Hexcel Corporation (NYSE: HXL):
- Q1 2024 GAAP diluted EPS of $0.43 compared to Q1 2023 GAAP
diluted EPS of $0.50.
- Q1 2024 adjusted diluted EPS of $0.44, compared to Q1 2023
adjusted diluted EPS of $0.50.
- Q1 2024 Sales were $472 million, an increase of 3.2% over Q1
2023 sales of $458 million (3.1% increase in constant
currency).
- Returned $113 million in Q1 2024 to stockholders via share
repurchases and dividends.
- Full year 2024 guidance is reaffirmed.
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
March 31,
(In millions, except per share data)
2024
2023
% Change
Net Sales
$
472.3
$
457.7
3.2
%
Net sales change in constant currency
3.1
%
Operating Income
52.9
62.8
(15.8
)%
Net Income
36.5
42.7
(14.5
)%
Diluted net income per common share
$
0.43
$
0.50
(14.0
)%
Non-GAAP measures for year-over-year
comparison (Table C)
Adjusted Operating Income
$
54.1
$
63.0
(14.1
)%
As a % of sales
11.5
%
13.8
%
Adjusted Net Income
37.4
42.9
(12.8
)%
Adjusted diluted net income per share
$
0.44
$
0.50
(12.0
)%
Hexcel Corporation (NYSE: HXL) today reported first quarter 2024
results including net sales of $472 million and adjusted diluted
EPS of $0.44 per share.
Chairman, CEO and President Nick Stanage said, “Our commercial
aerospace market continues to build momentum with our first quarter
2024 sales growing sequentially from the fourth quarter of 2023,
including growth in both widebody and narrowbody programs. Volume
leverage across the business drove sequential margin expansion
demonstrating continued strong execution on our upward trajectory.
We remain committed to delivering our full-year 2024 and our
mid-term guidance as the Hexcel team focuses on growth, margin
expansion and cash generation.”
Mr. Stanage continued, "Reports that global air passenger
traffic has now exceeded pre-pandemic levels are encouraging and
highlight steadily growing demand for new commercial aircraft and
for lightweight composite Hexcel products to build them. We are
especially pleased that two airlines recently ordered a sizeable
number of new widebody aircraft where Hexcel has significant
content. The demand for lightweight, fuel-efficient,
composite-intensive aircraft continues to grow, and we remain
focused on execution to meet customer demand.”
Markets
Sales in the first quarter of 2024 were $472.3 million compared
to $457.7 million in the first quarter of 2023.
Commercial Aerospace (63% of YTD Sales)
- Commercial Aerospace sales of $299.3 million increased 5.2%
(5.2% in constant currency) for the first quarter of 2024 compared
to the first quarter of 2023 on higher widebody sales. Other
Commercial Aerospace sales decreased 6.3% for the first quarter of
2024 compared to the first quarter of 2023 on lower business jet
sales.
Space & Defense (30% of YTD Sales)
- Space & Defense sales of $139.1 million increased 10.2%
(10.0% in constant currency) for the quarter as compared to the
first quarter of 2023. The sales increase was led by fixed wing
aircraft programs including the Lockheed F-35 and Airbus A400M as
well as classified programs.
Industrial (7% of YTD Sales)
- Total Industrial sales of $33.9 million in the first quarter of
2024 decreased 27.9% (28.5% in constant currency) compared to the
first quarter of 2023, with lower sales across all industrial
sub-markets.
Consolidated Operations
Gross margin for the first quarter of 2024 saw another
sequential improvement achieving 25.0%. The first quarter of 2023
had a gross margin of 27.9% and benefited from a number of items
including particularly favorable absorption and a favorable sales
mix. As a percentage of sales, selling, general and administrative
and R&T expenses for the first quarter of 2024 were 13.6%
compared to 14.1% for the first quarter of 2023. Adjusted operating
income in the first quarter of 2024 was $54.1 million or 11.5% of
sales, compared to $63.0 million, or 13.8% of sales in 2023. The
impact of exchange rates on operating income as a percentage of
sales was favorable by approximately 30 basis points in the first
quarter of 2024 compared to the first quarter of 2023.
Cash and other
- Net cash used for operating activities in the first quarter of
2024 was $7.0 million, compared to a use of $23.4 million for the
first quarter of 2023. Working capital was a cash use of $84.5
million in the first quarter of 2024 compared to a use of $104.0
million in the first quarter of 2023. Capital expenditures on a
cash basis were $28.7 million for the first quarter of 2024
compared to $18.1 million for the first quarter of 2023. Free cash
flow was ($35.7) million in the first quarter of 2024 compared to
($41.5) million in the first quarter of 2023. Free cash flow is
defined as cash generated from operating activities less cash paid
for capital expenditures. Capital expenditures on an accrual basis
were $18.6 million for the first quarter of 2024 compared to $16.8
million for the first quarter of 2023.
- The Company used $100.7 million to repurchase shares of its
common stock during the first quarter. The aggregate remaining
authorization under the share repurchase program as of March 31,
2024 was $386.4 million following an additional $300 million
authorization in February 2024.
- As announced today, the Board of Directors declared a quarterly
dividend of $0.15 per share payable to stockholders of record as of
May 3, 2024, with a payment date of May 10, 2024.
2024 Guidance
(unchanged)
- Sales of $1.925 billion to $2.025 billion
- Adjusted diluted earnings per share of $2.10 to $2.30
- Free cash flow of greater than $200 million
- Capital expenditures less than $100 million
- Effective tax rate of 22.0%
Market-Specific Sales Outlook
(unchanged)
- Commercial Aerospace: Up mid-teens
- Space & Defense: Up mid-single digits
- Industrial: Up low to mid-single digits
Hexcel will host a conference call at 10:00 a.m. ET, on April
23, 2024 to discuss first quarter 2024 results. The event will be
webcast via the Investor Relations webpage at www.Hexcel.com. 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
March 31,
(In millions, except per share data)
2024
2023
Net sales
$
472.3
$
457.7
Cost of sales
354.1
330.0
Gross margin
118.2
127.7
% Gross Margin
25.0
%
27.9
%
Selling, general and administrative
expenses
49.0
50.8
Research and technology expenses
15.1
13.9
Other operating expense
1.2
0.2
Operating income
52.9
62.8
Interest expense, net
6.5
9.4
Income before income taxes, and equity in
earnings of affiliated companies
46.4
53.4
Income tax expense
9.9
11.7
Income before equity in earnings of
affiliated companies
36.5
41.7
Equity in earnings from affiliated
companies
-
1.0
Net income
$
36.5
$
42.7
Basic net income per common share:
$
0.44
$
0.50
Diluted net income per common share:
$
0.43
$
0.50
Weighted-average common shares:
Basic
83.9
84.6
Diluted
84.8
85.5
Hexcel Corporation and
Subsidiaries
Condensed Consolidated Balance
Sheets
Unaudited
March 31,
December 31,
(In millions)
2024
2023
Assets
Cash and cash equivalents
$
85.9
$
227.0
Accounts receivable, net
271.0
234.7
Inventories, net
353.8
334.4
Contract assets
31.2
25.1
Prepaid expenses and other current
assets
47.8
43.0
Total current assets
789.7
864.2
Property, plant and equipment
3,194.8
3,195.5
Less accumulated depreciation
(1,536.6
)
(1,516.8
)
Net property, plant and equipment
1,658.2
1,678.7
Goodwill and other intangible assets,
net
248.7
251.3
Investments in affiliated companies
5.0
5.0
Other assets
119.6
119.3
Total assets
$
2,821.2
$
2,918.5
Liabilities and Stockholders'
Equity
Liabilities:
Short-term borrowings
$
0.1
$
0.1
Accounts payable
128.1
159.1
Accrued compensation and benefits
67.3
75.7
Accrued liabilities
93.1
81.0
Total current liabilities
288.6
315.9
Long-term debt
714.6
699.4
Retirement obligations
44.3
42.6
Other non-current liabilities
141.6
144.1
Total liabilities
$
1,189.1
$
1,202.0
Stockholders' equity:
Common stock, $0.01 par value, 200.0
shares authorized, 111.3 shares issued at March 31, 2024 and 110.8
shares issued at December 31, 2023
$
1.1
$
1.1
Additional paid-in capital
954.6
936.8
Retained earnings
2,192.6
2,168.7
Accumulated other comprehensive loss
(89.0
)
(74.1
)
3,059.3
3,032.5
Less – Treasury stock, at cost, 28.2
shares at March 31, 2024 and 26.7 shares at December 31, 2023
(1,427.2
)
(1,316.0
)
Total stockholders' equity
1,632.1
1,716.5
Total liabilities and stockholders'
equity
$
2,821.2
$
2,918.5
Hexcel Corporation and
Subsidiaries
Condensed Consolidated Statements of
Cash Flows
Unaudited
Quarters Ended
March 31,
(In millions)
2024
2023
Cash flows from operating
activities
Net income
$
36.5
$
42.7
Reconciliation to net cash used for
operating activities:
Depreciation and amortization
31.0
30.7
Amortization related to financing
0.1
0.1
Deferred income taxes
(0.7
)
(2.1
)
Equity in earnings from affiliated
companies
-
(1.0
)
Stock-based compensation
13.1
12.9
Restructuring expenses, net of
payments
0.7
(2.1
)
Impairment of assets
-
1.7
Changes in assets and liabilities:
Increase in accounts receivable
(37.5
)
(40.5
)
Increase in inventories
(23.0
)
(32.6
)
(Increase) decrease in prepaid expenses
and other current assets
(10.0
)
0.1
Decrease in accounts payable/accrued
liabilities
(14.0
)
(31.0
)
Other - net
(3.2
)
(2.3
)
Net cash used for operating activities
(a)
(7.0
)
(23.4
)
Cash flows from investing
activities
Capital expenditures (b)
(28.7
)
(18.1
)
Net cash used for investing activities
(28.7
)
(18.1
)
Cash flows from financing
activities
Borrowings from senior unsecured credit
facilities
15.0
65.0
Net repayments from senior unsecured
credit facilities
-
(20.0
)
Repurchases of common stock
(100.7
)
-
Repayment of finance lease obligation and
other debt, net
(0.1
)
(0.1
)
Dividends paid
(12.6
)
(10.5
)
Activity under stock plans
(5.9
)
0.4
Net cash (used for) provided by financing
activities
(104.3
)
34.8
Effect of exchange rate changes on cash
and cash equivalents
(1.1
)
0.4
Net decrease in cash and cash
equivalents
(141.1
)
(6.3
)
Cash and cash equivalents at beginning of
period
227.0
112.0
Cash and cash equivalents at end of
period
$
85.9
$
105.7
Supplemental data:
Free Cash Flow (a)+(b)
$
(35.7
)
$
(41.5
)
Accrual basis additions to property, plant
and equipment
$
18.6
$
16.8
Hexcel Corporation and
Subsidiaries
Net Sales to Third-Party Customers by
Market
Quarters Ended March 31, 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
$
299.3
$
284.5
5.2
$
(0.1
)
$
284.4
5.2
Space & Defense
139.1
126.2
10.2
0.3
126.5
10.0
Industrial
33.9
47.0
(27.9
)
0.4
47.4
(28.5
)
Consolidated Total
$
472.3
$
457.7
3.2
$
0.6
$
458.3
3.1
Consolidated % of Net Sales
%
%
%
Commercial Aerospace
63.4
62.2
62.1
Space & Defense
29.4
27.6
27.6
Industrial
7.2
10.2
10.3
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 ended March 31, 2023 have been estimated using the same
U.S. dollar, British pound and Euro exchange rates as applied for
the respective period 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
First Quarter 2024
Net sales to external customers
$
379.5
$
92.8
$
-
$
472.3
Intersegment sales
23.3
0.3
(23.6
)
-
Total sales
402.8
93.1
(23.6
)
472.3
Other operating expense
0.8
0.4
-
1.2
Operating income (loss)
63.7
12.9
(23.7
)
52.9
% Operating margin
15.8
%
13.9
%
11.2
%
Depreciation and amortization
27.2
3.8
-
31.0
Stock-based compensation expense
3.1
0.8
9.2
13.1
Accrual based additions to capital
expenditures
16.7
1.9
-
18.6
First Quarter 2023
Net sales to external customers
$
378.2
$
79.5
$
-
$
457.7
Intersegment sales
19.3
1.0
(20.3
)
-
Total sales
397.5
80.5
(20.3
)
457.7
Other operating expense
0.2
-
-
0.2
Operating income (loss)
73.2
12.0
(22.4
)
62.8
% Operating margin
18.4
%
14.9
%
13.7
%
Depreciation and amortization
27.2
3.5
-
30.7
Stock-based compensation expense
3.1
0.8
9.0
12.9
Accrual based additions to capital
expenditures
13.1
3.7
-
16.8
(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
March 31,
(In millions)
2024
2023
GAAP operating income
$
52.9
$
62.8
Other operating expense (a)
1.2
0.2
Non-GAAP operating income
$
54.1
$
63.0
Unaudited
Quarters Ended March 31,
2024
2023
(In millions, except per diluted share
data)
Net Income
EPS
Net Income
EPS
GAAP
$
36.5
$
0.43
$
42.7
$
0.50
Other operating expense, net of tax
(a)
0.9
0.01
0.2
-
Non-GAAP
$
37.4
$
0.44
$
42.9
$
0.50
Unaudited
Quarters Ended March 31,
(In millions)
2024
2023
Net cash used for operating activities
$
(7.0
)
$
(23.4
)
Less: Capital expenditures
(28.7
)
(18.1
)
Free cash flow (non-GAAP)
$
(35.7
)
$
(41.5
)
(a)
The quarters ended March 31, 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
March 31,
December 31,
December 31,
(In millions)
2024
2023
2022
Current portion finance lease
$
0.1
$
0.1
$
0.2
Total current debt
0.1
0.1
0.2
Senior unsecured credit facility
15.0
-
25.0
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
(0.6
)
(0.7
)
(0.9
)
Senior notes deferred financing costs
(1.4
)
(1.6
)
(2.2
)
Other debt
1.6
1.7
1.4
Total long-term debt
714.6
699.4
723.3
Total Debt
714.7
699.5
723.5
Less: Cash and cash equivalents
(85.9
)
(227.0
)
(112.0
)
Total debt, net of cash
$
628.8
$
472.5
$
611.5
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240422187215/en/
Kurt Goddard | Vice President Investor Relations |
Kurt.Goddard@Hexcel.com | +1 (203)-352-6826
Hexcel (NYSE:HXL)
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Hexcel (NYSE:HXL)
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