Good morning. My name is Joanne, and I will be your conference operator today. At this time, I would like to welcome everyone to the Celestica's 2013 First Quarter Results Conference Call. [Operator Instructions] I would now like to hand today's call over to Manny Panesar, Director of Investor Relations. Sir, you may begin your conference.

Thank you, Joanne. Good morning, everyone, and thank you for joining us on Celestica's first quarter of 2013 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 Q&A. During the Q&A session, please limit yourself to 1 question and a brief follow-up, as we have our Annual General Meeting immediately following this conference call. We will be available after the Annual General Meeting for additional follow-up. Copies of the supporting slides accompanying this webcast can be viewed at celestica.com. As a reminder, during this call, we make forward-looking statements related to our future growth, trends in our industry, our financial and operational results and performance, and financial guidance that are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. We also refer you to our cautionary statements regarding forward-looking information in the company's various public filings including the Safe Harbor statement in today's press release. We refer you to the assumptions, risk factors and uncertainties discussed in 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 is discussed 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 the Securities and Exchange Commission, which can be accessed at sedar.com and sec.gov. During this call, we'll refer to certain non-IFRS financial measures, which include adjusted gross margin, adjusted SG&A, adjusted operating margin or EBIAT, adjusted net earnings, adjusted EPS, return on invested capital or ROIC and free cash flow. These non-IFRS measures do not have any standardized meaning under IFRS and may not be comparable with other GAAP, non-GAAP or non-IFRS financial measures presented by other companies, including our major North American competitors. We refer you to our press release, which is available at celestica.com, for more information about these non-IFRS measures including the reconciliation of the non-IFRS measures to the corresponding IFRS measures where a comparable IFRS exists. Unless otherwise specified, all reference to dollars in this call are U.S. dollars. I will now turn the call over to Darren Myers.

Thank you, Manny, and good morning, everyone. Celestica delivered first quarter revenue, profitability and free cash flow generally in line with our expectations. While we delivered revenue at the midpoint of our guidance range, adjusted earnings per share were at the higher end of our guidance despite a challenging demand environment. First quarter revenue of $1.37 billion declined 8% sequentially and was down 19% compared with the first quarter of 2012, with a year-over-year decline predominantly due to our disengagement from RIM. After excluding revenue from RIM for the first quarter 2012, first quarter revenue was relatively flat year-over-year. Some additional highlights for the first quarter include: non-IFRS adjusted earnings per share of $0.16 came in at the higher end of our guidance range of $0.11 to $0.17 per share; non-IFRS operating margin of 2.5% was down 60 basis points sequentially on lower revenue, however, at the higher end of our guidance range; IFRS net earnings of $10.5 million or $0.06 per share were impacted by restructuring and other charges totaling $7.3 million. We generated free cash flow of $13.5 million and we ended the quarter with a cash balance of $531 million. With respect to our revenue by end market, consistent with our beginning-of-quarter expectations, we experienced year-over-year growth in our diversified markets and sequential declines generally across the business, mainly due to seasonality and overall demand weakness. Our diversified end market comprised 24% of our total revenue, up from 19% in the first quarter of 2012. First quarter diversified revenue declined 4% sequentially, as we experienced slightly weaker-than-expected demand from some customers. The communication end market, comprising 40% of total revenue for the first quarter, was relatively flat sequentially and on a year-over-year basis, and we saw growth from some programs offset by lower demand from others. The…

Thank you, Darren, and good morning, everyone, and thank you for joining us this morning. Overall, while our first quarter results were consistent with our guidance, we did experience higher than typical variability in customer orders during the latter part of the quarter. While our operating teams were able to effectively manage the dynamic changes to customer demand, longer-term forecasts have come more volatile. Let me provide a brief summary of the trends that we're seeing in our business. Within our diversified markets, while we did experience year-over-year growth, however, it was not as strong as expected, in particular, due to challenges in our health care business, which is proving to take longer to ramp than we originally anticipated. For the second quarter, we're expecting strong double-digit sequential growth in our diversified markets, with revenue increases across all segments except health care. While it's premature to assume a recovery, we're also expecting sequential growth in our semiconductor and industrial businesses, and aerospace and defense continues to be steady and we expect sequential growth. Our semiconductor business is currently operating below capacity, creating overall pressure on our short-term margins, which we expect to continue over the coming quarters as we continue to invest in resources to support our new program ramps and the long-term growth strategy in this end market. We remain focused on expanding in the complex mechanical and semiconductor equipment markets. We are strengthening our relationships and pursuing new business opportunities with leading customers in this industry. Within our communications end market, we experienced stronger than anticipated demand in the first quarter from several of our key customers, which was offset by lower demand from other customers. For the second quarter, we expect revenue to be up sequentially and year-over-year due to the transfer and ramping of business from…

[Operator Instructions] And your first question comes from the line of Amit Daryanani from RBC Capital Markets.

It's Mitch Steves filling in for Amit. I just had a quick question on the communications segment trends. It looks like a little better than historical, so I was wondering if you guys provide any color of what you guys kind of expect from a server-side basis, both on organic and inorganic basis.

Well, we see as basically program specific, customer specific, some very strong programmatic demands in the second quarter, offset, as I said, by weaknesses in some other customers. But overall, the strength of our communications business is strong. And obviously, the mix of business, the program-specific opportunities that we are involved with, are driving the growth of that business. And then the underlying improvements we expect to see in the second half will be driven largely by the transition of a key program from one of our competitors.

Okay. And if you guys -- I have 1 other quick question. What kind of leverage will we be looking for, for your ramp from 2.5% operating margins to like 3% bogey?

Well, we haven't given firm guidance on the operating margin improvements in the second half, but we will see operating margin leverage on the growth of the business as we go into the second half.

Your next question comes from the line of Matt Sheerin from Stifel. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Craig, I'm hoping you can elaborate on the issues that you're seeing in the health care side of the business in terms of ramp issues. Is it specific to programs? Is the cycle longer -- winning business cycle? Is it end-demand related? If you could just be more specific, that would be great.

Sure, Matt. I mean, we have a very targeted strategy of 3 subsegments in health care. What we've got is a portfolio of quality customers. So we've dramatically increased the number of customers that we're serving in the health care base. The revenue delays have not been related to program ramp difficulties. It's been the closed cycle on the new business opportunities and then, basically, the qualification, as well as the customer transition, in some cases, from competitors to Celestica. So those are the primarily factors, not the operational-related issues. It's really market factors relating to the sales cycle to close the business, as well as the ramp cycle when it involves transferring business either from customer facilities or from competitors. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. And then on the semi capital -- semiconductor capital segment which, obviously, is a big part of your business now. It sounds like you're seeing some positive demand trends. But on the other hand, you talked about still lower volumes impeding margin expansion. So what kind of growth are you looking at there? And what kind of volumes do you need to get the margins up in that business?

Well, we are building infrastructure, as you know, on the basis of forecast demand due to program ramps that we actually have won with customers. So the timing of those ramps and the speed of those ramps and the fact that we're investing before those ramps meet production volume is driving the margin compression. Obviously, we are now in a situation where we are looking for the second quarter to show sequential improvement, the full year, then quarter-on-quarter showing continuing improvement. And then we are beginning to get indications of some upside due to some of the improvements in the overall industry. So we're not getting specific demand around segment-by-segment guidance on the margin. But we will get leverage in that business, as I mentioned, for the entire company, but especially in this business due to the high-fixed-cost nature of the business as we go into the second half and into 2014.

Your next question comes from the line of Brian Alexander from Raymond James. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: If I could just revisit the revenue guidance, up 4% sequentially. And if I back out the $35 million of server revenue decline, it's up closer to 6.5%. If I look over the last few years, which has also been a challenging demand environment, you've guided Q2 basically flat to up 2%. You've come in a little bit better than that. But again, you're guiding up 6.5% ex the server issue. So is that mostly new program ramps? It didn't sound like your overall demand commentary was all that positive. You talked about increased volatility. So I'm just trying to reconcile those comments with your June outlook.

So that would be, Matt -- or Brian, that would be primarily new program ramps and then taking market share from customers and some of our core customers.

As Craig mentioned, we are, Brian, expecting that double-digit growth in diversified off the backs of the booking success we've been having over some time here.

Right. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: Yes, and so just to follow on that, Darren, just operating margins being flat sequentially in June despite your diversified segment being up, I think, you said double digits, and that tends to be higher margin. So I know you talked about maybe some ramp cost, lower utilization in semi cap. But just maybe a little bit more color on why we're not seeing leverage in the June quarter.

Sure, Brian. I mean, as we started the year, we thought about a 2%, 2.5% operating margin for the first half of the year. The midpoint of our guidance range, obviously, we've achieved that in the first quarter, and the midpoint of the guidance range is at the 2.5%. From an increase, I mean, there is an increase quarter-over-quarter, but it's relatively -- it's not significant. And as we do ramp these programs, there's ramp cost associated with then. So we're making sure that we have the execution engine, as we always do. And therefore, are comfortable with our guidance at the high end of that 2% to 2.5% range. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: And then just final one for me on health care, to make sure I'm not reading anything into your comments that I shouldn't be. In terms of the closed cycle elongating, is any of that related to emerging competition? I'm thinking specifically of the pending deal between Jabil and Nypro. And I don't know if customers are sort of reevaluating their strategy on the deal with that or if this is completely unrelated to that.

Brian, it's completely unrelated to that. It's really due to the programs that we're involved with and then the timing of the customers' decisions. And then also, primarily with the ramps of the new customers that we've won over the course of the last 18 months.

Your next question comes from the line of Joe Whitney (sic) [Wittine] from Longbow Research.

Just a question on the gross margins for the first quarter. You hit the high end of the range, despite SG&A being at the high end of the range. So curious, if there's anything worth discussing there? If it's just a matter of the guidance put out, the 2% to 2.5% EBIT was on the conservative side.

Right, Joe, it's Darren here. No, in terms of our gross margin performance, it came in, frankly, in line with where we would have expected with the revenue drop from the fourth quarter and just the leverage of the network. So it was as expected, maybe mildly better. And SG&A came in mildly better as well, driving the 2.5% that we achieved.

Okay. And then a brief follow-up. In the semi cap business, is there any kind of rough time frame you can give us? I understand you're investing ahead. But when you can expect to, let's say, hit target levels of profitability for that business? Is it a, as you sit here right now, is it a 2-quarter phenomena? A 4-quarter phenomena, et cetera?

No, it's going -- I mean, it's going to continue to grow over the course of the balance of the year and then into 2014. And the question on timing, obviously, depends on a number of factors. But based on the backlog of business, the new customers that we've won and, obviously, the base of business we're building, we would anticipate continued leverage as we grow through the period into 2014 and beyond. But we're not giving guidance on the timing of that or the amount of leverage involved at this point.

Right. Then finally, if I could, any thoughts on a -- another buyback, potentially in the second half of the year?

Well, I think what we'll do at the midpoint of the year is obviously look at our cash generation. We are driving a lot of transition. There's the number of new programs launching in the company and the magnitude and scale of some of these transition is very large. As you can see from our inventory balance, we're also talking about somewhere between 20% -- 18% to 20% growth in our diversified space. So we're using our working capital right now primarily in the building of inventory for new programs that are launching and to support transitions. We reevaluated the July time period. We anticipate on working -- leverage, as these programs mature over the course of the second half and cash flow generation. And then at that time, we'll evaluate what the right deployment for the cash would be.

Your next question comes from the line of Brian White from Topeka.

Yes, I just want to clarify. The communications market seemed to outperform in March quarter. And that was some business shifted over to you in the March quarter? Or was that new wins outside of that shift? Or it's simply end market demand?

Brian, it's Darren. It's generally program specific versus end market demands. So certain programs that we manufacture for performed well in the space. There were some that were down, but overall, we saw strength in certain programs that brought the overall end market a little bit higher than we expected.

Okay, great. And then storage, is that market share shift? Or is that just the demand in storage was soft?

It's the demand in storage was soft. There's no market share shift, from our perspective. And then we have, as Darren mentioned, in the similar in the communications space, we have in the storage space. We have some customers and programs that are down year-on-year. So due to market effects, but not any share shift.

And semi cap seems to be picking up. But it doesn't -- do you see that yet? The semi cap pick up? It had a horrible second half of the year, but is it getting better?

We do. I mean we certainly see it ticking up in first quarter, second quarter, and then moving into the balance of the year. And based on that, we see -- we're optimistic about the investments we're making. And then we see the opportunity for share gains, as we work with customers and new programs on the investments we've made. So yes, we're optimistic about semi cap improving over the second quarter into the balance of the year and then on into 2014.

Your next question comes from the line of Sherri Scribner from Deutsche Bank.

I was just wondering if you could remind us about your expectations for the restructuring that you're going through. Will you have some charges in the second quarter? And have you seen all the benefits of those restructuring actions? Or do you think there's more benefits to come? Because it doesn't seem like there's much of a benefit to operating margins in the second quarter from the restructuring.

Sherri, in terms of the restructuring, we've spent $51 million, relative to the range of $55 million to $65 million. We expect to complete that over the balance of the year. And we are seeing some benefits from the restructuring, certainly, not all the restructuring yet. It takes time to get those benefits. Generally, paybacks are 9 months to 12 months and it takes time from when you announce it to when you're actually getting those benefits. So we'll see those benefits as we move through the year, as well as we've ramped our programs. We're also spending money right now through the network as we ramp programs, which offset some of the benefits that we've seen.

Okay. So you'll see some of those benefits in the second half of the year. And that -- would that primarily be on the gross margin line? Or will you see some SG&A benefit, too?

It will, primarily from where we are today, be in the gross margin line.

Okay. And then just thinking about your guidance and your outlook for the rest of the year. It sounds like the strength you're seeing into the second quarter is primarily related to new program ramps. Are there any end markets or segments where you're actually seeing demand being better? Because it sounded like the commentary was that things were generally mixed. But I wanted to know if you're seeing any bright spots in your end markets?

Well, we're seeing some big bright spots, Sherri. It's Craig. We're seeing some bright spots, certainly in all of our end markets. What it ends up being though is very interesting. We see some very, very bright spots in some demand, both in communications and in enterprise. But largely, we see corresponding offsets in the programs, and the customers that we're serving are in some of the -- either projects or market segments that are under pressure. So that's why we have that mixed outlook. But it's a balance. And then we have share transfers through competitive takeaways, as well as new business. So there's a lot of moving pieces today. Overall, there's a lot of volatility as we've seen recently in some of the end market demand. But by and large, we're executing. We're at the high end of our guidance for the end of this quarter. We're forecasting 2.5% at the midpoint the next quarter. We've got strong business wins this quarter. So the model is working. We're getting business in the right areas and we just wanted to mention the volatility so you understand it's not some sort of demand pattern, as much as it is the winners are winning and the losers are losing. And we're participating in a very balanced way to take business in the right areas of our business -- in the right areas of the market.

Your next question comes from the line of Todd Coupland from CIBC.

I was wondering if you can roughly size the new networking win that's transferring over to you?

Todd, we're not -- this is Craig. We're not going to give any specific guidance on the size or magnitude of that win. Obviously, it's certainly moving very successfully during the transition. We're doing it in a very, very expeditious way. And we're executing at a level that -- and with the customer very bullish on the opportunities they face. So we'll finish that transition. We'll get more clarity on exactly what the forward-looking guidance is for the second half. But it will obviously be a material contribution to our communications business.

When would it be fully ramped? So it's starting now. Would it be fully ramped in by Q3?

It will be ramping over the balance of the second half.

Okay, through the balance of the second half. Okay.

Your next question comes from the line of Naser Iqbal from Salman Partners.

If I may, and just maybe prying into your server business. I think from one of your customers, you have the Spark product line. Can you talk if you have the new M servers?

Well, we can't comment specifically on our customer-specific programs or our involvement in those programs. I can comment on our strategy. So what we do, we tend to serve the very high end of the server space. So obviously, the more commoditized segments of the server business are largely ODM. And as we've seen recently, some of the x86 series programs are under tremendous cost pressure or price pressure. So we are at the, we'll call it, proprietary silicon end of that business. We are certainly a well-established player in that space, and obviously with a very strong market position with the market leaders. So -- but we're not in it for a volume play. We're in it for a -- really, to participate in the areas of the business where we can add the greatest value. So that's the overall strategy. And specifically, we tend to be on the winning programs, with the winning customers in the higher value-added segments of the market. But it's not a revenue volume play. It's more of a margin and value-added play.

Yes. And it would seem that, on the high end, that some of the anticipations for the new program -- product launches in the high end in the coming quarters, I mean, it would seem that you would be a beneficiary of that. Would that be some of the strength that's driving the Q2 in the second half?

Well, I think the -- we would be the beneficiary, as higher-end storage or server solutions become attractive to the end markets and as they are going to be. We also see a trend toward, what we call, more of a convergence of networking, servers and storage, okay? The convergence infrastructure. So we see the opportunity to leverage our capability in all 3 technologies to offer more of an integrated solution. And we're working with customers on developing those options. So as I said, it's a rapidly changing environment. We're participating in the right segments to play to our strengths and, obviously, we have market positions with the leading customers in servers, in storage, in networking to be a major player in how this market unfolds. And so we're very, very excited by the portfolio. The other great news is we had a very, very strong quarter in our JDM business and a significant amount of new business in the first quarter. So that, obviously, will feed through over the course of the next, I'll say, 12 to 24 months, as you'll see the underpinning of that business strengthen through that higher-margin opportunity.

Great. And just my follow-up, just to beat a dead horse. But in terms of -- you talked about that in the July quarter, you're going to give us an update on your cash priority. But it would seem that, at least in the comments in the circle, that a dividend would be helpful in the environment. Is that something you're looking at, I guess, as part of all things that's being considered?

Naser, it's Darren. I mean, in terms of our priorities, as Craig mentioned, it's investing in the business, investing in the ramps. I mean, as you've seen in the past, if you look at the last 3 years, we've invested $400 million in the business and we returned $400 million to shareholders. Consistent with the past, our belief has been that the Normal Course Issuer Bid, the buybacks, is a more advantageous way in order to execute returns to shareholders. In particular, in this industry where growth is very dynamic and cash flow needs are very dynamic. And it allows you to meter that. So that continues to be our preference. But we will always look at options, and we are always looking at options. And as we get through the second quarter, we'll be exploring what options we -- as we go forward.

Your next question comes from the line of Jim Suva from Citigroup.

When you think about, looking at your detailed press release, I think it's like around Page 14 or so, you talked about your customers, that BlackBerry has transitioned away, which -- it's nice to kind of move on there. But you mentioned that you have 2 customers that individually represent more than 10% of revenues. Can you let us know who they are and what segments that they reside in?

Jim, it's Darren. We don't disclose that on a quarterly basis in terms of the top 10. There were 2 top 10 customers, but we don't disclose that. But we would certainly on the annual basis disclose that.

Okay. Could you give us any feel for, at least the segment, I guess? By the math, it would appear that communications would have to harness 1 if not both of them? Is that fair?

Sorry, Jim. We're not going to provide that color at this time.

Your next question comes from Gus Papageorgiou from Scotiabank.

Most of my questions have been answered, but just on the balance sheet. I mean you're sitting on half -- roughly $0.5 billion of cash with no debt. In contrast to most of your major competitors that all have some leverage on their balance sheet. I mean, Darren, as the new CFO, how do you view your capital structure? Do you think it's too conservative? Are you willing to take on some debt? Or are you just happy sitting on a nice, big cash pile?

Gus, well, as the new CFO, I'm happy to come in here with the big cash pile. That's for sure. I mean, we certainly have the strongest balance sheet in the industry and we want to be thoughtful on how we use that and we're looking at -- are always looking at a number of opportunities. We certainly could afford to and would be willing to take on some leverage, but it's for the right opportunities. So it's something we are constantly looking at. And we're going to be thoughtful and make sure that what we do makes sense for the company and for our shareholders.

When you say the right opportunities, I mean, just to be clear, that would be more in line of making some sort of acquisition or investment in the business rather than doing some sort of share buyback? Is that correct?

Yes. Our priority has been and will be investing in the business. But as we've shown in the -- through history, we'll probably do a combination of both.

And your final question comes from the line of Wamsi Mohan from Bank of America.

This is actually Ruplu in for Wamsi. Just a quick question, first on the restructuring. Can you remind us which end markets that restructuring is focused on? And which ones have been completed? And the $10 million or so that's left, where would that effort be focused on?

I mean, we're not -- we haven't been providing color exactly on the exact end markets because it's really spread across the network and across our business. So it's impacting our various different end markets. Certainly, the lion's share of the charges that we took earlier were associated around the RIM business and that infrastructure. But we've taken actions across our infrastructure -- across our infrastructure, across our SG&A, and we'll continue to take further actions as we complete the program through the year.

And Craig, I think you mentioned -- you talked about strength in the communications end market. Was that confined to certain geographies? Can you just talk in terms of Americas versus Europe? I mean, where did you see the strength there?

The primary strength that we saw was from customers serving the North American markets and some of the build outs that are going on across the infrastructure in North America currently. Okay. I'd like to thank everybody for joining us today and we look forward to talking to you again in the second quarter. Thank you very much.

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