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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hexcel Corp | TG:HXL | Tradegate | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.00 | 1.71% | 59.50 | 59.00 | 59.50 | 58.00 | 58.00 | 58.00 | 1 | 22:50:16 |
Regulatory News:
Hexcel Corporation (NYSE:HXL)(Paris:HXL):
Quarter EndedSeptember 30,
Nine Months EndedSeptember 30,
(In millions, except per share data) 2012 2011 % Change 2012 2011 % Change Net Sales $ 391.6 $ 351.8 11.3% $ 1,190.9 $ 1,037.1 14.8% Net sales change in constant currency 13.4% 17.0% Operating Income 60.0 46.0 30% 194.5 142.6 36% Net Income 39.8 32.2 24% 127.4 96.0 33% Diluted net income per common share $ 0.39 $ 0.32 22% $ 1.25 $ 0.95 32% Non-GAAP Measures for y-o-y comparisons: Adjusted Operating Income (table C) $ 60.0 $ 48.7 23% $ 185.0 $ 139.6 33% As a % of sales 15.3% 13.8% 15.5% 13.5% Adjusted Net Income (table C) 39.8 34.0 17.1% 122.1 91.2 34% Adjusted diluted net income per share $ 0.39 $ 0.34 14.7% $ 1.20 $ 0.91 32%Hexcel Corporation (NYSE:HXL), today reported results for the third quarter of 2012. Net sales during the quarter were $391.6 million, 11.3% higher than the $351.8 million reported for the third quarter of 2011. Operating income for the period was $60.0 million, compared to $46.0 million last year, while net income for the third quarter of 2012 was $39.8 million, or $0.39 per diluted share, compared to $32.2 million or $0.32 per diluted share in 2011. Excluding the impact of items in Table C, adjusted diluted net income for the third quarter of 2012 was $0.39 per share compared to $0.34 per share in 2011.
Chief Executive Officer Comments
Mr. Berges commented, “Hexcel’s results continue to be strong, as solid execution and increased sales combined to yield another quarter with excellent performance. For the quarter, adjusted operating income grew 23% over the same period last year on 13% constant currency revenue growth, resulting in a 150 basis point improvement in operating margins.”
Looking ahead, Mr. Berges said, “As we expect continued year over year sales growth and operational performance, we are increasing our 2012 guidance for adjusted diluted EPS to $1.54 to $1.59 (from $1.45 to $1.55). We are also narrowing the sales range to $1.56 billion to $1.59 billion (from $1.55 billion to $1.65 billion). Additionally, we have revised our capital spending plan to incorporate recent yield and productivity improvements, reduced cycle time to replicate and qualify new lines, and our latest demand model. We are lowering our 2012 accrued capital expenditure guidance to $230 million to $250 million (from $250 million to $275 million) and expect 2013 to be around $200 million.”
Markets
Commercial Aerospace
Space & Defense
Industrial
Tax
Cash and other
2012 Outlook
We have updated our 2012 outlook:
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Hexcel will host a conference call at 10:00 A.M. ET, tomorrow, October 23, 2012 to discuss the third quarter results and respond to analyst questions. The telephone number for the conference call is (719) 325-2144 and the confirmation code is 5171354. The call will be simultaneously hosted on Hexcel’s web site at www.hexcel.com/investors/index.html. Replays of the call will be available on the web site for approximately three days.
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Hexcel Corporation is a leading advanced composites company. It develops, manufactures and markets lightweight, high-performance structural materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures, used in commercial aerospace, space and defense and industrial applications such as wind turbine blades.
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Disclaimer on Forward Looking Statements
This press release contains statements that are forward looking, including statements relating to anticipated trends in constant currency for the market segments we serve (including changes in commercial aerospace revenues, the estimates and expectations based on aircraft production rates made publicly available by Airbus and Boeing, the revenues we may generate from an aircraft model or program, the impact of delays in new aircraft programs, the outlook for space & defense revenues and the trend in wind energy, recreation and other industrial applications); our ability to maintain and improve margins in light of the changes in product mix, efficiency improvements, continued cost reduction efforts and the current economic environment; outcome of legal matters; the magnitude and timing of capital expenditures in relation to market demand; and the impact of the above factors on our expectations of 2012 financial results. 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 changing market conditions, increased raw material costs, competition, product mix, inability to achieve planned manufacturing improvements and cost reductions, supply chain disruptions, conditions in the financial markets and changes in currency exchange rates, interest rates, governmental and environmental regulations and tax codes. Additional risk factors are described in our filings with the SEC. 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
Quarter Ended
September 30,
Nine Months Ended
September 30,
(In millions, except per share data) 2012 2011 2012 2011 Net sales $ 391.6 $ 351.8 $ 1,190.9 $ 1,037.1 Cost of sales 292.4 265.3 879.8 780.6 Gross margin 99.2 86.5 311.1 256.5 % Gross margin 25.3 % 24.6 % 26.1 % 24.7 % Selling, general and administrative expenses 30.3 29.9 99.4 92.5 Research and technology expenses 8.9 7.9 26.7 24.4 Other operating (income) expense (a) — 2.7 (9.5 ) (3.0 ) Operating income 60.0 46.0 194.5 142.6 Interest expense, net 2.2 2.2 8.2 9.3 Non-operating expense (b) — — 1.1 4.9 Income before income taxes and equity in earnings from affiliated companies 57.8 43.8 185.2 128.4 Provision for income taxes (c) 18.0 12.0 58.5 33.5 Income before equity in earnings from affiliated companies 39.8 31.8 126.7 94.9 Equity in earnings from affiliated companies — 0.4 0.7 1.1 Net income $ 39.8 $ 32.2 $ 127.4 $ 96.0 Basic net income per common share: $ 0.40 $ 0.33 $ 1.27 $ 0.97 Diluted net income per common share: $ 0.39 $ 0.32 $ 1.25 $ 0.95 Weighted-average common shares: Basic 100.3 99.0 100.1 98.6 Diluted 102.1 101.1 102.0 100.7(a) Other operating income for the nine months ended September 30, 2012 includes income from a $9.6 million business interruption insurance settlement related to a prior year claim, a $4.9 million gain on the sale of land and a $5.0 million charge for additional environmental reserves primarily for remediation of a manufacturing facility sold in 1986. For the nine months ended September 30, 2011 other operating income is a $5.7 million benefit from the curtailment of a pension plan and a $2.7 million charge for additional environmental reserves for remediation of a manufacturing facility sold in 1986.
(b) Non-operating expense is the accelerated amortization of deferred financing costs and expensing of the call premium from redeeming $73.5 million in June 2012 and $150 million in February 2011 of the Company’s 6.75% senior subordinated notes.
(c) Provision for income taxes for the nine months ended September 30, 2011 includes a release of $5.5 million of reserves primarily for uncertain tax positions as a result of an audit settlement.
Hexcel Corporation and SubsidiariesCondensed Consolidated Balance Sheets
Unaudited(In millions)
September 30, 2012 December 31, 2011 Assets Current assets: Cash and cash equivalents $ 43.2 $ 49.5 Accounts receivable, net 242.2 199.3 Inventories, net 235.7 215.7 Current deferred tax assets and other current assets 63.1 59.8 Total current assets 584.2 524.3 Property, plant and equipment 1,391.0 1,223.5 Less accumulated depreciation (532.8 ) (501.4 ) Property, plant and equipment, net 858.2 722.1 Goodwill and other intangible assets, net 57.7 57.4 Investments in affiliated companies 21.9 21.7 Deferred tax assets 28.0 33.0 Other assets 16.9 17.6 Total assets $ 1,566.9 $ 1,376.1 Liabilities and Stockholders' Equity Current liabilities: Notes payable and current maturities of capital lease obligations $ 17.1 $ 12.6 Accounts payable 104.3 141.7 Accrued liabilities 108.1 93.2 Total current liabilities 229.5 247.5 Long-term notes payable and capital lease obligations 279.3 238.3 Other non-current liabilities 109.2 88.1 Total liabilities 618.0 573.9 Stockholders' equity: Common stock, $0.01 par value, 200.0 shares authorized, 102.2 shares issued at September 30, 2012 and 101.0 shares issued at December 31, 2011 1.0 1.0 Additional paid-in capital 612.2 589.2 Retained earnings 411.3 283.9 Accumulated other comprehensive loss (36.4 ) (39.8 ) 988.1 834.3 Less – Treasury stock, at cost, 2.5 shares and 2.2 shares at September 30, 2012 and December 31, 2011, respectively (39.2 ) (32.1 ) Total stockholders' equity 948.9 802.2 Total liabilities and stockholders' equity $ 1,566.9 $ 1,376.1 Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows Unaudited Year to Date EndedSeptember 30,
(In millions) 2012 2011 Cash flows from operating activities Net income $ 127.4 $ 96.0 Reconciliation to net cash provided by operating activities: Depreciation and amortization 43.0 41.6 Amortization of deferred financing costs and call premium expense 2.5 6.4 Deferred income taxes 21.3 27.4 Equity in earnings from affiliated companies (0.7 ) (1.1 ) Share-based compensation 13.1 11.3 Gain on sale of land (4.9 ) Pension curtailment gain—
(5.7 ) Excess tax benefits on share-based compensation (5.8 ) (3.7 ) Changes in assets and liabilities: Increase in accounts receivable (45.0 ) (31.8 ) Increase in inventories (20.7 ) (41.8 ) (Increase) decrease in other current assets 1.5 (2.0 ) Increase in accounts payable and accrued liabilities26.9
18.4 Other – net (8.1 ) (4.0 ) Net cash provided by operating activities (a) 150.5 111.0 Cash flows from investing activities Proceeds from sale of land 5.3 — Capital expenditures (b) (208.9 ) (99.5 ) Settlement of foreign currency hedge—
(5.2 ) Net cash used for investing activities (203.6 ) (104.7 ) Cash flows from financing activities Borrowings from senior secured credit facility 122.0 135.0 Repayments of capital lease obligations and other debt, net 1.8 (3.6 ) Issuance costs related to senior secured credit facility (0.6 ) — Call premium payment for 6.75% senior subordinated notes (0.8 ) (3.4 ) Repayment of senior secured credit facility – term loan (5.0 ) (3.8 ) Repayment of 6.75% senior subordinated notes (73.5 ) (150.0 ) Repayment of senior secured credit facility — (61.0 ) Activity under stock plans 3.0 9.1 Net cash provided by (used in) financing activities 46.9 (77.7 ) Effect of exchange rate changes on cash and cash equivalents (0.1 ) 2.6 Net decrease in cash and cash equivalents (6.3 ) (68.8 ) Cash and cash equivalents at beginning of period 49.5 117.2 Cash and cash equivalents at end of period $ 43.2 $ 48.4 Supplemental Data: Free cash flow (a)+(b) $ (58.4 ) $ 11.5 Accrual basis additions to property, plant and equipment $ 174.7 $ 104.3 Hexcel Corporation and Subsidiaries Net Sales to Third-Party Customers by Market Segment Quarters Ended September 30, 2012 and 2011 (Unaudited) Table A (In millions) As Reported Constant Currency (a) Market Segment 2012 2011 B/(W) % FXEffect (b)
2011 B/(W)%
Commercial Aerospace $ 234.1 $ 207.4 12.9 $ (1.4) $ 206.0 13.6 Space & Defense 90.6 80.9 12.0 (1.7) 79.2 14.4 Industrial 66.9 63.5 5.4 (3.5) 60.0 11.5 Consolidated Total $ 391.6 $ 351.8 11.3 $ (6.6) $ 345.2 13.4 Consolidated % of Net Sales % % % Commercial Aerospace 59.8 59.0 59.7 Space & Defense 23.1 23.0 22.9 Industrial 17.1 18.0 17.4 Consolidated Total 100.0 100.0 100.0 Nine Months Ended September 30, 2012 and 2011 (Unaudited) (In millions) As Reported Constant Currency (a) Market Segment 2012 2011 B/(W) % FXEffect (b)
2011 B/(W)%
Commercial Aerospace $ 709.9 $ 612.8 15.8 $ (6.5) $ 606.3 17.1 Space & Defense 263.6 242.3 8.8 (4.2) 238.1 10.7 Industrial 217.4 182.0 19.5 (8.4) 173.6 25.2 Consolidated Total $ 1,190.9 $ 1,037.1 14.8 $ (19.1) $ 1,018.0 17.0 Consolidated % of Net Sales % % % Commercial Aerospace 59.6 59.1 59.6 Space & Defense 22.1 23.4 23.4 Industrial 18.3 17.5 17.0 Consolidated Total 100.0 100.0 100.0(a) To assist in the analysis of our net sales trend, total net sales and sales by market for the quarter and nine months ended September 30, 2011 have been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the respective period in 2012 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 (b) Engineered Products Corporate & Other (a)(b) Total Third Quarter 2012 Net sales to external customers $ 299.9 $ 91.7 $ — $ 391.6 Intersegment sales 14.0 0.9 (14.9 ) — Total sales 313.9 92.6 (14.9 ) 391.6 Operating income (loss) 57.0 14.9 (11.9 ) 60.0 % Operating margin 18.2 % 16.1 % 15.3 % Depreciation and amortization 13.4 1.2 0.1 14.7 Stock-based compensation expense 0.7 0.2 1.7 2.6 Accrual based additions to capital expenditures 55.6 4.6 — 60.2 Third Quarter 2011 Net sales to external customers $ 262.4 $ 89.4 $ — $ 351.8 Intersegment sales 14.6 0.3 (14.9 ) — Total sales 277.0 89.7 (14.9 ) 351.8 Operating income (loss) (b) 45.1 16.2 (15.3 ) 46.0 % Operating margin 16.3 % 18.1 % 13.1 % Other operating (income) expense (b) — — 2.7 2.7 Depreciation and amortization 12.5 1.1 0.1 13.7 Stock-based compensation expense 0.9 0.5 1.1 2.5 Accrual based additions to capital expenditures 46.5 2.2 0.5 49.2 First Nine Months 2012 Net sales to external customers $ 932.8 $ 258.1 $ — $ 1,190.9 Intersegment sales 44.8 1.2 (46.0 ) — Total sales 977.6 259.3 (46.0 ) 1,190.9 Operating income (loss) 203.7 38.4 (47.6 ) 194.5 % Operating margin 20.8 % 14.8 % 16.3 % Other operating (income) expense (b) (14.5 ) — 5.0 (9.5 ) Depreciation and amortization 39.6 3.3 0.1 43.0 Stock-based compensation expense 3.7 0.7 8.7 13.1 Accrual based additions to capital expenditures 166.2 8.3 0.2 174.7 First Nine Months 2011 Net sales to external customers $ 795.5 $ 241.6 $ — $ 1,037.1 Intersegment sales 42.4 0.8 (43.2 ) — Total sales 837.9 242.4 (43.2 ) 1,037.1 Operating income (loss) 143.4 40.6 (41.4 ) 142.6 % Operating margin 17.1 % 16.7 % 13.7 % Other operating (income) expense (b) (5.7 ) — 2.7 (3.0 ) Depreciation and amortization 38.2 3.2 0.2 41.6 Stock-based compensation expense 3.4 0.9 7.0 11.3 Accrual based additions to capital expenditures 99.2 4.6 0.5 104.3(a) We do not allocate corporate expenses to the operating segments.
(b) Other operating income for the nine months ended September 30, 2012 includes income from a $9.6 million business interruption insurance settlement related to a prior year claim, a $4.9 million gain on the sale of land and a $5.0 million charge for additional environmental reserves primarily for remediation of a manufacturing facility sold in 1986. The third quarter of 2011 includes $2.7 million of charges to the environmental reserves primarily for remediation at a manufacturing facility sold in 1986. For the nine months ended September 30, 2011 other operating income is a $5.7 million benefit from the curtailment of a pension plan.
Hexcel Corporation and Subsidiaries Reconciliation of GAAP and Non-GAAP Operating Income and Net Income Table C Unaudited Quarter EndedSeptember 30,
Nine Months EndedSeptember 30,
(In millions) 2012 2011 2012 2011 GAAP operating income $ 60.0 46.0 $ 194.5 $ 142.6 - Other operating (income) expense (a) — 2.7 (9.5 ) (3.0 ) Adjusted Operating Income $ 60.0 48.7 $ 185.0 $ 139.6 % of Net Sales 15.3 % 13.8 % 15.5 % 13.5 % - Stock Compensation Expense $ 2.6 2.5 $ 13.1 $ 11.3 - Depreciation and Amortization 14.7 13.7 43.0 41.6 Adjusted EBITDA $ 77.3 64.9 $ 241.1 $ 192.5 Unaudited Quarter Ended September 30, 2012 2011 (In millions, except per diluted share data) As Reported EPS As Reported EPS GAAP net income $ 39.8 $ 0.39 $ 32.2 $ 0.32 - Other operating (income) expense (net of tax) (a) — — 1.8 0.02 Adjusted net income $ 39.8 $ 0.39 $ 34.0 $ 0.34 Unaudited Nine Months Ended September 30, 2012 2011 (In millions, except per diluted share data) As Reported EPS As Reported EPS GAAP net income $ 127.4 $ 1.25 $ 96.0 $ 0.95 - Other operating (income) expense (net of tax) (a) (6.0 ) (0.06 ) (2.3 ) (0.02 ) - Non-operating expense (net of tax) (b) 0.7 0.01 3.0 0.03 - Benefit from tax audit settlement (c) — — (5.5 ) (0.05 ) Adjusted net income $ 122.1 $ 1.20 $ 91.2 $ 0.91(a) Other operating income for nine months ended September 30, 2012 includes income from a $9.6 million business interruption insurance settlement related to a prior year claim, a $4.9 million gain on the sale of land and a $5.0 million charge for additional environmental reserves primarily for remediation of a manufacturing facility sold in 1986. The third quarter of 2011 includes $2.7 million of charges to the environmental reserves primarily for remediation at a manufacturing facility sold in 1986. For the nine months ended September 30, 2011 other operating income is a $5.7 million benefit from the curtailment of a pension plan.
(b) Non-operating expense is the accelerated amortization of deferred financing costs and expensing of the call premium from redeeming $73.5 million in June 2012 and $150 million in February 2011 of the Company’s 6.75% senior subordinated notes.
(c) Tax benefit from the release of $5.5 million of reserves primarily for uncertain tax positions as a result of an audit settlement.
Management believes that adjusted operating income, adjusted EBITDA, adjusted net income and free cash flow (defined as cash provided by operating activities less cash payments for capital expenditures), which are non-GAAP measurements, are meaningful to investors because they provide a view of Hexcel with respect to ongoing 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. In addition, management believes that total debt, net of cash, which is also a non-GAAP measure, is an important measure of Hexcel’s liquidity. Such 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 September 30, June 30, December 31, (In millions) 2012 2012 2011 Notes payable and current maturities of capital lease obligations $ 17.1 $ 19.2 $ 12.6 Long-term notes payable and capital lease obligations 279.3 280.7 238.3 Total Debt 296.4 299.9 250.9 Less: Cash and cash equivalents (43.2 ) (32.6 ) (49.5 ) Total debt, net of cash $ 253.2 $ 267.3 $ 201.4
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