Core Viewpoint - The market anticipates a year-over-year decline in Hexcel's earnings due to lower revenues, with a focus on how actual results compare to estimates [1][2]. Earnings Expectations - Hexcel is expected to report quarterly earnings of $0.39 per share, reflecting a 17% decrease year-over-year [3]. - Revenue projections stand at $450.82 million, indicating a 1.2% decline from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 0.13% higher in the last 30 days, suggesting a slight positive adjustment by analysts [4]. - The Most Accurate Estimate for Hexcel is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -5.94%, indicating a bearish outlook from analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank of 1, 2, or 3 [10]. - Hexcel currently holds a Zacks Rank of 3, making it challenging to predict a consensus EPS beat [12]. Historical Performance - In the last reported quarter, Hexcel exceeded earnings expectations by delivering $0.50 per share against an expected $0.46, resulting in a surprise of +8.70% [13]. - Over the past four quarters, Hexcel has beaten consensus EPS estimates three times [14]. Conclusion - While Hexcel does not appear to be a strong candidate for an earnings beat, investors should consider other factors influencing stock performance ahead of the earnings release [17].

Group 1 - Hexcel Corporation (NYSE: HXL) is a key supplier of advanced composite materials for the aerospace and defense industry, showing a gain of approximately 24%, trailing the S&P 500's gain of 27.4% [1] - The Aerospace Forum aims to discover investment opportunities in the aerospace, defense, and airline industry, providing analysis driven by data-informed insights [1] - The investing group offers direct access to data analytics monitors, enhancing the investment research process [1] Group 2 - The article emphasizes the importance of context in understanding developments within the aerospace and defense industry and their potential impact on investment theses [1]

Group 1 - Hexcel Corporation (NYSE: HXL) is a key supplier of advanced composite materials for the aerospace and defense industry, showing a gain of approximately 24%, trailing the S&P 500's gain of 27.4% [1] - The Aerospace Forum aims to discover investment opportunities in the aerospace, defense, and airline industry, providing analysis driven by data-informed insights [1] - The investing group offers direct access to data analytics monitors, enhancing the investment research process [1] Group 2 - The article emphasizes the importance of context in understanding developments within the aerospace and defense industry and their potential impact on investment theses [1]

Core Viewpoint - Hexcel (HXL) is currently facing challenges due to low aftermarket demand for its carbon fiber composites, particularly impacted by reduced airplane production expectations from key customers Airbus and Boeing. However, the long-term growth prospects remain strong, and recent positive signs in the aerospace supply chain suggest potential recovery for the company [2][3][5][16]. Company Performance - Hexcel has experienced a difficult period, with Wall Street projecting minimal sales growth for the current year and a decline in earnings per share from $2.03 in 2024 to $1.87 in 2025 due to production shortfalls from major customers [5]. - Approximately 40% of Hexcel's 2024 sales are tied to Airbus, while 15% are linked to Boeing, making the company vulnerable to their production fluctuations [3]. Market Conditions - The commercial aerospace supply chain is showing signs of improvement, with GE Aerospace reporting a 38% increase in LEAP engine deliveries in Q2, and RTX's Pratt & Whitney expected to ramp up production in the second half of the year [9][10]. - Airbus has lowered its production expectations for the A350, which has a shipset value of $4.5 million to $5 million, indicating challenges in the market [4]. Long-term Growth Prospects - Despite current challenges, Hexcel's growth potential is highlighted by the expected ramp-up in aircraft production and deliveries from Airbus and Boeing, which are currently behind schedule [12][15]. - The increasing incorporation of composites in new aircraft generations presents additional opportunities for Hexcel, as aircraft deliveries are anticipated to rise, positively impacting sales and margins [15][16].

Core Viewpoint - Hexcel Corporation's share price declined by 2% to $61.11 following its second-quarter 2025 earnings release, which showed a decrease in adjusted earnings and net sales compared to the previous year [1][9]. Financial Performance - Hexcel reported adjusted earnings of 50 cents per share for Q2 2025, down 16.7% from 60 cents in the same quarter last year, but exceeded the Zacks Consensus Estimate of 46 cents by 8.7% [1][9]. - GAAP earnings were reported at 17 cents per share, a significant decline of 71.7% from the prior year's 60 cents [1]. - Total net sales for Q2 2025 were $489.9 million, surpassing the Zacks Consensus Estimate of $471 million by 4%, but down 2.1% from $500.4 million in Q2 2024 [3][9]. Operational Insights - The gross margin for Q2 2025 was 22.8%, a contraction of 250 basis points from the previous year, attributed to lower sales and unfavorable cost leverage due to inventory reduction actions [4]. - Selling, general and administrative (SG&A) expenses increased by 7.8% year over year to $43 million, while research and technology expenses decreased by 2.7% to $14.3 million [5]. Market Segment Performance - In the Commercial Aerospace segment, net sales fell by 8.6% year over year to $293.1 million, impacted by lower sales from major programs including Airbus A350 and A320neo, and Boeing 787 and 737 MAX [6]. - Conversely, the Defense, Space & Other segment saw a 9.5% increase in net sales to $196.8 million, driven by strong demand from various military and space programs [7][9]. Financial Position - As of June 30, 2025, Hexcel's cash and cash equivalents were $77.2 million, down from $125.4 million at the end of 2024, while long-term debt increased to $827.7 million from $700.6 million [10]. - The company reported a cash outflow from operating activities of $5.2 million in the first half of 2025, compared to a cash inflow of $37.2 million in the same period last year [10]. Guidance - Hexcel maintained its 2025 guidance, expecting sales between $1.88 billion and $1.95 billion, with the Zacks Consensus Estimate at $1.91 billion [12]. - The company anticipates adjusted earnings per share in the range of $1.85 to $2.05, with the Zacks Consensus Estimate at $1.87 [12]. - Hexcel also expects to generate approximately $190 million in free cash flow for 2025, with capital expenditures projected to be less than $90 million [13].

Financial Data and Key Metrics Changes - The company generated sales of $490 million in Q2 2025, with adjusted diluted EPS of $0.50 per share [13] - Gross margin decreased to 22.8% in Q2 2025 from 25.3% in Q2 2024, impacted by lower operating leverage and inventory reduction actions [16][28] - Adjusted operating income was $54.2 million, or 11.1% of sales, compared to $72 million, or 14.4% of sales in the prior year [30] Business Line Data and Key Metrics Changes - Commercial aerospace sales totaled $293 million, down 8.9% year-over-year on a constant currency basis, primarily due to the A350 and Boeing 787 [13][26] - Defense, Space, and Other sales reached $197 million, up 7.6% year-over-year, driven by various military programs [15][27] - The Composite Materials segment represented 80% of total sales with an adjusted operating margin of 14.1%, down from 17.2% in the prior year [31] Market Data and Key Metrics Changes - The commercial aerospace market accounted for approximately 60% of total sales in Q2 2025, while Defense, Space, and Other represented about 40% [26] - The company noted strong demand in the defense sector, with NATO members in Europe planning to increase defense spending to 5% of GDP [10] Company Strategy and Development Direction - The company aims to generate over $1 billion in cash cumulatively over the next four years, supported by strong demand for advanced lightweight composite materials [9][38] - The company is focused on operational excellence and cost control, with plans to optimize production efficiency through automation and AI [20][22] - The company is exploring targeted M&A opportunities to complement its advanced material science technology [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the commercial aerospace industry's recovery, with a backlog for new aircraft at an all-time high [37] - The company anticipates a strong fourth quarter in 2025 as production rates increase, particularly for the A350 program [45][85] - Management highlighted the importance of maintaining on-time delivery and quality, receiving recognition from Airbus for outstanding performance [18][76] Other Important Information - The company took a restructuring charge of $24 million in Q2 2025 related to the closure of its engineered product facility in Belgium [21][29] - The company repurchased $50 million of shares in Q2 2025, totaling $100 million for the year [25] Q&A Session Summary Question: Can you outline the assumptions on build rates for the A350 program? - Management indicated that the A350 program's build rate has been adjusted down to the low sixties for the full year, with expectations for a strong fourth quarter as destocking ends [44][85] Question: Is there continued growth expected in the defense space? - Management expressed optimism about ongoing growth in defense spending globally, particularly in the second half of the year [46][47] Question: What were the actual shipping rates for the A350 in the first half of the year? - Shipping rates were in the low sixties in Q1 and high fives in Q2, reflecting destocking impacts [55][57] Question: How does the company view the impact of tariffs on earnings guidance? - Management noted that tariffs could impact earnings by $3 to $4 million per quarter, but they did not include this in guidance due to uncertainty [86][88] Question: What is the long-term growth outlook for the defense business? - Management sees defense as a significant growth opportunity, with increased spending in both the US and Europe expected to benefit the business [96][97]

Financial Data and Key Metrics Changes - Hexcel generated sales of $490 million in Q2 2025, with adjusted diluted EPS of $0.50 per share [12][24] - Commercial aerospace sales were $293 million, down 8.9% year-over-year on a constant currency basis [12][25] - Gross margin decreased to 22.8% from 25.3% in the previous year, impacted by lower operating leverage and inventory reduction actions [14][27] - Adjusted operating income was $54.2 million, or 11.1% of sales, compared to $72 million, or 14.4% of sales in the prior year [29] Business Line Data and Key Metrics Changes - The Composite Materials segment represented 80% of total sales, with an adjusted operating margin of 14.1%, down from 17.2% in the prior year [29] - Defense, Space, and Other sales totaled $197 million, up 7.6% year-over-year, driven by various military programs [13][26] - Sales for other commercial aerospace increased by 5.1% year-over-year, led by international demand [13][25] Market Data and Key Metrics Changes - The commercial aerospace market accounted for approximately 60% of total sales in Q2 2025 [24] - Defense budgets globally are increasing, with NATO members in Europe indicating a rise to 5% of GDP, supporting higher build rates for military platforms [9][10] - The outlook for the A350 program remains challenging due to supply chain disruptions, but Airbus aims to stabilize production rates [6][12] Company Strategy and Development Direction - Hexcel is focused on maintaining operational excellence and controlling costs while navigating near-term production reductions [14][18] - The company is investing in automation and digitization to improve production efficiency and reduce costs per unit over the next several years [18][20] - Hexcel plans to generate over $1 billion in cash cumulatively over the next four years, driven by strong demand in commercial aerospace and defense sectors [7][36] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the commercial aerospace industry's recovery, with a strong backlog for new aircraft orders [36] - The company expects production rates to increase in the second half of 2025, leading to improved margins and cash flow [15][21] - Management highlighted the importance of maintaining strong relationships with customers and adapting to changing market conditions [10][74] Other Important Information - Hexcel took a restructuring charge of $24 million in Q2 2025 related to the closure of its engineered products facility in Belgium [19][28] - The company repurchased $50 million of shares in Q2 2025, totaling $100 million for the year [22][31] - Hexcel's average contract length is about seven years, with 15-20% of contracts up for renewal each year, allowing for pricing adjustments [66][67] Q&A Session Summary Question: Can you outline the assumptions on build rates for the A350 program? - Management indicated that the A350 program's build rate has been adjusted down to the low sixties for the full year, with expectations for a strong fourth quarter as destocking ends [41][42] Question: What is the outlook for defense spending in the second half of the year? - Management expressed optimism about continued growth in defense spending, which has been higher than expected, and expects this trend to continue [45][46] Question: What were the actual shipping rates for the A350 in the first half of the year? - Shipping rates were in the low sixties in Q1 and high fives in Q2, with destocking primarily affecting European shipments [53][56] Question: How does the company plan to manage tariff impacts? - Management noted that tariffs are expected to impact earnings by $3-4 million per quarter, but they are working on mitigating strategies [34][85] Question: What is the long-term growth outlook for the defense business? - Management sees defense as a significant growth opportunity, with increased spending in the US and Europe expected to benefit Hexcel's defense segment [94][95]

Investor Briefing July 2025 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 number of factors that could cause actual resul ...

Core Insights - Hexcel reported revenue of $489.9 million for the quarter ended June 2025, a year-over-year decline of 2.1%, with EPS of $0.50 compared to $0.60 a year ago, exceeding the Zacks Consensus Estimate of $471.17 million by 3.98% and delivering an EPS surprise of 8.7% [1] Financial Performance - Net Sales in Commercial Aerospace - Composite Materials reached $249.9 million, slightly above the average estimate of $248.24 million, but down 8.3% year-over-year [4] - Net Sales in Defense, Space & Other - Composite Materials were $143.3 million, significantly exceeding the estimated $112.99 million, reflecting a year-over-year increase of 49.3% [4] - Net Sales in Commercial Aerospace - Engineered Products totaled $43.2 million, below the average estimate of $44.46 million, marking a decline of 10.2% year-over-year [4] - Total Net Sales in Commercial Aerospace amounted to $293.1 million, below the estimated $297.01 million, representing an 8.6% year-over-year decline [4] - Total Net Sales in Defense, Space & Other reached $196.8 million, surpassing the average estimate of $163.52 million, with a year-over-year increase of 41.7% [4] - Composite Materials Net Sales were $393.2 million, exceeding the average estimate of $371.23 million, but down 3.8% year-over-year [4] - Operating income for Composite Materials was $58.3 million, below the estimated $64.11 million [4] - Operating income for Corporate & Other was -$14.7 million, better than the estimated -$22.93 million [4] - Operating income for Engineered Products was -$13.6 million, significantly below the estimated $11.76 million [4] Stock Performance - Hexcel's shares have returned 12.4% over the past month, outperforming the Zacks S&P 500 composite's 5.7% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Hexcel (HXL) reported quarterly earnings of $0.5 per share, exceeding the Zacks Consensus Estimate of $0.46 per share, but down from $0.6 per share a year ago, indicating an earnings surprise of +8.70% [1] Group 1: Earnings Performance - The company surpassed consensus EPS estimates three times over the last four quarters [2] - Hexcel's revenues for the quarter ended June 2025 were $489.9 million, exceeding the Zacks Consensus Estimate by 3.98%, but down from $500.4 million year-over-year [2] - The company has topped consensus revenue estimates three times over the last four quarters [2] Group 2: Stock Performance and Outlook - Hexcel shares have declined approximately 0.2% year-to-date, while the S&P 500 has gained 8.1% [3] - The future stock price movement will largely depend on management's commentary during the earnings call [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.46 on revenues of $467.48 million, and for the current fiscal year, it is $1.87 on revenues of $1.91 billion [7] Group 3: Industry Context - The Aerospace - Defense Equipment industry, to which Hexcel belongs, is currently in the top 35% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Hexcel's stock performance [5][6]