Hexcel(US:HXL)2020-10-19 20:39Financial Performance - Net sales for Q3 2020 were $286.9 million, a decrease of 49.9% compared to $572.5 million in Q3 2019[81]. - Commercial Aerospace sales fell to $128.8 million, down 66.6% from the previous year, primarily due to reduced demand related to the COVID-19 pandemic[82]. - Space & Defense sales were $108.8 million, a slight decrease of 0.9% compared to Q3 2019, with mixed demand across programs[84]. - Total Industrial sales decreased by 35.8% to $49.3 million, with wind energy sales declining by 40.4% compared to Q3 2019[85]. - The company reported a net income of $9.7 million for Q3 2020, down from $80.3 million in Q3 2019, reflecting a decline of 87.9%[89]. - Adjusted operating income (loss) for Q3 2020 was $(21.8) million, compared to $109.9 million in Q3 2019, indicating a significant operational downturn[92]. - Operating loss for Q3 2020 was $37.6 million, compared to an operating income of $109.9 million in Q3 2019, with a 89.5% decline in operating income for the first nine months[1]. Cash Flow and Expenses - Operating cash flow for the first nine months of 2020 was $157.0 million, down from $277.3 million in the same period of 2019[88]. - Free cash flow for the nine months ended September 30, 2020 was a use of $109.2 million, compared to a use of $114.6 million in the prior year[88]. - Selling, general and administrative expenses decreased by 26% year-over-year due to cost realignment and headcount reductions[87]. - Net cash provided by operating activities was $157.0 million for the first nine months of 2020, compared to $277.3 million in the same period of 2019[1]. - Net cash used for investing activities was $47.8 million in the first nine months of 2020, a decrease from $325.9 million in 2019, which included $163.2 million for the ARC acquisition[117]. - Financing activities used $106.9 million of cash in the first nine months of 2020, compared to $64.8 million provided in the same period in 2019[118]. - The company returned $38.8 million to stockholders in the first nine months of 2020, down from $106.8 million in 2019[118]. Margins and Debt - Gross margin for Q3 2020 dropped to 4.7%, down from 27.6% in Q3 2019, due to lower sales levels and temporary idling of production facilities[86]. - Gross margin for Q3 2020 was 4.7%, significantly down from 27.6% in Q3 2019, and 17.3% for the first nine months compared to 27.6% in the prior year[1]. - Total debt, net of cash, was $931.2 million as of September 30, 2020, down from $995.7 million at the end of 2019[1]. - The next significant scheduled debt maturity will not occur until 2024[119]. Impact of COVID-19 - The company plans to close its wind energy prepreg production facility in Windsor, Colorado, due to a shift in customer demand in the U.S. market[2]. - The company suspended dividend payments and stock repurchases in response to the COVID-19 pandemic[119]. - The company anticipates challenges due to the COVID-19 pandemic, including reduced consumer demand for air travel and disruptions in global financial markets[127]. - Forward-looking statements include expectations regarding aircraft production rates and potential impacts of the COVID-19 pandemic on operations and financial results[126]. - There have been no material changes in market risk from the information provided in the Annual Report for the year ended December 31, 2019, except for the effects of COVID-19[130]. Sales Breakdown - Composite Materials net sales fell to $215.7 million in Q3 2020, down 51.9% from $448.0 million in Q3 2019, and decreased 32.4% to $960.4 million for the first nine months[2]. - Engineered Products net sales were $71.2 million in Q3 2020, a 42.8% decrease from $124.5 million in Q3 2019, and down 33.8% to $246.2 million for the first nine months[3]. - Commercial Aerospace sales decreased by 66.6% to $128.8 million in Q3 2020, with a 42.9% decline to $695.6 million for the first nine months[1].