Hexcel reports 2023 first quarter results

Chairman, CEO and President Nick Stanage said: “Our relentless focus on execution and growing demand drove an 18% increase in sales, and we delivered adjusted operating income that was more than double the same period last year. The margin expansion reflects strong operating leverage from higher production levels as our key markets grow. Hexcel is well-positioned to benefit from the multi-year production ramps our aerospace customers have announced, as well as growth in other markets – all of which will lead to significant cash generation and expanding shareholder value.”

Mr. Stanage continued, “Innovating the next generation of advanced lightweight composite materials is at the heart of who we are and what we do, so it was a pleasure last month to welcome many customers and partners to join us at the grand opening of our new Center of Research & Technology Excellence in Salt Lake City, Utah. This state-of-the-art facility will allow us to expand our research and broaden our technology portfolio. It will provide an even stronger platform for us to collaborate with our customers on the latest developments in lightweight sustainable solutions, to create a better world for us all.”

Markets
Sales in the first quarter of 2023 were $457.7 million compared to $390.6 million in the first quarter of
2022.
Commercial Aerospace (62% of YTD Sales)
• Commercial Aerospace sales of $284.5 million increased 30.0% (30.0% in constant currency) for
the first quarter of 2023 compared to the first quarter of 2022 led by growth in the Airbus A350
and A320neo programs. Other Commercial Aerospace increased 23.5% for the first quarter of
2023 compared to the first quarter of 2022 on expanding business jet demand.
Space & Defense (28% of YTD Sales)
• Space & Defense sales of $126.2 million increased 6.8% (7.6% in constant currency) for the
quarter as compared to the first quarter of 2022 with growth across a number of platforms
globally, including fixed-wing aircraft and both military and civilian rotorcraft.
Industrial (10% of YTD Sales)
• Total Industrial sales of $47.0 million in the first quarter of 2023 decreased 12.1% (9.1% in
constant currency) compared to the first quarter of 2022, due to lower wind energy sales that
were partially offset by sales growth in recreation, automotive and other industrial markets.

Consolidated Operations
Gross margin for the first quarter of 2023 was 27.9% compared to 22.2% in first quarter of 2022 with
the improvement driven by strong production volume leverage, and also reflecting a favorable sales
mix, favorable absorption and a beneficial foreign exchange impact. As a percentage of sales, selling,
general and administrative and R&T expenses for the first quarter of 2023 were 14.1% compared to
14.2% for the first quarter of 2022. Adjusted operating income in the first quarter of 2023 was $63.0
million or 13.8% of sales, compared to $31.1 million, or 8.0% of sales in 2022. The impact of exchange
rates on operating income as a percentage of sales was favorable by approximately 80 basis points in
the first quarter of 2023 compared to Q1 2022.

Cash and other
• The first quarter 2023 tax expense was $11.7 million compared to a tax expense of $4.7 million for
the first quarter of 2022.
• Net cash used for operating activities in the first quarter of 2023 was $23.4 million, compared to a
use of $19.0 million for the first quarter of 2022. Working capital increased to support higher sales
and was a cash use of $104.0 million in the first quarter of 2023 compared to a use of $74.3
million in the first quarter of 2022. Capital expenditures on a cash basis were $18.1 million for the
first quarter of 2023. Free cash flow was ($41.5) million in the first quarter of 2023 compared to
($39.9) million in the first quarter of 2022. Free cash flow is defined as cash generated from
operating activities less cash paid for capital expenditures. Capital expenditures on an accrual
basis were $16.8 million for the first quarter of 2023 compared to $11.1 million for the first
quarter of 2022.
• The Company did not repurchase any common stock during the first quarter of 2023 and the
remaining authorization under the share repurchase program on March 31, 2023, was $217
million.
• As announced today, the Board of Directors declared a quarterly dividend of $0.125 per share
payable to stockholders of record as of May 5, 2023, with a payment date of May 12, 2023.

2023 Guidance (unchanged)
• Sales of $1.725 billion to $1.825 billion
• Adjusted diluted earnings per share of $1.70 to $1.90
• Free cash flow greater than $140 million
• Accrual basis capital expenditures of approximately $90 million
• Underlying effective tax rate is estimated to be 23%