Hexcel (HXL) Q1 2025 earnings summary

Executive summary

• Q1 2025 sales were $457 million, down 3.3% year-over-year, with adjusted diluted EPS of $0.37, reflecting lower commercial aerospace demand and ongoing supply chain disruptions.

• Commercial Aerospace sales declined 6.4% due to reduced Boeing 787/MAX volumes and flat Airbus A350, partially offset by international demand; Defense, Space & Other sales grew 2.0%.

• Guidance for 2025 was revised downward due to lower A350 and A320 production rates, with the A350 ship set assumption reduced from 84 to 68.

• $64 million was returned to shareholders in Q1 2025 via share repurchases and dividends; $300 million of fixed rate debt was refinanced.

• The company remains focused on cost control, operational efficiency, and positioning for future growth as OEM production ramps up.

Financial highlights

• Gross margin for Q1 2025 was 22.4%, down from 25% in Q1 2024, impacted by lower operating leverage and a power outage at the Decatur facility.

• Adjusted operating income was $45.3 million (9.9% of sales), compared to $54.1 million (11.5%) in Q1 2024.

• Adjusted EBITDA totaled $84.8 million, down from $98.2 million in Q1 2024.

• Free cash flow was negative $54.6 million, compared to negative $35.7 million in Q1 2024.

• Net cash used by operating activities was $28.5 million, with working capital use of $97.7 million.

Outlook and guidance

• 2025 sales guidance revised to $1.88–$1.95 billion (from $1.95–$2.05 billion), mainly due to lower A350 and A320 demand.

• Adjusted diluted EPS guidance lowered to $1.85–$2.05 (from $2.05–$2.25); free cash flow guidance now around $190 million.

• Commercial Aerospace and Defense/Space/Other sales expected to be flat year-over-year.

• Guidance excludes impact from tariffs announced after March 31, 2025, and any further sales from the Neumarkt, Austria facility.

• Capital expenditures for 2025 projected at less than $90 million; effective tax rate at 21%.