CELESTICA INC. (CLS)

Business overview

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. Our telephone number is (416) 448-5800, and our internet address is www. celestica. com.

We operate a network of sites and design centers strategically located in North America, Asia, and Europe. 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. 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 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). Subsequent to the August 2023 secondary offering, we have no MVS outstanding and Onex is no longer our controlling shareholder. See "Overview — Celestica's Business " and "Recent Developments" in Item 7, MD&A for a discussion of recent trends impacting our businesses. Business Overview General Celestica is a technology leader with deep expertise in design, engineering, manufacturing, supply chain, and platform solutions. Celestica enables critical data center infrastructure for AI, cloud and hybrid cloud, and advances technologies in high-growth markets. We serve across two operating and reportable segments: Connectivity and Cloud Solutions (CCS) and Advanced Technology Solutions (ATS).

See note 21 to the 2025 consolidated annual financial statements (2025 AFS) included herein. Our CCS segment consists of our Communications and Enterprise end markets. Our Enterprise end market is comprised of our servers and storage businesses. Our ATS segment consists of our ATS end market, and is comprised of our Aerospace and Defense (A&D), Industrial, HealthTech, and Capital Equipment businesses. Customers in our CCS segment include cloud-based service providers, hyperscalers and other data center customers (including digital native companies), as well as hardware original equipment manufacturer (OEMs) and enterprise customers. Customers in our ATS segment include OEMs in a range of diversified markets that we serve.

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. Products in our CCS segment consist predominantly of data communications and information processing infrastructure products and systems primarily used in hyperscale data centers. These products include networking switches, optical systems, data center racks, servers and storage products used primarily by cloud-based and other service providers (including AI service providers), as well as enterprise customers, for a range of applications including AI workloads and cloud computing services.

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. Our CCS segment businesses, compared to our ATS businesses, typically have higher margin profiles and larger program volumes, as well as more significant concentration with major customers. We engage with customers in our capacity as an original design manufacturer (ODM) and electronics manufacturing services (EMS) provider, as well as offering various software solutions and services.

Within our CCS segment, our HPS business, which is broadly characterized as ODM in nature (see below), typically has a higher margin profile than our traditional EMS businesses, as we are solely or jointly involved in the design of the solution. However, due to the nature of these programs, it also requires us to make specific investments, including in research and development (R&D). […]

Management discussion and analysis

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). 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. Certain statements contained in this MD&A constitute “forward-looking statements” within the meaning of Section 27A of the U. S. Securities Act of 1933, as amended (U. S.

Securities Act) and Section 21E of the U. S. Securities Exchange Act of 1934, as amended (U. S.

Exchange Act), and “forward-looking information” within the meaning of applicable Canadian securities laws (collectively, forward-looking statements), including, without limitation, statements related to: our priorities, intended areas of focus, targets, objectives and goals; our expanded capital investment plans and capacity additions and the funding therefor; market opportunities and investments in technology platforms and roadmaps; expected research and development and other capital expenditures; developments related to new customer or program wins; timing of production ramps, deliveries and availabilities of certain key components; anticipated economic conditions, industry and market trends and projections, underlying market growth rates, customer demand, prospects and opportunities; strategic initiatives; trends in our segments and/or their constituent businesses; the anticipated impact of current market conditions and customer-specific factors on each of our segments (and/or their constituent businesses) and near term expectations; potential restructuring and divestiture actions; our anticipated financial and/or operating results and outlook, including expected revenue increases and decreases (or remaining flat), as well as growth in certain segments, businesses and end markets; our strategies; our credit risk; the potential impact of acquisitions, or program wins, transfers, losses or disengagements; materials, component and supply chain constraints; anticipated expenses and other working capital requirements and contractual obligations (and intended methods of funding such items); the potential impact of trade policies between countries in which we conduct business (including the tariffs proposed and implemented by the U.

S.

government, and any reciprocal or retaliatory tariffs); the adoption, integration and use of artificial intelligence (AI) in manufacturing and service offerings and in certain of our internal processes; the impact of our price reductions and longer payment terms; our intended repatriation of certain undistributed earnings from non-Canadian subsidiaries; the potential impact of tax and litigation outcomes; investor dissatisfaction with inclusion, employee engagement, and other sustainability matters; our ability to use certain tax losses; planned investments in our business; the potential impact of the pace of technological changes (including with respect to AI technologies), customer outsourcing, program transfers, and the global economic environment; the intended method of funding common share (Common Share) repurchases; the impact of our outstanding indebtedness; liquidity and the sufficiency of our capital resources; our intention to settle outstanding share unit awards with Common Shares; our financial statement estimates and assumptions; recently-issued accounting pronouncements and amendments; the potential adverse impacts of events outside of our control (including those described under "External Factors that May Impact our Business" below); mandatory prepayments under our credit facility; pension plan funding requirements and obligations, and the impact of annuity purchases; our compliance with covenants under our credit facility; refinancing debt at maturity; interest rates and expense; income tax incentives; expectations with respect to reporting units with goodwill; our future warranty obligations; cybersecurity threats and incidents; our intentions with respect to environmental assessments for newly-leased or acquired properties; our expectations with respect to expiring leases; our intention to retain earnings for general corporate purposes; costs in connection with our pursuit of acquisitions and strategic transactions; and expectations regarding the acceptance of offers to sell accounts receivable (A/R) under our A/R sales programs and supplier financing programs.

Such forward-looking statements may, without limitation, be preceded by, followed by, or include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “continues,” “project,” “target,” "objective," “goal,” “potential,” “possible,” “contemplate,” “seek,” or similar expressions, or may employ such future or conditional verbs as “may,” “might,” “will,” “could,” “should,” or “would,” or may otherwise be indicated as forward-looking statements by grammatical construction, phrasing or context. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U. S. […]

Key risk disclosures

of this Annual Report 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. 2 Risk Factor Summary Forward-looking statements are provided to assist readers in understanding management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes.

Forward-looking statements are not guarantees of future performance and are subject to risks that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including, among others, as is described in more detail in Item 1A, “Risk Factors” and elsewhere in this Annual Report: Risks Related to Our Business and Operations • dependence on a limited number of customers and end markets and sensitivity to their investment cycles and operating conditions; • managing changes in customer demand, which may impact our planning, supply chain execution and manufacturing; • dependence on our customers' ability to compete and succeed using the products we manufacture and services we provide; • dependence on third parties to supply certain materials and the quality, availability and cost of such materials; • inventory risk related to our products and services; • change in the mix of customers and/or the types of products or services we provide; • new customers or programs, or the provision of new services, and variation in demand cycles related to new customers, programs and services; • recruitment and retention of skilled talent in key jurisdictions; • variability of revenue and operating results from period to period; • increased capital expenditures to expand capacity to support anticipated growth in customer demand; • difficulties expanding our operations or introducing new competencies or new offerings; • quality and execution issues related to materials, testing, or other manufacturing or supply chain activities; • disruptions to operations by events outside our control; • disruptions to our information technology (IT) systems and IT infrastructure; • dependence on winning competitive bid selection processes; • changes to our operating model and implementation of such changes; • risks associated with adoption, integration and use of AI in manufacturing and service offerings and certain internal processes; • integration and other challenges with respect to our acquisitions and strategic transactions; Risk Related to Our Industry • adoption of AI and deployment of data center infrastructure are uncertain and constrained by power and water availability; • we operate in a highly competitive industry with aggressive pricing dynamics; • ability to keep pace with rapidly evolving technology; Risks Related to the International Nature of our Business • uncertain global economic and political environment; • global operations and supply chain risks; • geopolitical uncertainty and conflicts; • foreign currency exchange rate fluctuations; Financial Risks • deterioration in financial markets or the macro-economic environment; • volatility in energy and commodity prices related to our production and transportation activities; • rising labor costs and increases in competition for specific talent/resources; • financial and reputational risks related to non-performance by counterparties; 3 • use of cash, debt and equity financing to complete future acquisitions or fund operations; • interest rate fluctuations and their potential impact on our credit agreement; • impairment charges and operating losses related to long-lived assets or goodwill; • increasing income and other taxes, tax audits and the challenges of successfully defending our tax positions; • ability to achieve some or all of the expected benefits from our restructuring activities; • ability to prevent or detect all errors or fraud; • total return swap agreement (TRS Agreement) and the potential impacts of decreases in the price of our Common Shares, counterparty risk and interest rate risk; • potential downgrading of our credit ratings; • compliance with credit facility covenants; • third-party debt may reduce our ability to fund acquisitions/capital expenditures; • risks associated with refinancing outstanding indebtedness from time to time and the potential inability to refinance on favorable terms, or at all; • potential obligations to make larger contributions to pension and other benefit plans; • changes in judgments, estimates and assumptions used in preparation of our financial statements; Legal/Regulatory Risks • ability to adequately protect our intellectual property (IP) or the IP of others; • uncertainty regarding trade agreements and free trade generally as a result of changes in U. S. policies or legislation; • negative impacts on demand for our services and reputation, or increased costs, related to product liability/warranty claims; […]

Source and methodology

Review the latest Form 10-K document for the complete filing and its full context. Extraction is automated and is not a substitute for reading the original filing.

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