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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 | |
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0.00 | 0.00% | 60.00 | 60.00 | 60.00 | 0.00 | 01:00:00 |
Regulatory News:
Quarter EndedDecember 31,
Year EndedDecember 31,
(In millions, except per share data) 2011 2010 % Change 2011 2010 % Change Net Sales $ 355.3 $ 311.0 14.2% $ 1,392.4 $ 1,173.6 18.6% Net sales change in constant currency 14.4% 17.1% Operating Income 49.4 31.0 59% 192.0 129.8 48% Net Income 39.5 22.9 72% 135.5 77.4 75% Diluted net income per common share $ 0.39 $ 0.23 70% $ 1.35 $ 0.77 75% Non-GAAP Measures for y-o-y comparisons: Adjusted Operating Income (table C) $ 49.4 $ 31.0 59% $ 189.0 $ 133.3 42% As a % of sales 13.9% 10.0% 13.6% 11.4% Adjusted Net Income (table C) 33.7 20.0 69% 124.9 77.5 61% Adjusted diluted net income per share $ 0.33 $ 0.20 65% $ 1.24 $ 0.78 59%Hexcel Corporation (NYSE: HXL) (Paris:HXL), today reported results for the fourth quarter of 2011. Net sales during the quarter were $355.3 million, 14.2% higher than the $311.0 million reported for the fourth quarter of 2010. Operating income for the period was $49.4 million, compared to $31.0 million last year. Net income for the fourth quarter of 2011 was $39.5 million, or $0.39 per diluted share, compared to $22.9 million or $0.23 per diluted share in 2010. Excluding the impact of tax adjustments (Table C), adjusted diluted net income for the fourth quarter of 2011 was $0.33 per share compared to $0.20 per share in 2010.
Chief Executive Officer Comments
Mr. Berges commented, “This was another strong quarter that completed a very good year for Hexcel. For the quarter, our adjusted diluted EPS of $0.33 was 65% higher than last year on a 14.4% increase in constant currency sales, while for the year our adjusted diluted EPS of $1.24 was 59% higher on a 17.1% increase in constant currency sales. Revenues from the commercial aerospace market, now nearly 60% of our total sales, grew 21% this quarter compared to the prior year. Solid gross margins coupled with continued cost controls allowed us to achieve fourth quarter operating margins of 13.9% versus 10.0% in 2010. The quarter was consistent with the strong execution displayed throughout 2011, enabling us to improve our adjusted operating margin for the year to 13.6%, as compared to 11.4% in 2010.”
Looking ahead, Mr. Berges said, “Despite concerns about the global economy, the large backlogs of orders at our major customers suggest we are well positioned for 2012 and beyond. As previously disclosed, we are accelerating our capital spending plans to expand our capacity in line with our outlook. We remain focused on delivering earnings leverage on our expected higher levels of sales in the coming years. We reaffirm our previously announced 2012 guidance and look forward to a period of sustained growth.”
Markets
Commercial Aerospace
Space & Defense
Industrial
Operations
Tax
Cash and other
2012 Outlook
We reaffirm our 2012 outlook, which was previously issued on December 7, 2011. Our 2012 outlook includes:
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Hexcel will host a conference call at 11:00 A.M. ET, tomorrow, January 26, 2012 to discuss the fourth quarter results and respond to analyst questions. The telephone number for the conference call is (719) 325-4816 and the confirmation code is 9180149. 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 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 UnauditedQuarter EndedDecember 31,
Year EndedDecember 31,
(In millions, except per share data) 2011 2010 2011 2010 Net sales $ 355.3 $ 311.0 $ 1,392.4 $ 1,173.6 Cost of sales 269.7 243.4 1,050.3 891.0 Gross margin 85.6 67.6 342.1 282.6 % Gross margin 24.1 % 21.7 % 24.6 % 24.1 % Selling, general and administrative expenses 28.0 28.8 120.5 118.5 Research and technology expenses 8.2 7.8 32.6 30.8 Other operating (income) expense (a) — — (3.0 ) 3.5 Operating income 49.4 31.0 192.0 129.8 Interest expense, net 2.3 4.2 11.6 23.2 Non-operating expense (b) — — 4.9 6.8 Income before income taxes and equity in earnings from affiliated companies 47.1 26.8 175.5 99.8 Provision for income taxes (c) 8.1 4.0 41.6 22.9 Income before equity in earnings from affiliated companies 39.0 22.8 133.9 76.9 Equity in earnings from affiliated companies 0.5 0.1 1.6 0.5 Net income $ 39.5 $ 22.9 $ 135.5 $ 77.4 Basic net income per common share: $ 0.40 $ 0.23 $ 1.37 $ 0.79 Diluted net income per common share: $ 0.39 $ 0.23 $ 1.35 $ 0.77 Weighted-average common shares: Basic 99.2 97.7 98.8 97.6 Diluted 101.3 100.1 100.7 99.9(a) Other operating (income) expense for the year ended December 31, 2011 includes a $5.7 million benefit from the curtailment of a pension plan. Other operating (income) expense for the full years 2011 and 2010 also includes $2.7 million and $3.5 million, respectively, for charges to the environmental reserves primarily for remediation at a manufacturing facility sold in 1986.
(b) Non-operating expense for year ended December 31, 2011 is the accelerated amortization of deferred financing costs and expensing of the call premium from redeeming $150 million of 6.75% senior subordinated notes. The $6.8 million non-operating expense in the full year 2010 reflects the accelerated amortization of deferred financing costs as a result of the refinancing of our Senior Secured Credit Facility.
(c) The quarter ended December 31, 2011 includes a $5.8 million benefit primarily from the reversal of valuation allowances against net operating loss and foreign tax credit carryforwards. The year ended December 31, 2011 also includes a tax benefit from the release of $5.5 million of reserves primarily for uncertain tax positions as a result of an audit settlement. The quarter ended December 31, 2010 includes a $2.9 million benefit from the reversal of valuation allowances against U.S. deferred tax assets. The year ended December 31, 2010 also includes a $3.5 million benefit from New Clean Energy Manufacturing Tax Credits awarded in January 2010 for qualifying capital investments made in our U.S. wind energy facility in 2009.
Hexcel Corporation and SubsidiariesCondensed Consolidated Balance Sheets
Unaudited
(In millions)
December 31, 2011
December 31, 2010
Assets Current assets: Cash and cash equivalents $ 49.5 $ 117.2 Accounts receivable, net 199.3 173.9 Inventories, net 215.7 169.9 Prepaid expenses and other current assets 59.8 36.7 Total current assets 524.3 497.7 Property, plant and equipment 1,223.5 1,063.9 Less accumulated depreciation (501.4 ) (465.6 ) Property, plant and equipment, net 722.1 598.3 Goodwill and other intangible assets, net 57.4 56.2 Investments in affiliated companies 21.7 19.9 Deferred tax assets 33.0 63.6 Other assets 17.6 22.4 Total assets $ 1,376.1 $ 1,258.1 Liabilities and Stockholders' Equity Current liabilities: Notes payable and current maturities of capital lease obligations $ 12.6 $ 27.6 Accounts payable 141.7 83.0 Accrued liabilities 93.2 95.3 Total current liabilities 247.5 205.9 Long-term notes payable and capital lease obligations 238.3 304.6 Other non-current liabilities 88.1 88.2 Total liabilities 573.9 598.7 Stockholders' equity: Common stock, $0.01 par value, 200.0 shares authorized, 101.0 shares issued at December 31, 2011 and 99.5 shares issued at December 31, 2010 1.0 1.0 Additional paid-in capital 589.2 552.3 Retained earnings 283.9 148.4 Accumulated other comprehensive loss (39.8 ) (15.1 ) 834.3 686.6 Less – Treasury stock, at cost, 2.2 shares at December 31, 2011 2010, respectively (32.1 ) (27.2 ) Total stockholders' equity 802.2 659.4 Total liabilities and stockholders' equity $ 1,376.1 $ 1,258.1 Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows UnauditedYear to Date Ended December 31,
(In millions) 2011 2010 Cash flows from operating activities Net income $ 135.5 $ 77.4 Reconciliation to net cash provided by operating activities: Depreciation and amortization 55.3 53.2 Amortization of debt discount and deferred financing costs and call premium expense 7.1 10.3 Deferred income taxes 23.4 16.1 Equity in earnings from affiliated companies (1.6 ) (0.5 ) Share-based compensation 13.9 12.4 Pension curtailment gain (5.7 ) — Excess tax benefits on share-based compensation (8.5 ) (2.3 ) Changes in assets and liabilities: Increase in accounts receivable (28.2 ) (22.5 ) Increase in inventories (48.8 ) (16.7 ) Increase in prepaid expenses and other current assets (1.1 ) (0.2 ) Increase in accounts payable/accrued liabilities 34.1 4.5 Other – net (4.9 ) (5.2 ) Net cash provided by operating activities (a) 170.5 126.5 Cash flows from investing activities Capital expenditures and deposits for capital purchases (b) (158.0 ) (48.8 ) Settlement of foreign currency hedge (5.2 ) — Net cash used in investing activities (163.2 ) (48.8 ) Cash flows from financing activities Borrowings from senior secured credit facility 135.0 — Repayment of 6.75% senior subordinated notes (151.5 ) — Repayment of senior secured credit facility (57.0 ) — Repayment of senior secured credit facility – term loan (5.0 ) (2.5 ) Call premium payment for 6.75% senior subordinated notes (3.4 ) — (Repayments) borrowings from credit line (2.3 ) 3.9 Repayments of capital lease obligations and other debt, net (0.7 ) (0.5 ) Borrowings from senior secured credit facility – new and former term B loan — 100.0 Repayment of senior secured credit facility – former term loans — (164.1 ) Issuance costs related to new Senior Secured Credit Facility — (5.1 ) Activity under stock plans 10.5 3.1 Net cash used in financing activities (74.4 ) (65.2 ) Effect of exchange rate changes on cash and cash equivalents (0.6 ) (5.4 ) Net (decrease) increase in cash and cash equivalents (67.7 ) 7.1 Cash and cash equivalents at beginning of period 117.2 110.1 Cash and cash equivalents at end of period $ 49.5 $ 117.2 Supplemental Data: Free cash flow (a)+(b) $ 12.5 $ 77.7 Cash interest paid 15.5 23.5 Cash taxes paid (refunded) 10.2 (1.5 ) Accrual basis additions to property, plant and equipment $ 184.5 $ 60.7 Hexcel Corporation and Subsidiaries Net Sales to Third-Party Customers by Market Segment Quarters Ended December 31, 2011 and 2010 (Unaudited) Table A (In millions) As Reported Constant Currency (a) Market Segment 2011 2010 B/(W) %FX Effect (b)
2010B/(W) %
Commercial Aerospace $ 210.7 $ 174.1 21.0 $ (0.4) $ 173.7 21.3 Space & Defense 77.1 84.2 (8.4) (0.2) 84.0 (8.2) Industrial 67.5 52.7 28.1 0.1 52.8 27.8 Consolidated Total $ 355.3 $ 311.0 14.2 $ (0.5) $ 310.5 14.4 Consolidated % of Net Sales % % % Commercial Aerospace 59.3 56.0 55.9 Space & Defense 21.7 27.1 27.1 Industrial 19.0 16.9 17.0 Consolidated Total 100.0 100.0 100.0 Years Ended December 31, 2011 and 2010 (Unaudited) Table A (In millions) As Reported Constant Currency (a) Market Segment 2011 2010 B/(W) %FX Effect (b)
2010B/(W) %
Commercial Aerospace $ 823.5 $ 644.7 27.7 $ 3.1 $ 647.8 27.1 Space & Defense 319.4 310.5 2.9 2.7 313.2 2.0 Industrial 249.5 218.4 14.2 9.6 228.0 9.4 Consolidated Total $ 1,392.4 $ 1,173.6 18.6 $ 15.4 $ 1,189.0 17.1 Consolidated % of Net Sales % % % Commercial Aerospace 59.2 54.9 54.5 Space & Defense 22.9 26.5 26.3 Industrial 17.9 18.6 19.2 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 year ended December 31, 2010 have been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the respective period in 2011 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 Fourth Quarter 2011 Net sales to external customers $ 279.0 $ 76.3 $ — $ 355.3 Intersegment sales 11.4 0.8 (12.2 ) — Total sales 290.4 77.1 (12.2 ) 355.3 Operating income (loss) 51.1 11.0 (12.7 ) 49.4 % Operating margin 17.6 % 14.3 % 13.9 % Depreciation and amortization 12.6 1.1 — 13.7 Stock-based compensation expense 0.9 0.2 1.5 2.6 Accrual based additions to capital expenditures 77.4 2.3 0.5 80.2 Fourth Quarter 2010 Net sales to external customers $ 240.6 $ 70.4 $ — $ 311.0 Intersegment sales 8.5 0.3 (8.8 ) — Total sales 249.1 70.7 (8.8 ) 311.0 Operating income (loss) (b) 32.0 11.8 (12.8 ) 31.0 % Operating margin 12.8 % 16.7 % 10.0 % Depreciation and amortization 12.9 1.0 — 13.9 Stock-based compensation expense 0.7 0.1 1.1 1.9 Accrual based additions to capital expenditures 34.7 1.9 — 36.6 Full Year 2011 Net sales to external customers $ 1,074.5 $ 317.9 $ — $ 1,392.4 Intersegment sales 53.8 1.6 (55.4 ) — Total sales 1,128.3 319.5 (55.4 ) 1,392.4 Operating income (loss) (b) 194.5 51.6 (54.1 ) 192.0 % Operating margin 17.2 % 16.2 % 13.8 % Other operating (income) expense (5.7 ) — 2.7 (3.0 ) Depreciation and amortization 50.8 4.3 0.2 55.3 Stock-based compensation expense 4.3 1.1 8.5 13.9 Accrual based additions to capital expenditures 176.6 6.9 1.0 184.5 Full Year 2010 Net sales to external customers $ 904.5 $ 269.1 $ — $ 1,173.6 Intersegment sales 38.7 0.6 (39.3 ) — Total sales 943.2 269.7 (39.3 ) 1,173.6 Operating income (loss) (b) 139.6 45.7 (55.5 ) 129.8 % Operating margin 14.8 % 16.9 % 11.1 % Other operating expense — — 3.5 3.5 Depreciation and amortization 49.1 3.9 0.2 53.2 Stock-based compensation expense 4.2 0.7 7.5 12.4 Accrual based additions to capital expenditures 57.3 3.3 0.1 60.7(a) We do not allocate corporate expenses to the operating segments.
(b) The full year 2011 Composite Materials operating income includes a $5.7 million benefit from the curtailment of a pension plan. The full years 2011 and 2010 Corporate and Other includes $2.7 million and $3.5 million, respectively, for charges to the environmental reserves primarily for remediation at a manufacturing facility sold in 1986.
Hexcel Corporation and Subsidiaries Reconciliation of GAAP and Non-GAAP Operating Income and Net Income Table C Unaudited Quarter EndedDecember 31,
Year EndedDecember 31,
(In millions) 2011 2010 2011 2010 GAAP operating income $ 49.4 31.0 $ 192.0 $ 129.8 - Other operating (income) expense (b) — — (3.0 ) 3.5 Adjusted Operating Income $ 49.4 31.0 $ 189.0 $ 133.3 % of Net Sales 13.9 % 10.0 % 13.6 % 11.4 % - Stock Compensation Expense $ 2.6 1.9 $ 13.9 $ 12.4 - Depreciation and Amortization 13.7 13.9 55.3 53.2 Adjusted EBITDA $ 65.7 46.8 $ 258.2 $ 198.9 Unaudited Quarter Ended December 31, 2011 2010 (In millions, except per diluted share data) As Reported EPS As Reported EPS GAAP net income $ 39.5 $ 0.39 $ 22.9 $ 0.23 - Benefit from tax adjustments (a) (5.8 ) (0.06 ) (2.9 ) (0.03 ) Adjusted net income $ 33.7 $ 0.33 $ 20.0 $ 0.20 Unaudited Year Ended December 31, 2011 2010 (In millions, except per diluted share data) As Reported EPS As Reported EPS GAAP net income $ 135.5 $ 1.35 $ 77.4 $ 0.77 - Other operating (income) expense (net of tax) (b) (2.3 ) (0.02 ) 2.2 0.02 - Non-operating expense (net of tax) (c) 3.0 0.03 4.3 0.04 - Benefit from tax audit settlement and other tax adjustments (a) (11.3 ) (0.11 ) (6.4 ) (0.06 ) Adjusted net income $ 124.9 $ 1.24 $ 77.5 $ 0.78(a) The quarter ended December 31, 2011 includes a $5.8 million benefit primarily from the reversal of valuation allowances against net operating loss and foreign tax credit carryforwards. The year ended December 31, 2011 also includes a tax benefit from the release of $5.5 million of reserves primarily for uncertain tax positions as a result of an audit settlement. The quarter ended December 31, 2010 includes a $2.9 million benefit from the reversal of valuation allowances against U.S. deferred tax assets. The year ended December 31, 2010 also includes a $3.5 million benefit from New Clean Energy Manufacturing Tax Credits awarded in January 2010 for qualifying capital investments made in our U.S. wind energy facility in 2009.
(b) Other operating (income) expense for the year ended December 31, 2011 includes a $5.7 million benefit from the curtailment of a pension plan. In 2011 and 2010, other operating (income) expense includes increases in environmental reserves of $2.7 million and $3.5 million, respectively, primarily for remediation of a manufacturing facility sold in 1986.
(c) Non-operating expense for the year ended December 31, 2011 is the accelerated amortization of deferred financing costs and expensing of the call premium from redeeming $150 million of 6.75% senior subordinated notes. Non-operating expense for the year ended December 31, 2010 is the acceleration of deferred financing costs due to the refinancing of the Senior Secured Credit Facility.
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 Net Income Per Common Share Table D Unaudited Quarter EndedDecember 31,
Year EndedDecember 31,
(In millions, except per share data) 2011 2010 2011 2010 Basic net income per common share: Net income $ 39.5 $ 22.9 $ 135.5 $ 77.4 Weighted average common shares outstanding 99.2 97.7 98.8 97.6 Basic net income per common share $ 0.40 $ 0.23 $ 1.37 $ 0.79 Diluted net income per common share: Net income $ 39.5 $ 22.9 $ 135.5 $ 77.4 Weighted average common shares outstanding – Basic 99.2 97.7 98.8 97.6 Plus incremental shares from assumed conversions: Restricted stock units 0.9 0.9 0.9 1.0 Stock Options 1.2 1.5 1.0 1.3 Weighted average common shares outstanding–Dilutive 101.3 100.1 100.7 99.9 Diluted net income per common share $ 0.39 $ 0.23 $ 1.35 $ 0.77 Hexcel Corporation and Subsidiaries Schedule of Total Debt, Net of Cash Table E Unaudited December 31, September 30, December 31, (In millions) 2011 2011 2010 Notes payable and current maturities of capital lease obligations $ 12.6 $ 11.9 $ 27.6 Long-term notes payable and capital lease obligations 238.3 236.9 304.6 Total Debt 250.9 248.8 332.2 Less: Cash and cash equivalents (49.5 ) (48.4 ) (117.2 ) Total debt, net of cash $ 201.4 $ 200.4 $ 215.0
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