Hexcel (HXL) reported $456.5 million in revenue for the quarter ended September 2024, representing a year-over-year increase of 8.8%. EPS of $0.47 for the same period compares to $0.38 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $456.18 million, representing a surprise of +0.07%. The company delivered an EPS surprise of +2.17%, with the consensus EPS estimate being $0.46.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and ho ...

Company Performance - Hexcel reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.46 per share, and up from $0.38 per share a year ago, representing an earnings surprise of 2.17% [1] - The company posted revenues of $456.5 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.07%, and an increase from year-ago revenues of $419.5 million [1] - Over the last four quarters, Hexcel has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [1] Future Outlook - The sustainability of Hexcel's stock price movement will depend on management's commentary during the earnings call and the company's earnings outlook [2][3] - Current consensus EPS estimate for the coming quarter is $0.55 on revenues of $488.51 million, and for the current fiscal year, it is $2.05 on revenues of $1.91 billion [4] - The estimate revisions trend for Hexcel is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [4] Industry Context - The Aerospace - Defense Equipment industry, to which Hexcel belongs, is currently in the top 33% of over 250 Zacks industries, suggesting a favorable industry outlook [5] - Another company in the same industry, FTAI Aviation, is expected to report quarterly earnings of $0.77 per share, reflecting a year-over-year change of +133.3%, with revenues expected to be $429.29 million, up 47.5% from the year-ago quarter [5]

Financial Performance - Net sales for Q3 2024 were $456.5 million, an increase of 8.8% from $419.5 million in Q3 2023[68] - Operating income for Q3 2024 was $52.5 million, a 20.4% increase from $43.6 million in Q3 2023, resulting in an operating margin of 11.5%[76] - Net income for Q3 2024 was $39.8 million, up 2.8% from $38.7 million in Q3 2023, with diluted net income per share increasing to $0.49[68] - Gross margin for Q3 2024 improved to 23.3% from 21.8% in Q3 2023, attributed to favorable cost leverage from higher sales[74] - Interest expense for Q3 2024 was $8.5 million, a 9.0% increase from $7.8 million in Q3 2023, while the nine-month interest expense decreased by 12.5% to $23.1 million from $26.4 million[77] - The income tax expense for Q3 2024 was $4.2 million compared to a tax benefit of $0.7 million in Q3 2023, with a nine-month tax expense of $27.8 million versus $22.5 million in 2023[78] - The effective tax rate for Q3 2024 was 9.6%, compared to a negative rate of (2.0%) in Q3 2023, while the nine-month effective tax rate was 18.0% versus 15.9% in 2023[78] Segment Performance - Commercial Aerospace segment sales increased by 17.5% to $295.9 million in Q3 2024, driven by strong demand for Airbus A350 and A320neo programs[72] - Composite Materials segment net sales reached $367.6 million in Q3 2024, an 8.0% increase from $340.5 million in Q3 2023[71] - Engineered Products segment net sales increased by 12.5% to $88.9 million in Q3 2024, supported by higher sales in Commercial Aerospace and Space & Defense[71] - Total Industrial sales decreased by 16.5% to $32.4 million in Q3 2024, reflecting declines across all sub-markets[74] Cash Flow and Capital Management - Cash on hand as of September 30, 2024, was $98.2 million, down from $227.0 million at December 31, 2023, while total debt increased to $805.2 million from $699.5 million[79] - Net cash provided by operating activities for the first nine months of 2024 was $127.3 million, up from $98.1 million in the same period last year[81] - Free cash flow for the first nine months of 2024 was $58.9 million, significantly higher than $3.7 million in the same period of 2023[90] - The company repurchased $252.2 million of common stock in the first nine months of 2024, compared to $30.1 million in the same period in 2023[82] - The company has $234.9 million remaining under its share repurchase program as of September 30, 2024[80] - Capital expenditures for the first nine months of 2024 were $68.4 million, down from $94.4 million in the same period last year[81] Challenges and Risks - The company continues to face challenges from global logistics, supply chain issues, and inflationary pressures impacting operations and financial results[67] - There are ongoing challenges related to the availability and cost of raw materials, influenced by supply disruptions and inflation[93] - Cybersecurity risks and potential impacts from breaches are acknowledged as significant concerns[93] - Changes in government defense procurement budgets may affect the company's operations and financial performance[93] - The company acknowledges known and unknown risks that may cause actual results to differ materially from forward-looking statements, including macroeconomic factors and geopolitical issues[93] - Significant customers like Airbus and Boeing are crucial, with potential sales reductions impacting overall performance[93] Strategic Initiatives - The company anticipates future revenue growth based on aircraft production rates from major manufacturers and ongoing strategic initiatives[92] - The company emphasizes the importance of aligning production and inventory levels with customer demand to mitigate risks[93] - Strategic initiatives, including sustainability goals and restructuring activities, are critical for future success[93] - The company highlights the need for timely new product development and capacity expansions to meet customer demand[93] Forward-Looking Statements - There is no obligation to update forward-looking statements or risk factors unless required by law[95] - The company reports no material changes in market risk from the previous Annual Report on Form 10-K[96]

Core Viewpoint - Hexcel Corporation is set to release its third-quarter earnings results on October 21, with expectations of improved earnings and revenue compared to the previous year [1] Financial Performance - Analysts predict Hexcel will report earnings of 46 cents per share, an increase from 38 cents per share in the same quarter last year [1] - The projected revenue for the recent quarter is $456.9 million, up from $427.28 million a year earlier [1] Analyst Ratings - Truist Securities analyst Michael Ciarmoli maintained a Buy rating but reduced the price target from $78 to $76 [2] - Vertical Research analyst Robert Stallard downgraded the stock from Buy to Hold with a price target of $65 [2] - Deutsche Bank analyst Scott Deuschle maintained a Hold rating and lowered the price target from $65 to $62 [2] - BMO Capital analyst John McNulty maintained a Market Perform rating and cut the price target from $71 to $70 [2] - RBC Capital analyst Ken Herbert downgraded the stock from Outperform to Sector Perform and reduced the price target from $76 to $68 [2]

Core Insights - Hexcel (HXL) is expected to report quarterly earnings of $0.46 per share, reflecting a 21.1% increase year-over-year, with revenues forecasted at $456.18 million, an 8.7% increase from the previous year [1] - The consensus EPS estimate has been revised down by 5.1% over the last 30 days, indicating a reevaluation by analysts [1][2] Revenue Estimates - Analysts estimate 'Net Sales- Commercial Aerospace- Composite Materials' at $235.91 million, a year-over-year increase of 10.9% [4] - The forecast for 'Net Sales- Space & Defense- Composite Materials' is $92.79 million, indicating a 3.1% increase year-over-year [4] - 'Net Sales- Industrial- Composite Materials' is projected to reach $38.05 million, reflecting a 0.7% increase [4] Engineered Products Estimates - 'Net Sales- Commercial Aerospace- Engineered Products' is expected to be $42.22 million, a 7.7% increase from the prior year [5] - 'Net Sales- Space & Defense- Engineered Products' is projected at $42.50 million, indicating a 9.5% increase [5] - Total 'Net Sales- Engineered Products' is forecasted to be $86.00 million, reflecting an 8.6% increase year-over-year [5] Composite Materials and Total Sales - 'Net Sales- Composite Materials' is estimated at $366.79 million, a 2.8% increase year-over-year [6] - 'Net Sales- Space & Defense- Total' is projected to reach $135.19 million, indicating a 5% increase [6] - 'Net Sales- Industrial- Total' is expected to be $39.58 million, reflecting a 2% increase [6] Operating Income Estimates - 'Operating income- Composite Materials' is expected to reach $61.04 million, up from $43.70 million year-over-year [7] - 'Operating income- Engineered Products' is projected at $11.43 million, compared to $6.20 million from the previous year [8] Stock Performance - Hexcel shares have remained unchanged over the past month, contrasting with the Zacks S&P 500 composite's 3.5% increase [8] - The company holds a Zacks Rank 4 (Sell), indicating expected underperformance relative to the overall market in the near term [8]

Rathke Investment Summary Hexcel (NYSE:HXL) is a leading manufacturer of advanced composite materials (carbon fiber) for commercial aerospace, defense, and industrial end markets. They operate globally with manufacturing facilities across the Americas, Europe, Asia, India, and Africa. Hexcel holds the #1 position in aerospace composite sales and production capacity and carries a wide range of trademark products. Three factors drive Hexcel's value. 1) its ability to sell composite materials to commercial aer ...

Group 1: ON Semiconductor - ON Semiconductor has faced near-term headwinds due to its significant exposure to the automotive and industrial markets, which account for over 79% of total revenue, and are weak in 2024 [4][3] - The company is investing up to $2 billion in a new silicon carbide (SiC) manufacturing facility in Europe to support long-term growth, particularly in electric vehicles [5] - Despite a projected 13.4% decline in full-year sales for 2024, management's guidance for third-quarter revenue suggests a sequential improvement, with expected revenue growth of 8.4% in 2025 [6] Group 2: Hexcel - Hexcel's revenue is heavily reliant on Airbus and Boeing, with 39% and 15% of sales coming from these companies respectively, but has faced challenges due to delivery delays and reduced delivery expectations [7] - The company has lowered its full-year revenue guidance for 2024 to $1.9 billion-$1.98 billion, impacting margins as it had prepared for higher delivery volumes [8] - Long-term growth is supported by the increasing use of advanced composites in newer aircraft, with a projected need for 43,975 new airplanes over the next 20 years [9] Group 3: Keysight Technologies - Keysight Technologies provides hardware, software, and services that assist customers in designing and optimizing their products, with a long-term growth expectation of 5% to 7% annually [11][12] - The company is currently facing challenges due to a pullback in R&D spending amid a slowing economy, leading to an expected sales decline of nearly 10% in 2024 [13] - Despite these challenges, Keysight is attractively priced at slightly less than 23 times expected 2024 earnings, with potential for strong recovery when R&D spending rebounds [14]

Core Viewpoint - Hexcel Corporation (HXL) reported a strong second quarter for 2024, with earnings and sales exceeding expectations, although the company has slightly lowered its guidance for the year [11][25][26]. Financial Performance - HXL's second-quarter earnings were 60 cents per share, a 20% increase from 50 cents in the same quarter last year [25]. - The company's net sales for the second quarter totaled $500.4 million, surpassing the Zacks Consensus Estimate of $482 million by 3.8% and reflecting a 10.1% year-over-year improvement from $454.3 million [26]. - Hexcel's gross margin improved to 25.3%, up 90 basis points from the prior year, attributed to favorable cost leverage from higher sales [12]. - Adjusted operating income was $72 million, compared to $61.8 million in the previous year [18]. - Cash and cash equivalents decreased to $75.4 million as of June 30, 2024, down from $227 million at the end of 2023 [4]. Sales Breakdown - Commercial Aerospace segment saw net sales increase by 21.3% year-over-year to $320.7 million, driven by growth in widebody and narrowbody sales [3]. - Space and Defense segment reported a 1% year-over-year increase in net sales to $138.9 million, supported by strong military helicopter sales [13]. - Industrial segment experienced a decline, with net sales decreasing by 22.3% year-over-year to $40.8 million due to a downturn in other sub-markets [27]. Guidance and Outlook - Hexcel has adjusted its 2024 sales guidance to a range of $1.90-$1.98 billion, down from the previous range of $1.93-$2.03 billion, with the Zacks Consensus Estimate at $1.94 billion [11]. - The company now expects adjusted earnings per share in the range of $2.02-$2.18 for 2024, lower than the prior guidance of $2.10-$2.30 [15][21]. - Free cash flow is projected to be approximately $200 million for 2024, consistent with previous guidance of more than $200 million [29]. Debt and Cash Flow - Long-term debt increased to $794.9 million as of June 30, 2024, up from $699.4 million at the end of 2023 [14]. - Adjusted free cash outflow was $14.4 million, an improvement from $44.7 million in the year-ago period [20]. - Cash flow from operating activities for the first half of 2024 was $37.2 million, compared to $30.1 million in the same period last year [28].

This quarterly report represents an earnings surprise of 9.09%. A quarter ago, it was expected that this maker of lightweight composite materials would post earnings of $0.44 per share when it actually produced earnings of $0.44, delivering no surprise. Hexcel shares have lost about 7.9% since the beginning of the year versus the S&P 500's gain of 17.2%. There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only d ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2024 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 1-8472 Hexcel Corporation (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or Organization) ...