Good morning, ladies and gentlemen, and welcome to the Celestica Q2 2022 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If you require immediate assistance at any time, please press star zero for the operator. This call is being recorded on Tuesday, July 26th, 2022. I would now like to turn the call over to Mr. Craig Oberg. Please go ahead. Good morning, and thank you for joining us on Celestica's second quarter 2022 earnings conference call. On the call today are Rob Mionis, President and Chief Executive Officer; and Mandeep Chawla, Chief Financial Officer. As a reminder, during this call, we will make forward-looking statements within the meanings of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian Securities Laws. Such forward-looking statements are based on management's current expectations, forecasts, and assumptions, which are subject to risks, uncertainties, and other factors that could cause actual outcomes and results to differ materially from conclusions, forecasts, or projections expressed in such statements. For identification and discussion of such factors and assumptions, as well as further information concerning forward-looking statements, please refer to yesterday's press release, including the cautionary note regarding forward-looking statements therein, our most recent annual report on Form 20-F, and other public filings, which can be accessed at SEC.gov and SEDAR.com. We assume no obligation to update any forward-looking statement except as required by law. In addition, during this call, we will refer to various non-IFRS financial measures, including ratios based on non-IFRS financial measures consisting of non-IFRS operating earnings, non-IFRS operating margin, adjusted gross margin, adjusted return on invested capital or adjusted ROIC, adjusted free cash flow, gross debt to non-IFRS trailing 12-month Adjusted EBITDA Leverage Ratio, Adjusted Net Earnings, Adjusted Earnings Per Share or Adjusted EPS, Adjusted SG&A, Lifecycle Solutions Revenue, and Adjusted Effective Tax Rate. Listeners should be cautioned that references to any of the foregoing measures during this call denote non-IFRS financial measures, whether or not specifically designated as such. These non-IFRS financial measures do not have any standardized meanings prescribed by IFRS and may not be comparable to similar measures presented by other public companies that report under IFRS or report under U.S. GAAP and use non-GAAP financial measures to describe similar operating metrics. We refer you to yesterday's press release and our Q2 2022 earnings presentation, which are available at celestica.com under the Investor Relations tab for more information about these and certain other non-IFRS financial measures, including a reconciliation of historical non-IFRS financial measures to the most directly comparable IFRS financial measures from our financial statements. Unless otherwise specified, all references to dollars on this call are to U.S. dollars, and per share information is based on diluted shares outstanding. Let me now turn the call over to Rob. Thank you, Craig. Good morning, everyone, and thank you for joining us on today's conference call. After a strong start to the year, we have carried forward that momentum into the second quarter, delivering another quarter of solid performance. Our results met or exceeded our expectations across both our ATS and CCS segments, despite challenges presented by the macro environment. Our solid performance in the second quarter was driven by double-digit year-over-year revenue growth in both our ATS and CCS segments and higher year-over-year revenues across all of our end markets. Additionally, we are pleased to have delivered strong adjusted free cash flow in a highly volatile environment. We believe that the current environment continues to present significant opportunities for us with customer demand remaining strong. However, we remain cautious and vigilant given the risks presented by the current supply chain situation, macroeconomic challenges, and other potential hurdles related to the COVID-19 and geopolitical tensions. I am pleased to say that our team has done an excellent job navigating these challenges, and we believe that our business is well positioned to weather any further challenges on these fronts. In early June, our Batam, Indonesia facility experienced a fire in their warehouse. Thankfully, no one was hurt, and the facility was back online a few weeks later. Although we lost inventory in the fire, we anticipate the site will be at pre-incident production rates as we exit the year. The financial impact to the second quarter was minimal, and we expect that the impact to our 2022 annual top line will be less than $100 million and will be made up in 2023. We have insurance that largely covers the impact of the fire, including building restoration, inventory, and disruption to the business. Given the solid demand backdrop across our businesses and our demonstrated ability to navigate the present challenges, we are pleased to raise our full-year 2022 guidance to $6.7 billion or more in revenue and tighten our non-IFRS adjusted EPS range to between $1.65 and $1.75. Before offering some additional color on our outlook for each of our businesses, I would like to turn the call over to Mandeep, who will provide additional details on our financial performance in the second quarter, as well as our guidance for the third quarter. Over to you, Mandeep. Thank you, Rob, and good morning, everyone. Second quarter 2022 revenue came in at $1.72 billion at the high end of our guidance range. Revenue was up 21% year-over-year and up 10% sequentially, fueled by revenue growth across our end markets. We delivered non-IFRS operating margin of 4.8%, 20 basis points higher than the midpoint of our revenue and non-IFRS adjusted EPS guidance ranges, driven by solid results in both our ATS and CCS segments. Non-IFRS operating margin was up 90 basis points year-over-year and up 40 basis points sequentially. Non-IFRS adjusted earnings per share were $0.44 at the high end of our guidance range and up $0.14 year-over-year and up $0.05 sequentially. ATS segment revenue was up 24% year-over-year in the second quarter, above our expectations of a low 20s percentage year-over-year increase. Sequentially, ATS segment revenue was flat. The year-over-year growth in ATS segment revenue was driven by higher revenue across all ATS businesses, with particular strength in Capital Equipment and our Industrial business. The year-over-year performance also benefited from the addition of PCI. Our CCS segment delivered another strong quarter, with revenue up 19% year-over-year, driven by strength from our communications and enterprise markets led by our HPS business. CCS segment revenue was 17% higher sequentially. Our HPS business delivered revenue of $459 million in the second quarter, up 52% year-over-year, driven by strong demand and new program ramps with service providers, supported by continuing capital investments in data centers. Communications revenue was up 12% year-over-year, in line with our expectations of a low double-digit percentage increase, and was up 14% sequentially. Year-over-year and sequential growth was driven by our HPS business. Enterprise revenue in the quarter was up 36% year-over-year, better than our expectation of a high percentage increase. Sequentially, enterprise revenue was 25% higher. The year-over-year increase was driven by strong demand across both compute and storage customers, fueled by demand in our HPS business and new program ramps. Turning to segment margins. ATS segment margin was 4.5% in the second quarter, up 40 basis points year-over-year and down 50 basis points sequentially. The year-over-year margin increase was driven by improved operating leverage from higher volumes and the addition of PCI. CCS segment margin of 5.0%, our highest recorded CCS segment margin ever, was up 130 basis points year-over-year and up 110 basis points sequentially. The year-over-year and sequential margin increase was driven by improved leverage from higher volume and improved mix due to growth in our HPS business. Moving on to some additional financial metrics. IFRS net earnings for the quarter were $36 million or $0.29 per share, compared to net earnings of $26 million or $0.21 per share in the same quarter last year, and net earnings of $22 million or $0.17 per share last quarter. Adjusted gross margin was 9.0%, up 60 basis points year-over-year and up 20 basis points sequentially. The year-over-year improvement was driven by improved operating leverage due to higher volumes in both segments, as well as more favorable mix. non-IFRS operating earnings were $83 million, up $28 million year-over-year and up $13 million sequentially. Our non-IFRS adjusted effective tax rate for the second quarter was 22%, 2% higher year-over-year and 3% higher sequentially as a result of unfavorable jurisdictional mix. For the second quarter, non-IFRS adjusted net earnings were $54 million, up $16 million year-over-year and up $6 million sequentially. Second quarter non-IFRS adjusted ROIC of 16.2% was up 2.5% year-over-year and up 2.3% sequentially. Moving on to working capital. Our inventory at the end of the second quarter was $2.1 billion, up $173 million sequentially and up $883 million year- over- year. While our inventory has increased recently, I will note that our revenue for the first half of 2022 was up 24% compared to 2021, and we continue to anticipate strong revenue growth in the second half of 2022. Given this anticipated level of growth coupled with ongoing material constraints, we have been investing in our inventory levels to ensure we can better service customer demand. We are also continuing to work with our customers to help offset the working capital impact of our inventory purchases by providing higher levels of cash deposits. As of the second quarter, our cash deposits were up over $300 million year-over-year, a more than 150% increase. Capital expenditures for the second quarter were $21.6 million or just over 1% of revenue. While our capital expenditures in the first half of 2022 have been lower than our annual target of 1.5%-2% of revenue, we do anticipate higher capital expenditures in the second half of 2022 to support new strategic program ramps and anticipated strong growth in Lifecycle Solutions. non-IFRS adjusted free cash flow was $43.3 million in the second quarter, compared to $31.2 million in the prior year period and $0.5 million last quarter. Cash cycle days were 69 in the second quarter, an improvement of two days year-over-year and seven days sequentially. Cash cycle days improved on a year-over-year basis as higher A/P days and higher cash deposit days more than offset higher inventory days. Moving on to some additional key metrics. Our cash balance at the end of the second quarter was $365 million, down $102 million year-over-year, and up $90 million sequentially. Combined with approximately $600 million of availability under our revolver, we believe that our current liquidity of approximately $1 billion is sufficient to meet our anticipated business needs. We ended the quarter with gross debt of $651 million, down $4 million from the previous quarter, leaving us with a net debt position of $286 million. Our second quarter gross debt to non-IFRS trailing 12-month Adjusted EBITDA leverage ratio was 1.7x, down 0.1 turn sequentially, and up 0.3 turns from the same quarter last year. At June 30th, 2022, we were compliant with all financial covenants under our credit agreement. During the second quarter, we repurchased approximately 1 million shares for cancellation at a cost of $9.8 million. We ended the quarter with 123.2 million shares outstanding, a reduction of approximately 3% from the prior year period. Our capital allocation strategy remains unchanged. Over the long term, we aim to return 50% of our adjusted free cash flow to our shareholders while investing 50% in our business. However, moving forward, our capital allocation priority will focus on reducing our net debt while continuing to be opportunistic with respect to share repurchases under our NCIB. Now turning to our guidance for the third quarter of 2022. We are guiding third quarter revenue to be in the range of $1.65 billion-$1.8 billion. If the midpoint of this range is achieved, revenue would be up 18% year- over- year and approximately flat sequentially. Third quarter non-IFRS adjusted earnings per share are expected to range from $0.41-$0.47 per share. If the midpoint of our revenue and non-IFRS adjusted EPS guidance ranges are achieved, non-IFRS operating margin would be approximately 4.8%, an increase of 60 basis points year- over- year and flat sequentially. Non-IFRS adjusted SG&A expense for the third quarter is expected to be in the range of $64 million-$66 million. We anticipate our non-IFRS adjusted effective tax rate to be approximately 21%. Now turning to our end market outlook for the third quarter of 2022. In our ATS end market, we anticipate revenue to be up in the high-teen perccentage range year-over-year, driven by demand strength and new program ramps in Capital Equipment and Industrial. In CCS, we anticipate our communications end market revenue to be up in the mid- to teen percentage range year-over-year, driven by strong demand from service provider customers supported by our HPS offering. In our enterprise end market, we anticipate revenue to also increase in the mid-teen% range year-over-year, supported by demand strength in our storage market and the continued growth in our HPS business. I will now turn the call back over to Rob for additional color on our businesses and overall outlook. Thank you, Mandeep. We believe that Celestica is a more diversified and resilient business today than at any point in our company's history. Recently, investors have heightened their focus on a number of mounting macroeconomic risks, which include interest rate hikes, inflation, supply chain constraints, and the potential for a recession. Given this, I think it may be instructive for us to provide additional color for each of our businesses. One of the core pillars of our strategy has been to grow our Lifecycle Solutions business, which represented 67% of our total revenue in the second quarter of this year, up from approximately 40% of revenues compared to five years ago. We believe that our shift towards Lifecycle Solutions businesses has resulted in a more diversified company with healthier margins, more attractive long-term growth profile, and less exposure to consumer markets. We also believe that these characteristics position Celestica to effectively execute in a recessionary environment and gives us confidence in a long-term outlook of 10% annual Lifecycle Solutions revenue growth and 10% annual EPS growth through 2025. Turning to our outlook for our businesses. Our Capital Equipment business has continued its strong performance in Q2 2022, driven by strong secular demand, new program ramps, and market share gains. We anticipate this strong performance to continue in the second half of the year. While the trajectory of capital spending growth in the wafer fab equipment market is expected to moderate in 2023, we believe that the current semiconductor component shortages are a positive indicator of continued intended investment over the coming years. The tailwinds underpinning growth in semiconductor demand are structural rather than cyclical in our view, and while spending on trailing edge technologies greater than 7- nanometer are likely to be impacted negatively by a recession, we believe that the demand we are seeing in leading-edge technologies less than 7- nanometer, which represent nearly 80% of our semiconductor business, is robust and far less sensitive to a broader slowdown in the economy. Additionally, we believe that our strong backlog, fueled by new program wins and customer mix, position us to outperform expectations for the broader wafer fab equipment market in the coming years. Moving on to our industrial business. Our industrial business remains a primary driver of our ATS segment revenue growth. As an example, over the past few years, we have won a number of new programs in the energy storage and generation markets, which are anticipated to generate strong revenue growth in the coming years. While the industrial market is not immune to a recession, we believe that the majority of our industrial portfolio is not exposed to markets typically more sensitive to economic slowdowns. Additionally, we believe that growth drivers such as automotive connectivity and green energy are long-term secular investment trends, and they are less likely to see major fluctuations in a recession. The A&D market continues to show year-over-year improvement, spurred by an increase in activity in the commercial aerospace market, along with increased defense investment. Within our business specifically, we believe that new defense wins, along with a recovery in the commercial and business jet markets, will support revenue growth moving forward. We also believe that the majority of our A&D business is somewhat insulated from a recession given the long-term nature of aircraft fleet and defense spending investment decisions. Now I'll shift to health tech. We believe that our health tech business continues to present attractive growth opportunities as demand in areas such as surgical instruments and patient monitoring devices continue to support growth in 2022. Even in recessionary times, people get sick, and we believe that the demand for the goods and services we provide should continue to grow as the population ages. Overall, we are pleased with the positioning of our ATS portfolio as we look to the second half of 2022. Now turning to our CCS segment. Our HPS business continues to perform remarkably well, recording 64% growth year to date compared to the prior year period and achieving approximately $820 million in revenue in the first half of 2022 with strong margins. The exceptional demand strength continues to be driven by investment in data center expansion from our service provider customers, a current trend that we believe is likely to persist for at least the near term. Our positive outlook is supported by the capital investment plans of several of our key customers and our solid order book. Additionally, our HPS business continues to gain market share from OEMs. Given the long-term horizon and strategic nature of service providers customers' capital investment plans, as well as what we believe are secular rather than cyclical trends supporting data center growth, it is our view that demand in our HPS business will remain resilient in the near term. Demand in the communications end market, largely comprised of service provider customers, is expected to be robust throughout the remainder of 2022, driven by networking customers and continued strong demand for 400G switches. Our HPS business continues to account for an increasing share of our communications end market. In our enterprise end market, largely comprised of OEM customers, the year-over-year growth we are seeing in storage and compute is expected to continue, at least in the near term, supported by a strong order book with industry leaders. However, we remain cautious in our outlook, as enterprise demand has historically been more prone to cyclicality in a slowing economy. We believe that Celestica is built for success over the long term. As we look ahead to the second half of 2022, I firmly believe that our business is well positioned to take advantage of the numerous growth opportunities across our markets. Importantly, however, we believe we are also capable of weathering the macroeconomic challenges that we may encounter. I continue to have great appreciation for the tireless work of our entire global team. Their commitment to our values and their consistent execution have helped make our strategic vision into a reality. Our company's talent and culture instill me with the confidence that we will continue to set a high bar for the future and that we will achieve those expectations. With that, I would now like to turn the call over to the operator for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift your handset before pressing any keys. One moment for your first question. Your first question comes from Robert Young with Canaccord Genuity. Please go ahead. Hi, good morning. I was hoping that you could just talk a little bit on visibility. You gave some comments in the prepared comments, but I just wanted to see if you had any changes from last quarter on the visibility you're seeing in the semi cap particularly. Are you still seeing the same build schedule and you know length of lead time? Hi, Rob. With specifically in semi cap, our customers are giving us one-year rolling forecasts. Visibility is about 3x normal levels. Right now, even customers because they're so anxious to get their units, they're authorizing us to ship some product short parts and when we catch it up before it hits the fab. There's no doubt, I think, you know, broadly speaking, within Capital Equipment, that there's a slowdown in the memory devices, but we see that being backfilled with foundry logic orders, i.e., leading edge less than 7- nanometer. As we mentioned on the call, that makes about 80% of our business. Combined with that mix, our strong order book, and new programs, we are poised to outperform the market, certainly through this year. We feel that we're well positioned for 2023 and 2024 as well. Great. Then second question for me would be on the CCS margins, which are very strong again this quarter. If you were to remove the impact of HPS, I was curious if the remaining business is still operating in that 2%-3% target level. Is there any thought of changing the target level? You know, outside of HPS, how is that performing? Yeah. Good morning, Rob. HPS is performing very well, and we're very pleased with it. The margins right now are accretive to our target range. Our target range for the company is 4%-5%, and HPS right now is operating pretty close to the high end of it and sometimes even higher. That being said, the non-HPS portfolio within CCS continues to be very healthy. We're seeing strong growth with both service provider as well as enterprise customers. We have the ability to continue to refine the portfolio as we go, and so we're very pleased with the book of business that we have. That 2%-3%, you know, historically was set with HPS being a very small contributor. The outsized growth is being driven by HPS. You can, you know, back into the fact that the rest of the portfolio is operating in line with expectations. In terms of going forward, clearly, CCS continues to operate above that 2%-3% range. We are considering when the right time is to adjust that. ATS is a little bit outside of its range, and we would like ATS to consistently be in its range before we go and make changes to our overall targets, but very pleased with the momentum in CCS, and we expect that we're going to see strong margins going forward as well. Last question, just on the ATS margins, what would be the key areas of drag there? I assume it's A&D is still operating at below optimal levels. Is that the key drag on margins in the ATS business or are there any other areas? No. You're right. A&D is not yet operating at its target margin levels. You know that it's a very heavy fixed cost business. That being said, we're very pleased with the sequential increases that we're seeing in A&D, and we are starting to see the benefits of the recovery. We are very confident that A&D will be able to return back to its historical strong margins. That being said, it is one of the drags on the quarter, but other than that was primarily ramping programs. We're very pleased with the revenue growth that we're seeing in ATS right now. It's exceeding our expectations, and we're expecting strong growth going into the second half. Some of that growth is being fueled by new wins that we have in the industrial business, and we are investing forward before those programs really turn to revenue. As we continue to ramp new programs in the back half of the year, we do expect some opportunities on the margin side. Okay. Thanks a lot. I'll I'll pass the line. Congrats on the quarter. Thanks, Rob. Your next question comes from Ruplu Bhattacharya with Bank of America. Please go ahead. Hi, thank you for taking my questions. Mandeep, you're raising the guidance for the full year by $200 million on the revenues. Looks like inventory was up about 9% sequentially. Can you comment on working capital requirements? I mean, do you think inventory now is at a level where you can maintain or reduce this level? How should we think about free cash flow given the higher growth expectations? Yeah. The inventory is elevated relative to last quarter. To your point, it's being driven by a lot of the growth that we're seeing. As Rob mentioned in the prepared remarks, we are seeing significant growth in the first half of this year, which we are expecting to continue into next year. Inventory that you buy today is not always just for the quarter in front of you or even two quarters. Sometimes you're looking forward to early parts of 2023. I think the inventory, one way to look at it is it's a good leading indicator for the growth that we're expecting as we finish this year and going into next year. Will it stabilize at these levels, or will it go dramatically different? I think it's a function of how quickly we're able to get the right parts in, because one of the reasons that we do have elevated inventory, as you know, is because we continue to work with our suppliers to square off the kits. As material availability becomes better, we would expect to see some improvement in overall turns. From a free cash flow perspective, we're happy with the free cash flow generation that we've had to date, about $44 million. As we mentioned last quarter, we are still targeting positive free cash flow in the back end of this year. Although we would like to do $100 million or more, you know, expectations should be set that we may do less than that. The number that we provided last quarter was $75 million for the full year, and I think that's still the right number to keep in front of you. Going forward, though, we think that with the order book that we have, as well as with the opportunity for inventory to start unwinding, we're in a very strong position to generate good cash flow in 2023 and beyond, above our $100 million target. Can that follow up- Ruplu, I would also add that on the supply chain environment, just to Mandeep's point, we are starting to see the light at the end of the tunnel, if you will. You know, due to some of the consumer products having some inflationary periods and the market cooling off, we are seeing more availability on some of the components that we use. Things are starting to gradually ease up. We're cautiously optimistic on that front. Okay. Thanks for that, Rob. It's helpful. Can I follow up on enterprise demand? You know, you saw a strong 36% year-on-year growth. Can you help us understand, you know, where that demand came from? Was it more on servers or storage? Do you see that sustaining over the rest of the year? Yeah. In Q2, it was both storage and service, particularly non-x86 proprietary compute. In terms of, you know, the third quarter, again, we see some strong demand largely in storage due to tough comps. We see compute on a year-over-year basis cooling off. Got it. For my last question, can I ask on HPS? You're seeing strong growth, and that has good margins. Is there a target percent of revenue that you're targeting for that business? Can it continue to gain share? What are some of the drivers that are driving that growth? What level of investment do you need to make to keep driving growth in the HPS business? Thank you. Yeah. Ruplu, as I think the word Rob used in this, in the script was remarkable performance in HPS, and that is what we are seeing, very strong growth overall. I would tie your question back to Lifecycle Solutions, though, in totality. Lifecycle Solutions, which is made up of the HPS business and ATS. We are expecting to grow at a 10% growth rate, over the next number of years. ATS is very much tied to the end markets that they're in, as well as the increasing level of outsourcing. Plus, we're having market share gains, in a lot of areas, which is helping us do very, very well this year, and we expect it will help us continue that growth going forward. On the HPS side is very much tied to data center growth rates. Our view right now is that data center build outs are going to continue at a double-digit rate, at least in the near term. As Rob had mentioned, we have a good level of visibility with our specific customers. So far in the first half of the year, Lifecycle Solutions, I think is up between 25% and 30% year-over-year revenues. Clearly we're operating above the 10% mark. We do anticipate some of that strength is going to continue into the back half of the year. The way to think about Lifecycle Solutions as we go into 2023 and beyond is that the 10% growth number we're feeling pretty confident on. Thanks for all the details. Appreciate it. Thanks, Ruplu. Your next question comes from Thanos Moschopoulos with BMO. Please go ahead. Hi, good morning. Rob, appreciate all your commentary on the macro. Maybe just to summarize, if we think about sort of the customer discussions you're having now versus three months ago, does it sound pretty consistent in terms of, you know, demand outlook and visibility or any significant changes you'd highlight just thinking to your conversations now versus last quarter? Yeah. Good question, Thanos. Thank you. You know, with all the noise in the market, we've just completed an exhaustive review of our entire portfolio by end market. You know, took the time to truly understand the demand drivers for each of our businesses. We understand the buying behaviors of our customers. We engaged customers at multiple levels and aligned with them on their outlook. We cross correlated their outlook with our views with our supply chain partners. You know, based on that, the message to your point has been fairly consistent quarter- over- quarter. You know, we have at least through the end of 2022 confidence in our outlook. As such, you know, we raised our expectations for the full year. In the midterm, you know, we think our portfolio is fairly resilient. Remember, this is, you know, what we're coining the New Celestica. We're a much more diversified business Lifecycle Solutions in Q2 with 67% of our business, and our strategic goals are to take it north of that. We're not in consumer-oriented markets. We're more insulated from a downturn. We've been operating, you know, very well with our Celestica Operating System, which has been a proven model to kind of manage supply chain constraints and some of the other macro issues. Again, the resiliency of our portfolio will be really a function of the depth and the duration of any potential recession. You know, based on the homework that we've done and the conversations we have, you know, for 2022, we feel pretty good. Moving into 2023 and 2024, we think we have a fairly resilient portfolio. Yeah, it's helpful. On the Q3 guidance, you're guiding for revenues to be roughly flat sequentially, though I thought that you've been supply constrained, and it sounds like the supply backdrop is getting a little bit better. Why would that not lead to a sequential revenue uptick or are there other kind of puts and takes to think about in that regard? Yeah. Thanos, I think it's really an end-market-by-end-market conversation. We are starting to see some levels of improved material supply. What that's turning into, though, is a reduction in lead times, not necessarily that we're able to secure materials immediately. We think the 70/25, but what I would really point you towards less about the sequential revenue growth, but the year-over-year revenue growth at 18%, it is still a tremendous amount of growth on a year-over-year basis. That growth, thankfully, is being fueled across our end markets in both HPS as well as ATS. The other thing I'd also mention though is PCI. We did talk about how the impact in the second quarter was negligible, but the revenue impact in the back half of the year is expected to be less than $100 million. We are seeing that impact in the third quarter. Really happy that we're able to continue to maintain very strong profitability despite those inefficiencies. Great. I'll pass along. Thanks. Thanks, Thanos. Your next question comes from Jim Suva with Citigroup. Please go ahead. Thank you, and congratulations to you and your team. As we look at your strong results and your guidance and outlook, I just want to get a little bit of commentary on color of your discussions you're getting with your customers. Are they all kind of like business is good, supply is short, we just wanna, you know, get stuff into the fulfillment system? Or is there any kind of overview or a little bit of, you know, tempering about macro concerns as we've heard from some other companies about some macro concerns? Hi, Jim. Yeah, the conversations we've had are really the former. You know, we have across Capital Equipment, Industrial, A&D, Health Tech, and our HPS business. You know, our customers are very eager to get their product. We have strong backlogs. We're still material constrained, although slowly easing across all of these product lines. They're fairly bullish in the short term. We're talking to them about the midterm, and it's a market-by-market dynamic. But in most cases, in these markets, you know, HPS specifically, you know, they're telling us these are not short cycle decisions that they're making. That the investment in the cloud and data center expansion, they view as strategic investments. They're, you know, underpinned by growth in cloud, by advertising, by augmented reality. All these they view as strategic anchors, and that's something they don't want to fall behind, you know, through any environment. They're also pretty flush with cash, this customer base, so they're continuing their investment. You know, similarly in Capital Equipment, leading-edge equipment is still in short supply, largely driven by some of the data center customers for some of this, leading-edge componentry and industrial. Once again, we're largely our growth logic comes from green energy. We're very materially constrained right now and very strong backlogs in A&D, a long cycle business. Health tech, as you mentioned, you know, is fairly, you know, recession-proof type of segment. Based on our mix of business, the conversations that we're having with them is business as normal. They are concerned about the macro environment, but they're asking us to fulfill their demand pretty quickly. Jim, one thing I would maybe just add to Rob's comments were, you know, the backlog for many of our customers continues to be multiple quarters out, and we have many of our customers who are still asking for more product than we're able to deliver. Of course, the gating item there is material constraints. An interesting point is that we continue to see some customers want to pay expedite fees in order to get the materials. Although there are slowdowns in parts of the macroeconomic environment, we're not necessarily seeing it at a grand scale within our customer base. Okay. I have a quick follow-up. The component constraints, are they kind of the similar ones as like last quarter, kinda like power management type items? Or have some resolved and others popped up about new constraints just generally speaking? I'm just kinda curious. They're generally consistent. Jim, we're seeing you know same areas, passives still have high lead times and semiconductors still have high lead times. We've seen the lead times stabilize. They haven't gotten any worse. We're seeing a little bit, as Mandeep mentioned, improvement in availability. We're also seeing our suppliers are saying some slots are opening up at the foundries, which is enabling them hopefully to fill supply a little quicker than originally anticipated in the future quarters. Again, we're cautiously optimistic, but it's the same type of componentry as previous quarters. Thank you so much for the clarifications. Again, congratulations to you and your team at Celestica. Thank you, Jim. Ladies and gentlemen, as a reminder, if you do have any questions, please press star one. Your next question comes from Todd Coupland with CIBC. Please go ahead. Yes, good morning. I wanted to ask you about two things. First, on HPS, in your business review, what kind of recession scenario would cause that business to pull back? It sounds like, you know, modest recession not gonna have an impact. Have you had those kinds of conversations with customers on what would be required to see actual pullback in that business? Yeah, we've had, Todd. You know, right now, what we're seeing from them is good order visibility, approximately six months, sometimes more. Mandeep mentioned earlier that, in many cases they're still paying premiums, they're still authorizing air freight, which means that they have confidence in. They have a true requirement. You know, the only change in the conversation right now is based on a little bit more availability of supply. We have seen some rebalancing of supply. This is the case where they might have too many optics versus the number of switches. Again, the impact on us has been fairly moderate, because we tend to focus more on the higher value areas of the data center. The rebalancing has been more on the lower value areas of data center. In terms of them pulling back, they haven't mentioned any of that. They all view this as long-term cycle decisions. You know, they get land, they construct a business, they start building the infrastructure. You know, based on these lead times, to construct and expand data centers, it doesn't feel like it's going to be a falling off the cliff or a sudden reverse pace. If anything, it might be a gradual slowing down over time. You know, in the midterm, we certainly haven't seen any signs of that. When we think about the customers here, you know, it's the hyperscalers, but it is for the web services and not the social media platform. That's the right customer base to think about. I would think it's all service provider customers, including everyone that you mentioned. Okay. As a reminder, Todd, we do business with eight of the top ten. Yeah. Okay. My second question was on working capital. It's great to see the free cash flow, but if I did my math right, the inventory investment was, you know, more or less offset by stretching accounts payable. Is that how you sort of get there in the second half of the year if you still have to make those investments in inventory? Really it's, you know, the step up in free cash flow is when that starts to unwind, whenever that happens. Just a little color on that. Thanks. Yeah. It's a dynamic situation that we're working through quarter by quarter. The other two items that you didn't mention there, Todd, were deposits as well as receivables. On the deposit side, we're very pleased with the performance that we've been seeing. Year-over-year, our deposits were up $325 million, and we continue to work with our customers as we make strategic decisions around inventory buying on how much of it can be customer funded. The other point, of course, is receivables, and we're pleased with the receivables performance. If you look at the breakdown on the cash cycle days, we are seeing an improvement on a year-over-year basis. We need to be very disciplined on managing our working capital in this type of environment. So far, we're pleased with the performance, and we think that discipline is, as it continues into the second half, should lead towards positive free cash flow. Great. Thanks for the color. Thank you. Your next question comes from Paul Treiber with RBC. Please go ahead. Oh, thanks very much, and good morning. Just wanted to follow up on a couple of comments that you made on the impact of the fire in Indonesia. You know, it looks like guidance for 2022 includes the less than $100 million revenue impact. Then you also mentioned that the cost of it or the impact would be covered by insurance. How do we think about the impact to EPS this year? Yeah, good morning, Paul. We're pleased that we have insurance coverage for almost all of the exposure within the Batam facility. One of the things you'll see as you have some time to start going through our financial statements is we had about a $90 million inventory impact, all of which we believe is covered by insurance. We're actively in the process right now of working with our insurers. There is some level of business interruption insurance, and what that really means is that we don't expect that the fixed cost structure that we have tied to the Batam facility is gonna put a material drag on the earnings. Right now, I think the way to think about it is that the contribution from that $100 million will be typical flow-through rates that you would normally see. If you know, maybe 5%-10% of an impact that goes with that $100 million. We do believe that the insurance is gonna help us not move into a loss position in the site in the back half of the year. Okay, that's helpful. Then secondly, when you look at the bigger picture outlook for the second half of the year in terms of, you know, revenue versus costs, you know, you raised revenue guidance, but then just tightened EPS guidance. You know, what is it you're seeing on the cost side that doesn't allow the higher revenue that you're guiding to drop to the bottom line and also drive higher EPS versus your previous range? Yeah. When we were doing $1.55-$1.75 at the beginning of the year, Paul, it was a combination of scenarios between margin and revenue. I think more importantly, what I would talk to is the current performance. At 4.8% EBITDA in the second quarter, which is also our guide now for the third quarter, that's the second highest EBITDA performance the company's had since it's IPO'd. The highest was in the fourth quarter of last year at 4.9%. Pretty close. Maintaining that 4.8% in the third quarter, and you can make your assumptions on the fourth quarter, what it implies is that we are operating in the 4.5%-5% range, which is the highest the company's ever done on a full year level. The EPS lends itself towards the higher end of that range. Do we have the ability to maintain this margin performance in 2023? We're certainly targeting to do so. You know, I'd also point you back to our commentary on how we look at the future. We are continuing to target 10% EPS growth off of that number going into 2023. Steady as it goes, I think is how we're looking at it, and we're pleased quarter by quarter how the performance is coming in. Just lastly for me, just also on the cost side as well, can you just provide an update on what you're seeing in terms of wage pressures and other costs, you know, excluding supply chain, you know, other costs that may be impacting your fixed cost structure and how you're managing that? Yeah. Hi. We've certainly seen wage inflation across the board. For the most part, we've been trying to recover that and have been recovering that in our forward pricing. Many of our contracts have quarterly repricing points, and the ones that don't, you know, we're engaging with our customers in these discussions to put in premiums or things along those lines to cover the cost of inflation, labor inflation in our forward pricing. Okay, thank you. I'll pass the line. Your next question comes from Daniel Chan with TD Securities. Please go ahead. Hey, Mandeep. You guys are talking about improving supply constraints. As we start to see that inventory unwind, and you have more flexibility on your use of capital, what should we expect that to your share buybacks to accelerate or is there other thoughts for that capital as the overall environment improves? Yeah. Good morning, Dan. I'd point back to our capital allocation remarks. As you know, we have a very strong track record on share buybacks. We've returned more than 50% of our free cash flow over the last 10 years or so back to shareholders. Our approach towards free cash flow generation and capital structuring is relatively consistent with the last few quarters. We wanna generate strong positive free cash flow, but our focus in the near term is really to pay down debt. We see multiple benefits from doing that. Of course, in a rising environment, it becomes a bigger drag on your P&L from an interest expense perspective. We'd like to manage that as we focus on growing EPS, but it also allows us to continue to build dry powder. We have both the balance sheet as well as the management capacity to take on more business. You know, for the right target, we are willing to act, and so it gives us that optionality. That being said, on the share buyback programs, you know, since we launched the program in the fourth quarter of last year, we bought back 1.7 million shares, and we have done it at a very favorable price as the market has had depressed multiples, we think. We'll continue to be opportunistic as we look forward. As a reminder, we actually have the ability to buy up to 6 million shares under this program, which doesn't expire until the end of November. We've bought back, again, less than 2 million. We have the ability to act when we need to act, but in the absence of a very volatile stock, our preference is to put that down towards debt repayment. Great. Thank you. Thanks, Dan. Mr. Mionis, there are no further questions at this time. Please proceed. Thank you. We continued our strong start to the year by posting another solid quarter of results. We continue to execute well through a difficult supply chain and macro environment. I'm also pleased we're able to raise our financial outlook for the full year and feel confident in our customers' demand profile in order to do so. I'd like to thank our global team for another strong quarter, and thank you all for joining today's call. We look forward to updating you as we progress throughout the year. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.