Hexcel (HXL) investor relations material

Executive summary

• Q2 2025 sales were $490M, down 2.1% year-over-year, with adjusted diluted EPS of $0.50 and net income of $13.5M, reflecting lower commercial aerospace sales and $24M+ in restructuring charges for the Belgium facility closure.

• Commercial aerospace sales declined 8.6%–8.9% year-over-year due to A350 and 787 softness, while Defense, Space & Other sales grew 7.6%–9.5% year-over-year, driven by strong demand in military and space programs.

• Gross margin fell to 22.8% from 25.3% year-over-year, impacted by lower volumes, tariffs, and unfavorable cost leverage.

• Restructuring charges of $24M–$24.2M were recorded for the closure of the Welkenraedt, Belgium facility, with production transferred to other sites and no top-line impact.

• The company maintains a strong market position in advanced composites for both commercial and defense applications, supported by high barriers to entry and innovation.

Financial highlights

• Q2 2025 sales: $489.9M (down 2.1% YoY); commercial aerospace: $293M (down 8.6%–8.9% YoY); defense, space & other: $196.8M (up 7.6%–9.5% YoY).

• Adjusted operating income: $54.2M (11.1% of sales), down from $72M (14.4%) YoY; operating income: $30M (6.1% margin), down from $71.8M (14.3%).

• Free cash flow for first six months: negative $46.6M (vs. negative $14.4M YoY); net cash used in operating activities: $5.2M.

• Adjusted diluted EPS for Q2 2025: $0.50 (down from $0.60 YoY); GAAP diluted EPS: $0.17.

• Cash on hand at June 30, 2025: $77.2M; total debt: $827.7M; net debt: $750.5M.

Outlook and guidance

• 2025 sales guidance: $1.88–$1.95B; adjusted diluted EPS: $1.85–$2.05; free cash flow: ~$190M; capital expenditures under $90M; effective tax rate expected at 21%.

• Guidance reaffirmed, but does not fully include potential tariff impacts; management expects continued challenges from supply chain, inflation, and geopolitical factors.

• Q3 expected to be seasonally weaker due to European holidays and A350 destocking; strong Q4 anticipated as destocking ends and build rates rise.

• Over $1B in cumulative cash generation expected over next four years; additional $500M annual revenue possible as OEM build rates peak.