07.26
CLS continued to demonstrate its ability to report strong results in a
challenging market. Q2 EPS and Q3 guidance came in higher than expected
(+$0.01). Our thesis remains unchanged and we expect earnings leverage
to play out as revenue growth returns in H2/09 and 2010.
In Q2/09, CLS delivered rev. of $1.4B (-5% q/q). GM was 7.3%, op. margin
was 2.7% (target 3%-3.5%), leading to EPS of $0.11 (est. $0.10). Storage
(new programs) fared better than other markets, while Consumer was weak
(program transitions). End markets look to be stabilizing.
The Q3/09 outlook was for rev. to be up 7% q/q, and for EPS to benefit
from CLS’s strong operational performance. We have lowered our rev. est.
to $1.5B (-$50MM) but EPS is $0.14 (+$0.01). Our F09 rev. forecast has
also declined to $5.97B, but our EPS has increased to $0.52 (+$0.02).
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