Why Hexcel Stock Fell in 2024

Boeing's Impact on Hexcel - Boeing's struggles in 2024 significantly affected Hexcel, a major supplier of carbon fiber materials, leading to a 15% decline in Hexcel's shares despite the S&P 500 rising by 23% [1] - Boeing, a key customer accounting for nearly two-thirds of Hexcel's revenue, reduced its material purchases due to manufacturing and engineering issues, causing a government-ordered slowdown in aircraft production [2][3] - Hexcel was forced to lower its financial expectations for 2024 and withdraw its long-term guidance for double-digit compound annual revenue growth through 2026 due to Boeing's reduced demand [4] Hexcel's Business and Market Position - Hexcel specializes in producing lightweight carbon fiber materials, which are essential for fuel-efficient aircraft and other large equipment, with commercial aerospace making up nearly two-thirds of its revenue [2] - Despite the slump, Hexcel's composite materials remain a critical component of the new plane supply chain, with Airbus forecasting demand for over 42,000 new aircraft deliveries in the next 20 years [7] Investor Sentiment and Capital Management - Investors exited Hexcel in 2024 due to the uncertainty surrounding Boeing's recovery timeline and the lack of control Hexcel management had over external factors [5] - Hexcel managed to return capital to investors by reducing its share count by 4% over the past year and 16% over the past decade, while also paying a modest dividend yielding about 1% [6] Future Outlook - While Hexcel's long-term potential remains strong, the timing of demand recovery is uncertain, and investors will need to wait for Boeing's recovery to see Hexcel's business rebound [7][8]