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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hexcel Corporation | NYSE:HXL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.83 | 1.32% | 63.48 | 63.58 | 61.82 | 62.57 | 946,501 | 20:16:21 |
Hexcel Corporation (NYSE: HXL):
See Table C for reconciliation of GAAP and non-GAAP operating income, net income, earnings per share and operating cash flow to free cash flow. Free cash flow is cash from operations less capital expenditures.
Summary of Results from Operations
Quarters Ended
Six Months Ended
June 30,
June 30,
(In millions, except per share data)
2024
2023
% Change
2024
2023
% Change
Net Sales
$
500.4
$
454.3
10.1%
$
972.7
$
912.0
6.7%
Net sales change in constant currency
10.5%
6.7%
Operating Income
71.8
61.3
17.1%
124.7
124.1
0.5%
Net Income
50.0
42.5
17.6%
86.5
85.2
1.5%
Diluted net income per common share
$
0.60
$
0.50
20.0%
$
1.03
$
1.00
3.0%
Non-GAAP measures for year-over-year comparison (Table C)
Adjusted Operating Income
$
72.0
$
61.8
16.5%
$
126.1
$
124.8
1.0%
As a % of sales
14.4
%
13.6
%
13.0
%
13.7
%
Adjusted Net Income
50.2
42.8
17.3%
87.6
85.7
2.2%
Adjusted diluted net income per share
$
0.60
$
0.50
20.0%
$
1.04
$
1.00
4.0%
Hexcel Corporation (NYSE: HXL) today reported second quarter 2024 results including net sales of $500 million and adjusted diluted EPS of $0.60 per share.
CEO and President Tom Gentile said, “Our Hexcel team delivered a solid financial performance in the second quarter with strong overall revenue growth that drove continued recovery in margins. We are well-positioned and ready to support our customers’ rate increases and remain excited about the medium-term outlook and opportunity. In the near term, aircraft delivery levels and public comments by our customers on production plans warrant a more cautious stance, which we are reflecting in our revised 2024 guidance. We remain strongly positioned for growth with available plant capacity, and we continue employee training and operational optimization for the production ramp ahead. Reflecting our continued confidence in Hexcel’s future, we repurchased another $100 million of Hexcel common stock during the second quarter, bringing the total 2024 share repurchases to $200 million.”
Mr. Gentile continued, “Since joining Hexcel earlier this year, I have had the chance to visit more than half of our manufacturing sites, which has accelerated my learning about our products and capabilities. Hexcel’s broad portfolio of lightweight materials is helping current programs reduce carbon emissions and suppress noise, and our R&T team is advancing technologies that will help next generation products drive more efficient and sustainable aviation.”
Markets
Sales in the second quarter of 2024 were $500.4 million compared to $454.3 million in the second quarter of 2023.
Commercial Aerospace
Space & Defense
Industrial
Consolidated Operations
Gross margin for the second quarter of 2024 was 25.3% compared to 24.4% in the second quarter of 2023 as higher sales drove favorable cost leverage. As a percentage of sales, selling, general and administrative expenses for the second quarter of 2024 were 8.0% compared to 7.9% for the second quarter of 2023. R&T expenses as a percentage of sales were 2.9% in the second quarter of 2024 compared to 2.9% in Q2 2023. Adjusted operating income in the second quarter of 2024 was $72.0 million or 14.4% of sales, compared to $61.8 million, or 13.6% of sales in the second quarter of 2023. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 40 basis points in the second quarter of 2024 compared to the second quarter of 2023.
Year-to-Date 2024 Results
Sales for the first six months of 2024 were $972.7 million compared to $912.0 million, a 6.7% increase from the same period in 2023.
Commercial Aerospace (64% of YTD sales)
Space & Defense (28% of YTD sales)
Industrial (8% of YTD sales)
Consolidated Operations
Gross margin for the first six months of 2024 was 25.2% compared to 26.2% in the prior year period. The first quarter of 2023 benefited from particularly favorable cost absorption and sales mix. As a percentage of sales, selling, general and administrative expenses for the first six months of 2024 were 9.1% compared to 9.5% for the first six months of 2023. R&T expenses as a percentage of sales were 3.1% in the first six months of 2024 compared to 3.0% in the first half of 2023. Adjusted operating income for the first six months of 2024 was $126.1 million or 13.0% of sales, compared to $124.8 million or 13.7% of sales in 2023. Other operating expense for the first six months of 2024 and 2023 included restructuring costs. The impact of exchange rates on operating income as a percent of sales was favorable by approximately 30 basis points in the first six months of 2024 compared to the first six months of 2023.
Cash and other
2024 Guidance
Market-Specific Sales Outlook
Hexcel will host a conference call at 10:00 a.m. ET, on July 18, 2024 to discuss second quarter 2024 results. The live webcast will be available on the Investor Relations section of the Hexcel website via the following link: https://events.q4inc.com/attendee/579495300 The event can also be accessed by dialing +1 (646) 307-1963. The conference ID is 2360739. Replays of the call will be available on the website.
About Hexcel
Hexcel Corporation is a global leader in advanced lightweight composites technology. We propel the future of flight, energy generation, transportation, and recreation through excellence in providing innovative high-performance material solutions that are lighter, stronger and tougher, helping to create a better world for us all. Our broad and unrivaled product range includes carbon fiber, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, resins, engineered core and composite structures for use in commercial aerospace, space and defense, and industrial applications.
Disclaimer on Forward Looking Statements
This news release contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the estimates and expectations based on aircraft production rates provided by Airbus, Boeing and others, and the revenues we may generate from an aircraft model or program; expectations with regard to the impact of regulatory activity related to the Boeing 737 MAX or Boeing 787 on our revenues; expectations with regard to raw material cost and availability; expectations of composite content on new commercial aircraft programs and our share of those requirements; expectations regarding revenues from space and defense applications, including whether certain programs might be curtailed or discontinued; expectations regarding sales for industrial applications; expectations regarding cash generation, working capital trends, and inventory levels; expectations as to the level of capital expenditures, capacity, including the timing of completion of capacity expansions, and qualification of new products; expectations regarding our ability to improve or maintain margins; expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy; projections regarding our tax rate; expectations with regard to the continued impact of macroeconomic factors or geopolitical issues or conflicts; expectations regarding our strategic initiatives, including, our sustainability goals; expectations with regard to the effectiveness of cybersecurity measures; expectations regarding the outcome of legal matters or the impact of changes in laws or regulations; and our expectations of financial results for 2024 and beyond. Actual results may differ materially from the results anticipated in the forward looking statements due to a variety of factors, including but not limited to the extent of the impact of macroeconomic factors or geopolitical issues or conflicts; reductions in sales to any significant customers, particularly Airbus or Boeing, including related to regulatory activity or public scrutiny impacting the Boeing 737 MAX or the Boeing 787; our ability to effectively adjust production and inventory levels to align with customer demand; our ability to effectively motivate, retain and hire the necessary workforce; the availability and cost of raw materials, including the impact of supply disruptions and inflation; our ability to successfully implement or realize our strategic initiatives, including our sustainability goals and any restructuring or alignment activities in which we may engage; changes in sales mix; changes in current pricing due to cost levels; changes in aerospace delivery rates; changes in government defense procurement budgets; timely new product development or introduction; our ability to install, staff and qualify necessary capacity or complete capacity expansions to meet customer demand; cybersecurity-related risks, including the potential impact of breaches or intrusions; currency exchange rate fluctuations; changes in political, social and economic conditions, including the effect of change in global trade policies, such as sanctions; work stoppages or other labor disruptions; our ability to successfully complete any strategic acquisitions, investments or dispositions; compliance with environmental, health, safety and other related laws and regulations, including those related to climate change; the effects of natural disasters or other severe weather events, which may be worsened by the impact of climate change, and other severe catastrophic events, including any public health crisis; and the unexpected outcome of legal matters or impact of changes in laws or regulations. Additional risk factors are described in our filings with the Securities and Exchange Commission. We do not undertake an obligation to update our forward-looking statements to reflect future events.
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
Unaudited
Quarters Ended
Six Months Ended
June 30,
June 30,
(In millions, except per share data)
2024
2023
2024
2023
Net sales
$
500.4
$
454.3
$
972.7
$
912.0
Cost of sales
373.8
343.5
727.9
673.5
Gross margin
126.6
110.8
244.8
238.5
% Gross Margin
25.3
%
24.4
%
25.2
%
26.2
%
Selling, general and administrative expenses
39.9
35.7
88.9
86.5
Research and technology expenses
14.7
13.3
29.8
27.2
Other operating expense
0.2
0.5
1.4
0.7
Operating income
71.8
61.3
124.7
124.1
Interest expense, net
8.1
9.2
14.6
18.6
Income before income taxes, and equity in earnings of affiliated companies
63.7
52.1
110.1
105.5
Income tax expense
13.7
11.5
23.6
23.2
Income before equity in earnings of affiliated companies
50.0
40.6
86.5
82.3
Equity in earnings from affiliated companies
-
1.9
-
2.9
Net income
$
50.0
$
42.5
$
86.5
$
85.2
Basic net income per common share:
$
0.61
$
0.50
$
1.04
$
1.01
Diluted net income per common share:
$
0.60
$
0.50
$
1.03
$
1.00
Weighted-average common shares:
Basic
82.5
84.7
83.2
84.6
Diluted
83.2
85.6
84.0
85.5
Hexcel Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
Unaudited
June 30,
December 31,
(In millions)
2024
2023
Assets
Cash and cash equivalents
$
75.4
$
227.0
Accounts receivable, net
283.1
234.7
Inventories, net
351.5
334.4
Contract assets
34.5
25.1
Prepaid expenses and other current assets
63.1
43.0
Total current assets
807.6
864.2
Property, plant and equipment
3,211.8
3,195.5
Less accumulated depreciation
(1,563.1
)
(1,516.8
)
Net property, plant and equipment
1,648.7
1,678.7
Goodwill and other intangible assets, net
246.8
251.3
Investments in affiliated companies
5.0
5.0
Other assets
119.5
119.3
Total assets
$
2,827.6
$
2,918.5
Liabilities and Stockholders' Equity
Liabilities:
Short-term borrowings
$
0.1
$
0.1
Accounts payable
124.8
159.1
Accrued compensation and benefits
80.2
75.7
Accrued liabilities
88.6
81.0
Total current liabilities
293.7
315.9
Long-term debt
794.9
699.4
Retirement obligations
31.1
42.6
Other non-current liabilities
136.7
144.1
Total liabilities
$
1,256.4
$
1,202.0
Stockholders' equity:
Common stock, $0.01 par value, 200.0 shares authorized, 111.4 shares issued at June 30, 2024 and 110.8 shares issued at December 31, 2023
$
1.1
$
1.1
Additional paid-in capital
959.6
936.8
Retained earnings
2,230.2
2,168.7
Accumulated other comprehensive loss
(91.3
)
(74.1
)
3,099.6
3,032.5
Less – Treasury stock, at cost, 29.7 shares at June 30, 2024 and 26.7 shares at December 31, 2023
(1,528.4
)
(1,316.0
)
Total stockholders' equity
1,571.2
1,716.5
Total liabilities and stockholders' equity
$
2,827.6
$
2,918.5
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Unaudited
Six Months Ended
June 30,
(In millions)
2024
2023
Cash flows from operating activities
Net income
$
86.5
$
85.2
Reconciliation to net cash provided by operating activities:
Depreciation and amortization
62.0
61.7
Amortization related to financing
0.2
0.4
Deferred income taxes
(3.0
)
(6.7
)
Equity in earnings from affiliated companies
-
(2.9
)
Stock-based compensation
16.4
15.7
Restructuring expenses, net of payments
0.2
(3.6
)
Impairment of assets
-
1.7
Changes in assets and liabilities:
Increase in accounts receivable
(50.4
)
(33.9
)
Increase in inventories
(21.8
)
(36.8
)
Increase in prepaid expenses and other current assets
(28.2
)
(7.3
)
Decrease in accounts payable/accrued liabilities
(17.9
)
(35.9
)
Other - net
(6.8
)
(7.5
)
Net cash provided by operating activities (a)
37.2
30.1
Cash flows from investing activities
Capital expenditures (b)
(51.6
)
(74.8
)
Proceeds from sale of investments
-
2.5
Net cash used for investing activities
(51.6
)
(72.3
)
Cash flows from financing activities
Borrowings from senior unsecured credit facilities
95.0
103.0
Repayments of senior unsecured credit facilities
-
(48.0
)
Issuance costs related to senior unsecured credit facilities
-
(2.5
)
Repurchases of common stock
(201.8
)
-
Proceeds (repayment) of finance lease obligation and other debt, net
0.1
(0.1
)
Dividends paid
(25.0
)
(21.1
)
Activity under stock plans
(4.3
)
2.7
Net cash (used for) provided by financing activities
(136.0
)
34.0
Effect of exchange rate changes on cash and cash equivalents
(1.2
)
0.4
Net decrease in cash and cash equivalents
(151.6
)
(7.8
)
Cash and cash equivalents at beginning of period
227.0
112.0
Cash and cash equivalents at end of period
$
75.4
$
104.2
Supplemental data:
Free Cash Flow (a)+(b)
$
(14.4
)
$
(44.7
)
Accrual basis additions to property, plant and equipment
$
41.1
$
70.5
Hexcel Corporation and Subsidiaries
Net Sales to Third-Party Customers by Market
Quarters Ended June 30, 2024 and 2023
Unaudited
Table A
(In millions)
As Reported
Constant Currency (a)
B/(W)
FX
B/(W)
Market
2024
2023
%
Effect (b)
2023
%
Commercial Aerospace
$
320.7
$
264.3
21.3
$
(0.6
)
$
263.7
21.6
Space & Defense
138.9
137.5
1.0
(0.5
)
137.0
1.4
Industrial
40.8
52.5
(22.3
)
(0.3
)
52.2
(21.8
)
Consolidated Total
$
500.4
$
454.3
10.1
$
(1.4
)
$
452.9
10.5
Consolidated % of Net Sales
%
%
%
Commercial Aerospace
64.1
58.2
58.2
Space & Defense
27.8
30.3
30.2
Industrial
8.1
11.5
11.6
Consolidated Total
100.0
100.0
100.0
Six Months Ended June 30, 2024 and 2023
Unaudited
(In millions)
As Reported
Constant Currency (a)
B/(W)
FX
B/(W)
Market
2024
2023
%
Effect (b)
2023
%
Commercial Aerospace
$
620.0
$
548.8
13.0
$
(0.7
)
$
548.1
13.1
Space & Defense
278.0
263.7
5.4
(0.2
)
263.5
5.5
Industrial
74.7
99.5
(24.9
)
0.1
99.6
(25.0
)
Consolidated Total
$
972.7
$
912.0
6.7
$
(0.8
)
$
911.2
6.7
Consolidated % of Net Sales
%
%
%
Commercial Aerospace
63.7
60.2
60.3
Space & Defense
28.6
28.9
28.9
Industrial
7.7
10.9
10.8
Consolidated Total
100.0
100.0
100.0
(a)
To assist in the analysis of the Company’s net sales trend, total net sales and sales by market for the quarter and six months ended June 30, 2023 have been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the respective periods in 2024 and are referred to as “constant currency” sales.
(b)
FX effect is the estimated impact on “as reported” net sales due to changes in foreign currency exchange rates.
Hexcel Corporation and Subsidiaries
Segment Information
Unaudited
Table B
(In millions)
Composite Materials
Engineered Products
Corporate & Other (a)
Total
Second Quarter 2024
Net sales to external customers
$
408.6
$
91.8
$
-
$
500.4
Intersegment sales
23.9
0.6
(24.5
)
-
Total sales
432.5
92.4
(24.5
)
500.4
Other operating expense
-
0.2
-
0.2
Operating income (loss)
74.3
13.0
(15.5
)
71.8
% Operating margin
17.2
%
14.1
%
14.3
%
Depreciation and amortization
27.3
3.7
-
31.0
Stock-based compensation expense
1.1
0.3
1.9
3.3
Accrual based additions to capital expenditures
18.6
3.9
-
22.5
Second Quarter 2023
Net sales to external customers
$
378.5
$
75.8
$
-
$
454.3
Intersegment sales
18.5
0.5
(19.0
)
-
Total sales
397.0
76.3
(19.0
)
454.3
Other operating expense
0.3
0.2
-
0.5
Operating income (loss)
64.2
6.8
(9.7
)
61.3
% Operating margin
16.2
%
8.9
%
13.5
%
Depreciation and amortization
27.5
3.5
-
31.0
Stock-based compensation expense
1.1
0.3
1.4
2.8
Accrual based additions to capital expenditures
12.9
40.8
-
53.7
First Six Months 2024
Net sales to external customers
$
788.1
$
184.6
$
-
$
972.7
Intersegment sales
47.2
0.9
(48.1
)
-
Total sales
835.3
185.5
(48.1
)
972.7
Other operating expense
0.8
0.6
-
1.4
Operating income (loss)
138.0
25.9
(39.2
)
124.7
% Operating margin
16.5
%
14.0
%
12.8
%
Depreciation and amortization
54.5
7.5
-
62.0
Stock-based compensation expense
4.2
1.1
11.1
16.4
Accrual based additions to capital expenditures
35.3
5.8
-
41.1
First Six Months 2023
Net sales to external customers
$
756.7
$
155.3
$
-
$
912.0
Intersegment sales
37.8
1.5
(39.3
)
-
Total sales
794.5
156.8
(39.3
)
912.0
Other operating expense
0.5
0.2
-
0.7
Operating income (loss)
137.4
18.8
(32.1
)
124.1
% Operating margin
17.3
%
12.0
%
13.6
%
Depreciation and amortization
54.7
7.0
-
61.7
Stock-based compensation expense
4.2
1.1
10.4
15.7
Accrual based additions to capital expenditures
26.0
44.5
-
70.5
(a) Hexcel does not allocate corporate expenses to the operating segments.
Hexcel Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Operating Income, Net Income, EPS and Operating Cash Flow to Free Cash Flow
Table C
Unaudited
Quarters Ended
Six Months Ended
June 30,
June 30,
(In millions)
2024
2023
2024
2023
GAAP operating income
$
71.8
$
61.3
$
124.7
$
124.1
Other operating expense (a)
0.2
0.5
1.4
0.7
Non-GAAP operating income
$
72.0
$
61.8
$
126.1
$
124.8
Unaudited
Quarters Ended June 30,
2024
2023
(In millions, except per diluted share data)
Net Income
EPS
Net Income
EPS
GAAP
$
50.0
$
0.60
$
42.5
$
0.50
Other operating expense, net of tax (a)
0.2
-
0.3
-
Non-GAAP
$
50.2
$
0.60
$
42.8
$
0.50
Unaudited
Six Months Ended June 30,
2024
2023
(In millions, except per diluted share data)
Net Income
EPS
Net Income
EPS
GAAP
$
86.5
$
1.03
$
85.2
$
1.00
Other operating expense, net of tax (a)
1.1
0.01
0.5
-
Non-GAAP
$
87.6
$
1.04
$
85.7
$
1.00
Unaudited
Six Months Ended June 30
(In millions)
2024
2023
Net cash provided by operating activities
$
37.2
$
30.1
Less: Capital expenditures
(51.6
)
(74.8
)
Free cash flow (non-GAAP)
$
(14.4
)
$
(44.7
)
(a) The quarters and six months ended June 30, 2024 and 2023 included restructuring costs.
NOTE: Management believes that adjusted operating income, adjusted net income, adjusted diluted net income per share and free cash flow, which are non-GAAP measures, are meaningful to investors because they provide a view of Hexcel with respect to the underlying operating results excluding special items. Special items represent significant charges or credits that are important to an understanding of Hexcel’s overall operating results in the periods presented. Non-GAAP measurements are not recognized in accordance with generally accepted accounting principles and should not be viewed as an alternative to GAAP measures of performance.
Hexcel Corporation and Subsidiaries
Schedule of Total Debt, Net of Cash
Table D
Unaudited
June 30,
December 31,
June 30,
(In millions)
2024
2023
2023
Current portion finance lease
$
0.1
$
0.1
$
0.1
Total current debt
0.1
0.1
0.1
Senior unsecured credit facility
95.0
-
80.0
4.7% senior notes due 2025
300.0
300.0
300.0
3.95% senior notes due 2027
400.0
400.0
400.0
Senior notes original issue discounts
(0.5
)
(0.7
)
(0.8
)
Senior notes deferred financing costs
(1.2
)
(1.6
)
(1.9
)
Other debt
1.6
1.7
1.7
Total long-term debt
794.9
699.4
779.0
Total Debt
795.0
699.5
779.1
Less: Cash and cash equivalents
(75.4
)
(227.0
)
(104.2
)
Total debt, net of cash
$
719.6
$
472.5
$
674.9
View source version on businesswire.com: https://www.businesswire.com/news/home/20240718583018/en/
Kurt Goddard | Vice President Investor Relations | Kurt.Goddard@Hexcel.com | +1 (203)-352-6826
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