Customers We provide a comprehensive suite of products and services for our data center customers, including hyperscalers, cloud and AI service providers and enterprise, as well as IT OEMs.
Data center related products and services We provide a comprehensive suite of products and services for our data center customers, including cloud and AI service providers, including hyperscalers, IT OEMs and enterprise customers.
These systems provide management with the data and analytics required to manage the logistical complexities of our business and are augmented by and integrated with other applications, such as shop floor controls, component and product database management, and design tools.
Supply chain management and services We utilize our enterprise systems, as well as specific supply chain IT tools, to provide management with the data and analytics required to manage the logistical complexities of our business and are augmented by and integrated with other applications, such as shop floor controls, component and product database management, and design tools.
Our telephone number is (416) 448-5800, and our internet address is www.celestica.com. Information on our website is not incorporated by reference into this Annual Report. Prior to our incorporation, we were an IBM manufacturing unit that provided manufacturing services to IBM for more than 75 years. In 1993, we began providing electronics manufacturing services to non-IBM customers.
Information on our website is not incorporated by reference into this Annual Report. 4 Prior to our incorporation, we were an IBM manufacturing unit that provided manufacturing services to IBM for more than 75 years. In 1993, we began providing electronics manufacturing services to non-IBM customers.
We continually seek to expand the services we offer to our customers, and we are committed to meeting our customers' needs in the areas of technology, engineering, quality, product lifecycle management and supply chain management.
We continually seek to expand the services we offer to our customers, and we are committed to meeting our customers' needs in the areas of technology, design, engineering, quality, product lifecycle management and supply chain management. We believe our expertise in these areas enables us to meet the rigorous demands of our customers.
We will continue to focus on our pursuit of the following, intended to strengthen our competitive position and enhance customer satisfaction and shareholder value: Increase Penetration in our End Markets/Offerings. We continually strive to further diversify our portfolio.
We will continue to focus on our pursuit of the following, intended to strengthen our competitive position and enhance customer satisfaction and shareholder value: 6 Increase Penetration in our End Markets/Offerings. We continually strive to further diversify our portfolio, including through the addition of new customers, as well as new programs with existing customers.
We also believe the systems and collaborative processes associated with our expertise in supply chain management help us to adjust our operations to meet customer lead time requirements, and quickly and effectively deliver products directly to end customers. We collaborate with our suppliers to influence component design for the benefit of our customers.
We also believe the systems, collaborative processes and our expertise in supply chain management help us to effectively meet customer lead time requirements, and enable our customers to achieve fast time-to-market. We collaborate with our suppliers to influence component design for the benefit of our customers.
We strive to reduce our customers' total cost of ownership by providing lower costs and reduced cycle times in their supply chain, and by delivering higher quality products.
With those systems and tools, we optimize material management from suppliers to our customers' customers. We strive to reduce our customers' total cost of ownership by providing lower costs and reduced cycle times in their supply chain, and by delivering higher quality products.
Additionally, the HRCC is responsible for reviewing and making recommendations to the Board of Directors of Celestica (Board) with respect to Celestica’s human capital management practices and strategies, including as a result of: (a) reviewing reports from management to monitor Celestica’s culture and employee engagement; (b) overseeing policies and programs in place to support and promote the health, safety and well-being of Celestica’s employees; and (c) considering other ESG practices related to the HRCC's charter. 16 Employees At December 31, 2024, we employed 26,865 permanent and temporary (contract) employees worldwide (December 31, 2023 — 26,554; December 31, 2022 — 26,324).
Additionally, the HRCC is responsible for reviewing and making recommendations to the Board of Directors of Celestica (Board) with respect to Celestica’s human capital management practices and strategies, including as a result of: (a) reviewing reports from management to monitor Celestica’s culture and employee engagement; (b) overseeing policies and programs in place to support and promote the health, safety and well-being of Celestica’s employees; and (c) considering other environmental, social and governance practices related to the HRCC's charter.
Se e Item 1A, Risk Factors, " Our ability to successfully manage unexpected changes or risks inherent in our global operations and supply chain may adversely impact our financial performance " for a discussion of various risks related to our foreign operations. All of the products we manufacture or assemble require one or more components.
See Item 1A, Risk Factors, " Our ability to successfully manage unexpected changes or risks inherent in our global operations and supply chain may adversely impact our financial performance " for a discussion of various risks related to our foreign operations.
Our competitors include Benchmark Electronics, Inc., Flex Ltd., Hon Hai Precision Industry Co., Ltd., Jabil Inc., Plexus Corp., and Sanmina Corporation, as well as smaller EMS companies that often have a regional, product, service or industry-specific focus, and ODMs (including Quanta Computer Inc., Wiwynn Corporation, and Accton Technology Corp.) that provide internally designed products and manufacturing services.
Our competitors in the EMS industry include Benchmark Electronics, Inc., Flex Ltd., Hon Hai Precision Industry Co., Ltd., Jabil Inc., Plexus Corp., and Sanmina Corporation, as well as smaller EMS companies that often have a regional, product, service or industry-specific focus.
These teams work with our subject matter experts to meet the requirements of each customer's product or supply chain. Our global network is comprised of such customer-focused teams, as well as operational and project managers, supply chain management teams, and senior executives. We provide comprehensive support before, during and after the delivery of our products and services.
These teams work with our subject matter experts to meet the requirements of each customer's product or supply chain. Our global network is comprised of such customer-focused teams, as well as operational and project managers, supply chain management teams, and senior executives. Customer Concentration and Relationship Management We target industry-leading customers in each of our segments.
A majority of these supply agreements also require the customer to purchase unused inventory that we have purchased to fulfill that customer's forecasted manufacturing demand.
A majority of these supply agreements also require the customer to purchase unused inventory that we have purchased to fulfill that customer's forecasted manufacturing demand. Some of these agreements require us to provide specific price reductions to our customers over the term of the contracts.
We work with a variety of substrates based on the products we build for our customers, from thin, flexible PCBs to highly complex, dense multi-layer PCBs, as well as a broad array of advanced component and attachment technologies employed in our customers' products and our own product designs.
We work with a variety of substrates based on the products we build for our customers, from thin, flexible PCBs to highly complex, dense multi-layer PCBs, as well as a broad array of advanced components and subcomponents and attachment technologies. Complex Mechanical Assembly We provide systems integration to our Capital Equipment customers.
These capabilities include design for manufacturing, PCB layout, packaging, assembly (circuit card assembly (CCA)), lead-free soldering, test development, and data analytics for complex flexible and rigid-flex circuits and hybrid PCBs. 10 Complex Mechanical Assembly We provide systems integration and precision machined components to our Capital Equipment customers.
These capabilities include design for manufacturing, PCB layout, packaging, assembly (circuit card assembly (CCA)), lead-free soldering, test development, and data analytics for complex flexible and rigid-flex circuits and hybrid PCBs.
Also see Item 1A, Risk Factors — " Inherent challenges in managing changes in customer demand may impact our planning, supply chain execution and manufacturing, and may adversely affect our operating performance and results. " Research and Technology Development We use advanced technology to design, assemble and test the products we manufacture.
Also see Item 1A, Risk Factors — " Inherent challenges in managing changes in customer demand has and may continue to impact our planning, supply chain execution and manufacturing, and may adversely affect our operating performance and results.
In cases where unanticipated customer demand or supply shortages occur, we attempt to arrange for alternative sources of supply, where available, or defer planned production in response to the availability of the critical components. We experienced materials constraints from certain suppliers in the past, which caused delays in the production of customer products in both of our segments.
In cases where unanticipated customer demand or supply shortages occur, we attempt to arrange for alternative sources of supply, where available, or defer planned production in response to the availability of the critical components.
See Item 1A, Risk Factors, " We operate in an industry comprised of numerous competitors and aggressive pricing dynamics " and Item 7, MD&A — "Overview — Overview of business environment " and "Recent Developments." Environmental Matters We are subject to various federal/national, state/provincial, local, foreign and supra-national laws and regulations, including environmental measures relating to the release, use, storage, treatment, transportation, discharge, disposal and remediation of contaminants, hazardous substances and waste, and health and safety measures related to practices and procedures applicable to the construction and operation of our sites.
Environmental Matters We are subject to various federal/national, state/provincial, local, foreign and supra-national laws and regulations, including environmental measures relating to the release, use, storage, treatment, transportation, discharge, disposal and remediation of contaminants, hazardous substances and waste, and health and safety measures related to practices and procedures applicable to the construction and operation of our sites.
" Environmental legislation also occurs at the product level. Celestica works with its customers in connection with compliance with applicable product-level environmental legislation in the jurisdictions where products are manufactured and/or offered for use and sale by our customers. Seasonality Seasonality does not currently have a material impact on either of our segments.
Celestica works with its customers in connection with compliance with applicable product-level environmental legislation in the jurisdictions where products are manufactured and/or offered for use and sale by our customers.
Furthermore, we offer a variety of recognition programs to acknowledge employees who are achieving business results by living our brand and values, and embracing the characteristics of our leadership imperatives. We encourage business and people leaders to acknowledge individual and team success in quarterly town halls, and in more formal ways through our Bravo! and Ignition Awards programs.
Furthermore, we offer a variety of recognition programs to acknowledge employees who are achieving business results by living our brand and values, and embracing the characteristics of our leadership imperatives.
To remain competitive, we believe we must continue to provide technologically advanced manufacturing services and solutions, maintain quality levels, offer flexible delivery schedules, deliver finished products and services on time and compete favorably on price.
To remain competitive, we believe we must continue to provide advanced manufacturing services and solutions, lead design capabilities in the technologies we support in our HPS business, maintain high quality levels, deliver finished products and services on time and compete favorably on price.
We believe our expertise in these areas enables us to meet the rigorous demands of our customers, allows us to produce a variety of electronic products ranging from high-volume electronics to highly complex technology infrastructure products used in a broad array of industries, and allows us to deliver consistently reliable products to our customers.
Additionally, it allows us to produce a variety of technologies ranging from high-volume electronics and equipment used in a broad array of industries, to highly complex data center technology products, and enables us to consistently and reliably deliver these products and services to our customers.
See Item 7, MD&A — "Operating Goals and Priorities" for a discussion of our current priorities and areas of focus. Celestica's Business Innovative Supply Chain Solutions and Services We are a global provider of innovative supply chain solutions.
See Item 7, MD&A — "Operating Goals and Priorities" for a discussion of our current priorities and areas of focus.
We offer a range of services including design and development, engineering services, supply chain management, new product introduction, component sourcing, electronics manufacturing, assembly, testing, complex mechanical assembly, systems integration, precision machining, order fulfillment, logistics, product licensing, and after-market repair and return and ITAM/ITAD services.
We offer a comprehensive range of products and services that cover the entire technology product lifecycle, including hardware design and development, new product introduction, engineering services, supply chain management and logistics, electronics manufacturing and assembly, complex mechanical assembly, precision machining, systems integration, testing, product licensing, software enablement solutions, and services, including asset management and disposition (ITAM/ITAD) services.
We apply automation solutions, where possible, to help improve product quality, lower product costs, and increase manufacturing efficiencies. Our ongoing R&D activities include the development of processes, test technologies, and hardware platform solutions, spanning core data center technologies, that can be used as-is or customized to optimize a customer's specific applications.
Our ongoing R&D activities include the development of processes, test technologies, and platform solutions, including rack-scale designs and spanning core data center technologies that can be used as-is or customized to optimize a customer's specific applications. We are proactive in developing manufacturing techniques that take advantage of the latest component, product and packaging designs.
We believe our competitive advantage is our track record in manufacturing technology, design and engineering, quality, complexity, responsiveness and cost-effective, value-added services, including supply chain services.
We believe our competitive advantage is our track record in advanced manufacturing capabilities, design and engineering, quality, delivery, managing complexity and responsiveness enabling cost-effective solutions and speed-to-market, as well as value-added services, including engineering and supply chain services. The landscape in our CCS segment remains very competitive.
We believe that collaboration between our customers' teams, key ecosystem partners, and our design and manufacturing groups helps to ensure that new designs are released rapidly, smoothly and cohesively into production. Our engineering services team works with our customers throughout the product lifecycle.
We believe that collaboration between our customers' teams, key ecosystem partners, and our design and manufacturing groups helps to ensure that new designs are released rapidly, smoothly and cohesively into production. We maintain ties with key industry associations and engineering firms to help us stay apprised of advances in technical knowledge.
In October 1996, we were purchased from IBM by an investor group led by Onex Corporation (Onex), and in 1998, we completed our initial public offering. In June 2023 and August 2023, Onex (our then-controlling shareholder), completed underwritten secondary public offerings of an aggregate of approximately 18.8 million of our Subordinate Voting Shares (now designated Common Shares).
In 2023, Onex (our then-controlling shareholder), completed two underwritten secondary public offerings in June and August of an aggregate of approximately 18.8 million of our Subordinate Voting Shares (now designated Common Shares) upon conversion of all of our then outstanding multiple voting shares (MVS).
Some of our employees in China, Japan, Mexico, Romania, Singapore and Spain are represented by unions or are covered by collective bargaining agreements. We believe we have a productive and collaborative working relationship between management and the relevant unions. We believe that our employee relationships are generally positive and stable.
We believe we have a 14 productive and collaborative working relationship between management and the relevant unions. We believe that our employee relationships are generally positive and stable.
We generally enter into master supply agreements with our customers that provide the framework for our overall relationship, although such agreements do not typically guarantee a particular level of business or fixed pricing. Instead, we bid on a program-by-program basis and typically receive customer purchase orders for specific quantities and timing of products.
Revenue decline or loss of any major customer could have a material adverse effect on our operating results, financial position and cash flows. " We generally enter into master supply agreements with our customers that provide the framework for our overall relationship, although such agreements do not typically guarantee a particular level of business or fixed pricing.
Our BCG Policy is available on our website: www.celestica.com (information on our website is not incorporated by reference into this Annual Report). In addition, we have well-established policies regarding fair labor practices and guidelines intended to create a respectful, safe and healthy work environment for our employees globally.
In addition, we have well-established policies regarding fair labor practices and guidelines to foster a respectful, safe and healthy work environment for our employees globally.
We offer a comprehensive range of product manufacturing and related supply chain services to customers in both of our segments, including design and development, new product introduction, engineering services, component sourcing, electronics manufacturing and assembly, testing, complex mechanical assembly, systems integration, precision machining, order fulfillment, logistics, product licensing, and after-market repair and return and IT asset management and disposition (ITAM/ITAD) services.
Our Services and Products We offer a comprehensive range of products and services that cover the entire technology product lifecycle, including hardware design and development, new product introduction, engineering services, supply chain management and logistics, 7 electronics manufacturing and assembly, complex mechanical assembly, precision machining, systems integration, testing, product licensing, software enablement solutions, and services, including ITAM/ITAD services.
Through our global supply chain management processes and integrated IT tools, we endeavor to provide our customers with enhanced visibility to balance their global demand and supply requirements, including inventory and order management. Manufacturing Services Printed Circuit Board Assembly Printed circuit board (PCB) assembly includes the attachment of electronic components, such as capacitors, microprocessors, resistors and memory modules, to PCBs.
Manufacturing services Printed Circuit Board Assembly Printed circuit board (PCB) assembly includes the attachment of electronic components, such as capacitors, microprocessors, resistors and memory modules, to PCBs. Our global network of engineers helps us to provide our customers with full PCB assembly technology capabilities.
We regularly review our compensation and benefits programs to ensure they remain competitive and aligned with our business strategy and meet the needs of our employees.
We encourage business and people leaders to acknowledge individual and team success in quarterly town halls, and in more formal ways through our global recognition programs, including Bravo! and Ignition Awards. We regularly review our compensation and benefits programs to ensure they remain competitive and aligned with our business strategy and meet the needs of our employees.
As part of Celestica's ODM offerings, we design and manufacture products, either as customized solutions, white box solutions or under Joint Design and Manufacturing (JDM) engagements in collaboration with our customers. This business is primarily within our HPS business.
As part of Celestica's ODM offerings, we design and manufacture products, either as customized solutions, white box solutions or under Joint Design and Manufacturing (JDM) engagements in collaboration with our customers. An ODM provider may engage in R&D activities related to new product design, optimization and other innovations, which often results in the creation of IP.
In the aggregate, our top 10 customers represented 73% of total revenue for 2024, 64% for 2023 and 66% for 2022. In 2024, two customers (each in our CCS segment) individually represented 10% or more of total revenue in 2024 (28% and 11%, respectively).
We depend on a small number of customers for a substantial portion of our revenue. In the aggregate, our top 10 customers represented 79% of total revenue for 2025, 73% for 2024 and 64% for 2023. In 2025, three customers (all in our CCS segment) individually represented 10% or more of total revenue (32%, 14% and 12%).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Changes in weather patterns and an increased frequency, intensity and duration of extreme weather conditions could, among other things, impair our production capabilities, disrupt the operation of our supply chain, and impact our customers and their demand for our services. There are inherent climate-related risks regardless of where we conduct our business.
Changes in weather patterns and an increased frequency, intensity and duration of extreme weather conditions could, among other things, impair our production capabilities, disrupt the operation of our supply chain, and impact our customers and their demand for our services. There are inherent climate and weather related risks regardless of where we conduct our business.
There can be no assurance that we will achieve a particular rating or maintain a particular rating in the future, which could place us at a disadvantage compared to our competitors and prevent us from taking actions that could benefit us in the long term.
There can be no assurance that we will achieve or maintain a particular rating in the future, which could place us at a disadvantage compared to our competitors and prevent us from taking actions that could benefit us in the long term.
The future adverse impact of these and/or other actions taken by the governments of either the U.S. or China, or both (including in response to continuing tensions), could be material.
The future adverse impact of these and/or other actions taken by the governments of either the U.S. or China, or both, or other governments (including in response to continuing tensions), could be material.
Although we are successful in resolving the majority of such issues, the existence of these variances could cause us to incur significant costs in relation to corrective actions, have a material adverse impact on the 24 demand for our services in future periods from any affected customers, damage our reputation, and/or have a material adverse effect on our business and operating results.
Although we are successful in resolving the majority of such issues, the existence of these variances could cause us to incur significant costs in relation to corrective actions, have a material adverse impact on the demand for our services in future periods from any affected customers, damage our reputation, and/or have a material adverse effect on our business and operating results.
Our competitors include large global EMS companies, ODMs that specialize in providing internally-designed products and manufacturing services, smaller EMS companies that often have a regional, product, service or industry-specific focus, as well as component and sub-system suppliers, distributors and/or systems integrators. In addition, our HPS offering may compete with our traditional customers' hardware offerings.
Our competitors include large global EMS companies, ODMs that specialize in providing internally-designed products and manufacturing services, smaller EMS companies that often have a regional, product, service or industry-specific focus, as well as component and sub-system suppliers, distributors and/or systems integrators. In addition, our HPS offering may compete with our traditional OEM customers' hardware offerings.
In some instances, where soil or groundwater contamination existed prior to our ownership or occupation, landlords or former owners may have retained some contractual responsibility or regulatory liability, but this may not provide sufficient protection to reduce or eliminate our liability. Third-party claims for damages or personal injury are also possible and could result in significant costs to us.
In some instances, where soil or groundwater contamination existed prior to our ownership or occupation, landlords 38 or former owners may have retained some contractual responsibility or regulatory liability, but this may not provide sufficient protection to reduce or eliminate our liability. Third-party claims for damages or personal injury are also possible and could result in significant costs to us.
The failure to make prudent engagement decisions or to establish appropriate contractual terms could adversely affect our profitability and margins. There are also risks associated with the timing and ultimate realization of anticipated revenue from a new program or service. Certain new programs or services require us to devote significant capital and personnel to new technologies and competencies.
The failure to make prudent engagement decisions or to establish appropriate contractual terms could adversely affect our profitability and margins. There are also risks associated with the timing and ultimate realization of anticipated revenue from a new program or service. Certain new programs or services require us to devote significant capital and personnel to new technologies and 19 competencies.
Failure to comply with these regulations may also materially affect our reputation and/or relationships with customers and regulators. We provide design, engineering and manufacturing related services to our customers in the A&D business. As part of these services, we are subject to substantial regulation from government agencies including the U.S. Department of Defense (DOD) and the U.S. Federal Aviation Administration.
Failure to comply with these regulations may also materially affect our reputation and/or relationships with customers and regulators. We provide engineering and manufacturing related services to our customers in the A&D business. As part of these services, we are subject to substantial regulation from government agencies including the U.S. Department of Defense (DOD) and the U.S. Federal Aviation Administration.
Our margins may be adversely impacted if we incur higher 23 than expected investment costs, or if our customers are not satisfied with our progress, or do not approve our completed designs. In addition, our design activities often require the purchase of inventory for initial production runs before we have a firm purchase commitment from a customer.
Our margins may be adversely impacted if we incur higher than expected investment costs, or if our customers are not satisfied with our progress, or do not approve our completed designs. In addition, our design activities often require the purchase of inventory for initial production runs before we have a firm purchase commitment from a customer.
Our customers from time to time change their forecasts, production quantities or product type requirements, or accelerate, delay or cancel production quantities. When customers change production volumes or request different products to be manufactured from those in their original forecast, the unavailability of components and materials for such changes could also adversely impact our revenue and working capital performance.
Our customers from time to time change their forecasts, production quantities or product type requirements, or accelerate, delay or cancel production quantities. When customers change production volumes or request different products to be manufactured from those in their original forecast, the unavailability of components and materials for such changes could also adversely impact our revenue and working capital.
In addition, certain customer agreements require us to provide specific price reductions over the contract term, which negatively impact our financial condition and operating results if they are not offset. 21 Challenges associated with new customers or programs, or the provision of new services, could adversely affect our operations and financial results.
In addition, certain customer agreements require us to provide specific price reductions over the contract term, which negatively impact our financial condition and operating results if they are not offset. Challenges associated with new customers or programs, or the provision of new services, could adversely affect our operations and financial results.
Further, political, economic and military instability in these or other regions could lead to an increase in cyberattacks and disruptions and instability in global markets (including increases in inflation rates, increases in energy prices and adverse effects on currency exchange rates and financial markets), supply chains and industries that could negatively impact our business, financial condition and results of operations.
Further, political, economic and military instability 30 in these or other regions could lead to an increase in cyberattacks and disruptions and instability in global markets (including increases in inflation rates, increases in energy prices and adverse effects on currency exchange rates and financial markets), supply chains and industries that could negatively impact our business, financial condition and results of operations.
Our ability to successfully manage unexpected changes or risks inherent in our global operations and supply chain may adversely impact our financial performance. We have sites in the following countries: Canada, the U.S., China, Ireland, Japan, Laos, Malaysia, Mexico, Romania, Singapore, South Korea, Spain, Indonesia, India and Thailand.
Our ability to successfully manage unexpected changes or risks inherent in our global operations and supply chain may adversely impact our financial performance. We have sites in the following countries: Canada, the U.S., China, Ireland, Japan, Laos, Malaysia, Mexico, Romania, Singapore, South Korea, Spain, Indonesia, Philippines, India and Thailand.
The existence of any material weakness in our internal control over financial reporting may result in errors in our financial statements that could require us to make corrective adjustments, restate our financial statements, cause us to fail to meet our reporting obligations, and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect the market price of our securities.
The existence of any material weakness in our internal control over financial reporting may result in errors in our financial statements that could require us to 34 make corrective adjustments, restate our financial statements, cause us to fail to meet our reporting obligations, and cause shareholders to lose confidence in our reported financial information, all of which could materially and adversely affect the market price of our securities.
These potential claims may include damages for the recall of a product and/or injury to person or property, including consequential and/or punitive damages. Even if customers or third parties, such as component suppliers, are responsible for defects, they may not, or may not be able to, assume responsibility for any such costs or required payments to us.
These potential claims may include damages for the recall of a product and/or injury to person or property, including consequential and/or punitive damages. 37 Even if customers or third parties, such as component suppliers, are responsible for defects, they may not, or may not be able to, assume responsibility for any such costs or required payments to us.
If we are unable to successfully identify and remediate any material weaknesses that may arise in a timely manner, the accuracy and timing of our financial reporting may be adversely affected, and we may be unable to 36 maintain compliance with securities law requirements regarding timely filing of periodic reports and applicable stock exchange listing requirements.
If we are unable to successfully identify and remediate any material weaknesses that may arise in a timely manner, the accuracy and timing of our financial reporting may be adversely affected, and we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports and applicable stock exchange listing requirements.
Any of these factors could prevent us from realizing the anticipated benefits of growth in new markets or technologies, which could materially adversely affect our business and operating results. As part of our strategy to enhance our end-to-end service offerings, we continue to expand our design, engineering and manufacturing capabilities.
Any of these factors could prevent us 21 from realizing the anticipated benefits of growth in new markets or technologies, which could materially adversely affect our business and operating results. As part of our strategy to enhance our end-to-end service offerings, we continue to expand our design, engineering and manufacturing capabilities.
The use of contracted or common carriers is subject to a number of risks, including increased costs due to rising energy prices and labor, vehicle and insurance costs; hijacking and theft resulting in lost 25 shipments; delivery delays resulting from port congestion and labor shortages and/or strikes; and other factors beyond our control.
The use of contracted or common carriers is subject to a number of risks, including increased costs due to rising energy prices and labor, vehicle and insurance costs; hijacking and theft resulting in lost shipments; delivery delays resulting from port congestion and labor shortages and/or strikes; and other factors beyond our control.
In 26 addition, there can be no assurance that our efforts will prevent further service interruptions or identify breaches in our systems that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us (as described above).
In addition, there can be no assurance that our efforts will prevent further service interruptions or identify breaches in our systems that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us (as described above).
The speed at which negative publicity can be disseminated has increased dramatically with the capabilities of electronic communication, including social media outlets, websites, blogs, and newsletters. Our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to this rapidly changing media environment.
The speed at which negative publicity 42 can be disseminated has increased dramatically with the capabilities of electronic communication, including social media outlets, websites, blogs, and newsletters. Our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to this rapidly changing media environment.
Although we have been successful in offsetting the majority of our increased costs with increased pricing for our products and services to date, unrecovered increased operating costs in future periods would adversely impact our margins. We cannot predict future trends in the rate of inflation or other negative economic factors or associated increases.
Although we have been successful in offsetting the majority of our increased costs with increased pricing for our products and 28 services to date, unrecovered increased operating costs in future periods would adversely impact our margins. We cannot predict future trends in the rate of inflation or other negative economic factors or associated increases.
Although the levels of inventory we carry in any period reflect inventory required to support new program ramps and business growth, inventory levels are also impacted by demand volatility and significant product mix changes, including late changes from customers. In the past, materials constraints from suppliers also negatively impacted our inventory levels.
Although the levels of inventory we carry in any period reflect inventory required to support new program ramps and business growth, inventory levels are also impacted by demand volatility and significant product mix changes, including late changes from customers. In the past, materials constraints from suppliers also negatively 17 impacted our inventory levels.
See " We have incurred significant restructuring charges in the past, and expect to incur further restructuring charges in the future; we may not achieve some or all of the expected benefits from our restructuring activities, these activities may adversely affect our business, and additional restructuring actions may be required once currently-contemplated actions are complete.
See " We have incurred restructuring charges in the past, and expect to incur further restructuring charges in the future; we may not achieve some or all of the expected benefits from our restructuring activities, these activities may adversely affect our business, and additional restructuring actions may be required once currently-contemplated actions are complete.
The preparation of our financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the recorded amounts of assets, liabilities and net earnings during the reporting period. A change in the facts and circumstances surrounding those estimates could result in a change to our estimates and could impact our future operating results.
The preparation of our financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the recorded amounts of assets, liabilities and net earnings during the reporting period. A change in the facts and circumstances surrounding those estimates could result in a material change to our estimates and could impact our future operating results.
The uncertainty of demand in our customers' end markets, intense competition in our customers' industries and general order volume volatility from time to time result in customers delaying or canceling the delivery of products we manufacture for them or placing purchase orders for lower volumes of products than previously anticipated.
The uncertainty of demand in our customers' end markets, intense competition in our customers' industries and general order volume volatility from time to time may result in customers delaying or canceling the delivery of products we manufacture for them or placing purchase orders for lower volumes of products than previously anticipated.
Customer relationships with emerging companies present special risks because we do not have an extensive product or customer relationship history. There is less demonstration of market acceptance of their products making it harder for us to anticipate requirements than with established customers.
Customer relationships with emerging companies may present special risks because we do not have an extensive product or customer relationship history. There is less demonstration of market acceptance of their products making it harder for us to anticipate requirements than with established customers.
In addition, our customers may significantly change these programs, or even cancel them altogether, due to decreases in their end-market demand or in the actual or anticipated success of their products in the marketplace. We may incur additional ramping costs as we further expand our business and ramp new programs.
In addition, our customers may significantly change these programs, or cancel them altogether, due to decreases in their end-market demand or in the actual or anticipated success of their products in the marketplace. We may incur additional ramping costs as we further expand our business and ramp new programs.
We have incurred significant restructuring charges in the past, and expect to incur further restructuring charges in the future; we may not achieve some or all of the expected benefits from our restructuring activities, these activities may adversely affect our business, and additional restructuring actions may be required once currently-contemplated actions are complete.
We have incurred restructuring charges in the past, and expect to incur further restructuring charges in the future; we may not achieve some or all of the expected benefits from our restructuring activities, these activities may adversely affect our business, and additional restructuring actions may be required once currently-contemplated actions are complete.
If we are unable to ascertain the origins of all such minerals used in the manufacturing of our products through the due diligence procedures we implement, we may be unable to satisfy our customers' certification requirements. This may harm our reputation, damage our customer relationships and result in a loss of revenue.
If we are unable to ascertain the origins of all such minerals used in the manufacturing of our products through the due diligence procedures we implement, we may be unable to satisfy our customers' certification requirements. This may harm our reputation, damage our customer relationships and result in a loss of 39 revenue.
Moreover, several jurisdictions in which we operate have tax laws with detailed transfer pricing rules which require that all transactions with non-resident related parties be priced using arm's-length pricing principles, and that contemporaneous documentation must exist to support such pricing.
Moreover, several jurisdictions in which we operate 33 have tax laws with detailed transfer pricing rules which require that all transactions with non-resident related parties be priced using arm's-length pricing principles, and that contemporaneous documentation must exist to support such pricing.
If we are not able to protect our IP rights, our business, financial condition and results of operations may be adversely affected. There is also a risk that claims of IP infringement could be brought against us, our customers and/or our suppliers.
If we are not able to protect our IP rights, our business, financial condition and results of operations may be adversely affected. 36 There is also a risk that claims of IP infringement could be brought against us, our customers and/or our suppliers.
Our quarterly and annual results may vary significantly depending on various factors, certain of which are described below, and many of which are beyond our control: • the volume and timing of customer demand relative to our capacity; • the typical short lifecycle, and success in the marketplace, of our customers' products; • the cyclical nature of customer demand in several of our businesses; • customers' financial condition; • changes to our mix of customers, programs and/or end market demand; • how well we execute on our operational strategies, and the impact of changes to our business model; 22 • varying revenues and gross margins among geographies and programs for the products or services we provide; • pricing pressures, the competitive environment and contract terms and conditions; • upfront investments and challenges associated with the ramping of programs for new or existing customers; • provisions or charges resulting from unexpected changes in market conditions impacting our industry or the end markets we serve; • customer disengagements or terminations or non-renewal of customer programs, arrangements or agreements; • the timing of expenditures in anticipation of future orders; • our effectiveness in planning production and managing inventory, fixed assets and manufacturing processes; • operational inefficiencies and disruptions in production at individual sites; • unanticipated disruptions to our cash flows; • changes in cost and availability of commodities, materials, components, services and labor; • current or future litigation; • governmental actions or changes in legislation; • currency fluctuations; and • changes in global economic and political conditions and world events, including the impact of External Events.
Our quarterly and annual results may vary significantly depending on various factors, certain of which are described below, and many of which are beyond our control: • the volume and timing of customer demand relative to our capacity; • the typical short lifecycle, and success in the marketplace, of our customers' products; • the cyclical nature of customer demand in several of our businesses; • customers' financial condition; • changes to our mix of customers, programs and/or end market demand; • how well we execute on our operational strategies, and the impact of changes to our business model; • varying revenues and gross margins among geographies and programs for the products or services we provide; • pricing pressures, the competitive environment and contract terms and conditions; • upfront investments and challenges associated with the ramping of programs for new or existing customers; • provisions or charges resulting from unexpected changes in market conditions impacting our industry or the end markets we serve; • customer disengagements, terminations or non-renewal of customer programs, arrangements or agreements; • the timing of expenditures in anticipation of future orders; • our effectiveness in planning production and managing inventory, fixed assets and manufacturing processes; 20 • operational inefficiencies and disruptions in production at individual sites; • unanticipated disruptions to our cash flows; • changes in cost and availability of commodities, materials, components, services and labor; • current or future litigation; • governmental actions or changes in legislation; • currency fluctuations; and • changes in global economic and political conditions and world events, including the impact of events outside of our control.
In addition, our competitors may be more effective than we are in investing in IT solutions to differentiate their offerings. Some of our competitors have increased their vertical capabilities by manufacturing modules or components used in the products they assemble.
In addition, our competitors may be more effective than we are in investing in IT solutions to differentiate their offerings. Some of our 27 competitors have increased their vertical capabilities by manufacturing modules or components used in the products they assemble.
In addition, such indebtedness could have a variety of other adverse effects, including: (i) default and foreclosure on our assets if we have insufficient funds to repay the debt obligations; (ii) acceleration of such indebtedness or cross-defaults if we breach financial or other covenants under applicable debt agreements and such breaches are not waived; (iii) increased vulnerability to adverse changes in competitive conditions or government regulation; (iv) other disadvantages compared to our competitors who have less debt; and (v) negatively impact on our credit ratings (see " Our credit rating may be downgraded " ).
In addition, such 35 indebtedness could have a variety of other adverse effects, including: (i) default and foreclosure on our assets if we have insufficient funds to repay the debt obligations; (ii) acceleration of such indebtedness or cross-defaults if we breach financial or other covenants under applicable debt agreements and such breaches are not waived; (iii) increased vulnerability to adverse changes in competitive conditions or government regulation; (iv) other disadvantages compared to our competitors who have less debt; and (v) negatively impact on our credit ratings (see " Our credit ratings may be downgraded " ).
In addition, the introduction or expansion of certain social programs in foreign jurisdictions may increase our costs, and certain supplier's costs, of doing business. In particular, a portion of our manufacturing, design, support and storage operations are conducted in our facilities in China.
In addition, the introduction or expansion of certain social programs in foreign jurisdictions may increase our costs, and certain supplier's costs, of doing business. In particular, a portion of our manufacturing, design and support operations are conducted in our facilities in China.
They may not be able to meet their 33 funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from us and other borrowers within a short period of time.
They may not be able to meet their funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from us and other borrowers within a short period of time.
In addition, the success of new business models or programs depends on a number of factors including: understanding the new business or markets; timely and successful product development; market acceptance; the effective management of purchase commitments and inventory levels in line with anticipated demand; the development or acquisition of appropriate IP and capital investments, to the extent required; the availability of materials in adequate quantities and at appropriate costs to meet anticipated demand; and the risk that new offerings may have quality or other defects in the early stages of introduction.
In addition, the success of new business models or programs depend on a number of factors including: understanding the new business or markets; timely and successful product development; market acceptance; the effective management of purchase commitments and inventory levels in line with anticipated demand; the development or acquisition of appropriate IP and capital investments, to the extent required; the availability of materials in adequate quantities and at appropriate costs to meet anticipated demand; and the risk that new offerings may have quality or other defects in the early stages of introduction.
Thus, any disruption in operations at a facility possessing specialized certifications or equipment could adversely affect our ability to provide products and services to our customers, and potentially have a negative affect our relationships and financial results.
Thus, any disruption in operations at a facility possessing specialized certifications or equipment could adversely affect our ability to provide products and services to our customers, and potentially have a negative affect on our relationships and financial results.
See " We are dependent on third parties to supply certain 19 materials, and our results were negatively affected by the availability of such materials in the past and may be negatively affected by the quality, availability and cost of such materials in the future.
See " We are dependent on third parties to supply certain materials, and our results were negatively affected by the availability of such materials in the past and may be negatively affected by the quality, availability and cost of such materials in the future.
In addition, certain of our customers have experienced, and may in the future experience, severe revenue erosion, pricing, margin and cash flow pressures, and excess inventories that, in turn, have adversely affected (and in the future may adversely affect) our operating results.
Certain of our customers have experienced, and may in the future experience, severe revenue erosion, pricing, margin and cash flow pressures, and excess inventories that, in turn, have adversely affected (and in the future may adversely affect) our operating results.
" To the extent we sell equity or convertible debt securities, the issuance of these securities (the pricing of which would be subject to market conditions at the time of issuance) could result in material dilution to our stockholders.
" To the extent we sell equity or convertible debt securities, the issuance of these securities (the pricing of which would be subject to market conditions at the time of issuance) could result in material dilution to 32 our stockholders.
China experiences high turnover of direct labor in the manufacturing sector, and engineers in our design centers, due to the intensely competitive and fluid market for labor, and the retention of adequate labor is a challenge.
China experiences high turnover of direct labor in the manufacturing sector and engineers in our design centers, due to the intensely competitive and fluid market for labor, and the retention of adequate talent is a challenge.
A decline in the U.S. and other government budgets, changes in spending or budgetary priorities, or delays in contract awards may significantly and adversely affect our future revenue and limit our growth prospects.
A decline in the U.S. and other government budgets, changes in spending or budgetary priorities, or delays in contract awards may adversely affect our future revenue and limit our growth prospects.
Our operations and those of our customers, component suppliers and/or our logistics partners may be disrupted by global or local events outside our control, including: fires and related disruptions; political instability; increased political tension between countries (including increased tensions between U.S. and other countries and between mainland China and Taiwan); geopolitical dynamics; terrorism; armed conflict (including the Russia/Ukraine conflict and the Middle East Conflicts); labor or social unrest; criminal activity; disease or illness or other widespread health concerns, pandemics, epidemics or outbreaks of illness that affects local, regional, national or international economies; natural disasters and unusually adverse weather conditions (including those caused by climate change), such as hurricanes, tornados, other extreme storms, wildfires, droughts and floods; cybersecurity incidents (see " Our operations and our customer relationships may be adversely and materially affected by disruptions to our IT systems, including disruptions from cybersecurity breaches of our IT infrastructure ") ; and other risks present in the jurisdictions in which we, our customers, our suppliers and/or our logistics partners operate.
Our operations and those of our customers, component suppliers and/or our logistics partners may be disrupted by global or local events outside our control, including: fires and related disruptions; political instability; increased political tension between countries (including increased tensions between U.S. and other countries and between mainland China and Taiwan); geopolitical dynamics; terrorism; armed conflict (including the Russia/Ukraine conflict and the conflicts in the Middle East area (Middle East Conflicts)); labor or social unrest; criminal activity; disease or illness or other widespread health concerns, pandemics, epidemics or outbreaks of illness that affects local, regional, national or international economies; natural disasters and unusually adverse weather conditions, such as hurricanes, tornados, other extreme storms, wildfires, droughts and floods; cybersecurity incidents (see " Our operations and our customer relationships may be adversely and materially affected by disruptions to our IT systems, including disruptions from cybersecurity breaches of our IT infrastructure ") ; and other risks present in the jurisdictions in which we, our customers, our suppliers and/or our logistics partners operate.
In addition, the amount we spend and the number of Common Shares we are able to repurchase for cancellation under any NCIB or substantial issuer bid may further be affected by a number of other factors, including the Common Shares we arrange to be purchased by non-independent brokers to satisfy stock-based compensation awards, the price of our Common Shares and blackout periods in which we are restricted from repurchasing Common Shares.
In addition, the amount we spend and the number of Common Shares we are able to repurchase for cancellation under any NCIB or substantial issuer bid may further be affected by a number of other factors, including the Common Shares we arrange to be purchased by non-independent brokers to satisfy stock-based compensation awards, the price of our Common Shares, blackout periods in which we are restricted from repurchasing Common Shares, and our available liquidity.
This may result in higher than expected levels of inventory, which could in turn have a material adverse impact on our operating results and working capital performance.
This may result in higher than expected levels of inventory, which could in turn have a material adverse impact on our operating results and working capital.
The perception of our operations held by our shareholders, potential investors, suppliers, customers, other stakeholders, or the communities in which we do business may depend, in part, on the ESG standards we have chosen to aspire to meet, whether or not we meet these standards on a timely basis or at all, and whether or not we meet external ESG factors they deem relevant.
The perception of our operations held by our shareholders, potential investors, suppliers, customers, other stakeholders, or the communities in which we do business may depend, in part, on the sustainability standards we have chosen to aspire to meet, whether or not we meet these standards on a timely basis or at all, and whether or not we meet external sustainability factors they deem relevant.
However, changes in U.S. social, political, regulatory and economic conditions or laws and policies governing foreign trade and exports, taxes, manufacturing, clean energy, the healthcare industry, development and investment in the jurisdictions in which we and/or our customers or suppliers operate, could materially adversely affect our business, results of operations and financial condition.
However, changes in U.S. social, political, regulatory and economic conditions or laws and policies governing foreign trade and exports, taxes, manufacturing, clean energy, the healthcare industry, AI technologies, development and investment in the jurisdictions in which we and/or our customers or suppliers operate, could materially adversely affect our business, results of operations and financial condition.
Item 1A. Risk Factors Each of the following risk factors, or any combination of them, could have a material adverse effect on our business, financial condition, and/or operating results. Our shareholders and prospective investors should carefully consider each of the following risks and all of the other information set forth in this Annual Report.
Item 1A. Risk Factors Each of the following risk factors, or any combination of them, could have a material adverse effect on our business, financial condition, and/or operating results. Our shareholders and prospective investors should carefully consider each of the following risks together with all of the other information set forth in this Annual Report.
" There may be problems with the products we design or manufacture that could result in liability/warranty claims against us, which may reduce demand for our services, damage our reputation, and/or cause us to incur significant costs. In most of our sales contracts, we provide warranties against defects or deficiencies in our products, services, or designs.
" There may be issues with the products we design or manufacture that could result in liability/warranty claims against us, which may reduce demand for our services, damage our reputation, and/or cause us to incur significant costs. In most of our sales contracts, we provide warranties against defects or deficiencies in our products, services, or designs.
Whether or not we are responsible, problems in the products we design and/or manufacture, or in products which include components we manufacture, whether real or alleged, whether caused by faulty customer specifications, the design or manufacturing processes or a component defect, may result in increased costs to us, as well as delayed shipments to our customers, and/or reduced or canceled customer orders.
Whether or not we are responsible, issues in the products we design and/or manufacture, or in products which include components we manufacture, whether real or alleged, whether caused by faulty customer specifications, the design or manufacturing processes or a component defect, may result in increased costs to us, as well as delayed shipments to our customers, and/or reduced or canceled customer orders.
Although we actively manage a broad range of ESG matters, including the potential impact of our business on society and the environment, and matters relating to an inclusive workplace, there can be no certainty that we will manage such issues effectively, or that we will successfully meet society's expectations in this regard.
Although we actively manage a broad range of sustainability matters, including the potential impact of our business on the environment, society and matters relating to an inclusive workplace, there can be no certainty that we will manage such issues effectively, or that we will successfully meet society's expectations in this regard.
Global operations are subject to inherent risks which may adversely affect us, including: 31 • changes in local tax rates and tax incentives and the adverse tax consequences of repatriating earnings; • labor unrest and differences in regulations and statutes governing employee relations, including increased scrutiny of labor practices within our industry; • cultural differences and/or differences in local business customs; • negative impacts, or ineffectiveness, of our restructuring activities; • changes in regulatory requirements; • inflationary trends and rising costs; • changes in international political relations; • difficulty in staffing (including skilled labor availability and cost) and managing foreign operations; • challenges in building and maintaining infrastructure to support operations; • compliance with a variety of foreign laws, including import and export tariffs and regulations; • adverse changes in trade policies and/or agreements between countries in which we maintain operations (including the potential tariffs implemented by U.S. government and retaliatory tariffs from and other actions by those affected countries or parties); • limitations on imports or exports of components or products, or other trade sanctions; • changes in logistics costs; • changes in the availability, lead time, and cost of components and materials; • weaker laws protecting IP rights and/or greater difficulty enforcing such rights; • global economic, political and/or social instability, including armed conflict and military actions (including the Russia/Ukraine conflict and the Middle East Conflicts), protectionism and reactive countermeasures, economic or other sanctions or trade barriers; • potential restrictions on the transfer of funds and/or other restrictive actions by foreign governments; • the effects of terrorist activity; • natural disasters, fires and widespread health concerns, pandemics, epidemics or outbreaks of illness); and • global currency fluctuations.
Global operations are subject to inherent risks which may adversely affect us, including: • changes in local tax rates and tax incentives and the adverse tax consequences of repatriating earnings; • labor unrest and differences in regulations and statutes governing employee relations, including increased scrutiny of labor practices within our industry; • cultural differences and/or differences in local business customs; • negative impacts, or ineffectiveness, of our restructuring activities; • changes in regulatory requirements; • inflationary trends and rising costs; 29 • changes in international political relations; • difficulty in staffing (including skilled labor availability and cost) and managing foreign operations; • challenges in building and maintaining infrastructure to support operations; • compliance with a variety of foreign laws, including import and export tariffs and regulations; • adverse changes in trade policies and/or agreements between countries in which we maintain operations (including the potential tariffs implemented by U.S. government and retaliatory tariffs from and other actions by those affected countries or parties); • limitations on imports or exports of components or products, or other trade sanctions; • changes in logistics costs; • changes in the availability, lead time, and cost of components and materials; • weaker laws protecting IP rights and/or greater difficulty enforcing such rights; • global economic, political and/or social instability, including armed conflict and military actions, protectionism and reactive countermeasures, economic or other sanctions or trade barriers; • potential restrictions on the transfer of funds and/or other restrictive actions by foreign governments; • the effects of terrorist activity; • natural disasters, fires and widespread health concerns, pandemics, epidemics or outbreaks of illness; and • global currency fluctuations.
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other GHGs in the atmosphere has, and will continue to, cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases (GHGs) in the atmosphere has, and will continue to, cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
Geopolitical changes in China - Taiwan relations, or conflict between China and Taiwan could disrupt our supply chain for semiconductors and other electronic components or the operations of our suppliers, limit access to key ports, and/or result in potential international sanctions, any of which could adversely affect our results of operations or increase our costs.
Geopolitical developments in China - Taiwan relations, or conflict between China and Taiwan could disrupt our supply chain for semiconductors and other electronic components or the operations of our suppliers, limit access to key ports, and/or result in potential international sanctions, any of which could adversely affect our results of operations or increase our costs.
" Our products and services involve inventory risk. For most of our products and services, we purchase some, or all, of the required materials and components based on customer forecasts or orders. Although our commercial contracts often obligate our customers to ultimately purchase inventory ordered to support their forecasts or orders, we typically finance these purchases initially.
For most of our products and services, we purchase some, or all, of the required materials and components based on customer forecasts or orders. Although our commercial contracts often obligate our customers to ultimately purchase inventory ordered to support their forecasts or orders, we typically finance these purchases initially.
Climate change-related weather events could negatively impact any of our locations or the locations of our customers, and may cause us to experience work stoppages, project delays, financial losses and/or additional costs to resume operations, including increased insurance costs or loss of coverage, legal liability and reputational losses.
Climate and weather-related 26 events could negatively impact any of our locations or the locations of our customers, and may cause us to experience work stoppages, project delays, financial losses and/or additional costs to resume operations, including increased insurance costs or loss of coverage, legal liability and reputational losses.
In addition, notwithstanding our achievements in these regards, the subjective nature and wide variety of methods and processes used by various stakeholders, including investors, to assess a company with respect to ESG criteria can result in the perception of negative ESG factors or a misrepresentation of our ESG policies and practices.
In addition, notwithstanding our achievements in these regards, the subjective nature and wide variety of methods and processes used by various stakeholders, including investors, to assess a company with respect to sustainability criteria can result in the perception of negative sustainability factors or a misrepresentation of our sustainability policies and practices.
Offering products or services that compete with the offerings of our customers may negatively impact our relationship with, or result in a loss of business from, such customers. We face indirect competition from current and prospective customers who decide to manufacture products internally, or insource previously outsourced business.
Offering products or services that compete with the offerings of our customers may negatively impact our relationship with, or result in a loss of business from, such customers. We face indirect competition from current and prospective customers who decide to manufacture products internally, or in-source previously outsourced business.
These types of events could disrupt operations at one or more of our sites or those of our customers, component suppliers and/or our logistics partners, with the impact of the event potentially magnified in areas where we or they have multiple facilities in close proximity.
These types of risks and events could disrupt operations at one or more of our sites or those of our customers, component suppliers and/or our logistics partners, with the impact of the event potentially magnified in areas where we or they have multiple facilities in close 22 proximity.
Complying with any new applicable reporting requirements will require increased corporate, operational, and administrative efforts, and result in increased costs and expenses. Further, certain investors are placing a greater emphasis on non-financial factors, including ESG factors, when evaluating investment opportunities.
Complying with any new applicable reporting requirements will require increased corporate, operational, and administrative efforts, and result in increased costs and expenses. Further, certain investors are placing a greater emphasis on non-financial factors, including sustainability factors, when evaluating investment opportunities.
The Russia/Ukraine conflict, the Middle East Conflicts, other hostilities or armed conflicts, or any related interruption or curtailment of trade or transport among the countries where our and our customers' facilities are located, could adversely affect our business, financial condition and results of operations.
Hostilities or armed conflicts (including the Russia/Ukraine conflict and the Middle East Conflicts), or any related interruption or curtailment of trade or transport among the countries where our and our customers' facilities are located, could adversely affect our business, financial condition and results of operations.
In addition, by electing to set and publicly share our ESG standards, our business may face increased scrutiny related to ESG activities. As a result, our reputation could be harmed if we fail to act effectively in the areas in which we report.
In addition, by electing to set and publicly share our sustainability standards, our business may face increased scrutiny related to sustainability activities. As a result, our reputation could be harmed if we fail to act effectively in the areas in which we report.
Given the uncertainty regarding the scope and duration of these (or further) trade and export actions, whether trade tensions will escalate further, and whether our customers will continue to bear the cost of the tariffs and/or avoid such costs by in-sourcing or shifting business to other providers, their impact on the demand for our services, our operations and results for future periods cannot be currently quantified, but may be material.
Given the uncertainty regarding the scope and duration of these (or further) trade and export actions, whether trade tensions will escalate further, and whether our customers will continue to bear the cost of the tariffs and/or avoid such costs by insourcing or shifting business to other providers, their impact on the demand for our services, our operations and results for future periods cannot be currently quantified, but may be material.
Additionally, if our suppliers experience financial difficulty, we could have difficulty sourcing supplies necessary to fulfill production requirements and meet scheduled shipments. When one or more of our customers becomes insolvent or otherwise is unable to pay for the services provided by us on a timely basis, or at all, our operating results and financial condition are adversely affected.
Additionally, if our suppliers experience financial difficulty, we could have difficulty sourcing supplies necessary to fulfill production requirements and meet scheduled shipments. When one or more of our customers become insolvent or otherwise are unable to pay for the services provided by us on a timely basis, or at all, our operating results and financial condition are adversely affected.
Although we currently have an NCIB in effect, whether we repurchase Common Shares under such NCIB for cancellation, and the amount and timing of any such repurchases, is subject to the restrictions under our credit facility, capital availability and periodic determinations by our Board that Common Share repurchases are in the best interest of our shareholders and are in compliance with all applicable laws and agreements.
Although we currently have an NCIB in effect, whether we repurchase Common Shares under such NCIB for cancellation, and the amount and timing of any such repurchases, is subject to the restrictions under our credit facility, capital availability and periodic determinations by our Board that Common Share repurchases are in the best interest of our shareholders and are in compliance with all applicable laws and agreements, among other factors.
Such indebtedness (which may increase if we are unable to sell desired amounts under our uncommitted A/R sales program or supplier financing programs) may also: require us to pursue additional term financing for potential investments, which may not be available on acceptable terms or at all; limit our ability to obtain additional financing for working capital, business activities, and other general corporate requirements; limit our ability to refinance our indebtedness on terms acceptable to us or at all; limit our flexibility to plan for and adjust to changing business and market conditions; and increase our vulnerability to general adverse economic and industry conditions.
Such indebtedness (which may increase if we are unable to sell desired amounts under our uncommitted A/R sales program or supplier financing programs) may also: require us to pursue additional term financing for potential acquisitions and/or future capital expenditures, which may not be available on acceptable terms or at all; limit our ability to obtain additional financing for working capital, business activities, and other general corporate requirements; limit our ability to refinance our indebtedness on terms acceptable to us or at all; limit our flexibility to plan for and adjust to changing business and market conditions; and increase our vulnerability to general adverse economic and industry conditions.
Proposed and existing efforts to address climate change by reducing GHG emissions could directly or indirectly affect our costs of energy, materials, manufacturing, distribution, packaging and other operating costs, which could adversely impact our business and financial results. In addition, governmental bodies are increasingly adopting and proposing additional mandatory climate-related reporting obligations.
Proposed and existing efforts to address climate and weather-related risks by reducing GHG emissions could directly or indirectly affect our costs of energy, materials, manufacturing, distribution, packaging and other operating costs, which could adversely impact our business and financial results. In addition, governmental bodies are increasingly adopting and proposing additional mandatory climate-related reporting obligations.
Any negative change in our credit rating or outlook may make it more expensive for us to raise additional capital in the future on terms that are acceptable to us, if at all.
Any negative change in our credit ratings or outlook may make it more expensive for us to raise additional capital in the future on terms that are acceptable to us, if at all.
See " Our revenue and operating results may vary significantly from period to period. " See Item 7, MD&A — "Recent Developments" for a discussion of the impact on our operating results of customer and service mix during 2024.
See " Our revenue and operating results may vary significantly from period to period. " See Item 7, MD&A — "Recent Developments" for a discussion of the impact on our operating results of customer and service mix during 2025.
Our A&D sites are certified in quality management standards applicable 40 to the A&D industry.
Our A&D sites are certified in quality management standards applicable to the A&D industry.
Any future permitted Common Share repurchases, including their timing and amount, may be affected by, among other factors: our consolidated leverage ratio (as defined in our credit facility); our views on potential future capital requirements for strategic transactions, including acquisitions; debt service requirements; our credit rating; changes to our business model; and/or changes to applicable tax laws or corporate laws (including equity buyback taxes enacted in Canada and the U.S.).
Any future permitted Common Share repurchases, including their timing and amount, may be affected by, among other factors: our consolidated leverage ratio (as defined in our credit facility); our views on potential future capital requirements for strategic transactions or investments in our operations, including acquisitions; debt service requirements; our credit ratings; changes to our business model; and/or changes to applicable tax laws or corporate laws (including equity buyback taxes enacted in Canada and the U.S.).
It may also be difficult for shareholders to enforce a U.S. judgment in Canada predicated upon the civil liability provisions of U.S. federal or state securities laws or to succeed in a lawsuit in Canada based only on U.S. federal or state securities laws. 42 Our business and operations could be adversely impacted by ESG initiatives.
It may also be difficult for shareholders to enforce a U.S. judgment in Canada predicated upon the civil liability provisions of U.S. federal or state securities laws or to succeed in a lawsuit in Canada based only on U.S. federal or state securities laws. Our business and operations could be adversely impacted by sustainability initiatives.
The acquisition and implementation of new technologies and equipment and the offering of new or additional services to our customers may require significant expense or capital investment, which could reduce our operating margins and our operating results.
The acquisition and implementation of new technologies and equipment and the offering of new or additional services to our customers may require significant expense or capital investment, which could reduce our operating margins and adversely affect our operating results.
Because we generate a portion of our revenue from contracts with the U.S. government and government agencies, our results of operations could be adversely affected by relevant spending caps or changes in budgetary priorities, as well as by delays in the budget process, program starts, or the award of contracts or orders.
Because we generate a portion of our revenue from contracts with the U.S. government and its contractors, our results of operations could be adversely affected by relevant spending caps or changes in budgetary priorities, as well as by delays in the budget process, program starts, or the award of contracts or orders.
There is an increased focus by foreign, federal, state, provincial and local regulatory and legislative bodies investors and other stakeholders regarding environmental and corporate responsibility policies relating to climate change, regulating GHG emissions, carbon taxes, emissions trading schemes, sustainability, human rights and inclusion matters, and disclosure regarding the foregoing, many of which may be ambiguous, inconsistent, dynamic or conflicting.
There is an increased focus by foreign, federal, state, provincial and local regulatory and legislative bodies, investors and other stakeholders regarding environmental and corporate responsibility policies relating to climate and weather-related risks, regulating GHG emissions, carbon taxes, emissions trading schemes, sustainability, human rights and inclusion matters, and disclosure regarding the foregoing, many of which may be ambiguous, inconsistent, dynamic or conflicting.
The emergence of new technologies, industry standards or customer requirements may render our equipment, designs, inventory or processes obsolete or noncompetitive. In addition, we may have to invest in new processes, capabilities or equipment to support new technologies used in our customers' current or future products, and to support their supply chain processes.
The emergence of new technologies (including evolving AI technologies), industry standards or customer requirements may render our equipment, designs, inventory or processes obsolete or noncompetitive. In addition, we may have to invest in new processes, capabilities or equipment to support new technologies used in our customers' current or future products, and to support their supply chain processes.
We may not be able to return or re-sell excess inventory resulting from these factors, or we may be required to hold such inventory for a period of time, any of which may result in higher working capital needs (offset in part by customer cash deposits), and/or a requirement to record additional (and higher-than-typical) reserves for excess or obsolete inventory (as occurred in recent years).
We may not be able to return or re-sell excess inventory resulting from these factors, or we may be required to hold such inventory for a period of time, any of which may result in higher working capital needs (offset in part by customer cash deposits), and/or a requirement to record additional (and higher-than-typical) reserves for excess or obsolete inventory.
A weakening of the local currency against the U.S. dollar could have a negative impact on our income taxes payable (related to increased local-currency taxable profits) and on our deferred tax costs (primarily related to the revaluation of non-monetary foreign assets from historical average exchange rates to the period-end exchange rates). See note 19 to the 2024 AFS included herein.
A weakening of the local currency against the U.S. dollar could have a negative impact on our income taxes payable (related to increased local-currency taxable profits) and on our deferred tax costs (primarily related to the revaluation of non-monetary foreign assets from historical average exchange rates to the period-end exchange rates). See note 18 to the 2025 AFS included herein.
Our customers are also required to comply with various government regulations, legal requirements and industry standards, including many of the industry-specific regulations discussed above. Our customers' failure to comply could affect their businesses, which in turn would affect our sales to them.
Our customers and channel partners are also required to comply with various government regulations, legal requirements and industry standards, including many of the industry-specific regulations discussed above. Their failure to comply could affect their businesses, which in turn would affect our sales to them.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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This team is led by our Vice President, Security, Infrastructure & Site IT (VP Security), who reports to our Chief Information Officer (CIO), who in turn reports to our Chief Operations Officer (COO). The IT Security Team is subject to oversight from several cross-functional teams, including our Executive Leadership Team, our IT Security Council and our Compliance Council.
This team is led by our Vice President, Security, Infrastructure & Site IT (VP Information Security), who reports to our Chief Information Officer (CIO), who in turn reports to our Chief Operations Officer (COO). The IT Security Team is subject to oversight from several cross-functional teams, including our Executive Leadership Team, our IT Security Council and our Compliance Council.
Our Compliance Council includes representatives from, among others, our legal, compliance, ethics, internal audit, operations, security, and supply chain teams to assess the Company’s risk exposures, mitigation strategies and policies, and meets quarterly to discuss risks, policies and compliance issues, including with respect to cybersecurity.
Our Compliance Council includes representatives from, among others, our legal, compliance, ethics, internal audit, operations, security, and supply chain teams to assess the Company’s risk exposures and mitigation strategies and policies and meets quarterly to discuss risks, policies and compliance issues, including with respect to cybersecurity.
Generally, if a suspected or confirmed breach is identified, a Cybersecurity Incident Manager from the Global Information Security Team is assigned to evaluate and escalate the issue as needed to the VP Security.
Generally, if a suspected or confirmed breach is identified, a Cybersecurity Incident Manager from the Global Information Security Team is assigned to evaluate and escalate the issue as needed to the VP Information Security.
The Company’s response to cybersecurity incidents (which includes prompt steps to protect our systems and information by containing and mitigating the impact of any incident) is managed by the VP Security, in consultation with the CIO, and when appropriate, with the CFO, COO, CEO and our Chief Legal Officer.
The Company’s response to cybersecurity incidents (which includes prompt steps to protect our systems and information by containing and mitigating the impact of any incident) is managed by the VP Information Security, in consultation with the CIO, and when appropriate, with the CFO, COO, CEO and our Chief Legal Officer.
For a discussion of risks from cybersecurity threats that could be reasonably likely to materially affect us, please see Item 1A, Risk Factors — “ Our operations and our customer relationships may be adversely and materially affected by disruptions to our IT systems, including disruptions from cybersecurity breaches of our IT infrastructure " in this Annual Report.
For a discussion of risks from cybersecurity threats that could be likely to materially affect us, please see Item 1A, Risk Factors — “ Our operations and our customer relationships may be adversely and materially affected by disruptions to our IT systems, including disruptions from cybersecurity breaches of our IT infrastructure " in this Annual Report.
Our CIO has 20 years of experience in leading security, compliance and digital forensics functions. Collectively, the other members of our IT Security Team have decades of relevant education and experience and maintain a wide range of industry certifications. In addition, we invest in regular, ongoing cybersecurity training for our IT Security Team.
Our CIO has over 20 years of experience in leading security, compliance and digital forensics functions. Collectively, the other members of our IT Security Team have decades of relevant education and experience and maintain a wide range of industry certifications. In addition, we invest in regular, ongoing cybersecurity training for our IT Security Team.
Governance As part of its oversight responsibilities, which include the identification of the principal risks of the business and ensuring the implementation of appropriate systems to manage such risks, the Board devotes significant time and attention to information security and risk management, including cybersecurity, and regulatory compliance, supported by the Audit Committee.
Governance As part of its oversight responsibilities, which include the identification of the principal risks of the business and implementation of appropriate systems to manage such risks, the Board devotes significant time and attention to information security and risk management, including cybersecurity, and regulatory compliance, supported by the Audit Committee.
Internal Audit : Our Internal Audit department performs audits, and our IT Risk and Compliance Team, which reports to the VP Security, monitors certain IT systems controls that are integrated into our larger internal control environment.
Internal Audit : Our Internal Audit department performs audits, and our IT Risk and Compliance Team, which reports to the VP Information Security, monitors certain IT systems controls that are integrated into our larger internal control environment.
Management oversight procedures include: (i) a methodology to ensure cybersecurity events are promptly escalated and that appropriate internal and external reporting occurs; (ii) a monthly Information Security Governance Council meeting with site IT managers; and (iii) quarterly meetings between senior executives and our Internal Audit department to discuss the outlook for the following year, focusing on the current risk environment. 47
Management oversight procedures include: (i) a methodology to ensure cybersecurity events are promptly escalated and that appropriate internal and external reporting occurs; (ii) a monthly Information Security Governance Council meeting with site IT managers; and (iii) quarterly meetings between senior executives and our Internal Audit department to discuss the outlook for the following year, focusing on the current risk environment. 45
Item 1C. Cybersecurity 44 Risk Management and Strategy We prioritize the effective management of cybersecurity risks through a strategy focused on identifying, assessing, and responding to cybersecurity vulnerabilities, threats and incidents.
Item 1C. Cybersecurity Risk Management and Strategy We prioritize the effective management of cybersecurity risks through a strategy focused on identifying, assessing, and responding to cybersecurity vulnerabilities, threats and incidents.
As noted above, our IT Security Team is led by our VP Security, who has 15 years of experience in leading global security and compliance functions and strategies and holds several certifications including Certified Information Systems Security Professional (CISSP), Information Systems Security Management Professional (ISSMP), Certified Information Systems Auditor (CISA), Certified in Risk and Information Systems Control (CRISC), and Certified Information Security Manager (CISM).
As noted above, our IT Security Team is led by our VP Information Security, who has 16 years of experience in leading global security and compliance functions and strategies and holds several certifications including Certified Information Systems Security Professional (CISSP), Information Systems Security Management Professional (ISSMP), Certified Information Systems Auditor (CISA), Certified in Risk and Information Systems Control (CRISC), and Certified Information Security Manager (CISM).
Monitoring of Third Parties : In 2023, we implemented a Third-Party Risk Management Program to perform IT security controls assessments for our third-party suppliers and vendors and measure the IT security rating of Celestica and these entities through an external security rating solution platform.
Monitoring of Third Parties : Our third-party risk management process includes a Third-Party Risk Management Program to perform IT security controls assessments for our third-party suppliers and vendors and measure the IT security rating of Celestica and these entities through an external security rating solution platform.
The Audit Committee’s Mandate also requires it to discuss guidelines, policies and steps to govern the process by which risk assessment and management is undertaken (including risks related to information security, cybersecurity and data protection) and the establishment and management of appropriate systems to manage such risks.
The Audit Committee’s Mandate also requires it to discuss guidelines, policies and steps to govern the process by which risk assessment and management is undertaken (including risks related to AI, information security, cybersecurity and data protection) and the establishment and management of appropriate systems to manage such risks as they relate to financial reporting integrity and disclosure controls.
These leaders will assess the materiality of a particular incident (alone or in combination with other factors), and the Chief Legal Officer will determine whether any reporting or notification responsibilities have been triggered. The CEO is responsible for informing our Board and the Audit Committee regarding any significant incidents, and coordinates management’s recommendations concerning materiality.
These leaders will assess the materiality of a particular incident (alone or in combination with other factors), and the Chief Legal Officer will determine whether any reporting or notification responsibilities have been triggered.
The Audit Committee reviews cybersecurity risks through quarterly reports from management, and monitors the status of existing information security controls and practices to mitigate the potential risk from evolving cybersecurity threats.
The Audit Committee reviews cybersecurity risks through quarterly reports from management, and monitors the status of existing information security controls and practices to mitigate the potential risk from evolving cybersecurity threats. In addition, in accordance with its Mandate, the Board receives a quarterly report from management regarding the principal cyber security risks inherent in the business.
Our primary objectives are to safeguard information assets, prevent their misuse or loss, and minimize business disruptions, through a comprehensive cybersecurity program intended to detect, analyze, contain and address cybersecurity risk exposures, threats and incidents. Our Board has oversight of our strategic and business risk management, including cybersecurity risk management, with support from our Audit Committee (described under “Governance” below).
Our primary objectives are to safeguard information assets (both data and systems), prevent their misuse or loss, and minimize business disruptions, through a comprehensive cybersecurity program intended to detect, analyze, contain and address cybersecurity risk exposures, threats and incidents.
Continuous Evaluation : We update our information security management system periodically and employ standards and frameworks as we deem necessary to assist us in monitoring compliance with regulatory, industry and evolving data privacy requirements.
The CEO is responsible for informing our Board and the Audit Committee regarding any significant incidents, and coordinates management’s recommendations concerning materiality. 43 Continuous Evaluation : We update our information security management system periodically and employ standards and frameworks as we deem necessary to assist us in monitoring compliance with regulatory, industry and evolving data privacy and security requirements.
Select members of our IT Security Team participate in security training focusing on emergency preparedness and remediation, including annual table top exercises to test our security protocols and response times. 45 Outside Consultants : Third party experts are engaged to conduct National Institute of Standards and Technology (NIST) CSF (Cyber Security Framework) Audits to measure the Company’s cybersecurity maturity level, in addition assistance with our cybersecurity risk management and strategy.
Outside Consultants : Third party experts are engaged to conduct National Institute of Standards and Technology (NIST) CSF (Cyber Security Framework) Assessments to measure the Company’s cybersecurity maturity level, in addition to providing assistance with our cybersecurity risk management and strategy.
These reports address a range of topics, including industry trends, benchmark and assessment reports, information security projects and updates on cyber related metrics, technology modernization, policies and practices, and specific and ongoing efforts to prevent, detect, and respond to internal and external critical threats. 46 Management’s role : Our IT Security Team is composed of several support teams (including our IT Site Managers, our Cybersecurity Incident Managers, our Global Information Security Team, and our IT Risk and Compliance Team) that address and respond to cybersecurity risks and incidents, including risks related to security architecture and engineering, identity and access management and security operations.
These reports address a range of topics, including industry trends, benchmark and assessment reports, information security projects and updates on cyber related metrics, technology 44 modernization, policies and practices, and specific and ongoing efforts to prevent, detect, and respond to internal and external critical threats.
The Audit Committee is responsible for ensuring that management has processes in place designed to identify and evaluate cybersecurity risks to which we are exposed and to implement processes and programs to manage cybersecurity risks and mitigate cybersecurity incidents.
Our Board has oversight of our strategic and business risk management, including cybersecurity risk management, with support from our Audit Committee (described under “Governance” below). The Audit Committee is responsible for overseeing management's processes designed to identify and evaluate cybersecurity risks to which we are exposed and to implement processes and programs to manage cybersecurity risks and mitigate cybersecurity incidents.
Removed
Training : We provide cybersecurity and information security compliance training for our employees once per year, track completion, and require attestations. We conduct monthly mock phishing attacks to all employees, and cater training specifically to our needs, based on industry trends and potential threats.
Added
Training : Our cybersecurity program includes mandatory awareness training for all employees and contractors upon hire and annually thereafter. These efforts are supplemented by monthly phishing simulations and specialized role-based training tailored to the specific risk profiles of our technical and administrative personnel.
Removed
In addition, in accordance with its Mandate, the Board receives a quarterly report from management regarding the principal risks inherent in the business of the Corporation, including appropriate crisis preparedness, business continuity, information system controls, cybersecurity and information security, and disaster recovery plans.
Added
Select members of our IT Security Team participate in security training focusing on emergency preparedness and remediation, including annual table top exercises to test our security protocols and response times.
Added
Management’s role : Our IT Security Team is composed of several support teams (including our IT Site Managers, our Cybersecurity Incident Managers, our Global Information Security Team, and our IT Risk and Compliance Team) that address and respond to cybersecurity risks and incidents, including risks related to security architecture and engineering, identity and access management and security operations.

Item 2. Properties

Properties — owned and leased real estate

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The Purchaser lease started in June 2024. In November 2022, we extended (on a long-term basis) the lease on our current corporate headquarters, and in 2023, we executed a sublease for a portion of the space under the Purchaser Lease. Leased square footage under Purchaser Lease was excluded from the table above. (2) Represents multiple locations.
In November 2022, we extended (on a long-term basis) the lease on our current corporate headquarters, and in 2023 and 2025, we executed subleases for the space under the Purchaser Lease. Leased square footage under the Purchaser Lease and our corporate headquarters was excluded from the table above. 2. Represents multiple locations. 3.
(3) With respect to these locations, the land is leased, and the buildings are either owned or leased by us. (4) We are committed to leasing additional space at this site starting April 2027.
With respect to these locations, the land is leased, and the buildings are either owned or leased by us. 4. Excludes leased manufacturing space under renovation or construction at February 27, 2026.
See Item 7, MD&A — "Liquidity — Cash requirements — Contractual Obligations." We consider each of the properties in the table above to be adequate for its purpose and suitably utilized according to the individual nature and requirements of the relevant operations.
We consider each of the properties in the table above to be adequate for its purpose and suitably utilized according to the individual nature and requirements of the relevant operations. We currently expect to be able to extend the terms of expiring leases or to find replacement sites on commercially acceptable terms.
Major locations Estimated square footage (in thousands) Segment Owned/Leased Lease Expiration Dates Canada (1)(2) 341 ATS/CCS Leased between 2025 and 2028 Arizona 111 ATS Leased 2027 California (2) 202 ATS/CCS Leased between 2025 and 2028 China (2)(3) 1,026 ATS/CCS Owned/Leased between 2025 and 2056 Georgia (2) 48 CCS Leased between 2025 and 2026 India 23 CCS Leased 2027 Indonesia (3) 169 ATS Owned/Leased 2028 Ireland (2) 89 ATS/CCS Leased between 2030 and 2034 Japan (2) 544 ATS/CCS Owned/Leased 2026 Laos 114 CCS Leased 2026 Malaysia (2)(3) 1,476 ATS/CCS Owned/Leased between 2025 and 2060 Massachusetts 60 ATS Owned N/A Minnesota (2) 82 ATS Leased between 2025 and 2032 Mexico (2) 699 ATS/CCS Leased between 2027 and 2032 New Hampshire 30 CCS Leased 2028 Oregon 165 ATS Leased 2026 Romania 286 ATS/CCS Owned N/A Singapore (2)(3) 188 ATS/CCS Owned/Leased between 2025 and 2053 South Korea (2) 207 ATS Owned/Leased 2026 Spain 109 ATS Owned N/A Texas (4) 274 ATS/CCS Leased 2032 Thailand (2)(3) 1,011 ATS/CCS Owned/Leased between 2025 and 2048 (1) In connection with our March 2019 Toronto real property sale, we entered into a 10-year lease with the purchaser of such property for our then-anticipated corporate headquarters, to be built by such purchaser on the site of our former location (Purchaser Lease).
Major locations Estimated square footage (in thousands) Segment Owned/Leased Lease Expiration Dates Canada (1) 223 ATS/CCS Leased 2028 Arizona 111 ATS Leased 2027 California (2)(4) 153 ATS/CCS Leased between 2026 and 2030 China (2) 546 ATS/CCS Owned/Leased between 2026 and 2028 Georgia (2) 48 CCS Leased 2026 India (2) 48 CCS Leased between 2027 and 2028 Indonesia (2)(3) 221 ATS Owned/Leased between 2026 and 2028 Ireland (2) 132 ATS/CCS Leased 2030 Japan (2) 544 ATS/CCS Owned/Leased 2026 Laos 114 CCS Leased 2026 Malaysia (2)(3) 1,635 ATS/CCS Owned/Leased between 2026 and 2060 Massachusetts 60 ATS Owned N/A Minnesota 48 ATS Leased 2032 Mexico (2) 732 ATS/CCS Leased between 2027 and 2032 New Hampshire 30 CCS Leased 2028 Oregon 198 ATS Leased 2026 Romania 313 ATS/CCS Owned N/A Singapore (2)(3) 138 ATS/CCS Owned/Leased between 2026 and 2053 South Korea (2) 208 ATS Owned/Leased 2026 Spain 109 ATS Owned N/A Texas (4) 673 ATS/CCS Leased 2032 Thailand (2)(3)(4) 1,695 ATS/CCS Owned/Leased between 2026 and 2055 1.
We currently expect to be able to extend the terms of expiring leases or to find replacement sites on commercially acceptable terms. Our principal executive office is located at 5140 Yonge Street, Suite 1900, Toronto, Ontario, Canada M2N 6L7. 48
Our corporate headquarters is located at 5140 Yonge Street, Suite 1900, Toronto, Ontario, Canada M2N 6L7.
Removed
Item 2. Properties The following table summarizes our principal owned and leased properties as of February 28, 2025.
Added
Item 2. Properties The following table summarizes our principal owned and leased properties at February 27, 2026. These sites are used to provide manufacturing, design and engineering and other services with a total of approximately 8.0 million square feet of productive capacity.
Removed
These sites are used to provide manufacturing services and solutions, including the manufacture of PCBs, assembly and configuration of final systems, complex mechanical assembly, precision machining, as well as other related services and customer support activities, including design and development, warehousing, distribution, fulfillment and after-market services, with a total of approximately 7.3 million square feet of productive capacity.
Added
In connection with our March 2019 Toronto real property sale, we entered into a 10-year lease with the purchaser of such property for our then-anticipated corporate headquarters, to be built by such purchaser on the site of our former location (Purchaser Lease). The Purchaser lease started in June 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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There are no material proceedings in which any of our directors, officers, affiliates, or owners of more than 5% of our Common Shares is either a party adverse to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.
There are no material proceedings in which any of our directors, officers, affiliates, or owners of more than 5% of our Common Shares is 46 either a party adverse to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.
Information concerning the status of certain tax matters is disclosed in Item 7, MD&A — Liquidity and Capital Resources — Litigation and Contingencies (including indemnities), and note 21 to the 2024 AFS herein. Item 4. Mine Safety Disclosure Not applicable. Part II.
Information concerning the status of certain tax matters is disclosed in Item 7, MD&A — "Liquidity and Capital Resources — Litigation and Contingencies ", and note 20 to the 2025 AFS herein. Item 4. Mine Safety Disclosure Not applicable. Part II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The 2024 NCIB allowed us to repurchase, at our discretion, from November 1, 2024 until the earlier of October 31, 2025 or the completion of purchases thereunder, up to 8,609,693 of our Common Shares in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids and compliance with applicable law and the volume and other limitations under Rule 10b-18 under the Exchange Act.
The 2024 NCIB allowed us to repurchase, at our discretion, from November 1, 2024 until the earlier of October 31, 2025 or the completion of purchases thereunder, up to 8,609,693 of our Common Shares in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids and compliance with applicable securities laws, TSX rules, and the volume and other limitations under Rule 10b-18 under the Exchange Act.
Performance Graph The following chart compares the cumulative total shareholder return (TSR) of $100 invested in Common Shares with the cumulative TSR of the S&P/TSX Composite Total Return Index and S&P 500 Information Technology Total Return for the period from December 31, 2019 to December 31, 2024. 49 Table 1: Performance Graph * For the purpose of the graph, it was assumed that CAD:US dollar conversion ratio remained at 1:1 for the years presented.
Performance Graph The following chart compares the cumulative total shareholder return (TSR) of $100 invested in Common Shares with the cumulative TSR of the S&P/TSX Composite Total Return Index and S&P 500 Information Technology Total Return for the period from December 31, 2020 to December 31, 2025. 47 Performance Graph* * For the purpose of the graph, it was assumed that CAD:US dollar conversion ratio remained at 1:1 for the years presented.
The maximum number of Common Shares we are permitted to repurchase for cancellation under the 2024 NCIB will be reduced by the number of Common Shares we arrange to be purchased by any non-independent broker in the open market during its term to satisfy delivery obligations under our SBC plans, if any.
The maximum number of Common Shares we are permitted to repurchase for cancellation under the 2025 NCIB will be reduced by the number of Common Shares we arrange to be purchased by any non-independent broker in the open market during its term to satisfy delivery obligations under our SBC plans, if any. Item 6. [Reserved] 48
Issuer Purchases of Equity Securities ISSUER PURCHASES OF EQUITY SECURITIES Period (a) Total Number of Common Shares Purchased (in millions) (b) Average Price Paid per Common Share (c) Total Number of Common Shares Purchased as Part of Publicly Announced Plans or programs (in millions) (d) Maximum Number of Common Shares that May Yet Be Purchased Under the Plans or Programs (in millions) October 1 — 31, 2024 (1) — $— — 8.9 November 1 — 30, 2024 (2) — $— — 8.6 December 1 — 31, 2024 (2) 0.5 (3) $86.90 0.3 8.3 Total 0.5 $86.90 0.3 (1) On December 12, 2023, the TSX accepted our notice to launch, and we announced, a NCIB (2023 NCIB).
Issuer Purchases of Equity Securities ISSUER PURCHASES OF EQUITY SECURITIES Period (a) Total Number of Common Shares Purchased (in millions) (b) Average Price Paid per Common Share (c) Total Number of Common Shares Purchased as Part of Publicly Announced Plans or programs (in millions) (d) Maximum Number of Common Shares that May Yet Be Purchased Under the Plans or Programs (in millions) October 1 — 31, 2025 (1) — $— — 7.1 November 1 — 30, 2025 (2) 0.04 $272.40 0.04 5.7 December 1 — 31, 2025 (2) 0.09 $270.03 0.09 5.6 Total 0.13 $270.74 0.13 (1) On October 30, 2024, the TSX accepted our notice to launch a NCIB (2024 NCIB).
Holders As of February 20, 2025, based on information provided to us by our transfer agent, there were 1,501 holders of record of Common Shares, of which 373 holders, holding approximately 96.4 % of the outstanding Common Shares, were resident in the U.S. and 277 holders, holding approximately 3.5 % of the outstanding Common Shares, were resident in Canada.
Holders As of February 19, 2026, based on information provided to us by our transfer agent, there were 1,429 holders of record of Common Shares, of which 368 holders, holding approximately 97.1 % of the outstanding Common Shares, were resident in the U.S. and 251 holders, holding approximately 2.8 % of the outstanding Common Shares, were resident in Canada.
The 2023 NCIB allowed 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 11,763,330 of our Common Shares in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids and compliance with applicable law and the volume and other limitations under Rule 10b-18 under the Exchange Act.
The 2025 NCIB allows us to repurchase, at our discretion, from November 3, 2025 until the earlier of November 2, 2026 or the completion of purchases thereunder, up to 5,722,527 of our Common Shares in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids and compliance with applicable securities laws, TSX rules, and the volume and other limitations under Rule 10b-18 under the Exchange Act.
In October 2024, we purchased and cancelled nil Common Shares under the 2023 NCIB. The 2023 NCIB was early terminated on October 30, 2024. 50 (2) On October 30, 2024, the TSX accepted our notice to launch, and we announced, a NCIB (2024 NCIB).
In October 2025, we purchased and cancelled no Common Shares under the 2024 NCIB. The 2024 NCIB expired on October 31, 2025. (2) On October 29, 2025, the TSX accepted our notice to launch a new NCIB (2025 NCIB).
Removed
Recent Sales of Unregistered Securities On January 29, 2024, an aggregate of 581 deferred share units (DSUs), valued at $29.28 per share, the closing price of the Common Shares on the NYSE on the last trading day of the preceding fiscal quarter; on March 31, 2024, an aggregate of 7,091 DSUs, valued at $44.94 per share, the closing price of the Common Shares on the NYSE on the last trading day prior to the date of grant; on June 30, 2024, an aggregate of 5,719 DSUs, valued at $57.33 per share, the closing price of the Common Shares on the NYSE on the last trading day prior to the date of grant; on July 30, 2024, an aggregate of 196 DSUs, valued at $57.33 per share, the closing price of the Common Shares on the NYSE on the last trading day of the preceding fiscal quarter; and on September 30, 2024, an aggregate of 5,767 DSUs, valued at $51.12 per share, the closing price of the Common Shares on the NYSE on the date of grant, were issued to our non-employee directors as compensation earned for service on the Board in reliance on the exemption from registration under Section 4(a)(2) of the U.S.
Removed
Securities Act. Each DSU represents the right to receive one Common Share or an equivalent value in cash (at the Corporation’s discretion) when the director ceases to be (a) a director of the Corporation or (b) an employee of the Corporation (Retires).
Removed
DSUs that vest on retirement will be settled on the date that is 45 days following the date on which the director Retires, or the following business day if the 45th day is not a business day (Valuation Date), or as soon as practicable thereafter.
Removed
The amount used to cash-settle DSUs (if applicable) will be based on the closing price of the Common Shares on the Valuation Date. DSUs will in all cases be redeemed and payable on or prior to the 90th day following the date on which the director Retires.
Removed
In December 2024, we purchased 0.3 million Common Shares under the 2024 NCIB.
Removed
(3) From time-to-time, we enter into Automatic Share Purchase Plans (ASPPs) complying with Rule 10b5-1 under the Exchange Act covering a defined period, instructing a broker to purchase in the open market a specified number of shares (subject to specified conditions) to settle vested employee awards under our SBC plans (SBC ASPPs).
Removed
In December 2024, 0.2 million Common Shares were purchased on our behalf by an independent broker under a SBC ASPP. The maximum number of Common Shares we were permitted to repurchase for cancellation under the 2024 NCIB was not reduced by the number of Common Shares we arranged to be purchased by such independent broker. Item 6. [Reserved] 51

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Similarly, if the value of the TRS decreases over the term of such agreement, we are obligated to pay the counterparty the amount of such decrease upon Settlement.
Similarly, if the value of the TRS Agreement decreases over the term of such agreement, we are obligated to pay the counterparty the amount of such decrease upon Settlement.
Net invested capital (calculated in the tables below) is derived from GAAP financial measures, and is defined as total assets less: cash, ROU assets (operating and finance leases), accounts payable, accrued and other current liabilities (excluding finance and operating lease liabilities), provisions, and income taxes payable.
Net invested capital (calculated in the tables below) is derived from GAAP financial measures, and is defined as total assets less: cash, ROU assets (operating and finance leases), accounts payable, accrued and other current liabilities and provisions (excluding finance and operating lease liabilities) and income taxes payable.
Operating Results Our product and service volumes, revenue and annual and quarterly operating results are affected by, among other factors: the level and timing of customer orders; our customer and business mix and the types of products or services we provide; the rate at which, the costs associated with, and the execution of, new program ramps; demand volumes; price competition and other competitive factors; the mix of manufacturing or service value-add; manufacturing capacity, utilization 63 and efficiency; the degree of automation used in the assembly process; the availability of components or labor; the location of qualified personnel; costs and inefficiencies of transferring programs between sites; program completions or losses, or customer disengagements and the timing and the margin of follow-on business or any replacement business; the impact of foreign exchange fluctuations; the performance of third-party providers; our ability to manage inventory, production location and equipment effectively; our ability to manage changing labor, component, energy and transportation costs effectively; fluctuations in variable compensation costs; the timing of our expenditures in anticipation of forecasted sales levels; and the timing of any acquisitions and related integration costs.
Operating Results Our product and service volumes, revenue and annual and quarterly operating results are affected by, among other factors: the level and timing of customer orders; our customer and business mix and the types of products or services we provide; the rate at which, the costs associated with, and the execution of, new program ramps; demand volumes; price competition and other competitive factors; the mix of manufacturing or service value-add; manufacturing capacity, utilization and efficiency; the degree of automation used in the assembly process; the availability of components or labor; the location of qualified personnel; costs and inefficiencies of transferring programs between sites; program completions or losses, or customer disengagements and the timing and the margin of follow-on business or any replacement business; the impact of foreign exchange fluctuations; the performance of third-party providers; our ability to manage inventory, production location and equipment effectively; our ability to manage changing labor, component, energy and transportation costs effectively; fluctuations in variable compensation costs; the timing of our expenditures in anticipation of forecasted sales levels; and the timing of any acquisitions and related integration costs.
Segment income excludes employee SBC expense, amortization of intangible assets (excluding computer software), Restructuring and Other charges (Recoveries), TRS FVAs related to our TRS Agreement, Miscellaneous Expense (Income) and transitional hedge reclassifications and adjustments related to foreign currency forward exchange contracts (FCC Transitional ADJ) (each defined in "Non-GAAP Financial Measures" below), as well as finance costs, as these costs, charges/recoveries and adjustments are managed and reviewed by our chief executive officer at the company level.
Segment income excludes employee SBC expense, amortization of intangible assets (excluding computer software), Restructuring and Other charges (Recoveries), TRS FVAs related to our TRS Agreement, Miscellaneous Expense (Income) and transitional hedge reclassifications and adjustments related to foreign currency forward contracts (FCC Transitional ADJ) (each defined in "Non-GAAP Financial Measures" below), as well as finance costs, as these costs, charges/recoveries and adjustments are managed and reviewed by our chief executive officer at the company level.
Financing and Finance Costs : Credit Agreement 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 the June 2024 Amendment, includes a term loan in the original principal amount of $250.0 million (Term A Loan), a term loan in the original principal amount of $500.0 million (Term B Loan, and collectively with the Term A Loan, the New Term Loans), and a $750.0 million revolving credit facility (Revolver).
Financing and Finance Costs: Credit Agreement 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 the June 2024 Amendment, includes a term loan in the original principal amount of $250.0 million (Term A Loan), a term loan in the original principal amount of $500.0 million (Term B Loan, and collectively with the Term A Loan, the Term Loans), and a $750.0 million revolving credit facility (Revolver).
We centrally manage our funding and treasury activities in accordance with corporate policies, and our main objectives are to ensure appropriate levels of liquidity, to have funds available for 81 working capital or other investments we determine are required to grow our business, to comply with debt covenants, to maintain adequate levels of insurance, and to balance our exposures to market risks.
We centrally manage our funding and treasury activities in accordance with corporate policies, and our main objectives are to ensure appropriate levels of liquidity, to have funds available for working capital or other investments we determine are required to grow our business, to comply with debt covenants, to maintain adequate levels of insurance, and to balance our exposures to market risks.
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.
We are also required to make annual prepayments of outstanding obligations under the Credit Facility (applied first to the 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.
Prior to the June 2024 Amendment, the Credit Facility included a term loan in the original principal amount of $350.0 million (Initial Term Loan) and a term loan in the original principal amount of $365.0 million (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 million under the Revolver.
Prior to the June 2024 Amendment, the Credit Facility included a term loan in the original principal amount of $350.0 million (Initial Term Loan) and a term loan in the original principal amount of $365.0 million (Incremental Term Loan), the outstanding borrowings under each of which were fully repaid with a substantial portion of the proceeds of the Term Loans, and commitments of $600.0 million under the Revolver.
Payment defaults under the Credit Facility will incur interest on unpaid amounts at an annual rate equal to the sum of (i) 2%, plus (ii) the rate per annum otherwise applicable to such unpaid amounts, or if no rate is specified or available, the rate per annum applicable to Base Rate revolving loans.
Payment defaults under the Credit Facility will incur interest 69 on unpaid amounts at an annual rate equal to the sum of (i) 2%, plus (ii) the rate per annum otherwise applicable to such unpaid amounts, or if no rate is specified or available, the rate per annum applicable to Base Rate revolving loans.
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. Repaid amounts on the Revolver may be re-borrowed.
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 Term Loans without any other premium or penalty. Repaid amounts on the Term Loans may not be re-borrowed. Repaid amounts on the Revolver may be re-borrowed.
Identifiable Segment Costs are allocated 66 directly to the applicable segment while other Segment Costs, including indirect costs and certain corporate charges, are allocated to our segments based on an analysis of the relative usage or benefit derived by each segment from such costs.
Identifiable Segment Costs are allocated directly to the applicable segment while other Segment Costs, including indirect costs and certain corporate charges, are allocated to our segments based on an analysis of the relative usage or benefit derived by each segment from such costs.
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.
In order to partially hedge against our exposure to interest rate variability on our Term Loans, we are party to various agreements with third-party banks to swap the variable interest rate with a fixed rate of interest.
Our review of the estimates, judgments and assumptions used in the preparation of our 2024 AFS 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 reporting units, 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.
Our review of the estimates, judgments and assumptions used in the preparation of our 2025 AFS 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 reporting units, 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.
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 million, plus an unlimited amount to the extent that a specified 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 Credit Facility has an accordion feature that allows us to increase the Term Loans and/or commitments under the Revolver by $200.0 million, 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.
There were no amounts outstanding under these overdraft facilities at December 31, 2024 or December 31, 2023. We are party to an agreement with a third-party bank to sell up to $450.0 million in A/R on an uncommitted, revolving basis, subject to pre-determined limits by customer. This agreement provides for automatic annual one-year extensions.
There were no amounts outstanding under these overdraft facilities at December 31, 2025 or December 31, 2024. We are party to an agreement with a third-party bank to sell up to $450.0 million in A/R on an uncommitted, revolving basis, subject to pre-determined limits by customer. This agreement provides for automatic annual one-year extensions.
See "Non-GAAP Financial Measures" below for the definitions and uses of these non-GAAP financial measures, and a reconciliation of these non-GAAP financial measures to the most directly- 56 comparable financial measures determined under GAAP for specified periods.
See "Non-GAAP Financial Measures" below for the definitions and uses of these non-GAAP financial measures, and a reconciliation of these non-GAAP financial measures to the most directly-comparable financial measures determined under GAAP for specified periods.
Any such increase in our income tax expense and related interest and/or penalties could have a significant adverse impact on our future earnings and future cash flows.
Any such increase in our tax expense and related interest and/or penalties could have a significant adverse impact on our future earnings and future cash flows.
We base our judgments, estimates and assumptions on current facts, historical experience and various other factors that we believe are reasonable under the circumstances.
We base our judgments, estimates and 57 assumptions on current facts, historical experience and various other factors that we believe are reasonable under the circumstances.
Historically, we have not made significant payments relating to these types of indemnifications. Capital Resources Our capital resources consist of cash provided by operating activities, access to the Revolver, uncommitted intraday and overnight bank overdraft facilities, an uncommitted A/R sales program, three uncommitted SFPs, and our ability to issue debt or equity securities.
Historically, we have not made significant payments relating to these types of indemnifications. 72 Capital Resources Our capital resources consist of cash provided by operating activities, access to the Revolver, uncommitted intraday and overnight bank overdraft facilities, an uncommitted A/R sales program, uncommitted SFPs, and our ability to issue debt or equity securities.
Factors that might cause such differences include, but are not limited to, those discussed in the Risk Factor Summary and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 (of which this MD&A forms a part) under the heading “Risk Factors,” which are incorporated herein by reference, and subsequent Quarterly Reports on Form 10-Q and other documents filed with the SEC, and as applicable, the Canadian Securities Administrators.
Factors that might cause such differences include, but are not limited to, those discussed in the Risk Factor Summary and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 (referred to herein as this "Annual Report") (of which this MD&A forms a part) under the heading “Risk Factors,” which are incorporated herein by reference, and subsequent Quarterly Reports on Form 10-Q and other documents filed with the SEC, and as applicable, the Canadian Securities Administrators.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with our 2024 audited consolidated annual financial statements (2024 AFS) and related notes, which we prepared in accordance with U.S. generally accepted accounting principles (GAAP).
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with our 2025 audited consolidated annual financial statements (2025 AFS) and related notes, which we prepared in accordance with U.S. generally accepted accounting principles (GAAP).
The increase was primarily due to $279.6 million in higher gross profit and $26.8 million in lower Finance Cost, offset in part by $61.6 million in higher Miscellaneous Expense (Income), $42.6 million in higher income tax expense and $17.1 million in higher R&D costs (to support the growth of our HPS business).
The increase was primarily due to $279.6 million in higher gross profit and $26.8 million in lower Finance Costs, offset in part by $61.6 million in higher Miscellaneous Expense, 65 $42.6 million in higher income tax expense and $17.1 million in higher R&D expense (to support the growth of our HPS business).
The Credit Facility contains restrictive covenants that limit our ability to engage in specified types of transactions, and limit share repurchases for cancellation if our consolidated secured leverage ratio (as defined in such facility) exceeds a specified amount, as well as specified financial covenants (described in "Capital Resources" below).
The Credit Facility contains restrictive covenants that limit our ability to engage in specified types of transactions, and limit share repurchases for cancellation if our consolidated secured leverage ratio (as defined in such facility) exceeds a specified amount, as well as specified financial covenants (See "Capital Resources" below).
Such consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present fairly our financial position as at December 31, 2024 and 2023 and the operating results and cash flows for each of the years in the three-year period ended December 31, 2024.
Such consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present fairly our financial position as at December 31, 2025 and 2024 and the operating results and cash flows for each of the years in the three-year period ended December 31, 2025.
In December 2022, we entered into the TRS Agreement to manage our cash flow requirements and 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 "Liquidity — Cash requirements — TRS" below for further detail.
We entered into the TRS Agreement to manage our cash flow requirements and 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 "Liquidity — Cash requirements — TRS" below for further detail.
As described in " Miscellaneous Expense (Income) " below, our interest rate swaps did not qualify for hedge accounting prior to 2024, and as a result, the effects of our interest rate swaps were excluded from Finance Costs in 2023 and 2022 but included in Finance Costs in 2024.
As described in " Miscellaneous Expense (Income) " below, our interest rate swaps did not qualify for hedge accounting prior to 2024, and as a result, the effects of our interest rate swaps were excluded from Finance Costs in 2023 but included in Finance Costs in 2024 and 2025.
No prepayments based on excess cash flow were required in 2022, 2023, 2024, or will be required in 2025. 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 excess cash flow were required in 2025, 2024, 2023, or will be required in 2026. In addition, prepayments of outstanding obligations under the Credit Facility (applied as described above) 67 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).
See "Capital Resources" below and note 11 to our 2024 AFS for a description of the Credit Facility, including amounts outstanding thereunder, and applicable interest rates, commitment fee rates and margins.
See "Capital Resources" below and note 11 to our 2025 AFS for a description of the Credit Facility, including amounts outstanding thereunder, and applicable interest rates, commitment fee rates and margins.
We define non-GAAP free cash flow as cash provided by or 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). Non-GAAP free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures.
We define non-GAAP free cash flow as cash provided by or used in operations less the purchase of property, plant and equipment (net of proceeds from the sale of certain surplus assets, when applicable). Non-GAAP free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures.
No prepayments based on net cash proceeds were required in 2022, 2023, 2024, or will be required in 2025. Any outstanding amounts under the Revolver are due at maturity.
No prepayments based on net cash proceeds were required in 2025, 2024, 2023, or will be required in 2026. Any outstanding amounts under the Revolver are due at maturity.
Non-GAAP 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). Free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures.
Non-GAAP free cash flow is defined as cash provided by (used in) operations less the purchase of property, plant and equipment (net of proceeds from the sale of certain surplus assets, when applicable). Free cash flow does not represent residual cash flow available to Celestica for discretionary expenditures.
As part of our 2019 Toronto real property sale, we entered into a related 10-year lease for our then-anticipated headquarters (Purchaser Lease). In November 2022, we extended the lease (on a long-term basis) on our current corporate headquarters due to several Purchaser Lease commencement date delays.
As part of our 2019 Toronto real property sale, we entered into the Purchaser Lease for our then-anticipated headquarters. In November 2022, we extended the lease (on a long-term basis) on our current corporate headquarters due to several Purchaser Lease commencement date delays.
We believe the non-GAAP financial measures enable investors to evaluate and compare our results from operations 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, to analyze operating results using the same measures our chief operating decision makers use to measure performance, and to help compare our results with those of our competitors.
We believe the non-GAAP financial measures enable investors to evaluate and compare our results from operations 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, to analyze operating results using the same measures our chief operating decision maker uses to measure performance, and to help compare our results with those of our competitors.
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.
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.
Unless otherwise noted, all dollar amounts are expressed in United States (U.S.) dollars. The information in this discussion is provided as of February 28, 2025 unless we indicate otherwise. 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.
Unless otherwise noted, all dollar amounts are expressed in United States (U.S.) dollars. The information in this discussion is provided as of February 27, 2026 unless we indicate otherwise. 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.
At December 31, 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.
At December 31, 2025, 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.
No mandatory principal prepayments of the New Term Loans based on specified excess cash flow or net cash proceeds will be required in 2025, but we are currently unable to determine whether any such prepayments will be required thereafter.
No mandatory principal prepayments of the Term Loans based on specified excess cash flow or net cash proceeds will be required in 2026, but we are currently unable to determine whether any such prepayments will be required thereafter.
Products and services in our ATS segment are extensive and are often more regulated than in our CCS segment, and can include the following: government-certified and highly-specialized manufacturing, electronic and enclosure-related services for A&D customers; high-precision semiconductor and display equipment and integrated subsystems; a wide range of industrial automation, controls, test and measurement devices; engineering-focused engagements, including in the areas of telematics, human machine interface, Internet-of-Things and embedded systems; advanced solutions for surgical instruments, diagnostic imaging and patient monitoring; and efficiency products to help manage and monitor the energy and power industries.
Products and services in our ATS segment are extensive, serving a broader customer base and are often more regulated than those in our CCS segment, and can include: government-certified and highly-specialized manufacturing, electronic and enclosure-related services for A&D customers; high-precision semiconductor equipment and integrated subsystems; a wide range of industrial automation, controls, test and measurement devices; engineering-focused engagements, including in the areas of telematics, human machine interface, Internet-of-Things and embedded systems; advanced solutions for surgical instruments, diagnostic imaging and patient monitoring; and efficiency products to help manage and monitor the energy and power industries.
See "Operating Results — Finance Costs " and " Liquidity — Cash provided by and used in financing activities — Financing and Finance Costs " and "Liquidity — Cash requirements — Financing Arrangements" above. Our strategy on capital risk management has not changed significantly since the end of 2023.
See "Operating Results — Finance Costs " and " Liquidity — Cash used in and provided by financing activities — Financing and Finance Costs" and "Liquidity — Cash requirements — Financing Arrangements" above. 74 Our strategy on capital risk management has not changed significantly since the end of 2024.
For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995, where applicable, and applicable Canadian securities laws. Forward-looking statements contained in this Annual Report are based on various assumptions, many of which involve factors that are beyond our control.
For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995, where applicable, and applicable Canadian securities laws. Forward-looking statements contained in this MD&A are based on various assumptions, many of which involve factors that are beyond our control.
Our effective tax rate can also vary due to the impact of restructuring charges, foreign exchange fluctuations, operating losses, cash repatriations, certain tax exposures, the time period in which losses may be used under tax laws and whether management believes it is probable that future taxable profit will be available to allow us to recognize deferred income tax assets.
Our effective tax rate can also vary due to the impact of restructuring charges, foreign exchange fluctuations, operating losses, cash repatriations, certain tax exposures, the time period in which losses may be used under tax laws and whether management believes it is more likely than not that future taxable profit will be available to allow us to recognize deferred income tax assets.
Currently, we expect to remain in compliance with our Credit Facility covenants. However, our ability to maintain compliance with applicable financial covenants will depend on our ongoing financial and operating performance, which, in turn, may be impacted by economic conditions and financial, market, and competitive factors, many of which are beyond our control.
We currently are and expect to remain in compliance with our Credit Facility covenants and A/R sales program covenants. However, our ability to maintain compliance with applicable covenants will depend on our ongoing financial and operating performance, which, in turn, may be impacted by economic conditions and financial, market, and competitive factors, many of which are beyond our control.
The maximum number of Common Shares we are permitted to repurchase for cancellation under the New Bid will be reduced by the number of Common Shares we arrange to be purchased by any non-independent broker in the open market during its term to satisfy delivery obligations under our stock-based compensation (SBC) plans.
The maximum number of Common Shares we are permitted to repurchase for cancellation under the 2025 NCIB will be reduced by the number of Common Shares we arrange to be purchased by any non-independent broker in the open market during its term to satisfy delivery obligations under our stock-based compensation (SBC) plans.
In addition, we may require additional capital in the future to fund capital expenditures, acquisitions (including contingent consideration payments), strategic transactions or other investments. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our objectives, operating performance, economic and capital market conditions and other relevant circumstances.
In addition, we may require additional capital in the future to fund capital expenditures, acquisitions, strategic transactions or other investments. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our objectives, operating performance, economic and capital market conditions and other relevant circumstances.
In the event of a payment or other specified defaults, outstanding obligations accrue interest at a specified default rate. At December 31, 2024, we had $11.1 million outstanding in L/Cs under the Revolver (December 31, 2023 — $10.5 million). We also arrange bank guarantees and surety bonds outside of the Revolver.
In the event of a payment or other specified defaults, outstanding obligations accrue interest at a specified default rate. At December 31, 2025, we had $10.8 million outstanding in L/Cs under the Revolver (December 31, 2024 — $11.1 million). We also arrange bank guarantees and surety bonds outside of the Revolver.
This agreement may be terminated at any time by the bank or by us upon 3 months' prior notice, or by the bank upon specified defaults.
This agreement may be terminated at any time by the bank or by us upon three months' prior notice, or by the bank upon specified defaults.
FCC Transitional ADJ and IRS transitional ADJ are not reflective of the on-going operational impacts of our hedging activities and are excluded in assessing operating performance. Amortization of intangible assets (excluding computer software) consist of non-cash charges for intangible assets that are impacted by the timing and magnitude of acquired businesses.
FCC Transitional ADJ do not reflect the on-going operational impacts of our hedging activities and are excluded in assessing operating performance. Amortization of intangible assets (excluding computer software) consist of non-cash charges for intangible assets that are impacted by the timing and magnitude of acquired businesses.
In Q4 2024, the Thailand tax authorities issued an assessment letter seeking to impose additional value-added taxes and surcharges in the aggregate amount of approximately 403 million Thai baht (approximately $12 million at 2024 year-end exchange rates) for our Thai subsidiary for the 2019 tax year.
In 2024, the Thailand tax authorities issued an assessment letter seeking to impose additional value-added taxes and surcharges in the aggregate amount of approximately 403 million Thai baht (approximately $13 million at 2025 year-end exchange rates) for our Thai subsidiary for the 2019 tax year.
Adjusted net earnings per share is calculated by dividing adjusted net earnings by the number of diluted weighted average shares outstanding. Management uses adjusted net earnings as a measure to assess performance related to our core operations.
Adjusted EPS is calculated by dividing adjusted net earnings by the number of diluted weighted average shares outstanding. Management uses adjusted net earnings as a measure to assess performance related to our core operations.
Those derivative instruments were accounted for as either cash flow hedges (qualifying for hedge accounting) or economic hedges under IFRS. However, those contracts were not accounted for as such under GAAP until January 1, 2024. Certain gains and losses related to those contracts were recorded in Miscellaneous Expense (Income).
Those derivative instruments were accounted for as either cash flow hedges (qualifying for hedge accounting) or economic hedges under International Financial Reporting Standards (IFRS). However, those contracts were not accounted for 63 as such under GAAP until January 1, 2024. Certain gains and losses related to those contracts were recorded in Miscellaneous Expense (Income).
Specifically, we believe that cash flow from operating activities, together with cash on hand, availability under the Revolver ($738.9 million at December 31, 2024), potential availability under uncommitted intraday and 77 overnight bank overdraft facilities, and cash from accepted sales of A/R, will be sufficient to fund our anticipated working capital needs, planned capital spending, contractual obligations and other cash requirements (including any required SBC share repurchases, debt repayments and Finance Costs).
Specifically, we believe that cash flow from operating activities, together with cash on hand, availability under the Revolver ($739.2 million at December 31, 2025), potential availability under uncommitted intraday and overnight bank overdraft facilities, and cash from accepted sales of A/R, will be sufficient to fund our anticipated working capital needs, planned capital spending, contractual obligations and other cash requirements (including any required SBC share repurchases and SBC cash settlements, debt repayments and Finance Costs).
A significant deterioration in the asset values or asset returns could lead to higher than expected future contributions. Adjustments to actuarial valuation measurements may also result in higher future cash contributions. We fund our pension and non-pension post-employment plan contributions from cash on hand.
See note 16 to our 2025 AFS. A significant deterioration in the asset values or asset returns could lead to higher than expected future contributions. Adjustments to actuarial valuation measurements may also result in higher future cash contributions. We fund our pension and non-pension post-employment plan contributions from cash on hand.
Transition Costs (Recoveries) consist of costs and recoveries 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 88 (Property Dispositions); and (iii) specified charges or recoveries related to the Purchaser Lease (defined below).
Transition Costs (Recoveries) consist of costs and recoveries 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 or recoveries related to the Purchaser Lease.
Business combinations: We use judgment to determine the estimates used to value identifiable assets acquired, liabilities assumed, and the fair value of contingent consideration and other potential obligations, if applicable, at the acquisition date. We may engage third parties to determine the fair value of certain inventory, PP&E and intangible assets.
Business combinations: We use judgment to determine the estimates used to value identifiable assets acquired, liabilities assumed, and the fair value of contingent consideration and other potential obligations, if applicable, at the acquisition date. We may engage third parties to determine the fair value of certain inventory, property, plant and equipment and intangible assets.
We exclude the impact of these non-cash fair value adjustments (which reflect fluctuations in the market price of our Common Shares recorded in cost of sales, SG&A, or Miscellaneous Expenses (Income)) from period to period as such fluctuations do not represent our ongoing operating performance.
We exclude the impact of these non-cash fair value adjustments (which reflect fluctuations in the market price of our Common Shares recorded in cost of sales and SG&A) from period to period as such fluctuations do not represent our ongoing operating performance.
In addition, at 78 December 31, 2024 , our interest rate swap agreements require us to pay a fixed rate of interest with respect to an aggregate of $330.0 million outstanding under the New Term Loans. These payments, however, are partially offset by related interest we receive, based on the variable interest rates swapped.
In addition, at December 31, 2025 , our interest rate swap agreements require us to pay a fixed rate of interest with respect to an aggregate of $350.0 million outstanding under the Term Loans. These payments, however, are partially offset by related interest we receive, based on the variable interest rates swapped.
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.
Similarly, if the value of 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 number of sites, the location of qualified personnel, the manufacturing and engineering capacity and network, and the mix of business through that capacity are also vital considerations for EMS and ODM providers in terms of generating appropriate returns.
The number of sites, the location of qualified personnel, the manufacturing and engineering capacity and network, and the mix of business through that capacity are also vital considerations for us in terms of generating appropriate returns.
Although it is not always possible to estimate the extent of potential costs, if any, management believes that the ultimate resolution of all such currently pending matters will not have a material adverse impact on our financial performance, financial position or liquidity.
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, management believes that the ultimate resolution of all such currently pending matters will not have a material adverse impact on our financial performance, financial position or liquidity.
Those derivative instruments were accounted for as either cash flow hedges (qualifying for hedge accounting) or economic hedges under IFRS. However, those contracts were not accounted for as such under GAAP until January 1, 2024. Certain gains and losses related to those contracts were recorded in Miscellaneous Expense (Income) .
Those derivative instruments were accounted for as either 77 cash flow hedges (qualifying for hedge accounting) or economic hedges under IFRS. However, those contracts were not accounted for as such under GAAP until January 1, 2024. Certain gains and losses related to those contracts were recorded in Miscellaneous Expense (Income) . See FCC Transitional ADJ above.
See "Liquidity — Cash provided by and used in financing activities — Financing and Finance Costs " above for a discussion of amounts borrowed and repaid under our Credit Facility during 2022, 2023 and 2024.
See "Liquidity — Cash used in and provided by financing activities — Financing and Finance Costs" above for a discussion of amounts borrowed and repaid under our Credit Facility during 2025.
At December 31, 2024, we had $23.0 million of bank guarantees and surety bonds outstanding (December 31, 2023 — $16.5 million). At December 31, 2024, we also had a total of $198.5 million in uncommitted bank overdraft facilities available for intraday and overnight operating requirements (December 31, 2023 — $198.5 million).
At December 31, 2025, we had $38.1 million of bank guarantees and surety bonds outstanding (December 31, 2024 — $23.0 million). At December 31, 2025, we also had a total of $198.5 million in uncommitted bank overdraft facilities available for intraday and overnight operating requirements (December 31, 2024 — $198.5 million).
See the reconciliation of segment income to our earnings before income taxes for 2022 — 2024 in note 22 to the 2024 AFS. Our segments do not record inter-segment revenue. Although segment income and segment margin are used to evaluate the performance of our segments, we may incur operating costs in one segment that may also benefit the other segment.
See the reconciliation of segment income to our earnings before income taxes in note 21 to the 2025 AFS. Our segments do not record inter-segment revenue. Although segment income and segment margin are used to evaluate the performance of our segments, we may incur operating costs in one segment that may also benefit the other segment.
Subsequent to the June 2024 Amendment, borrowings under the Revolver bear interest, depending on the currency of the borrowing and our election for such currency, at: (i) 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 subsequent to the June 2024 Amendment) plus a specified margin.
Borrowings under the Revolver bear interest, depending on the currency of the borrowing and our election for such currency, at: (i) term SOFR (Term SOFR) plus 0.1% (Adjusted Term SOFR), (ii) Base Rate, (iii) Canadian Prime, (iv) an Alternative Currency Daily Rate, or (v) an Alternative Currency Term Rate plus a specified margin (each as defined in the Credit Facility).
Also see " Recently adopted accounting pronouncements " in note 2 to our 2024 AFS.
Also see " Recently adopted accounting pronouncements " in note 2 to our 2025 AFS.
See note 15 to our 2024 AFS for the impacts of interest rate swaps we recorded in Miscellaneous Expense (Income).
See 15 to our 2025 AFS for the impacts of interest rate swaps we recorded in Miscellaneous Expense (Income).
As a result, we make intra-quarter borrowings and repayments under the Revolver (Intra-Quarter B/Rs, see the Credit Facility activity table under "Financing and Finance Costs — Credit Agreement " above for Intra-Quarter B/Rs during recent periods), sell A/R through our A/R sales program, and/or participate in available customer SFPs, when deemed necessary or desirable to effectively manage our short-term liquidity and working capital requirements.
As a result, we make intra-quarter borrowings and repayments under the Revolver (Intra-Quarter B/Rs) (see "Financing and Finance Costs — Credit Agreement " above for Intra-Quarter B/Rs we made in 2025), sell A/R through our A/R sales program, and/or participate in available customer SFPs when deemed necessary or desirable to effectively manage our short-term liquidity and working capital requirements.
Restructuring Charges (Recoveries) , consist of costs or recoveries 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.
Restructuring Charges (Recoveries) , consist of costs or recoveries relating to: employee severance, site closings and consolidations, accelerated depreciation of owned and leased property and equipment which are no longer used and are held for sale, and reductions in infrastructure.
Our non-GAAP financial measures are calculated by making the following adjustments (as applicable) to our GAAP financial measures: 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.
Our non-GAAP financial measures are calculated by making the following adjustments as applicable to our GAAP financial measures: 76 Employee SBC expense , which represents the estimated fair value of stock options, RSUs and PSUs granted to employees, is excluded because grant activities vary significantly from quarter-to-quarter in both quantity and fair value.
(2) GAAP EPS for Q4 2024 included an aggregate charge of $0.17 (pre-tax) per share for employee SBC expense, amortization of intangible assets (excluding computer software), and restructuring charges. See "Operating Results" above and "Non-GAAP Financial Measures" below for per-item charges.
(1) GAAP EPS for Q4 2025 included an aggregate charge of $0.25 per share (pre-tax) for employee SBC expense, amortization of intangible assets (excluding computer software), and restructuring charges. See "Operating Results" above and "Non-GAAP Financial Measures" below for per-item charges.
Miscellaneous Expense (Income) consists primarily of: (i) certain net periodic benefit costs (credits) related to our pension and post-employment benefit plans consisting of interest costs and expected returns on pension balances, and amortization of actuarial gains or losses; and (ii) gains or losses related to our TRS Agreement and foreign currency forward exchange contracts and interest rate swaps that we entered into prior to 2024.
Miscellaneous Expense (Income) consists primarily of: (i) certain net periodic benefit costs (credits) related to our pension and post-employment benefit plans consisting of interest costs, expected returns on plan balances, and amortization of actuarial gains or losses; (ii) gains on insurance claims settlement; and (iii) gains or losses related to foreign currency forward contracts and interest rate swaps that we entered into prior to 2024.
See "Capital Resources" below. Notwithstanding the foregoing, although we anticipate that we will be able to repay or refinance outstanding obligations under our Credit Facility when they mature (our primary current long-term cash liquidity requirement), there can be no assurance we will be able to do so, or that the terms of any refinancing will be favorable.
See "Capital Resources" below. Notwithstanding the foregoing, although we anticipate that we will be able to repay or refinance outstanding obligations under our Credit Facility when they mature, there can be no assurance we will be able to do so, or that the terms of any refinancing will be favorable.
See "Capital Resources" below for a description of our available sources of liquidity. 79 However, our current outstanding indebtedness, and the mandatory prepayment provisions of the Credit Facility (described above), require us to use a portion of our cash flow to service such debt, and may reduce our ability to fund future acquisitions and/or to respond to unexpected capital requirements; limit our ability to obtain additional financing for future investments, working capital, or other corporate purposes; limit our ability to refinance our indebtedness on terms acceptable to us or at all; limit our flexibility to plan for and adjust to changing business and market conditions; increase our vulnerability to general adverse economic and industry conditions; and/or reduce our debt agency ratings.
However, our current outstanding indebtedness, and the mandatory prepayment provisions of the Credit Facility (described above), require us to use a portion of our cash flow to service such debt, and may reduce our ability to fund future acquisitions and/or capital expenditures; limit our ability to obtain additional financing for future investments, working capital, or other corporate purposes; limit our ability to refinance our indebtedness on terms acceptable to us or at all; limit our flexibility to plan for and adjust to changing business and market conditions; increase our vulnerability to general adverse economic and industry conditions; and/or reduce our debt agency ratings.
See "Liquidity — Cash provided by and used in financing activities — Financing and Finance Costs" above for maturity dates, prepayment obligations, and annual interest and commitment fees paid under the Credit Facility in 2022 — 2024.
See "Liquidity — Cash used in and provided by financing activities — Financing and Finance Costs" above for maturity dates, prepayment obligations, and annual interest and commitment fees paid under the Credit Facility in 2023 to 2025.
The amounts we sell under our A/R sales program and the SFPs can vary from quarter to quarter (and within each quarter) depending on our working capital and other cash requirements, including by geography. See charts above and "Liquidity — Cash requirements — Financing Arrangements" below.
The amounts we sell under our A/R sales program and the SFPs can vary from quarter to quarter (and within each quarter) depending on our working capital and other cash requirements, including by geography. See the chart above and "Capital Resources" below.
A one-percentage point increase in applicable interest rates would increase interest expense, based on outstanding borrowings under the Credit Facility at December 31, 2024, and including the impact of our interest rate swap agreements, by $4.1 million annually. See note 19 to our 2024 AFS for further information regarding our interest rate swap agreements.
A one-percentage point increase in applicable interest rates would increase interest expense, based on outstanding borrowings under the Credit Facility at December 31, 2025, and including the impact of our interest rate swap agreements, by $3.7 million annually. See note 18 to our 2025 AFS for further information regarding our interest rate swap agreements.
Our future performance is subject to risks, uncertainties and other factors that could cause actual outcomes and results to differ materially from the goals and priorities described above. † Segment performance is evaluated based on segment revenue, segment income and segment margin (segment income as a percentage of segment revenue), each of which is defined in "Operating Results — Segment income and margin " below. * Non-GAAP adjusted EPS, non-GAAP adjusted operating margin (each a ratio based on a non-GAAP financial measure), and non-GAAP free cash flow are non-GAAP financial measures without standardized meanings, and may not be comparable to similar measures presented by other companies.
Our future performance is subject to risks, uncertainties and other factors that could cause actual outcomes and results to differ materially from the goals and priorities described above. * Non-GAAP adjusted EPS, non-GAAP adjusted operating margin (each a ratio based on a non-GAAP financial measure), and non-GAAP free cash flow are non-GAAP financial measures without standardized meanings, and may not be comparable to similar measures presented by other companies.
In 2021, the Romanian tax authorities issued a final assessment in the aggregate amount of approximately 31 million Romanian leu (approximately $6 million at 2024 year-end exchange rates), for additional income and value-added taxes for one of our Romanian subsidiaries for the 2014 to 2018 tax years.
In 2021, the Romanian tax authorities issued a final assessment in the aggregate amount of approximately 31 million Romanian leu (approximately $7 million at 2025 year-end exchange rates), for additional income and value-added taxes for our Romanian subsidiary for the 2014 to 2018 tax years.
(v) This table excludes $49.4 million of long-term deferred income tax liabilities and $58.0 million of provisions and other non-current liabilities primarily pertaining to warranties, as we are unable to reliably estimate the timing of any future payments related thereto. However, long-term liabilities included on our consolidated balance sheet at December 31, 2024 include these items.
(v) This table excludes $41.2 million of long-term deferred income tax liabilities and $65.6 million of other non-current liabilities and provisions primarily pertaining to warranties, as we are unable to reliably estimate the timing of any future payments related thereto. However, long-term liabilities included on our consolidated balance sheet at December 31, 2025 include these items.
We recorded $15.0 million in net miscellaneous expense in 2024, compared to $46.6 million in net miscellaneous income in 2023 and $1.5 million in net miscellaneous income in 2022. In 2023, we recorded $45.6 million in favorable TRS FVAs in Miscellaneous Expense (Income). See note 15 to our 2024 AFS for details of Miscellaneous Expense (Income).
We recorded $4.9 million in net miscellaneous expense in 2025, compared to $15.0 million in net miscellaneous expense in 2024 and $46.6 million in net miscellaneous income in 2023. In 2023, we recorded $45.6 million in favorable TRS FVAs in Miscellaneous Expense (Income). See note 15 to our 2025 AFS for details of Miscellaneous Expense (Income).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

24 edited+16 added−6 removed8 unchanged
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 risk of counterparty non-performance continues to be relatively low. We are in regular contact with our customers, suppliers and logistics providers, and to date have not experienced significant counterparty credit-related non-performance.
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 to date have not experienced significant counterparty credit-related non-performance.
The table below presents the notional amounts (the U.S. dollar equivalent amounts of the foreign currency buy/sell contracts at hedge rates), weighted average exchange rates by expected (contractual) maturity dates, and the fair values of our outstanding foreign currency forward contracts and swaps at December 31, 2024.
The table below presents the notional amounts (the U.S. dollar equivalent amounts of the foreign currency buy/sell contracts at hedge rates), weighted average exchange rates by expected (contractual) maturity dates, and the fair values of our outstanding foreign currency forward contracts and swaps at December 31, 2025.
However, if a key supplier (or any company within such supplier's supply chain) or customer experiences financial difficulties or fails to comply with their contractual obligations, this could result in a significant financial loss to us.
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.
Interest Rate Risk Borrowings under the Credit Facility bear interest at specified rates, plus specified margins. See note 11 to the 2024 AFS included herein. Our borrowings under this facility at December 31, 2024 totaled $741.2 million, comprised of amounts 95 outstanding under our Term Loans, and other than ordinary course letters of credit, no amounts outstanding under the Revolver.
Interest Rate Risk Borrowings under the Credit Facility bear interest at specified rates, plus specified margins. See note 11 to the 2025 AFS included herein. Our borrowings under this facility at December 31, 2025 totaled $723.7 million, comprised of amounts outstanding under our Term Loans, and other than ordinary course letters of credit, no amounts outstanding under the Revolver.
Including the impact of interest rate swap agreements outstanding as of December 31, 2024, a one-percentage point increase in relevant interest rates would increase interest expense, based on the outstanding borrowings under the Credit Facility at December 31, 2024, by $4.1 million annually (December 31, 2023 — $2.8 million).
Including the impact of interest rate swap agreements outstanding as of December 31, 2025, a one-percentage point increase in relevant interest rates would increase interest expense, based on the outstanding borrowings under the Credit Facility at December 31, 2025, by $3.7 million annually (December 31, 2024 — $4.1 million).
Assuming our outstanding aggregate borrowings under the Credit Facility as at December 31, 2024 as described above (December 31, 2023 — aggregate outstanding borrowings of $608.9 million), and without accounting for the interest rate swap agreements described below, a one-percentage point increase in applicable interest rates would increase our interest expense by $7.4 million annually (December 31, 2023 — an increase of $6.1 million annually).
Assuming our outstanding aggregate borrowings under the Credit Facility as at December 31, 2025 as described above (December 31, 2024 — aggregate outstanding borrowings of $741.2 million), and without accounting for the interest rate swap agreements described below, a one-percentage point increase in applicable interest rates would increase our interest expense by $7.2 million annually (December 31, 2024 — an increase of $7.4 million annually).
Currency risk on our income tax expense arises as we are generally required to file our tax returns in the local currency for each particular country in which we have operations.
Although our functional currency is the U.S. dollar, currency risk on our income tax expense arises as we are generally required to file our tax returns in the local currency for each particular country in which we have operations.
These notional amounts are used to calculate the contractual payments to be exchanged under the contracts. At December 31, 2024, we had foreign currency contracts and swaps covering various currencies in an aggregate notional amount of $748.0 million (December 31, 2023 — $700.4 million).
These notional amounts are used to calculate the contractual payments to be exchanged under the contracts. At December 31, 2025, we had foreign currency contracts and swaps covering various currencies with an aggregate notional amount of $874.6 million (December 31, 2024 — $748.0 million).
Management's emphasis is primarily on safety of principal. Management, in its discretion, has diversified our cash and cash equivalents among banking institutions to adjust our exposure to levels they deem acceptable with respect to any one of these entities.
Management, in its discretion, has diversified our cash and cash equivalents among banking institutions to adjust our exposure to levels they deem acceptable with respect to any one of these entities.
As of December 31, 2024, we had interest rate swaps hedging the interest rate risk associated with $130.0 million of our Term A Loan borrowings and $200.0 million of our Term B Loan borrowings.
As of December 31, 2025, we had interest rate swaps hedging the interest rate risk associated with $120.0 million of our Term A Loan borrowings and $230.0 million of our Term B Loan borrowings.
At December 31, 2024, the interest rate risk related to $411.2 million of borrowings under the Credit Facility was unhedged, consisting of unhedged amounts outstanding under the New Term Loans and no amounts outstanding (other than ordinary course letters of credit) under the Revolver (December 31, 2023 — $278.9 million, consisting of unhedged amounts under the Initial Term Loan and the Incremental Term Loan and no amounts outstanding (other than ordinary course letters of credit) under the Revolver).
At December 31, 2025, the interest rate risk related to $373.7 million of borrowings under the Credit Facility was unhedged, consisting of unhedged amounts outstanding under the Term Loans and no amounts outstanding (other than ordinary course letters of credit) under the Revolver (December 31, 2024 — $411.2 million, consisting of unhedged amounts under the Term Loans and no amounts outstanding (other than ordinary course letters of credit) under the Revolver).
While our hedging program is designed to mitigate currency risk vis-à-vis the U.S. dollar, we remain subject to taxable foreign exchange impacts in our translated local currency financial results relevant for tax reporting purposes. In addition, we earn revenues and incur expenses in foreign currencies as part of our global operations.
While our hedging program is designed to mitigate currency risk vis-à-vis the U.S. dollar, we remain subject to taxable foreign exchange impacts in our translated local currency financial results relevant for tax reporting purposes.
These contracts had a fair value net unrealized loss of $18.5 million at December 31, 2024 (December 31, 2023 — $6.5 million net unrealized gain), resulting from fluctuations in foreign exchange rates between the contract execution and year-end date. 94 At December 31, 2024, we had foreign currency forward contracts and swaps to trade U.S. dollars in exchange for the following currencies: Expected Maturity Date 2025 2026 2027 and thereafter Total Fair Value Gain (Loss) (in millions) Currency Forward and Swap Agreements* (Contract amounts in millions) Receive C$/Pay U.S.$ Contract amount $ 210.2 $ — $ — $ 210.2 $ (12.1) Average exchange rate 0.72 Receive Thai Baht/Pay U.S.$ Contract amount $ 185.8 — — $ 185.8 $ (2.8) Average exchange rate 0.03 Receive Malaysian Ringgit/Pay U.S.$ Contract amount $ 79.8 — — $ 79.8 (0.4) Average exchange rate 0.23 Receive Mexican Peso/Pay U.S.$ Contract amount $ 94.6 — — $ 94.6 (3.8) Average exchange rate 0.05 Pay British Pound Sterling/Receive U.S.$ Contract amount $ 2.6 — — $ 2.6 $ 0.2 Average exchange rate 1.29 Receive Chinese Renminbi/Pay U.S.$ Contract amount $ 44.2 — — $ 44.2 $ (1.6) Average exchange rate 0.14 Pay Euro/Receive U.S.$ Contract amount $ 43.3 — — $ 43.3 $ 3.8 Average exchange rate 1.08 Receive Romanian Leu/Pay U.S.$ Contract amount $ 45.9 — — $ 45.9 $ (1.7) Average exchange rate 0.22 Receive Singapore Dollar/Pay U.S.$ Contract amount $ 32.4 — — $ 32.4 $ (0.8) Average exchange rate 0.76 Pay Japanese Yen/Receive U.S.$ Contract amount $ 6.8 — — $ 6.8 $ 0.4 Average exchange rate 0.007 Pay Korean Won/Receive U.S.$ Contract amount $ 2.4 — — $ 2.4 $ 0.3 Average exchange rate 0.001 Total $ 748.0 $ — $ — $ 748.0 $ (18.5) * Average exchange rate represents the U.S. dollar equivalent 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 December 31, 2024.
These contracts had a fair value net unrealized gain of $13.2 million at December 31, 2025 (December 31, 2024 — $18.5 million net unrealized loss), resulting from fluctuations in foreign exchange rates between the contract execution and year-end date. 82 At December 31, 2025, we had foreign currency forward contracts and swaps to trade U.S. dollars in exchange for the following currencies, all of which mature in 2026: Currency Forward and Swap Agreements Contract amount (in millions) Average exchange rate* Fair value gain (loss) (in millions) Receive C$/Pay U.S.$ $ 206.3 0.73 $ 2.1 Receive Thai Baht/Pay U.S.$ 247.2 0.03 2.7 Receive Malaysian Ringgit/Pay U.S.$ 94.7 0.24 3.2 Receive Mexican Peso/Pay U.S.$ 89.2 0.05 3.6 Receive British Pound Sterling/Pay U.S.$ 7.9 1.35 0.1 Receive Chinese Renminbi/Pay U.S.$ 57.7 0.14 0.4 Pay Euro/Receive U.S.$ 38.9 1.17 0.3 Receive Romanian Leu/Pay U.S.$ 50.2 0.22 1.1 Receive Singapore Dollar/Pay U.S.$ 52.8 0.78 (0.2) Receive Indonesian Rupiah/Pay U.S.$ 16.1 0.0001 (0.1) Pay Japanese Yen/Receive U.S.$ 5.7 0.007 0.2 Receive Korean Won/Pay U.S.$ 7.9 0.001 (0.2) Total $ 874.6 $ 13.2 * Average exchange rate represents the U.S. dollar equivalent of one unit of the foreign currency, weighted based on the notional amounts of the underlying foreign currency forward and swap contracts outstanding at December 31, 2025.
These components are impacted by global pricing pressures, general economic conditions, market conditions, geopolitical issues, weather, changes in tariff rates, and other factors which are neither predictable nor within our control.
Commodity Price Risk We are exposed to market risk with respect to commodity price fluctuations for components used in the products we manufacture. These components are impacted by global pricing pressures, general economic conditions, market conditions, geopolitical issues, weather, changes in tariff rates, and other factors which are neither predictable nor within our control.
We attempt to mitigate customer credit risk by monitoring our customers' financial condition and performing ongoing credit evaluations as appropriate. In certain instances, we obtain letters of credit or other forms of security from our customers. We may also purchase credit insurance from a financial institution to reduce our credit exposure to certain customers.
Longer payment terms could adversely impact our working capital requirements, and increase our financial exposure and credit risk. We attempt to mitigate customer credit risk by monitoring our customers' financial condition and performing ongoing credit evaluations as appropriate. In certain instances, we obtain letters of credit or other forms of security from our customers.
We would also suffer a significant financial loss if an institution from which we purchased foreign exchange contracts or 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 pension obligations, we retain ultimate responsibility for the payment of benefits to plan participants unless and until such pension plans are wound-up).
We would also suffer a significant financial loss if an institution from which we purchased foreign currency forward contracts or swaps, interest rate swaps or annuities for our pension plans, or the counterparty to our TRS Agreement, defaults on their contractual obligations.
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.
While these contracts are intended to reduce the effects of fluctuations in foreign currency exchange rates on our operating costs and cash flows, our hedging strategy does not mitigate the longer-term impacts of changes to foreign exchange rates. There can be no assurance that our hedging transactions will be successful in mitigating our foreign exchange risk.
We do not hold financial instruments for speculative trading purposes. Exchange Rate Risk Conducting business in currencies other than the U.S. dollar subjects us to translation and transaction risks associated with fluctuations in currency exchange rates. Although we conduct the majority of our business in U.S. dollars (our functional currency), our global operations subject us to foreign currency volatility.
We do not hold financial instruments for speculative trading purposes. Exchange Rate Risk Due to the global nature of our operations, we are subject to translation and transaction risks associated with fluctuations in currency exchange rates.
We enter into these contracts to lock in the exchange rates for future foreign currency transactions and balance sheet balances, which is intended to reduce the foreign currency risk related to our operating costs and future cash flows denominated in local currencies.
We enter into foreign currency forward contracts to hedge our cash flow exposures and swaps to hedge our exposures of monetary assets and monetary liabilities (Economic Hedges), generally for periods of up t o 12 months, to lock in the exchange rates for future foreign currency transactions, which is intended to reduce the foreign currency risk related to our operating costs and future cash flows denominated in local currencies.
See Item 7, MD&A — "Liquidity — Cash requirements — TRS" for a description of our TRS Agreement. Interest payments on our TRS Agreement are based on a variable interest rate and the counterparty's Common Share purchase costs.
See Item 7, MD&A — "Liquidity — Cash requirements — TRS" for a description of our TRS Agreement. At December 31, 2025, our TRS Agreement had a notional quantity of 1.25 million Common Shares and a Strike Price of $288.87 per share. Interest payments on our TRS Agreement are based on a variable interest rate.
If the value of the TRS (as defined in the TRS Agreement) decreases over the agreement's term, we are obligated to pay the counterparty the amount of such decrease upon Settlement.
Also see "Equity Price Risk" below. 83 Equity Price Risk See Item 7, MD&A — "Liquidity — Cash requirements — TRS" for a description of our TRS Agreement. If the value of the TRS Agreement decreases over the agreement's term, we are obligated to pay the counterparty the amount of such decrease upon Settlement.
With respect to our financial market activities, we have adopted a policy of dealing only with counterparties we deem to be creditworthy to help mitigate the risk of financial loss from defaults. We monitor the credit risk of the counterparties with whom we conduct business, through a combined process of credit rating reviews and portfolio reviews.
With respect to pension obligations, we retain ultimate responsibility for the payment of benefits to plan participants unless and until such pension plans are wound-up. With respect to our financial market activities, we have adopted a policy of dealing only with counterparties we deem to be creditworthy to help mitigate the risk of financial loss from defaults.
We consider credit risk in determining our allowance for credit losses, and we believe that such allowance, as adjusted from time to time, is adequate. We assess the financial stability and liquidity of our customers to identify customers we believe to be at greatest risk of default. We also monitor, and/or develop plans intended to mitigate any identified exposures.
We may also purchase credit insurance from a financial institution to reduce our credit exposure to certain customers. We consider credit risk in determining our allowance for credit losses, and we believe that such allowance, as adjusted from time to time, is adequate.
We also provide unsecured credit to our customers in the normal course of business. From time 96 to time, we extend the payment terms applicable to certain customers and/or provide longer payment terms when deemed commercially reasonable. Longer payment terms could adversely impact our working capital requirements, and increase our financial exposure and credit risk.
Customer exposures that potentially subject us to credit risk include our A/R, inventory on hand, and non-cancellable purchase orders in support of customer demand. From time to time, we extend the payment terms applicable to certain customers and/or provide longer payment terms when deemed commercially reasonable.
Removed
As part of our risk management program, we enter into foreign currency forward contracts and swaps, generally for periods up to 12 months, intended to hedge foreign currency transaction risk and local currency denominated balance sheet exposures. These contracts include, to varying degrees, elements of market risk.
Added
Although the majority of our cash balances, pricing to customers, and materials costs are denominated in U.S. dollars, a significant portion of our non-materials costs (including payroll, pensions, site costs, costs of 81 locally sourced supplies and inventory, and income taxes) are denominated in various other currencies.
Removed
Exchange rate volatility between the relevant local currency and the U.S. dollar will affect the recorded amounts of our foreign assets, liabilities, revenues and expenses in local currency for statutory financial statement purposes.
Added
As a result, we may experience foreign exchange gains or losses on translation or transactions due to currency fluctuations.
Removed
As a result, we are also exposed to foreign currency exchange transaction risk, such that fluctuations in currency exchange rates may significantly impact the amount of translated U.S. dollars required for expenses incurred in other currencies or received from non-U.S. dollar revenues.
Added
As part of our risk management program, we attempt to mitigate currency risk through a hedging program using forecasts of our anticipated future cash flows and monetary assets and monetary liabilities denominated in foreign currencies.
Removed
Based on the counterparty's Common Share purchase costs at December 31, 2024, a 1% increase in the applicable interest rate would have resulted in an insignificant increase in interest expense in 2024. Also see "Equity Price Risk" below. Equity Price Risk See Item 7, MD&A — "Liquidity — Cash requirements — TRS" for a description of our TRS Agreement.
Added
Economic Hedges are based on our forecasts of the future position of anticipated monetary assets and monetary liabilities denominated in foreign currencies, and therefore may not mitigate the full impact of any translation impacts in the future.
Removed
If the price of our Common Shares decreased by 10% (assuming Settlement on December 31, 2024), we would not have been obligated to pay any amount to the counterparty (assuming Settlement on December 31, 2023 — no payment obligation). Credit and Counterparty Risk Management monitors the institutions that hold our cash and cash equivalents.
Added
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, results of operations and financial condition.
Removed
No significant adjustments were made to our allowance for credit losses in the last three years in connection with our ongoing assessments and monitoring activities. Commodity Price Risk We are exposed to market risk with respect to commodity price fluctuations for components used in the products we manufacture.
Added
We have entered into agreements to swap the variable interest rates with fixed rates of interest with respect to a portion of the amounts outstanding under the Term Loans.
Added
At December 31, 2025, the fair value of our interest rate swap agreements was a net unrealized loss of $2.4 million (December 31, 2024 — an unrealized gain of $6.6 million). A downward shift of the forward interest rate curve would result in a further loss.
Added
Based on the notional quantity and the Strike Price in effect as of December 31, 2025, a one-percentage point increase in the applicable interest rate would increase interest expense by $3.6 million annually.
Added
As a result, the TRS Agreement is subject to equity price risk. A one-dollar decrease in our Common Share price would decrease the value of the TRS Agreement as of December 31, 2025 by $1.3 million.
Added
At December 31, 2025, the fair value of the TRS Agreement was an unrealized gain of $7.2 million (December 31, 2024 — unrealized gain of $99.4 million ). Credit and Counterparty Risk Management monitors the institutions that hold our cash and cash equivalents. Management's emphasis is primarily on safety of principal.
Added
We monitor the credit risk of the counterparties with whom we conduct business, through a combined process of credit rating reviews and portfolio reviews. We also provide unsecured credit to our customers in the normal course of business.
Added
We assess the financial stability and liquidity of our customers to identify customers we believe to be at greatest risk of default. We also monitor, and/or develop plans intended to mitigate any identified exposures. At December 31, 2025, less than 2% of our gross A/R was over 90 days past due (December 31, 2024 — less than 1%).
Added
A/R are net of an allowance for credit losses of $30.5 million at December 31, 2025 (December 31, 2024 — $10.1 million). We recorded expected credit losses of $18.2 million in SG&A in 2025 (2024 — $2.8 million ; 2023 — $2.2 million ).
Added
Liquidity Risk Liquidity risk is the risk that we may not have cash available to satisfy our financial obligations as they come due. We manage liquidity risk by maintaining a portfolio of liquid funds and investments and having access to a revolving credit facility, uncommitted intraday and overnight bank overdraft facilities, an A/R sales program and customer SFPs.
Added
Since our A/R sales 84 program and customer SFPs are each uncommitted, there can be no assurance that any participant bank will purchase any of the A/R that we wish to sell.
Added
We believe, however, 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.