Hexcel (HXL) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales reached $457 million, up 8.8% year-over-year, led by 17.5% growth in commercial aerospace, while industrial sales declined 16.5%.

• Adjusted EPS was $0.47, a 23.7% increase from Q3 2023, aided by favorable tax planning.

• Ongoing supply chain disruptions and the Boeing strike impacted production rates and margins, leading to the withdrawal of midterm guidance.

• $50 million in stock repurchases occurred in Q3, totaling over $250 million year-to-date, with $234.9 million remaining authorized.

• The company expects full-year 2024 results at the lower end of guidance and will provide 2025 guidance with Q4 results.

Financial highlights

• Q3 2024 net sales were $456.5 million (+8.8%); nine-month sales reached $1,429.2 million (+7.3%).

• Commercial aerospace sales were $296 million in Q3, up 17% year-over-year, with double-digit growth in A350, A320neo, and 787 programs.

• Space and defense sales were $128 million, flat year-over-year, with growth in F-35 and Black Hawk offset by softness in SpaceX and V-22 wind-down.

• Industrial sales were $32.4 million, down 16.5% year-over-year, with broad-based softness.

• Gross margin improved to 23.3% from 21.8% a year ago, reflecting operating leverage.

Outlook and guidance

• 2024 sales are expected between $1.90 billion and $1.98 billion, with adjusted diluted EPS of $2.02 to $2.18.

• Results are expected at the lower end of guidance, supported by a lower effective tax rate of 19%.

• Midterm guidance issued in February is withdrawn; 2025 guidance will be provided in January.

• Capital expenditures are expected to remain below $100 million annually for the foreseeable future.

• Free cash flow guidance remains around $200 million.