Shares of Celestica Inc. (CLS) surged in after-hours trading on Monday after the company reported third-quarter revenue of $5.83 billion, an 83% year-over-year increase, alongside adjusted earnings per share that more than doubled.

The stock climbed 9.17% to $268.99 once regular trading ended, reversing an earlier decline. During the regular session, Celestica shares fell 5.14% to $246.65, shedding $13.36 ahead of the earnings release. Because the results were released after the closing bell, the after-hours session marked the market's first opportunity to react to the numbers.

Q3 Results: Revenue and Earnings Accelerate

The results cover the quarter ended September 30, 6. Revenue climbed from $3.19 billion in the comparable 2025 quarter as demand tied to cloud infrastructure continued to expand.

Adjusted earnings reached $3.30 per diluted share, compared with $1.58 in the prior-year quarter — a 109% year-over-year increase. GAAP earnings rose to $3.26 per share from $2.31 a year earlier.

Profitability metrics were mixed. Celestica posted an 8.5% adjusted operating margin, up from 7.6% in the year-ago quarter, while its GAAP operating margin declined to 7.9% from 10.2% last year. Separately — and unconnected to the quarter's operating results — the company completed a public offering that generated $3.45 billion in gross proceeds.

Celestica Raises 2026 Outlook

Following the quarterly report, Celestica increased its full-year 2026 revenue outlook to $21 billion from $20.5 billion and lifted its adjusted earnings forecast to $11.55 per share from $11.30. Management attributed the higher guidance to recent results and stronger fourth-quarter demand.

For the fourth quarter, the company projected revenue between $6.275 billion and $6.575 billion, with adjusted earnings of $3.37 to $3.57 per diluted share. The guidance assumes an 8.7% adjusted operating margin at the midpoint. Celestica's previously issued target for a full-year adjusted operating margin of 8.4% remains unchanged.

The company did lower its 2026 free cash flow forecast to $460 million from $600 million, attributing the revision to working capital investments intended to support faster expansion next year. That is a dynamic common in hardware manufacturing, where ramping production for larger orders means cash is absorbed into inventory and components before customer payments arrive.

2027 Targets: $40 Billion in Revenue

Looking further ahead, Celestica expects revenue to reach $40 billion in 2027, representing 90% growth over its updated 2026 target. The company also forecasts adjusted earnings of $21.50 per share for that year and targets a 9.0% adjusted operating margin, which would set another company record. Capital spending is planned at $1.5 billion to $2 billion during 2027.

Management also indicated that customer demand projections for 2028 exceed current expectations for 2027, a projection that extends the company's demand outlook two years beyond the current quarter. The new guidance and long-range targets now set clear benchmarks against which the company's upcoming quarterly reports can be measured.

Celestica operates two segments: Connectivity and Cloud Solutions, and Advanced Technology Solutions. Its cloud business includes networking, servers, and storage products, while its other operations serve the aerospace, healthcare, and manufacturing sectors. The company's growth strategy centers on equipment and infrastructure for large cloud operators and advanced AI developers, and the updated forecasts reflect greater capacity needs as customers expand their orders.

This article was originally published by Blockonomi.