Hexcel reports 2024 first quarter results

• Q1 2024 GAAP diluted EPS of $0.43 compared to Q1 2023 GAAP diluted EPS of $0.50.
• Q1 2024 adjusted diluted EPS of $0.44, compared to Q1 2023 adjusted diluted EPS of $0.50.
• Q1 2024 Sales were $472 million, an increase of 3.2% over Q1 2023 sales of $458 million (3.1% increase in constant currency).
• Returned $113 million in Q1 2024 to stockholders via share repurchases and dividends.
• Full year 2024 guidance is reaffirmed.

Chairman, CEO and President Nick Stanage said, “Our commercial aerospace market continues to build momentum with our first quarter 2024 sales growing sequentially from the fourth quarter of 2023, including growth in both widebody and narrowbody programs. Volume leverage across the business drove sequential margin expansion demonstrating continued strong execution on our upward trajectory. We remain committed to delivering our full-year 2024 and our mid-term guidance as the Hexcel team focuses on growth, margin expansion and cash generation.”

Mr. Stanage continued, “Reports that global air passenger traffic has now exceeded pre-pandemic levels are encouraging and highlight steadily growing demand for new commercial aircraft and for lightweight composite Hexcel products to build them. We are especially pleased that two airlines recently ordered a sizeable number of new widebody aircraft where Hexcel has significant content. The demand for lightweight, fuel-efficient, composite-intensive aircraft continues to grow, and we remain focused on execution to meet customer demand.”

Markets

Sales in the first quarter of 2024 were $472.3 million compared to $457.7 million in the first quarter of 2023.

Commercial Aerospace (63% of YTD Sales)

• Commercial Aerospace sales of $299.3 million increased 5.2% (5.2% in constant currency) for the first quarter of 2024 compared to the first quarter of 2023 on higher widebody sales. Other Commercial Aerospace sales decreased 6.3% for the first quarter of 2024 compared to the first quarter of 2023 on lower business jet sales.

Space & Defense (30% of YTD Sales)

• Space & Defense sales of $139.1 million increased 10.2% (10.0% in constant currency) for the quarter as compared to the first quarter of 2023. The sales increase was led by fixed wing aircraft programs including the Lockheed F-35 and Airbus A400M as well as classified programs.

Industrial (7% of YTD Sales)

• Total Industrial sales of $33.9 million in the first quarter of 2024 decreased 27.9% (28.5% in constant currency) compared to the first quarter of 2023, with lower sales across all industrial sub-markets.

Consolidated Operations

Gross margin for the first quarter of 2024 saw another sequential improvement achieving 25.0%. The first quarter of 2023 had a gross margin of 27.9% and benefited from a number of items including particularly favorable absorption and a favorable sales mix. As a percentage of sales, selling, general and administrative and R&T expenses for the first quarter of 2024 were 13.6% compared to 14.1% for the first quarter of 2023. Adjusted operating income in the first quarter of 2024 was $54.1 million or 11.5% of sales, compared to $63.0 million, or 13.8% of sales in 2023. The impact of exchange rates on operating income as a percentage of sales was favorable by approximately 30 basis points in the first quarter of 2024 compared to the first quarter of 2023.

Cash and other

• Net cash used for operating activities in the first quarter of 2024 was $7.0 million, compared to a use of $23.4 million for the first quarter of 2023. Working capital was a cash use of $84.5 million in the first quarter of 2024 compared to a use of $104.0 million in the first quarter of 2023. Capital expenditures on a cash basis were $28.7 million for the first quarter of 2024 compared to $18.1 million for the first quarter of 2023. Free cash flow was ($35.7) million in the first quarter of 2024 compared to ($41.5) million in the first quarter of 2023. Free cash flow is defined as cash generated from operating activities less cash paid for capital expenditures. Capital expenditures on an accrual basis were $18.6 million for the first quarter of 2024 compared to $16.8 million for the first quarter of 2023.
• The Company used $100.7 million to repurchase shares of its common stock during the first quarter. The aggregate remaining authorization under the share repurchase program as of March 31, 2024 was $386.4 million following an additional $300 million authorization in February 2024.
• As announced today, the Board of Directors declared a quarterly dividend of $0.15 per share payable to stockholders of record as of May 3, 2024, with a payment date of May 10, 2024.

2024 Guidance (unchanged)

1. Sales of $1.925 billion to $2.025 billion
2. Adjusted diluted earnings per share of $2.10 to $2.30
3. Free cash flow of greater than $200 million
4. Capital expenditures less than $100 million
5. Effective tax rate of 22.0%

Market-Specific Sales Outlook (unchanged)

• Commercial Aerospace: Up mid-teens
• Space & Defense: Up mid-single digits
• Industrial: Up low to mid-single digits

To see all results tables, view the full press release on Hexcel’s website.