Manny Panesar - Director of Investor Relations Darren Myers - CFO Craig Muhlhauser - President and CEO.

Daniel Chan - Scotia Bank Tim Yang - Citigroup Thanos Moschopoulos - BMO Capital Markets Brian Alexander - Raymond James Larry Zhong - Deutsche Bank AG Unidentified Analyst - RBC Capital Markets Todd Coupland - CIBC World Markets Naser Iqbal - Salman Partners Robert Young - Canaccord Genuity Matt Sheerin - Stifel Nicolaus.

Good afternoon. My name is Kirk, and I will be your conference operator today. At this time, I would like to welcome everyone to the Celestica Inc. Fourth Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. [Operator Instructions].

Thank you. Manny Panesar, Director of Investor Relations, you may begin your conference..

Thank you, Kirk. Good afternoon and thank you for joining us on Celestica's Fourth Quarter 2014 Earnings Conference Call. On the call today are Craig Muhlhauser, President and Chief Executive Officer and Darren Myers, Chief Financial Officer. This conference call will last approximately 45 minutes.

Darren and Craig will provide some brief comments on the quarter, and then we will open the call for questions. During the Q&A session please limit yourself to one question and a brief follow-up. We will be available after the conference call for additional follow-up.

Please visit www.celestica.com to view the supporting slides accompanying this webcast.

As a reminder, during this call, we make forward-looking statements related to our future growth, trends in our industry, our intentions concerning the return of capital to our shareholders, our financial and operational results and performance, and financial guidance that are based on management's current expectations, forecasts and assumptions that are subject to risks and uncertainties that could cause actual outcomes and results to differ materially.

Please refer to our cautionary statements regarding forward-looking information in the company's various public filings, including the cautionary note regarding forward-looking information in today's press release.

We also refer you to the company's various public filings which contain and identify material factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements and which discuss material factors and assumptions on which such forward-looking statements are based.

These filings include our annual report on Form 20-F and subsequent reports on Form 6-K filed with or furnished too with the Securities and Exchange Commission. And our annual information form filed with the Canadian Securities Administrators, which can be accessed, respectively, at sec.gov and sedar.com.

During this call, we will refer to certain non-IFRS financial measures, which include adjusted gross margin, adjusted SG&A, operating profit or adjusted EBIAT, operating margin, adjusted net earnings, adjusted EPS, return on invested capital or ROIC, inventory turns, cash cycle days, free cash flow, and adjusted tax rate.

These non-IFRS measures do not have any standardized meaning under IFRS and may not be comparable with other non-GAAP or non-IFRS financial measures presented by other public companies, including our major competitors.

We refer you to today's press release, which is available at celestica.com for more information about these and certain other non-IFRS measures, including a reconciliation of the historical non-IFRS measures to the corresponding IFRS measures, where a comparable IFRS measure exists.

Unless otherwise specified, all reference to dollars in this call is to U.S. dollars. I will now turn the call over to Darren Myers..

Thank you Manny and good afternoon everyone. Celestica continue to deliver solid operating margin and free cash flow performance in the fourth quarter while continuing to return capital to shareholders.

Fourth quarter revenue of $1.424 billion was in line with the midpoint of our guidance range as strength in our storage business offset demand softness in telecom and solar. Revenue in the quarter was relatively flat compared to the third quarter of 2014 and decreased 1% compared with the fourth quarter of 2013.

Let me start with a few highlights for the fourth quarter. The non-IFRS operating margin of 3.6% increased 30 basis points compared with the fourth quarter of 2013. IFRS net loss of $4.4 million or $0.03 per share includes a non-cash goodwill impairment charge of $41 million or $0.23 per share.

Adjusted earnings per share of $0.23 was $0.01 below the midpoint of our guidance range and included a negative impact of $0.02 per share related to higher income tax expense resulting from certain foreign exchange fluctuations. We generated $60 million of free cash flow and we achieved ROIC of approximately 21%.

Before discussing the fourth quarter details I’d like to highlight some of the financial results for the full year.

In 2014, our revenue mix continued to improve with growth in our strategic areas of storage and diversified offset by reductions in the lower margin areas of server and consumer while we continue to experience lower demand in our telecom end market. Full year 2014 revenue of approximately $5.6 billion decreased 3% compared to 2013.

2014 IFRS net earnings were $108 million or $0.60 per share compared with $118 million or $0.64 per share in 2013. Adjusted operating profit or adjusted EBIAT grew 15% year-over-year. Full year 2014 adjusted operating margin of 3.5% increased 50 basis points compared to 2013 despite lower revenue year-over-year.

Adjusted earnings per share were $1 for the year, an improvement of 20% year-over-year. We generated free cash flow of $177 million, an increase of $79 million or 81% from 2013. We achieved full year ROIC of 19.5%, up from 17.9% in 2013.

And we continue to return capital to shareholders, repurchasing and cancelling approximately 8.5 million of our subordinate voting shares for approximately $91 million. Moving on to the fourth quarter details, looking at our revenue from an end market perspective.

Relative to our beginning of quarter expectations, strong revenue performance from our storage business was offset by the continuing demand softness in our telecom end market as well as lower than expected revenue from one of our solar programs. Our diversified end markets comprised 27% of our total revenue for the quarter.

Diversified revenue decreased 9% sequentially which exceeded our expectation of a mid single-digit decrease largely due to reduced volumes in solar.

Compared with the fourth quarter of 2013, diversified revenue was relatively flat as growth from new industrial programs was offset primarily by lower volumes in solar and the timing of new program ramps. Our communications end markets represented 40% of total revenue and was relatively flat from the third quarter.

While we had expected modest sequential growth at the beginning of the quarter, we experienced lower demand from a few customers. Compared with the fourth quarter of 2013, communications revenue declined 5% primarily due to lower overall demand. Our storage business had a very strong quarter representing 20% of total revenue.

Storage revenue increased 20% on a sequential basis, in part due to seasonal demand but also strength from our certain new programs. Compared to the fourth quarter of 2013 our storage business experienced 33% growth driven by new programs across a number of customers.

Fourth quarter revenue from our server end market representing 10% of total revenue for the quarter increased 7% compared to third quarter which was consistent with our expectations. Server revenue decreased 9% compared with the fourth quarter of 2013 primarily due to lower overall demand.

And finally our consumer end market representing 3% of total fourth quarter revenue decreased 27% on a sequential basis consistent with our expectations. Consumer revenue for this quarter decreased 47% compared with the fourth quarter of 2013 primarily due to program completions and the de-emphasis of certain lower margin business in this space.

Our top ten customers represented 69% of revenue for the fourth quarter up 4 percentage points from the third quarter primarily due to strengths within our storage end market. For the fourth quarter and for the full year we had three customers individually contributing greater than 10% of total revenue.

For the full year of Cisco, IBM, and Juniper individually contributed greater than 10% of our total revenue. Moving onto to some other financial highlights for the quarter, adjusted gross margin of 7.5% was down slightly on a sequential basis due to onetime items recorded in the third quarter of 2014.

Adjusted SG&A expense for the quarter was $50 million which was within our expected range of $49 million to $51 million. SG&A expense increased sequentially mainly due to the timing of certain spending and a foreign exchange recorded in the third quarter.

Adjusted operating profit for the quarter was $51.5 million or 3.6% of revenue, a sequential decrease of 30 basis points largely due to the higher SG&A in the fourth quarter.

Compared with the fourth quarter of 2014 despite lower revenue, our adjusted operating margin increased 30 basis points driven by -- primarily by improved program mix and our continued focus on cost management.

Our adjusted tax rate in the fourth quarter was 20.1% above our estimated and annual range of 10% to 12% impacted by foreign exchange fluctuations, most notably the weakening of the Malaysian ringgit against the U.S. dollar.

Full year 2014 adjusted tax rate of 8.6% was below our expected annual range of 10% to 12% mainly due to net income tax recoveries recorded in the first quarter of 2014. Adjusted net earnings for the fourth quarter were $40.3 million or $0.23 per share compared to $44.4 million or $0.24 per share for the same period of 2013.

Despite the higher adjusted operating profit in the fourth quarter of 2014, adjusted net earnings were lower year-over-year mainly due to tax recoveries recorded in the fourth quarter of 2013.

Fourth quarter IFRS net loss of $4.4 million or $0.03 per share includes a non-cash goodwill impairment of $41 million or $0.23 per share relating to our semiconductor business.

Fourth quarter IFRS net earnings decreased $27 million or $0.15 per share compared to the fourth quarter of 2013 mainly due to the non-cash goodwill impairment charge partially offset by lower restructuring charges in the fourth quarter of 2014.

The decrease from the same quarter of 2013 is also due in part to certain income tax recoveries recorded in the fourth quarter of 2013. Let me provide some additional color on the impairments.

Our semiconductor business which arose from acquisitions in 2011 and 2012 has experienced operating losses and has continued to underperform as mentioned during our previous conference calls.

Performance has been impacted by overall demand weakness in the semiconductor industry, the cost of investments, as well as operational inefficiencies and commercial challenges associated with the ramping of new facilities and new programs for a particular customer.

As a result upon completion of our 2014 annual impairment assessment we recorded a non-cash goodwill impairment charge of $41 million for our semiconductor business. We remain committed to the semiconductor capital equipment space and are working with our customers as well as driving operational initiatives to accelerate our progress.

Turning to working capital performance, we had strong working capital performance in the fourth quarter. Our inventory decreased $56 million from the end of the third quarter to $719 million at December 31st. The inventory turns for the quarter improved to 7.1 turns from 6.8 turns in the third quarter.

Capital expenditures for the fourth quarter were approximately $17 million or 1.2% of revenue within our estimated range of 1% to 1.5% of revenue. For the full year our capital expenditures were $61 million or 1.1% of revenue. Cash cycle for the fourth quarter was 44 days, one day lower compared to the third quarter.

For the fourth quarter we generated $60 million of free cash flow. Moving on to our cash position, our cash position remains strong. Our cash balance decreased $30 million from the end of the third quarter to $565 million at December 31st, as we increased the cash outlay for share repurchases.

At the end of the fourth quarter we did not have any outstanding debt and our credit facility remains undrawn. During the fourth quarter we repurchased for cancellation 2.2 million subordinate voting shares for $24 million at a weighted average price of $10.52 per share.

We also launched a $50 million free funded program share repurchase or PSR as part of our normal course issuer bid. Subordinate voting shares repurchased under the PSR expected to be cancelled in the first quarter of 2015.

For the full year 2014, we spent $91 million to repurchase and cancel 8.5 million subordinate voting shares or approximately 5% of our beginning of year outstanding shares. At the end of the fourth quarter we had 174.6 million subordinate and multiple voting shares outstanding. Moving forward to our guidance for the first quarter of 2015.

For the first quarter we are projecting revenue to be in the range of $1.275 billion to $1.375 billion. At the midpoint first quarter revenue is projected to increase 1% compared to the first quarter of 2014 and decrease 7% sequentially in part impacted by seasonal demand.

At the midpoint of our guidance we expect adjusted operating margin of approximately 3.2%, an improvement of 10 basis points compared to the first quarter of 2014. First quarter adjusted earnings are expected to range from $0.18 to $0.24 per share.

Our projected adjusted SG&A expense for the first quarter is in the range of $49 million to $51 million and we estimate an annual adjusted tax rate range of 11% to 13%. I would now like to turn the call over to Craig for some comments on the full year and the outlook for our business. .

Thank you Darren, and good afternoon to everyone on the call, and thank you for joining us today. Overall Celestica continued to deliver solid operational performance in the fourth quarter and throughout 2014, despite a challenging business environment.

In 2014 we successfully improved our business portfolio and drove productivity across the business delivering year-over-year growth in adjusted operating profit, return on invested capital, and free cash flow.

And we increased our investments to accelerate the diversification of our company while returning more capital to shareholders through share repurchases. While we are very disappointed with the partial goodwill impairment in our semiconductor business in the fourth quarter, we remain committed to this market and have continued to win new business.

While our progress in this area has been slower than expected, we reduced our quarterly losses through 2014 and continued to improve our quality and delivery performance while ramping current and new customer programs.

We are forecasting continued operational and financial improvements in our semiconductor business for the first quarter as we work closely with our customers to accelerate our progress throughout 2015.

Notwithstanding our semiconductor business our overall operational performance remains strong as evidenced by solid operating results for the fourth quarter and for 2014 with year-over-year improvements in adjusted operating margin, adjusted earnings per share, and return on invested capital.

For the full year we also had very strong free cash flow performance generating $177 million of free cash flow, an increase of $79 million from 2013. Returned $91 million of capital to shareholders through share repurchases which was more than twice the amount we returned to shareholders in 2013.

Turning to our near-term outlook in our end markets, while we had the typical seasonal impact from the fourth quarter to the first quarter we are projecting modest year-over-year revenue growth at the midpoint of our guidance range.

For the first quarter we are expecting year-over-year revenue growth in our diversified business in the mid single digit range. We are projecting sequential and year-over-year growth in our semiconductor business driven by new programs and we are also expecting year-over-year revenue growth in our solar and commercial aerospace businesses.

On a sequential basis diversified is expected to be relatively flat as expected growth from semiconductor and solar is offset by the timing of new program ramps from various industrial and healthcare customers.

As a result of the higher anticipated revenue and continuing operational improvements in our semiconductor business we are expecting a positive gross profit contribution from semiconductor in the first quarter of 2015 compared to a loss of $1 million in the fourth quarter of 2014.

Our communications end market is expected to remain essentially flat compared to the first quarter of 2014 and sequentially decreased in the mid single digits. On a year-over-year basis strength from our enterprise customers is offsetting by lower Telco demand.

Our communications end market is continuing to experience overall demand volatility and softness specifically in the carrier space. Our storage business in the first quarter is projected to grow in the low double-digits year-over-year driven by new programs.

However, on a sequential basis storage is expected to decline in the high double-digits due to a very strong fourth quarter as well as seasonal impacts. Our server business is expecting year-over-year growth in mid single-digits resulting from the ramping of a new program win.

On a sequential basis server is expected to remain relatively flat as a new program ramp is offset by seasonal impacts. And finally our consumer business is expected to decline slightly on a sequential basis mainly due to seasonal impacts.

In summary, while end market demand continues to be dynamic in terms of volume and mix, we are expecting year-over-year revenue growth in the first quarter in three of our end markets.

With the positive momentum for the second half of 2014 with solid operating results having effectively managed the portfolio towards our targeted revenue mix and the plans we have established for all areas of our business, we will continue to invest in our diversification strategy and are excited about the opportunities that lie ahead for Celestica in 2015.

We will continue to focus on accelerating our progress and are targeting year-over-year operational and financial improvements while continuing to invest in the business and generate returns for our shareholders. Our priorities are clear, the profitability improvements in 2014 were in part due to improved revenue mix.

Our diversified end markets grew 7% and contributed 28% of our revenue in 2014 up from 25% in 2013. While we made progress in diversifying our revenue and customer base in 2014, we continued to drive further revenue diversification in our strategic areas.

While we had a solid bookings performance in the second half of 2014, we are also increasing our investments in people and resources throughout the world to further enhance our target market and customer coverage to accelerate our business development efforts to increase the bookings in 2015.

Accelerating the turnaround in our semiconductor business continues to be a top priority for the company. The start of the year for our semiconductor business is encouraging, the projected sequential revenue growth in the first quarter with continued improvements in quality and delivery performance.

We are also planning to increase our investments in our joint design and manufacturing offerings to capitalize on the momentum we have established in 2014.

While increased our investments in 2014 compared to 2013, we are targeting further investments in JDM which has been a major contributor to our success in our storage business and expand the service and solutions offering to other end markets. Flawless execution remains a minimum requirement of our customers.

And while we are pleased to be recognized by many customer and industry awards in 2014, we continue to implement numerous initiatives and invest in IT tools and analytics to raise the standards of operational excellence for our industry.

In conclusion I would like to thank our talented and dedicated employees for their commitment and passion in driving our customers success and for delivering meaningful year-over-year improvements across our key operational metrics in 2014.

I look forward to 2015 as we continue to drive higher value for our customers and our shareholders and that concludes our prepared remarks. Kirk please open the call for questions. .

[Operator Instructions]. Your first question comes from the line of Daniel Chan from Scotiabank, your line is open. .

Good afternoon. Thanks for taking my question. I just had a question about the semi cap space, semi cap space seem to be pretty strong last year.

Can you elaborate exactly what specifically you are seeing that’s causing weakness in that space for you guys?.

Well we are actually seeing demand strength, so in the first quarter of the year we are expecting double-digit growth in semiconductor and we are seeing demand strength and we expect that to continue at least through the first half of 2015. .

Okay, so I guess my follow-up then is 2015 seems to be a pretty strong quarter for semi cap. Samsung is going to be billing on you, and your factory was seeing pretty strong forecast from some of the semi cap vendors.

Do you believe you are going to be able to capture a lot of that growth this year and if you can give us an update on progress on kind of fixing up that semi cap business you have?.

Well we believe that the demand growth we’re seeing is in relation to those kinds of programs and projects and it will be -- we have a forecast and we have commitments from our customers to capture a share of that demand. And obviously it will be tied to continuing the improvements in our operational performance. .

And Daniel, it is Darren here. I would just add to that and we talked a lot about the losses at the gross margin level last year. We are seeing improvements. As Craig mentioned in his prepared remarks we expect to be positive gross profit in the first quarter.

So making progress we grew the overall business by 18% last year albeit from a slower starting point but making progress. .

Thank you. .

Thank you..

Your next question comes from the line of Jim Suva from Citi, your line is open. .

Hi, this is Tim Yang on behalf of Jim Suva. Thanks for taking my questions. Can you give us an update on JDM project, what’s the portion of the JDM related revenue as a percentage of total sales for the past quarter? Thank you..

Well, we don’t strike out JDM as a separate segment in the business. Obviously the bulk of our JDM opportunities today are coming from our storage segments so you can see the market share growth we are seeing which is beyond the industry growth in the JDM space.

Obviously that’s expanding into the server space, into the communication space, and then as we see convert systems becoming an important part of the future strategy of many of the cloud providers it will be expanding into that space.

So it will become a growing in more material part of the company but today we are starting from a relatively small base limited to the storage segment primarily with limited participation in the server space. .

Meaning it’s less than 10% of total revenue?.

That’s true, yes. .

Got you, thanks.

Just one more question on the communication segment, do you think the weakness more from top customers or is it more of an industry wide under performance, thanks?.

I think what we are seeing at least in the case of customers that we are serving we are seeing its coming from an industry in North America.

It is coming from the carrier spending being cut due to both short term refocus on whether or not the infrastructure is going to look different as they look to the future and certainly we see a major impact for what’s happening with NTT Docomo in Japan where they have pretty much cut back on most of their spending as they reassess their capital requirements going into the future.

So I’d say it’s more of an industry phenomenon then a customer specific phenomenon right now. But it’s certainly affecting us in that space. .

Got you, thanks. .

Your next question comes from the line of Thanos Moschopoulos from BMO Capital Markets your line is open. .

Hi, just to follow on the semi business, can you just clarify the timing of why you are taking the restructuring charge or the impairment charge now, did your outlook change it off from last quarter or is it more just that the year-end process forced you to reevaluate the goodwill you were carrying?.

Hi, Thanos. No, its more of the later as part of our annual impairment testing looking at the future cash flows of the business unit. They just could not sustain the -- based on our projection sustain the goodwill that we have on the books. And there is further disclosures on that in the statements and in the MD&A that I would refer you too. .

Okay, so our takeaway should be that relative to last quarter the outlook hasn’t deteriorated if anything might be improving a little?.

I would say that it hasn’t deteriorated since last quarter and we are showing signs of improvement here as we go. .

Okay and then just very quickly on the enterprise networking portion of the communication segment, it sounds like you are seeing good demand there?.

We’re seeing good demand there. I mean obviously in the fourth quarter and it is being offset by significantly reduced demand in the Telco space however. .

Okay, thanks for that one. .

Your next question comes from the line of Brian Alexander from Raymond James, your line is open. .

Good evening. Maybe a question on the overall demand environment, I just want to make sure I am capturing your comments correctly Craig.

It sounds relatively seasonal from everything you’ve said with maybe the exception of the carrier business, I am just curious if you’ve seen any change in tone from customers order patterns more broadly and any impacts from currency with a lot of volatility in currency lately, has that affected demand or timing from any of your customers beyond the tax rate issue that you called out?.

No, I think Brian your assessment is totally correct. I mean what we are seeing is more of a seasonal impact here. We are seeing the implications for Celestica being driven largely by new program ramp timing.

And then obviously as we heard on the semi space some of the markets are actually firming up so we are not seeing any sort of negative signals on the overall demand environment other than the carrier space. And that I think is really a reassessment of infrastructure requirements for many of those large scale carriers..

Right, okay that makes sense. And then just back on the goodwill right now, how much of that was related to the semi equipment assembly business versus the precision machining.

I know you had two separate acquisitions during that time frame and when you said you had $1 million loss was that gross profit or operating profit Darren and then just finally related to that what is your latest timing on getting that business up to corporate average profitability? That’s it thanks..

That’s it and one question Brian. In terms of the break down between the two, we look at it as a total business but certainly I’d say that the machining was more capital intensive in longer time to qualify is more of a challenge then on the assembly side. So that would have driven most of it.

In terms of the improvement, we are not giving a specific time. We are taking it one quarter at a time but we will be looking to improve the performance every quarter and operating margin of that business. And your last clarification that was gross margin that we were referring to. .

Great, okay. Thanks for remembering all those. .

Alright, thanks Brian. .

Your next question comes from the line of Sherri Scribner from Deutsche Bank, your line is open. .

Hi, this is Larry Zhong calling on behalf of Sherri Scribner. Your storage segment had seen strength growing double-digits over the past four quarters.

I am just wondering what’s driving this growth and how much longer do you expect this to continue?.

Well primarily new programs and market share gains through either new customers or existing customers that are either resourcing or getting awarded new program. So we expect the growth to continue certainly maybe not to the extent that we’ve seen in the most recent quarter but obviously we expect that growth to continue throughout 2015..

Okay, great. And just following up on that, the diversified segment has performed well.

Do you see this growth continuing forward as well and do you expect like mix in this segment to increase?.

Well obviously we are rebounding to 7% growth here in the guidance in the first quarter of the year and we expect that to continue to improve as we go through 2015..

Okay, great. Thank you. .

Your next question comes from the line of Nick Stevenson [ph] from RBC Capital Markets, your line is open..

Hey guys, thanks for taking my question.

Just quick one on the store side as well, looks like you guys are guiding for a double-digit decline here so is that because there is a significant demand uptick in December or if you guys are seeing softness in March?.

I mean it’s really the strong quarter we had this quarter. I mean as Craig mentioned we are seeing good strong year-over-year growth in Q1. It is just we had a very strong Q4 seasonality..

Okay and then going forward it looks like you guys going down at 3.2% on the operating margin side, so at what level do you guys think you guys can get back to that 4% kind of target range?.

Well we are still comfortable at the 1400s to be in the 3.5% to 4% starting at the 3.5% and you are seeing the margins were up quarter-to-quarter just based on the leverage of the revenue. So still comfortable at 3.5% at 1.4 billion. .

Okay, thank you. .

Thank you..

Your next question comes from the line of Todd Coupland from CIBC, your line is open. .

Good evening everyone. I just wanted a clarification on the semi cap loss.

So in prior quarters I think you talked about losing 2 million a quarter, so the 1 million that you lost at the gross profit level would that be comparable to the prior comments?.

Yes..

Okay and so -- and then you are projecting that essentially in two quarters has gone from 2 million loss to breakeven in the first quarter?.

That’s right Todd..

My second question has to do with the tax rate and its volatility. Should we, I know you have guided up a couple points for the year but given the strength of the U.S.

dollar and like who knows what’s going to happen to FX, could we see a volatile tax rate throughout the year, could you just give us a little color on that, thanks?.

Todd we are always dealing with quarterly volatility in tax rate and that’s why we guide to an annual number. Certainly this quarter we saw 7% change in the Malaysian ringgit against the U.S. dollar so that created a taxable foreign exchange. So it’s more the magnitude of the change in the quarter.

I certainly don’t expect, I am not predicting where foreign exchange rates will go but that type of movement we have not seen before. And all in all you saw at the midpoint of our tax range 1% increase in the tax rate. So relatively close to this year’s rate. .

Okay, great. Thanks a lot. .

Thanks Todd..

The next question comes from the line of Naser Iqbal from Salman Partners, your line is open. .

Thanks for taking my question.

I am just following up on the semi cap, its improving but what do you think given that it’s an issue with a specific plant, what do you think will it take, is it a combination of a demand improvement or do you needs more program wins and how much of the demand environments of an improvement do you need to bring that to where you think it could be a contributor to earnings on a net basis?.

Naser, good afternoon, it is Craig here. Basically it’s not a demand issue it’s a supply opportunity and its operational improvements and quality delivery cycle times that meet the demand, the tack times of our customer requirement so. Its execution, we have got a team in place that has that really in hand.

We’ve got a program in place to make sure we are de-bottle necking those, that facility specific facility you mentioned. And we, as Darren mentioned, we had a very deliberate quarter-by-quarter improvement plan. Obviously there is no quick fix. It’s a measured improvement overtime.

But it’s -- we have a very good demand outlook in the current backlog of opportunity and its all around the execution side of the business, so that’s where we are. .

Okay, I think that helps that it isn’t execution issue..

For that particular facility we are also undergoing some changes in the network design to get our capacity utilization up in the various locations that we are going to be operating. .

Right, and I think on the prior call you talked about that once you get it to where your target is that it could add about 50 basis points in the operating margin, does that still hold?.

Yes, I would say it does from the Q4 position as we improve that, that amount will diminish. But from where we’re in Q4 the target would be 50 basis points. .

Okay. .

So lot of leverage there. .

Right and I just for my follow up question, as it relates to the demand environment I guess we are seeing lot of different moving parts between Europe and China but just from your owned, what you can control how much of your top line growth is dependent on the macro and I think Craig you talked about a lot of program ramps coming in 2015 and in 2016.

So growth for this year do you think it’s a 50:50, you need 50% from the demand environment and 50 from program ramps or do you think program ramps could more than offset what’s happening on the global macro?.

It’s very difficult to forecast sort of that far in advance for 2015. Take up rates is the key assumption, revenue realization is the real operative variable that determines where we end up. So its revenue realization from the existing programs and the programs we ramp.

And it is really the take up rates for those programs and products those customers are developing. And we think we picked the winners but it is very difficult for us to pick the end market choices that are made today.

But we are bullish on the prospects, we design our strategy to target the winners, leaders in outsourcing, and you see even from the customers that Darren mentioned we are serving the market leaders and with the right programs and with JDM offerings and we think we have the best balance of risk to manage that revenue risk as we can get and continue to improve.

But it is just difficult for me to give you an absolute rock solid sort of percentage and stuff, how much is new, how much is existing, and how much revenue you are going to deliver this year. .

No, at least that helps us I think frame our outlook so appreciate that. Thank you very much..

Thank you again Naser. .

[Operator Instructions]. Your next question comes from the line of Robert Young from Canaccord Genuity, your line is open. .

Hi, good evening. .

Hi Rob. .

You had said you are comfortable with 3.5% operating margin at $1.4 billion and it looks like we may be moving into growth in 2015 just based on Q1 and a previous -- at 50 basis points is out there to win in the I guess if semi cap gets back to or gets to a good level.

So are there any bracket or an envelope around operating margin if we start to see revenue get past $1.4 billion on a quarterly basis, are there anything you can help with modeling there?.

Rob, I would say at this point, I mean I am not going to give you color on the higher end, there is just too many variables at play from a mix perspective from volume where it happens. Just a number of factors as well as investments we are making in sales and R&D.

But 3.5% to 4% continues to be the range that we are looking to operate in and as semiconductor improves then we get some volume and leverage on our SG&A. You will see the operating margin improve. It is really all I could provide you today, I think Rob. .

Okay, are there any other big categories of operating margin improvement beyond those, are there any other pieces to be won out there?.

Well there is continually ramping in business that we have and revenue realization for those and then it depends how the current programs do in the mix of those programs. And we are of course always looking for productivity and where we can further benefit our cost structure.

So, I mean we are looking at a number of areas to keep pushing our margin forward..

Okay, and then follow-up would be couple of spots you mentioned solar as an impact.

I have never thought about as a large impact on the revenue, could you maybe give an update on why that was a factor this quarter, is it a meaningful impact? And then maybe one last little bit, just an update on the replacement for Craig, I didn’t see an update there so I assumed there isn’t one but if there is could you share it?.

Okay, well in terms of solar, solar is more of a project business. As you know we developed an investment here in Toronto to serve the Ontario Fit program. We are leveraging that facility and supplying programs and modules to other companies today.

It is in the double-digits on the revenue base in the overall scheme of things, but relative to diversified it has an impact in terms of the quarter-on-quarter and year-on-year revenue growth.

So, in terms of the succession here as we have publicly stated there is a search committee that has been formed by the Board and it is my intention to stay in this role with the company through the end of 2015. So, that's about the latest and best update I can give you. And hopefully there is news on that but when it comes it will be publicly made. .

And Rob just to further dimension the solar comment, I mean it is less than 3% of our business just to put in perspective for you. It just happened as Craig mentioned to be a big swing this quarter. .

Okay, great. Thanks guys. .

Thank you. .

Thank you. .

Your next question comes from the line of Matt Sheerin from Stifel. Your line is open. .

Yes, thanks and good afternoon.

Just a couple of quick ones from me, first is you mentioned that the three 10% plus core customers for the year were they the same three 10% customers for the quarter or was that different?.

We only provide for the full year but I mean they have been top customers through the year..

Okay, and in terms of your EPS guidance could you give us a share count approximation for that, what that is based on, because we know you have a buyback?.

About -- use 177 for your model. .

Okay, and then just lastly Craig, as you look and you sound optimistic in terms of some of the program ramps and some of the momentum in semi and some of other businesses, do you have any outlook that you can provide for the year in terms of growth prospects, do you think you can grow revenue for the year because one thing is that when you get to the June quarter you are going to have tough year-over-year accounts because I know you had some pretty big program ramps last June?.

Yes, I mean I think the message is we are taking it one quarter at a time and we are off to a good start.

And as I mentioned I think you can hear in the tone we got good programs in place and obviously it is the timing of those ramps, the take up of those products, but nonetheless we are remixing the portfolio and I think we are building a stronger base to continue to build confidence as we go through the year but I am cautiously optimistic and I want to reserve judgment until we get to that 90-day window when I can be much more clear with where we think we are..

Okay, fair enough, thanks a lot. .

Thank you. .

Thanks Matt..

Kirk we will take one more question please. .

[Operator Instructions]. We appear to have no further questions at this time. I will hand the call back over to the presenters..

Okay Kirk, well thank you very much everybody for calling in today. We appreciate your interest in Celestica and we look forward to talking with you again in April. Thank you. .

Thank you. .

This concludes today's conference call. You may now disconnect..