Hexcel(HXL) - 2025 Q1 - Quarterly Report

Financial Performance - Consolidated net sales for Q1 2025 were $456.5 million, a decrease of 3.3% from$ 472.3 million in Q1 2024[80] - Operating income for Q1 2025 was $44.2 million, down 16.4% from$ 52.9 million in Q1 2024, with an operating margin of 9.7% compared to 11.2%[94] - Net income for Q1 2025 was $28.9 million, a decline of 20.8% from$ 36.5 million in Q1 2024, with diluted net income per share at $0.4[80] - GAAP operating income for Q1 2025 was$ 44.2 million, down from $52.9 million in Q1 2024, representing a decrease of approximately 16.5%[113] - Adjusted net income (non-GAAP) for Q1 2025 was$ 30.1 million, compared to $37.4 million in Q1 2024, reflecting a decline of about 19.5%[113] - Free cash flow (non-GAAP) for Q1 2025 was$ (54.6) million, compared to $(35.7) million in Q1 2024, indicating a worsening cash flow situation[115] Sales Performance - Commercial Aerospace sales decreased by 6.4% to$ 280.1 million in Q1 2025, primarily due to production delays and lower Boeing 787 and MAX sales[87] - Defense, Space & Other sales increased by 2.0% to $176.4 million in Q1 2025, driven by growth in the Defense & Space market[88] Expenses and Costs - Gross margin for Q1 2025 was$ 102.4 million, representing 22.4% of sales, down from 25.0% in Q1 2024[90] - SG&A expenses decreased by 11.6% to $43.3 million in Q1 2025, primarily due to lower employee-related expenses[92] - Interest expense increased by 20.0% to$ 7.8 million in Q1 2025, attributed to higher average borrowings and interest rates[96] Cash and Debt - Cash on hand as of March 31, 2025, was $89.2 million, down from$ 125.4 million at December 31, 2024, while total debt rose to $787.2 million[99] - The company has a remaining authorization under the Share Repurchase Program of$ 184.5 million as of March 31, 2025[103] Future Outlook - The company anticipates future revenue growth based on aircraft production rates from major clients like Airbus and Boeing[117] - Expectations regarding raw material costs and availability may impact future revenues, particularly due to tariffs and other restrictions[117] - The company is focused on improving margins and maintaining cash generation amid macroeconomic uncertainties[118] - Strategic initiatives include sustainability goals and potential restructuring activities to align with market demands[119] Risks and Challenges - The company faces risks related to supply chain disruptions, labor availability, and geopolitical factors that could affect operational performance[119] - There have been no material changes in market risk since the last annual report, indicating stability in this area[121] Other Notable Items - The quarter ended March 31, 2025 included a loss of $1.1 million related to the divestiture of the Hartford business, while Q1 2024 included restructuring costs[113]