Hexcel (HXL) Q2 Earnings Beat Estimates, Sales Rise Y/Y
Hexcel Corporation HXL reported second-quarter 2023 adjusted earnings of 50 cents per share, which beat the Zacks Consensus Estimate of 48 cents by 4.2%. The bottom line improved 51.5% from the year-ago earnings of 33 cents per share.
In the quarter under review, the company posted GAAP earnings of 50 cents per share compared with the prior-year quarter’s earnings of 53 cents.
Total Sales
In the second quarter, net sales totaled $454 million, which beat the Zacks Consensus Estimate of $445 million by 2.2%. Also, the top line witnessed an improvement of 15.6% from the year-ago quarter’s $393 million.
Hexcel Corporation Price, Consensus and EPS Surprise
Hexcel Corporation price-consensus-eps-surprise-chart | Hexcel Corporation Quote
Operational Update
Hexcel's gross margin in the second quarter was 24.4% compared with 22.8% in the prior-year period. This was driven by higher sales volume leverage.
SG&A expenses increased 6.6%. Meanwhile, research and technology expenses for the second quarter of 2023 rose 17.7% year over year.
HXL’s adjusted operating income was $61.8 million in the quarter compared with $44.7 million in the year-ago period.
Segmental Performance
Commercial Aerospace: Net sales increased 16.1% year over year to $264.3 million. The rise was driven by growth in the Airbus A350 and Boeing 787 programs.
Space and Defense: Net sales rose 22.9% year over year to $137.5 million. The increase can be attributed to growth across several platforms globally, including fighter aircraft, particularly the F-35 and Rafale, as well as the Black Hawk, civilian helicopters and space programs.
Industrial: Net sales decreased 1.9% year over year to $52.5 million. The decline was primarily due to lower wind energy and recreation sales.
Financial Details
As of Jun 30, 2023, cash and cash equivalents were $104.2 million compared with $112 million as of Dec 31, 2022.
The long-term debt totaled $779 million as of Jun 30, 2023, up from $723.3 million as of 2022-end.
During the six months ended Jun 30, 2023, the company’s cash outflow from operating activities was $30.1 million compared with $18.3 million in the prior-year period.
Hexcel’s adjusted free cash outflow for the six months ended Jun 30, 2023 was $44.7 million compared with $19.6 million in the prior-year period.
2023 Guidance
The company updated its 2023 financial guidance. Hexcel now expects to generate sales in the band of $1.765-$1.835 billion, up from the previous guidance range of $1.725-$1.825 billion. The Zacks Consensus Estimate for sales, pegged at $1.80 billion, is in line with the midpoint of the company's guidance range.
HXL now expects to generate adjusted earnings per share in the range of $1.80-$1.94 in 2023, revised up from the prior expected range of $1.70-$1.90. The Zacks Consensus Estimate for sales, pegged at $1.90 per share, is higher than the midpoint of the company's guidance range.
Zacks Rank
Hexcel currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
Lockheed Martin LMT reported second-quarter 2023 adjusted earnings of $6.73 per share, which surpassed the Zacks Consensus Estimate of $6.43 by 4.7%. The bottom line also improved 6.5% from the year-ago quarter's figure.
Net sales amounted to $16.69 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $15.86 billion by 5.3%. The top line rose 8.1% from $15.45 billion in the year-ago quarter.
AAR Corp. AIR reported fourth-quarter fiscal 2023 adjusted earnings of 83 cents per share, which surpassed the Zacks Consensus Estimate of 77 cents by 7.8%. Earnings surged 15% from the year-ago quarter.
In the quarter under review, AAR generated net sales worth $553.3 million. The reported figure surpassed the Zacks Consensus Estimate by 4.5% and increased 16.5% from the $474.9 million recorded in the year-ago quarter.
Upcoming Defense Release
Curtiss-Wright Corporation CW: The company is scheduled to report its second-quarter earnings on Aug 2, 2023. The Zacks Consensus Estimate for CW’s second-quarter earnings calls for a growth rate of 5.5% from the prior-year reported figure.
The Zacks Consensus Estimate for Curtiss-Wright’s second-quarter sales implies a growth rate of 6.2% from the prior-year reported figure. CW delivered an earnings surprise of 8.51% in the last reported quarter.
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