Company Overview - Hexcel Corporation (NYSE: HXL) is positioned as a leader in the advanced composites sector, playing a crucial role in the aerospace, defense, and next-generation mobility industries [1] Market Position - The company has a deep integration into many large aerodefense platforms, showcasing its dominance in the market [1] Investment Insights - Hexcel's story is compelling for investors looking at growth opportunities within the advanced materials space, particularly given the increasing demand in aerospace and defense sectors [1]

Core Viewpoint - Hexcel (HXL) is anticipated to report a year-over-year decline in earnings due to lower revenues for the quarter ended June 2025, with a consensus outlook indicating potential impacts on its near-term stock price [1][3]. Earnings Expectations - The consensus EPS estimate for Hexcel is $0.46 per share, reflecting a year-over-year decrease of 23.3% [3]. - Expected revenues for the quarter are $471.17 million, down 5.8% from the same quarter last year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised 2.83% lower, indicating a reassessment by covering analysts [4]. - The Most Accurate Estimate for Hexcel is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +0.93% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading can indicate a likely earnings beat, particularly when combined with a strong Zacks Rank [10]. - Hexcel currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat despite the positive Earnings ESP [12][20]. Historical Performance - In the last reported quarter, Hexcel was expected to post earnings of $0.43 per share but delivered only $0.37, resulting in a surprise of -13.95% [13]. - Over the past four quarters, Hexcel has beaten consensus EPS estimates three times [14]. Industry Comparison - Teledyne Technologies (TDY), a peer in the Aerospace - Defense Equipment industry, is expected to report earnings of $5.01 per share for the same quarter, indicating a year-over-year increase of 9.4% [18]. - Teledyne's revenues are projected to be $1.47 billion, up 7.1% from the previous year, with a higher Most Accurate Estimate leading to an Earnings ESP of +1.22% [19].

Financial Performance & Market Position - Hexcel's Last Twelve Months (LTM) sales as of September 2017 reached $1.945 billion[5] - Commercial Aerospace accounted for 72% of LTM sales[8] - Space & Defense represented 17% of LTM sales[9] - Industrial applications contributed 11% to LTM sales[9] - The company's backlog from Airbus and Boeing is currently worth almost $10 billion in sales[34] Growth & Investment - Hexcel is targeting markets with long-term growth potential[8] - The company is investing in research and technology with a double-digit investment strategy[18] - Hexcel completed $629 million in share repurchases since 2013[53] - Quarterly dividends increased 14% in 2017 to $0.125/share[53] Future Outlook - Hexcel anticipates sales to be just under $2 billion for 2017[52] - The company projects adjusted diluted EPS to be between $2.64 and $2.72 for 2017[52] - Hexcel is targeting >$100 million of free cash flow in 2017[53]

DECEMBER 12, 2017 | NEW YORK CITY 1 ©2017 Hexcel. All rights reserved. Risks, Uncertainties and Other Factors with Respect to Forward-Looking Statements Disclaimer Certain statements contained in this presentation constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements that are not of historical fact constitute "forward-looking statements" and accordingly, involve estimates, assumptions, judgments and uncertainties. There are a numb ...

Core Viewpoint - Hexcel's shares have increased by approximately 11.1% since the last earnings report, but this performance is still below that of the S&P 500 [1] Estimates Movement - Estimates for Hexcel have trended downward over the past month, with a consensus estimate shift of -8.64% [2] VGM Scores - Hexcel currently holds an average Growth Score of C, a Momentum Score of D, and a Value Score of C, resulting in an aggregate VGM Score of D, placing it in the middle 20% for investment strategies [3] Outlook - The downward trend in estimates suggests a negative outlook for Hexcel, reflected in its Zacks Rank of 4 (Sell), indicating expectations of below-average returns in the coming months [4]

Core Viewpoint - The partnership between Hexcel and JetZero aims to revolutionize the production of composite materials for JetZero's all-wing design aircraft, enhancing fuel efficiency and reducing carbon emissions in the aviation industry [1][2]. Group 1: Partnership and Collaboration - Hexcel and JetZero are accelerating their strategic partnership under the FAA's Aviation Sustainable Transformation (FAST) program to develop certified composite materials for JetZero's aircraft [1]. - The collaboration focuses on breakthroughs in manufacturing non-cylindrical pressure vessels, which is expected to lead to revolutionary advancements in aviation composite production [1]. Group 2: Aircraft Design and Efficiency - JetZero is developing the world's first commercial all-wing design aircraft, the Z4 model, which features a wider and shorter fuselage with four rows of passenger cabins, each equipped with independent aisles and dedicated overhead luggage compartments [1]. - Compared to traditional tube-wing aircraft of the same size, the Z4 design offers a 50% improvement in fuel efficiency due to greater lift and reduced drag [1]. Group 3: Environmental Impact and Future Plans - The aircraft is projected to enter commercial service by 2030, aiming to provide a clear pathway for the aviation industry to introduce mid-range passenger aircraft capable of carrying over 250 people with a range of 5,000 nautical miles while significantly lowering carbon emissions [1][2]. - NASA estimates that if 30% of the global mid-range fleet adopts this technology, it could reduce aviation carbon emissions by approximately 15 million tons annually, marking a significant step towards net-zero aviation [2].

Market Overview - The stock market is experiencing pressure in 2025, with the S&P 500 index down approximately 9% and the Nasdaq Composite index down about 13.5% due to various catalysts including China's DeepSeek R-1 model and trade war concerns [1][2] Reddit Analysis - Reddit's stock has decreased by 52% from its high this year, primarily due to weaker-than-expected user engagement metrics reported in its fourth-quarter results [3] - Despite the decline, Reddit achieved a 71% year-over-year revenue growth, reaching $427.7 million in the fourth quarter, and daily average unique users increased by 39% year-over-year to 101.7 million [4] - Reddit is positioning itself as a significant player in the AI market, licensing data for APIs and AI model training, with the AI market projected to grow at a 20% compound annual growth rate, reaching $1 trillion by 2027 [6] - The company is leveraging AI to enhance content relevance and safety, aiming to expand its international reach [7] Hexcel Analysis - Hexcel's stock is down 30% from its high in 2025, largely due to supply chain disruptions affecting its major customers, Boeing and Airbus [8] - The company has lowered its full-year sales, earnings, and free cash flow guidance due to production rate increases for commercial aircraft not meeting expectations, particularly impacting the Airbus A350 program [9] - Despite near-term challenges, Hexcel has multiyear backlogs from Boeing and Airbus, and it can support higher production rates, indicating potential for significant cash flow growth when sales improve [10] - The revised guidance for 2025 indicates adjusted diluted earnings of $1.85 to $2.05 and free cash flow of $190 million, suggesting the stock is trading at a favorable valuation with long-term growth prospects [11]

Financial Data and Key Metrics Changes - In Q1 2025, the company generated sales of $457 million and adjusted diluted EPS of $0.37, with commercial aerospace sales of $280.1 million, down 6.3% year-over-year on a constant currency basis [13][31][32] - Gross margin decreased to 22.4% from 25% in the same period last year, impacted by lower operating leverage and a power outage at the Decatur facility [18][35] - Adjusted operating income was $45.3 million or 9.9% of sales, compared to $54.1 million or 11.5% in the prior year [36] Business Line Data and Key Metrics Changes - The Composite Materials segment represented 80% of total sales, with an adjusted operating margin of 14.2%, down from 16% in the prior year [37] - The Engineered Products segment, accounting for 20% of total sales, had an adjusted operating margin of 6.8%, down from 14.3% in the prior year due to vendor quality issues [37][38] - Sales in the defense, space, and other market totaled $176.4 million, up 2.7% year-over-year, driven by growth in various defense programs [15][33] Market Data and Key Metrics Changes - Commercial aerospace sales represented approximately 61% of total sales, with a decline primarily due to lower sales of Boeing 787 and 737 MAX [31][32] - Sales for other commercial aerospace increased by 7.1% year-over-year, led by international demand [14][33] - The company expects 2025 commercial aerospace sales to be flat compared to 2024, with defense space and other sales also expected to remain unchanged [46] Company Strategy and Development Direction - The company is focused on operational excellence, innovation, and growth, particularly in defense and space markets [49][50] - Plans to streamline operations and improve margins through investments in research and technology [50] - The company is well-positioned to benefit from increased production rates across commercial and military programs as the industry recovers from the pandemic [51] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain disruptions affecting production rates, particularly in commercial aerospace [13][25] - The company is managing costs and cash flow carefully, with a focus on maintaining operational efficiency [20][36] - Despite near-term challenges, management remains optimistic about future cash flows and growth opportunities, particularly in the A350 program [26][110] Other Important Information - The company repurchased $50 million of common stock in Q1 2025 and has additional authorization for $185 million [11][41] - The Board declared a quarterly dividend of $0.17, payable on May 9, 2025 [42] - The company is divesting its wind and recreation-focused facility in Austria, with expectations to complete this by Q2 2025 [12][24] Q&A Session Summary Question: What is the overall tariff impact and profitability outlook? - Management indicated a direct tariff impact of $3 to $4 million per quarter, which can be offset by productivity improvements [54][56] Question: Are there pricing levers to offset tariff impacts? - Most contracts are structured to pass through costs, including tariffs, to buyers, providing a natural hedge [62][64] Question: What is the confidence level regarding inventory at Airbus? - Management acknowledged some inventory exists and has built plans considering potential destocking [106] Question: How is the company managing headcount in response to production changes? - The company is aligning headcount with current production levels and allowing attrition to manage costs effectively [82][85] Question: What is the outlook for the A350 production rates? - The company expects a reduction in A350 production rates, impacting revenue guidance, but remains optimistic about future cash flow generation [25][74][110]

Core Viewpoint - Hexcel Corporation (HXL) reported a decline in adjusted earnings and net sales for the first quarter of 2025, attributed to lower performance in the Commercial Aerospace market and overall operational challenges [1][2][3]. Financial Performance - Adjusted earnings per share for Q1 2025 were 37 cents, down 15.9% from 44 cents in the same quarter last year, and below the Zacks Consensus Estimate of 43 cents by 14% [1] - GAAP earnings per share were 35 cents, a decrease of 18.6% from 43 cents year-over-year [1] - Net sales totaled $456.5 million, missing the Zacks Consensus Estimate of $475 million by 3.8% and falling 3.3% from $472.3 million in the prior year [3] Operational Update - Gross margin for Q1 2025 was 22.4%, a contraction of 260 basis points from the previous year, primarily due to lower sales leverage [4] - Adjusted operating income was $45.3 million, down from $54.1 million in the year-ago period [5] - Selling, general and administrative (SG&A) expenses decreased by 11.6% year-over-year to $43.3 million, while research and technology expenses dropped 8.6% to $13.8 million [4] Market Contribution - In the Commercial Aerospace segment, net sales decreased by 6.4% year-over-year to $280.1 million, driven by lower sales of Boeing 787 and MAX [6] - The Space and Defense segment saw a 2% increase in net sales to $176.4 million, supported by strong sales from various helicopter and space programs [7] Financial Details - As of March 31, 2025, cash and cash equivalents were $89.2 million, down from $125.4 million at the end of 2024 [8] - Long-term debt increased to $787.1 million from $700.6 million at the end of 2024 [8] - Cash used in operating activities was $28.5 million, compared to $7 million in the prior year [8] - Adjusted free cash outflow was $54.6 million, up from $35.7 million year-over-year [9] 2025 Guidance - Hexcel lowered its 2025 sales guidance to a range of $1.88-$1.95 billion, down from $1.95-$2.05 billion, with the Zacks Consensus Estimate at $1.97 billion [10] - Adjusted earnings per share guidance was revised to $1.85-$2.05, lower than the previous range of $2.05-$2.25, with the Zacks Consensus Estimate at $2.10 [11] - Expected free cash flow for 2025 is now approximately $190 million, reduced from over $220 million, with capital expenditure outlook lowered to less than $90 million [12]

Financial Performance - Hexcel reported revenue of $456.5 million for the quarter ended March 2025, a decrease of 3.4% year-over-year [1] - Earnings per share (EPS) was $0.37, down from $0.44 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $474.54 million by 3.80% [1] - The EPS also missed the consensus estimate of $0.43 by 13.95% [1] Key Metrics - Net sales in Commercial Aerospace totaled $280.10 million, below the average estimate of $298.99 million, reflecting a year-over-year decline of 6.4% [4] - Net sales for Engineered Products were $91.50 million, compared to the average estimate of $96.76 million, marking a decrease of 1.4% year-over-year [4] - Net sales in Composite Materials reached $385.40 million, slightly above the estimated $381.42 million, showing a year-over-year increase of 1.6% [4] - Operating income for Composite Materials was $54.60 million, exceeding the average estimate of $38.99 million [4] - Operating income for Corporate & Other was -$15.50 million, worse than the average estimate of -$11.10 million [4] - Operating income for Engineered Products was $5.10 million, below the average estimate of $8.70 million [4] Stock Performance - Hexcel's shares have returned -6.6% over the past month, compared to a -5.6% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]