Lisa Headrick - Senior Director, Investor Relations Rob Mionis - President and Chief Executive Officer Mandeep Chawla - Chief Financial Officer.

Matt Sheerin - Stifel Ruplu Bhattacharya - Bank of America Merrill Lynch Thanos Moschopoulos - BMO Capital Markets Paul Steep - Scotia Capital Tim Yang - Citibank Gus Papageorgiou - Macquarie Robert Young - Canaccord Genuity.

Good afternoon ladies and gentlemen and welcome to the Celestica earnings call for the second quarter of 2017. At this time, all lines are in a listen-only mode. I would now like to turn the meeting over to one of your hosts for today's call, Lisa Headrick Harpell, Senior Director, Investor Relations. Please go ahead..

Thank you, Cheryl. Good afternoon and thank you for joining us on Celestica's second quarter of 2017 earnings conference call. On the call today are Rob Mionis, President and Chief Executive Officer and Mandeep Chawla, Chief Financial Officer. This conference call will last approximately 45 minutes.

Rob and Mandeep will provide some 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 later this afternoon for additional follow-ups. Please visit www.celestica.com to view the supporting slides accompanying this webcast.

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, including those related to our plans for future growth, priorities, trends in our industry and end markets, our anticipated financial and operational results and performance and financial guidance.

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 in discussion of such factors and the material assumptions on which such forward-looking statements are based, as well as further information concerning by financial guidance, please refer to the company's various public filings, including our most recent MD&A and Annual Report on Form 20-F including the Risk Factors section therein filed with and reports on Form 6-Ks furnished to, the U.S.

Securities and Exchange Commission and as a principle, the Canadian Securities Administrators. Please also refer to our cautionary statements regarding forward-looking information in such filings and in today's press release. Our public filings can be accessed at sec.gov and sedar.com. We assume no obligation to update any forward-looking statements.

During this call, we will also refer to certain non-IFRS financial measures which include adjusted gross margin, adjusted SG&A, non-IFRS operating earnings, non-IFRS operating margins which is non-IFRS operating earnings as a percentage of revenue, adjusted net earnings and adjusted EPS, free cash flow, adjusted effective tax rate, inventory turns and cash cycle days.

Other non-IFRS financial measures that we will refer to are return on invested capital or ROIC which for all purposes of this call means adjusted ROIC and adjusted tax rate which for all purposes of this call means adjusted effective tax rate.

These non-IFRS measures do not have any standardized meanings under the IFRS and may not be comparable with other non-U.S. GAAP or non-IFRS financial measures presented by other issuers.

We refer you to today's press release which is available at celestica.com under the Investor Relations tab for more information about these and certain other non-IFRS measures, including a reconciliation of historical non-IFRS measures to the most directly comparable IFRS measures from our financial statements.

Unless otherwise specified, all references to dollars on this call are to U.S. dollars. I will now turn the call over to Rob Mionis..

Thank you, Lisa. Good afternoon everyone and thank you for joining today's call. Celestica delivered a solid quarter representing a seventh straight quarter of year-over-year revenue growth.

For the quarter, we delivered results in line with our expectations, delivering 5% year-to-year revenue growth with 3.7% operating margin and 10% year-over-year growth and adjusted earnings per share. I'm pleased with the progress we've made on our strategy and on the priorities on which I'll provide an update towards the end of the call.

Now, before we dive into the details of the quarter, I would like to thank Darren Myers, our former Chief Financial Officer for his significant contributions to Celestica's success over the course of his career. As you all know, he has made the decision to leave Celestica at the end of July to pursue an opportunity in another industry.

Mandeep Chawla, our Senior Vice President of Finance has immediately assumed the CFO roll on an interim basis. Celestica is conducting a search for prominent replacement that will include both internal and external candidates. I'm pleased to have Mandeep join me on the call today.

He will discuss our financial results for the second quarter and provide guidance for the third quarter. Now, I'd like to turn the call over to Mandeep..

Thank you, Rob and good afternoon everyone. The second quarter of 2017 was another solid quarter for Celestica. Second quarter revenue of $1.56 billion was at the midpoint our guidance and up 5% year-over-year. Some highlights for the second quarter include, we delivered 14% year-over-year growth in the Communications market.

Revenue from the Advanced Technology Solutions or ATS market represented 31% of total revenue, compared to 33% in the second quarter of 2016. Revenue from the ATS market declined 3% year-over-year. However, excluding the impact of our exit from solar panel manufacturing, the ATS market grew 3% relative to the same period last year.

IFRS net earnings were $34 million, up $12 million relative to the first quarter of 2017 and down $2 million year-to-year. Adjusted operating margin was 3.7% in line with the midpoint of our guidance.

Adjusted earnings of $0.32 per share were up 10% relative to the same period last year and came in at the midpoint of our guidance and we achieved adjusted return on invested capital of 21%.

Moving to our revenue from an end market perspective, our Communications market performed in line with expectations representing 44% of total revenue and was up 12% sequentially due to seasonal demand strength.

Relative to the same period last year, the Communications market grew 14%, driven by continued demand strength in our Optical programs and new program growth, including Joint Design and manufacturing programs.

Advanced Technology Solutions revenue represented 31% of total revenue and was below our expectations due to demand softness primarily in our industrial sub segment. Sequentially, Advanced Technology Solutions revenue was down 3% driven by lower demand.

On a year-over-year basis, ATS revenue was down 3%, as growth from our semiconductor business and new program revenue offset reductions from the exit of our solar panel manufacturing business. Excluding the impact of solar, our Advanced Technology Solutions revenue was up 3% year-over-year.

Our Enterprise market delivered above our expectations, driven by strength in our server programs. Enterprise represented 25% to total revenue and increased 9% sequentially due to seasonal demand increases. On a year-over-year basis, Enterprise increased 1% with new program revenue offsetting overall softer demand in our legacy programs.

Our top 10 customers represented 71% of revenue for the second quarter, up 1% from the first quarter of 2017 and up 4% from one year ago. For the first quarter, we had 2 customers individually contributing greater than 10% of total revenue.

Moving to some of the other financial highlights for the quarter, from an IFRS perspective, net earnings for the quarter were $34.4 million or $0.24 per share compared to $36.2 million or $0.25 per share in the second quarter of 2016 as higher restructuring and other charges including as a result from the exit of our solar panel manufacturing business were partially offset by lower income tax.

With respect to our exit from the solar panel manufacturing, we are in the final stages of disclosing our remaining solar panel inventory and continue to be actively engaged in disposing our solar-related equipment.

The volatility in the market has continued and we have seen further pressure on pricing, which further supports our decision to exit this business.

In the second quarter of 2017, we recorded additional provisions of $7 million in restructuring charges and other expenses related to the write down of our remaining solar panel inventory and equipment to reflect lower expected recoveries.

At June 30, 2017, and after reflecting such write-downs, we had approximately $9 million in solar panel inventory, all of which we intend to ship to customers in the third quarter of this year. Moving on to some of our non-IFRS financial measures, adjusted gross margin of 7.2% was down 10 basis points sequentially due primarily to program mix.

Adjusted gross margin was down to 50 basis points when compared against a very strong performance in the second quarter of 2016. This year improved performance in our Advanced Technology Solutions market was offset by overall mix and pricing pressure primarily in our connectivity and cloud solutions market.

Our adjusted SG&A was $48 million, within our expected range of $46 million to $48 million for the quarter and down from $51 million for the same period last year. Adjusted operating earnings were $58 million or 3.7%, which was at the midpoint of our expectations, up $4 million sequentially and up $1million relative to the same period last year.

Our adjusted effective tax rate for the second quarter and year-to-date was 17%, within our expected annual range of 17% to 19%.

Adjusted net earnings for the second quarter were $46 million and adjusted earnings per share of $0.32 represents an improvement of 10% year-over-year largely due to lower income tax expense and higher non-IFRS operating earnings. Adjusted ROIC was 21.0%, up 1% sequentially and relatively flat compared to 20.9% for the same period last year.

Moving on to working capital, our inventory increased $20 million from March 31, 2017, to $976 million at June 30. Inventory turns for the second quarter were 6.0, an improvement from the first quarter of 2017 and a decline from 6.2 turns in the second quarter of 2016.

We continue to experience dynamic demand and some part constraints which are impacting our inventory performance. We anticipate these continuing into the third quarter.

Capital expenditures were $24 million or 1.5% of revenue for the second quarter and year-to-date was $50 million or 1.6% of revenue as we continue to invest in our manufacturing capabilities globally to support new customer programs this year.

We currently expect 2017 to be at the higher end of our annual range of 1% to 1.5% of revenue as we continue to invest to support future growth. Our cash provided by operations for the quarter was $55 million, while free cash flow was $33 million compared to free cash flow of negative $24 million for the same period last year.

Moving on to our balance sheet, our balance sheet remains strong. Our cash balance increased by $25 million sequentially to end at $583 million. During the quarter, we repaid $6 million of our outstanding term loan, which now has a balance of $200 million. As a result, our net cash position at June 30 was $383 million.

Within the quarter, no shares were purchased for cancellation. At the end of the second quarter, we had approximately 143.6 million subordinate and multiple voting shares outstanding. Moving on to our guidance for the third quarter of 2017, for the third quarter, we are projecting revenue to be in the range of $1.5 billion to $1.6 billion.

At the midpoint, revenue is projected to be relatively flat sequentially and relative to the third quarter of last year. At the midpoint of our expectations, we anticipate adjusted operating margin to be approximately 3.7%. Our operating margin this quarter is being impacted by higher than usual costs associated with new ramping programs.

Third quarter non-IFRS adjusted net earnings are expected to be in the range of $0.28 to $0.34 per share. Adjusted SG&A expense for the third quarter is projected to be in the range of $47 million to $49 million. And we anticipate an annual adjusted effective tax rate range of 17% to 19%.

Our third quarter guidance assumes this annual rate and does not account for any impacts from taxable foreign exchange.

Now, moving on to our third quarter outlook within our end markets, in our Advanced Technology Solutions business, we are anticipating revenue to be flat year-over-year as new program revenue and strong demand in our semiconductor business is expected to offset lower revenue from our exit from solar panel manufacturing.

Excluding the solar headwind, we are expecting ATS revenue to be up in the mid-single digits. Although we are not providing guidance beyond the third quarter, we do expect growth rates to improve in the ATS market as new program ramps and as the year-over-year impact to solar panels reduce.

In the Communications market, we expect revenue to increase in the low single digits year-over-year.

(Inaudible) year-to-year growth in the Communications market is normalizing when compared to a strong third quarter last year, we continue to drive year-to-year growth as we benefit from new program revenue, including our Optical and Joint Design and Manufacturing programs, as well as programs specific strength in our networking business.

Our Enterprise end market is anticipated to decline in the mid-single digits relative to the same period last year due to lower anticipated market demand. Now I'd like to turn over the call to Rob for some additional color on third quarter and an update on our priorities..

Thank you, Mandeep. Overall, we are making solid progress against our strategy of evolving our portfolio by growing our ATS business, while maintaining a strong position in CCS. We also plan on accelerating our portfolio evolution through focused M&A. In support of our strategy in the third quarter, we continue to make important investments.

These include ramping new programs, investing in Joint Design and Manufacturing and expanding our manufacturing capabilities to support our future growth. We also continue to invest in our corporate development and sales organizations to drive future growth.

We're in our multi-year journey to drive sustainable, long-term profitable growth and are pleased with the level of momentum that has been building. I am confident the investments we are making to strengthen our portfolio will enable us to drive profitable growth over the long term which brings me to our priorities in 2017.

The first priority continues to be the evolution and diversification of our customer and product portfolios to drive long-term consistency and growth in operating margins. Excluding the solar headwinds, the ATS market grew 8% on a year-to-date basis relative to the same period last year.

This was driven by double-digit growth in our semiconductor, industrial and energy product businesses. We believe we have made good progress in these areas and remain focused on targeting ATS annualized organic growth of 10% over the long term.

In our JDM business, we have delivered double-digit revenue and bookings growth in the second quarter year-to-date relative to the same period last year. Although this growth is of a relatively small base and this business accounts for less than 10% of our total revenue, I am pleased with our progress and momentum we have gained.

We are also focused on augmenting our organic growth with acquisitions to build at our capabilities, proof points and relationships.

The corporate development team is fully resourced and it's actively talking to a number of companies while it's still early daily, I'm pleased with our progress and the opportunities to have capabilities that will enable us to continue to grow and drive value for our customers.

Our next priority is to achieve continued margin enhancement in ATS, while balancing advancements needed to drive continued growth. In the first half of 2017 our adjusted operating margin expanded by 10 basis points, relative to the same period last year, driven by improved performance within the ATS business.

In the third quarter we're expecting investments to new programs to create some near-term margin pressure as we position ourselves for future growth and margin expansion in this business. We're targeting further margin expansion as these programs reach full volume and by driving productivity throughout the organization.

We also feel M&A will contribute to our goal of longer term margin expansion. Continuing to generate strong free cash flow and ROIC is also a priority. Year-to-date, we've generated close to $50 million of free cash flow and ROIC of 20%. Our balance sheet remains strong.

And we plan to continue our disciplined approach through use of cash to invest in our business, drive growth and to continue to return capital to our shareholders over the long-term. And finally, we'll continue drive for fullest execution, while driving increased productivity and superfication throughout our organization.

My leadership team and I are excited about the opportunities in front of us and we continue to focus on accelerating value for our customers, driving financial and operational improvements for our company. Before we close today's call, I would like to highlight two awards Celestica received this quarter.

We were honored to have received recognition including Hitachi's most prestigious award, The 2016 Excellent Partner Award. We were also named one of Canada's Best 50 Corporate Citizens for 2017 by Corporate Knights' for the fourth consecutive year. This organization is dedicated to encouraging responsible business practices.

In closing, we remain focused on driving value creation as we continue our multiyear journey to position us for sustainable long-term profitable growth. I look forward to sharing our progress in coming quarters. Now, I'd like to open the call to questions..

[Operator Instructions] Your first question comes from Matt Sheerin of Stifel. Your line is open..

Yes, thank you. Just a couple of questions, I just one on the guidance for your three key segments, Communications on the slice. You said it was going to be up low single digits year-over-year, but I thought on the commentary you said it was going to be down..

Communications, Matt. Hi, nice to talk to you again. Communications will be up low single digits..

Okay and what's driving that, if you could talk about some of the sub segments, Optical versus traditional networking et cetera..

Hey, Matt. This is Rob. Q3 we're seeing some growth and continued growth in Optical, but it's somewhat muted by a little bit of a slowdown in China. But we're also seeing some growth in networking, which is being driven by data center rollout..

Okay, in this as a follow up, you talked about this quarter being sort of an investment quarter which weighs on margins a little bit.

So as you make those investments, you did talk about maybe accelerated growth in the ATS segment, but are you also seeing growth opportunities in other segments where you would expect the December quarter to be up sequentially..

Matt, just to clarify, are you asking for the outlook at the end market level for the third quarter?.

That's right..

Yes, overall we're seeing CCS being slightly -.

For the fourth quarter, I'm sorry, the December quarter because of the investments you're making now..

Yeah, as you know we typically don't give guidance beyond the third quarter. Right now we're just giving guidance for the third..

Okay, alright. Thank you very much..

Thanks, Matt..

Your next question comes from Ruplu Bhattacharya of Bank of America Merrill Lynch. Your line is open..

Hi, thanks for taking my questions.

The first one for Mandeep, can you kind of quantify what is the margin head from the new program ramps in the third quarter?.

Yeah. Hi, there. So, in total it's about $3 million of ramp cost in the third quarter that we're calling out. As you know we typically do ramp programs growing the ATS business over the long-term at a 10% target and for the first half of the year excluding solar grew at 8%. So, we're pleased with the overall level of ramping that we're seeing.

These are a little bit more atypical, which is the reason that we called it out, it's above our typical ramping type of cost.

And just to give a little bit more clarity, it's really investing in capabilities that we are building out in some of our growth sectors, specifically in aerospace in the sense, aftermarket services business and the capabilities that are specific to those programs, but they're actually enabling us to grow in those markets over the longer-term as well.

And so the impact right now for the third quarter is $3 million..

And about 20 bps..

About 20 basis points, that's right..

Okay, that's helpful. And then Rob, I think in the past Celestica has talked about diversified, contributing about 40% of revenues in the long-term, maybe in terms of ATS because that's the classification now.

Do you have a long-term target for mix from the ATS segment?.

No, over the long-term we're looking to grow ATS on a 10% per year basis, over the long-term.

This year I think we're going to be a little challenged because of the solar headwinds, but once the solar headwinds are behind us and some of the program ramps that we talked about before put some of the capabilities that we're building out, we do feel like we'll be able to achieve that.

In terms of how that contributes to the overall mix of CCS versus ATS over the long-term, that's a little harder to predict, there's a lot to do with our CCS profile overtime.

And overall in ATS, one of the things that we're also trying to do via acquisition is really focusing on the contribution margin that ATS makes as a percent of the total as much as revenue..

Okay and the last one from me if I can. I think earlier this year you've talked about M&A being a - to have more focus on M&A in the second half of the year. In terms of targets, are you seeing more targets, are you concerned about valuation, if you can just update us on that like how is that progressing and which end markets are you looking at..

Sure, so as I mentioned on the call, the team is fully staffed to engaging in conversations for targets across several different segments. All the targets have some very similar things.

They support our investment thesis's, they've accreted margins, they're speaking with customers, longer product life cycles, we're looking at capability plays, we're also looking at scale plays. Our approach is really very focused. We don't have a gun to our head.

The speed of how we're moving is really governed by the target, but broadly speaking, it's still relatively early days..

Yeah, thank you for taking my questions..

You're welcome..

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

Hi, good afternoon. Can you update us on the component constrains in the supply chain. I know that impacted revenue last quarter.

Was there an impacted this quarter and is that an ongoing issue?.

Mandeep would you start, I'll finish..

Sure. Yeah. Hi, Thanos. Nice to talk to you. We're seeing constrain environment continue. We did talk a bit last quarter, we mentioned last quarter that the impact in the first quarter was around $10 million and we saw something very similar in the second quarter as well.

Revenue upside that we would have had would have been around $10 million and then the same impact on inventory. The parts constrains we at this point are foreseeing for the near term should continue into the third quarter as well..

Thanos, I would also add that beside the constrains, we're also seeing lead times extend even beyond memory into some of the passers as well. So seems like they're tightening up versus elevating across the entire supply chain..

Okay. And I think in your prepared remarks you referenced softness in the industrial segment that weighed on your ATS growth.

Can you clarify what you're seeing on that front and is that also something that might persist into the current quarter?.

No, it was a short-term measure. We had some program ramps that were shifting our, but nothing that was over the material. We expect normalization as we move into the back half of the year..

Okay. Thanks guys..

Thank you, Thanos..

Your next question comes from Paul Steep of Scotia Capital. Your line is open..

Great, thanks. On the semi equipment side, could you talk a little bit just about the pacing there? I know it's been strong in an area that's helped in the past couple of quarters within the ATS.

How the outlook looks there?.

Yeah, I will talk about the broad industry. From a year ago, semi cap is a much different business right now we have a lot of wind on our sales, largely been driven by some of the end market dynamics through demand to some extent.

DRAM for us, we have two different types of businesses inside semi cap, the high-level assembly, which is ramping nicely and also our machining which is ramping nicely. We continue to see strong I'll call it tail winds into the back half of the year..

Yeah, only thing I would add is Rob meant to talk to you, the semi business, the operational challenges that we had from a year ago have largely been addressed and with the demand strength that we have been seeing as of late and the business has been performing quite well.

It's been accretive to our overall margins and we're pleased with the performance in the business..

Great. You know what one quick clarification and I'll pass the line.

Just on the margin impact on ATS for the ramps and the new programs, is there anything unusual or different about those programs, longer, larger, it sounded like sort of a one-quarter impact you're calling it tonight?.

Yeah, so as I mentioned the investment is really around capabilities and proof points that's within our aerospace and defense market, as well as within aftermarket services which is actually within our CCS space.

And the typical ramp of our program for our business is in the three to six months range and so we do expect that these headwinds will persist actually into the fourth quarter as well.

But what we're pleased about again is that these - investment in these capabilities and proof points will really extend beyond the programs that we're specifically ramping at this point.

From a materiality perspective, they're not overly material at the revenue level, but when these programs do end up ramping for volume, they should be accretive to the Company's margins..

Great. Thanks guys..

Okay..

Thanks, Paul..

Okay, your next question comes from Jim Suva of Citibank. Your line is open..

Hi, this is Tim Yang calling on behalf of Jim Suva. Thanks for taking my question. On Communications segment, the guidance for the sector is up low single digit for next quarter, which [indiscernible] deceleration versus up 14% this quarter.

Can you provide some color on that? I understand that you mentioned some tough comp on Optical side but is there any other factor driving the lower gross rate for next quarter?.

Sure. Hi, Tim, this is Rob. On the sort of the tough level, Tim, our overall strategy for the business is to maintain a very strong position in CCS while growing ATS 10% over the long term. Our ATS business as I mentioned that we have a good head of steam, second quarter year-to-date up 8%.

We continue to invest in new programs so expenses and sales were. Our CCS business, it's up 11% year-to-date and we're pleased with the share gains and the market demand driven by some of the programs.

As I mentioned in last quarter, we're up against tougher comps, a lot of the programs that we won in the back half of last year are coming up to run rate. So some of the growth rates are normalizing and hence the guidance that we've given..

Got you. Thanks. And then a follow-up question on the JDM penetration. Do you guys have any target for the penetration rate in the near term and what's the penetration rate now? Thanks..

I'll take that. As we mentioned in some previous calls, the JDM - and relative to our strategy the JDM business is the core area focus for us. We're looking to grow it. And as we said in our prepared remarks, we are seeing double-digit growth in that space.

That being said, JDM continues to be below 10% of our overall revenue concentration and it's an area that we are actively working to grow. It's an area that we've been investing in for a number of years and we're seeing very good traction not only in year-over-year revenue growth rate now but also in bookings momentum..

Thank you..

Thank you..

Your next question comes from the line of Gus Papageorgiou from Macquarie. Your line is open..

Hi, thanks for taking my question. Just on the balance sheet, I mean, the balance sheet continues to be very strong and you're approaching $400 million in cash. And I appreciate that your focus is on M&A and growing the business but - and that you are being patient which is a good thing.

But I guess the other alternative is to go back and buy your own shares.

If you don't find an appropriate acquisition in the next quarter or two, at what point - I mean how patient are you before you become more active in deploying the balance sheet and buying back your own shares?.

Yeah, thanks Gus. This is Rob. Our long term approach has been and will continue to be a balance approach in terms of investing into the business and also buying back shares.

We are as we previously communicated looking to invest back in the business in the short term, but to your point if we don't find a suitable target that adds shareholder value, we will certainly revert back to buying back our shares.

In terms of the specific timing that's hard to predict, it's still early days in M&A but we do believe that a balance approach is the right capital allocation strategy for our business..

Can you just update me, do you have a MCID open currently?.

No, we do not..

Okay, thank you..

Thanks, Gus..

Your next question comes from the line of Robert Young of Canaccord Genuity. Your line is open..

Hi, just couple of questions about margins. I think you had said that the ramp costs $3 million should be about 20 basis points I assume that's operating margin.

And so would that imply that without that ramp you would be at 3.9% the midpoint of where you had guide this quarter?.

Hi, Rob. Mandeep here, nice to talk to you. Yeah, the impact is $3 million incremental for this quarter. So, on a straight basis, you're right it would be 20 basis points higher.

When we look at our business, we're really continuing to manage the overall portfolio and we continue to stay focused on trying to drive stable margins as we're transforming the portfolio. So in context to your question, we continue to drive towards that long-term range for a range of 3.5% to 4%.

We believe that the current revenue mix that we have continues to enables to do that. But the - you're right the impact this quarter is 20 basis points from the ramping of these specific programs..

Okay. Where I was going to go is that it seems there is a couple of other margin headwinds that one the - that the solar business is likely a margin impact, you've also got some material constraint to a likely some form of a margin impact.

And then I think the semi cap business, is there still opportunity to raise the margins on that business or are they of the operating model that you want it to be on the long run? Are there any other additional pieces that's with - you would call out that would be below normal margins here in this quarter?.

No, there are not. So as you know in the past we have called out the underperformance in our semiconductor business and our solar business as being a 30 basis point to 40 basis point headwind. The solar business obviously as we are exiting is no longer there.

It's impacting us right now at the revenue level briefly, but that headwind as Rob shared in his prepared remarks, are subsiding. The semi business, we are pleased with the operational improvements that we've seen in the last few quarters and with the demand strength we have been performing well in that business.

It is currently performing at our targeted margins and it is accretive to the overall company..

Okay. Great. And then maybe I will ask one last question. Can you talk about the cadence of the - you talked about expanding the sales force I guess a couple of quarters ago and you're coming into a tough compare with some ramps that have matured.

Can you talk about the canes of the benefit of that expanded sales force? When will we start to see that? Is that the second half growth that you're talking about earlier in the call? Now I'll pass the line..

Rob, we just had our sales conference earlier in the quarter and I asked everyone in the room who is new to Celestica and who is not and it's happy to see a lot of new faces in the room from some of the increased resources. Last year, I think we - towards the end of last year we had a very strong bookings quarter and our bookings strength continues.

But a lot of that strength is on the ATS side and some of these programs do take a long time to go from bookings all the way to new product introduction and to a ramp. So it's going to take a little bit of time to see the full benefits of some of these investments..

Okay. Thanks..

There are no further questions at this time. I'll turn the call back over to the presenters..

Thank you all for dialing in. And we look forward to updating you on our next quarter..

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