Celestica Announces Fourth Quarter and FY2008 Financial Results
* Revenue of $1,935 million, compared to $2,211 million for the same period last year
* GAAP loss of ($822.2) million or ($3.58) per share, including an ($850.5) million or ($3.71) per share charge resulting from the write-off of all goodwill, compared to a loss of ($11.7) million or ($0.05) per share last year
* Adjusted net earnings of $0.26 per share including a $0.07 per share benefit resulting from a lower adjusted tax rate, compared to adjusted net earnings of $0.16 per share last year
* Operating margin of 3.2% compared to 2.7% last year
* Gross margin of 7.3% compared to 6.0% last year
* First quarter of 2009 revenue guidance of $1.4 billion - $1.6 billion, adjusted net earnings per share of $0.07 - $0.13
TORONTO, Canada - Celestica Inc. (NYSE, TSX: CLS), a global leader in the delivery of end-to-end product lifecycle solutions, today announced financial results for the fourth quarter and fiscal year ended December 31, 2008.
Revenue was $1,935 million compared to $2,211 million in the fourth quarter of 2007. Net loss on a GAAP basis for the fourth quarter was ($822.2) million or ($3.58) per share, compared to a GAAP net loss of ($11.7) million or ($0.05) per share for the same period last year. The GAAP loss in the fourth quarter of 2008 was primarily a result of the write-off of the company’s remaining goodwill.
During the fourth quarter of 2008, the company performed its annual goodwill impairment test which resulted in the decision to write off the $850.5 million of goodwill on the company’s balance sheet. The goodwill write-off is non-cash in nature and does not affect liquidity, cash flows from operating activities, or compliance with debt covenants. The goodwill write-off is not deductible for income tax purposes and, therefore, the company has not recorded a corresponding tax benefit in 2008. (Additional detail on the impairment can be found in note 5(b) of the financial statements attached to this release).
Adjusted net earnings for the quarter were $59.1 million or $0.26 per share, including a $15.5 million or $0.07 per share benefit associated with a lower adjusted tax rate. These results compared to adjusted net earnings of $37.2 million or $0.16 per share for the same period last year. Adjusted net earnings is defined as net earnings before other charges, amortization of intangible assets, integration costs related to acquisitions, option expense, and gains or losses on the repurchase of shares and debt, net of tax and significant deferred tax write-offs or recovery (detailed GAAP financial statements and supplementary information related to adjusted net earnings appear at the end of this press release).
These revenue and adjusted net earnings results compare with the company’s guidance for the fourth quarter, announced on October 23, 2008, of revenue of $1.75 billion to $2.0 billion and adjusted net earnings per share of $0.16 to $0.24.
For 2008, revenue was $7,678 million compared to $8,070 million for 2007. Net loss on a GAAP basis was ($720.5) million or ($3.14) per share compared to GAAP net loss of ($13.7) million or ($0.06) per share last year. Adjusted net earnings for 2008 were $187.7 million or $0.82 per share compared to adjusted net earnings of $62.3 million or $0.27 per share in 2007.
“Despite the significant turmoil in the global economic environment, Celestica delivered strong operating results in the fourth quarter and throughout the year,” said Craig Muhlhauser, President and Chief Executive Officer, Celestica. “We had four positive quarters and generated full year gross margins of 7% and had operating margins of 3%. During the year, we generated free cash flow of $127 million and finished 2008 with a very strong balance sheet.
“While our operations performed very well in 2008, the current uncertain economic backdrop, combined with end-market weakness which accelerated in the fourth quarter, resulted in our decision to write-off our remaining goodwill. While end-market volatility is expected to continue throughout 2009, Celestica will remain focused on pursuing profitable revenue opportunities, while continuing to improve working capital efficiency, operating margins and free cash flow.”
First Quarter Outlook
For the first quarter ending March 31, 2009, the company anticipates revenue to be in the range of $1.4 billion to $1.6 billion, and adjusted net earnings per share to range from $0.07 to $0.13.
Fourth Quarter Webcast
Management will host its quarterly results conference call today at 4:15 p.m. Eastern. The webcast can be accessed at www.celestica.com.
In addition to disclosing detailed results in accordance with Canadian generally accepted accounting principles (GAAP), Celestica also provides supplementary non-GAAP measures as a method to evaluate the company’s operating performance.
Management uses adjusted net earnings as a measure of enterprise-wide performance. As a result of restructuring activities, acquisitions made by the company, fair value accounting for stock options and securities repurchases, management believes adjusted net earnings are a useful measure for the company as well as its investors to facilitate period-to-period operating comparisons and allow the comparison of operating results with its competitors in the U.S. and Asia. Excluded from adjusted net earnings are the effects of other charges, most significantly the write-down of goodwill and long-lived assets, gains or losses on the repurchase of shares or debt and the related income tax effect of these adjustments, and any significant deferred tax write-offs or recovery. The company also excludes some recurring charges such as restructuring costs, option expense, the amortization of intangible assets, and the related income tax effect of these adjustments. The term adjusted net earnings does not have any standardized meaning prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. Adjusted net earnings are not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for net earnings prepared in accordance with Canadian or U.S. GAAP. The company has provided a reconciliation of adjusted net earnings to Canadian GAAP net earnings (loss) below
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