CLS reported a 28% year-over-year increase in operating cash flow for the first nine months of fiscal 2025, reaching $420 million, while free cash flow rose 34% to $310 million. This improvement was fueled by robust demand for its Cloud and Connectivity Solutions (CCS) segment, which accounted for 46% of total revenue and saw 38% revenue growth in the period. Management highlighted that AI-driven networking orders jumped 52% sequentially in Q3, contributing to higher utilization rates at its Winnipeg and Guadalajara facilities and driving cash conversion above 110%.

Building on strong year-to-date performance, CLS raised its CCS revenue growth forecast to 40% compound annual growth through 2026 and indicated visibility into at least 2027. To support this, the company plans to increase capital expenditure intensity to 2.0%–2.5% of annual revenue in fiscal 2026, up from approximately 1.3% in fiscal 2024. The incremental $75–$95 million in capex will be fully funded by operating cash flow and directed toward expanding high-speed platform (HPS) assembly lines in Malaysia and China, targeting a 30% increase in total board capacity by the end of FY28.

Since early 2024, CLS shares have climbed 215%, lifting its enterprise-value-to-EBITDA multiple from 8.5x to 12.3x consensus estimates for fiscal 2025. Analysts attribute the premium expansion to greater visibility on high-margin HPS mix, which represented 22% of revenue in Q3 and is growing at twice the rate of legacy EMS businesses. With adjusted EBIT margins improving from 5.8% to 7.4% over the past four quarters, consensus now expects margin ceilings of 9% by fiscal 2027. Investors will be watching whether continued CCS traction and disciplined capex can sustain both cash flow growth and further multiple expansion.