Hexcel (HXL) Q3 Earnings Beat Estimates, Sales Rise Y/Y

Hexcel Corporation (HXL – Free Report) reported third-quarter 2021 adjusted earnings of 13 cents per share, which exceeded the Zacks Consensus Estimate of 8 cents by 62.5%. The bottom line also improved from a loss of 29 cents per share incurred in the year-ago quarter.

In the quarter under review, the company posted GAAP earnings of 11 cents compared with the prior-year quarter’s figure of 12 cents.

Total Sales

Net sales totaled $333.8 million, which missed the Zacks Consensus Estimate of $353 million by 5.3%. However, the top line witnessed an improvement of 16.3% from the year-ago quarter’s $286.9 million.

Operational Update

Hexcel’s gross margin for the third quarter was 19.8% compared with 4.7% in the prior-year period, driven by a favorable sales mix oriented toward carbon fiber combined with the benefits of prior cost reduction actions that reduced the overhead cost base.

Selling, general and administrative expenses rose 30.1%, whereas research and technology expenses for the third quarter of 2021 dropped 2.8% year over year.

The company’s adjusted operating income amounted to $23.6 million in the quarter against an adjusted operating loss of $21.8 million incurred in the year-ago period.

Segmental Performance

Commercial Aerospace: Net sales increased 29.8% year over year to $167.2 million. Strengthening narrowbody sales boosted this unit’s top-line performance.

Space and Defense: Net sales grew 1.5% year over year to $110.4 million. The improvement can be attributed to strength observed in F-35, CH-53K, civil helicopters in Europe and unmanned aerial vehicles in the United States.

Industrial: Net sales increased 14% year over year to $56.2 million, primarily driven by strong growth observed in automotive and recreation markets.

Financial Details

As of Sep 30, 2021, cash and cash equivalents were $105.8 million compared with $103.3 million as of Dec 31, 2020.

Long-term debt totaled $876.4 million as of Sep 30, 2021, down from $925.5 million as of 2020-end.

At the end of third-quarter 2021, cash generated from operating activities was $64.2 million compared with $157 million in the prior year.

Hexcel’s adjusted free cash outflow at the end of third-quarter 2021 was $49.2 million compared with $109.2 million at the end of the prior-year period.