Hexcel's (HXL) Q2 Earnings Increase Y/Y, Sales View Lowered

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].