Hexcel (HXL) Q3 Earnings Miss Estimates, Sales Rise Y/Y
Hexcel Corporation HXL reported third-quarter 2023 adjusted earnings of 38 cents per share, which missed the Zacks Consensus Estimate of 42 cents by 9.5%. However, the bottom line improved 15.2% from the year-ago earnings of 33 cents per share.
In the quarter under review, the company posted GAAP earnings of 45 cents per share compared with the prior-year quarter’s earnings of 31 cents.
Total Sales
In the third quarter, net sales totaled $420 million, which missed the Zacks Consensus Estimate of $431 million by 2.6%. However, the top line witnessed an improvement of 15% from the year-ago quarter’s $365 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 third quarter was 21.8% compared with 22.4% in the prior-year period. This was driven by higher sales volume leverage.
SG&A expenses increased 22.1%. Meanwhile, research and technology expenses for the third quarter of 2023 rose 15.5% year over year.
HXL’s adjusted operating income was $42.8 million in the quarter compared with $41.2 million in the year-ago period.
Segmental Performance
Commercial Aerospace: Net sales increased 20.5% year over year to $251.9 million. The rise was driven by growth in the Airbus A350 and Boeing 787 programs.
Space and Defense: Net sales rose 18.6% year over year to $128.8 million. The increase can be attributed to sales growth across many U.S. and international programs.
Industrial: Net sales decreased 17.4% year over year to $38.8 million. The decline was primarily due to lower wind energy sales.
Financial Details
As of Sep 30, 2023, cash and cash equivalents were $97.7 million compared with $112 million as of Dec 31, 2022.
The long-term debt totaled $754.1 million as of Sep 30, 2023, up from $723.3 million as of 2022-end.
During the nine months ended Sep 30, 2023, the company’s cash outflow from operating activities was $98.1 million compared with $56.4 million in the prior-year period.
Hexcel’s adjusted free cash flow for the nine months ended Sep 30, 2023 was $3.7 million compared to free cash outflow of $1.9 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 previously guided range of $1.725-$1.825 billion. The Zacks Consensus Estimate for sales, pegged at $1.81 billion, is slightly higher than the midpoint of the company's guidance range.
HXL continues to expect to generate adjusted earnings per share in the range of $1.80-$1.94 in 2023. The Zacks Consensus Estimate for sales, pegged at $1.92 per share, is higher than the midpoint of the company’s guidance range.
Hexcel expects to generate free cash flow of more than $110 million in 2023.
Zacks Rank
Hexcel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
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Net sales were $16.88 billion in the reported quarter, which surpassed the Zacks Consensus Estimate of $16.66 billion by 1.3%. The top line rose 1.8% from $16.58 billion reported in the year-ago quarter.
AAR Corp. AIR reported first-quarter fiscal 2024 adjusted earnings of 78 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents by 6.9%. Earnings surged 27.9% from the year-ago quarter.
In the quarter under review, AAR generated net sales worth $549.7 million. The reported figure surpassed the Zacks Consensus Estimate by 8.7% and increased 23.2% from $446.3 million recorded in the year-ago quarter.
RTX Corporation’s RTX third-quarter 2023 adjusted earnings per share (EPS) of $1.25 beat the Zacks Consensus Estimate of $1.19 by 5%. The bottom line also improved 3.3% from the year-ago quarter’s level of $1.21.
RTX’s third-quarter adjusted sales of $18,952 million beat the Zacks Consensus Estimate of $18,709 million by 1.3%.
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