S&P lifts Celestica

S&P said it raised its ratings for Celestica Inc. and its senior secured term loan to BB from BB-. The loan’s 3 recovery rating is unchanged.

“The upgrade reflects Celestica's improving leverage and strengthening free operating cash flow (FOCF) generation. The company's S&P Global Ratings'-adjusted net leverage improved to 1.6x in 2023. We expect it will decline further by the end of 2024, representing a significant improvement from higher leverage levels (1.8x) in fiscal 2019.

“Driving leverage improvement was a 2023 EBITDA increase to $525 million, with support from EBITDA margin expansion to 6.6% and debt repayments of approximately $18 million,” S&P said in a press release.

The agency said it projects Celestica will generate at least $150 million-$200 million in annual FOCF for 2024 and 2025.

The outlook is stable.

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