Celestica Q3 Adj. Profit Beats View, But Revenues Miss; CEO Muhlhauser To Retire

(RTTNews) - Canada-based electronics manufacturer Celestica Inc. (CLS.TO, CLS) on Tuesday reported a 40 percent decline in profit for the third quarter from last year, reflecting lower revenues primarily due to weakness in the company's Communications end market.

However, adjusted earnings per share for the quarter beat analysts' expectations, while revenues missed their estimates.

Separately, Celestica said that its president and chief executive officer, Craig Muhlhauser, has informed the board of directors of his intent to retire as an officer and director of the company by the end of 2015.

Celestica's net income for the third quarter was $34.4 million or $0.19 per share, down from $57.4 million or $0.31 per share for the year-ago quarter.

Excluding items, adjusted net income for the quarter was $47.2 million or $0.26 per share, compared to $41.5 million or $0.22 per share in the prior-year quarter. On average, analysts polled by Thomson Reuters expected the company to earn $0.24 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter declined 5 percent to $1.42 billion from $1.49 billion in the same period last year and missed analysts' consensus revenue estimate of $1.46 billion for the quarter.

However, revenue from the company's diversified end market grew 7 percent from the year-ago period to represent 29 percent of total revenue, up from 26 percent of total revenue for prior-year period.

Craig Muhlhauser, Celestica's President and CEO said, "Despite overall demand softness in the third quarter, primarily in our Communications end market, we improved our adjusted operating margin and generated higher free cash flow compared to the second quarter of this year, as well as to the same period of 2013."

Looking ahead to the fourth quarter, Celestica forecasts adjusted earnings per share in a range of $0.21 to $0.27 on revenue of $1.375 billion to $1.475 billion. Analysts currently expect the company to earn $0.26 per share for the quarter on revenue of $1.50 billion for the fourth quarter.

Muhlhauser added, "While we expect the overall business environment to remain challenging in the near term, we remain committed to investing for the future growth and profitability of Celestica while achieving improvements in our margins, ROIC and free cash flow."

Separately, Celestica said that Muhlhauser has informed the board of directors of his intent to retire as an officer and director of the company by the end of 2015, beginning an orderly leadership transition over the next twelve months.

Bill Etherington, Chairman of the Board of Directors said, "On behalf of everyone at Celestica, I want to thank Craig for his exceptional leadership. Over the past eight years, the company has significantly strengthened its operational and financial performance, particularly in the areas of revenue diversification, profitability and balance sheet."

The company's board has formed a committee and engaged Spencer Stuart to support a comprehensive search process to identify the next CEO, considering both external and internal candidates.

CLS closed Tuesday's trading at $9.99, up $0.24 or 2.46 percent on a volume of 169, 694 shares.