# Hexcel Corp: Form 10-Q for the period ended Mar 31, 2025

- Company: [Hexcel Corp](/companies/hxl.md) (CIK 717605)
- Form: 10-Q
- Filed: 2025-04-21
- Accepted by EDGAR: Apr 21, 2025, 16:35 ET
- Period: 2025-03-31
- Accession: 0000950170-25-056328
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/717605/000095017025056328/hxl-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/717605/000095017025056328/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $456.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $354.1m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $102.4m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $13.8m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $43.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $44.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $7.8m | us-gaap:InterestExpense |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $7.1m | us-gaap:IncomeTaxExpenseBenefit |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 81,700,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$28.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $26.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $13.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $50.4m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-03-31 | $89.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $822.5m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $2.78bn | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $317.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $1.25bn | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $787.1m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $100.0k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $1.53bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 22,632 characters.

### Business Overview

We are a global leader in advanced lightweight composites technology. We propel the future of flight and transportation through excellence in advanced material lightweighting solutions that create a better world for us all. Our broad and unrivaled product range includes carbon fiber, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, resins, engineered core and composite structures for use in commercial aerospace, defense and space, and industrial applications.

We serve international markets through manufacturing facilities, sales offices and representatives located in the Americas, Europe, Asia Pacific, India, and Africa.

We are a manufacturer of products within a single industry: Advanced Composites. We have two reportable segments: Composite Materials and Engineered Products. The Composite Materials segment is comprised of our carbon fiber, specialty reinforcements, resin systems, prepregs and other fiber-reinforced matrix materials, and honeycomb core product lines and pultruded profiles. The Engineered Products segment is comprised of lightweight high strength composite structures, radio frequency/electromagnetic interference (“RF/EMI”) and microwave absorbing materials, engineered core and specialty machined honeycomb products with added functionality.

Since 2022, the Commercial Aerospace market and our business has seen signs of recovery from the economic impacts of the COVID-19 pandemic, driven by growth in air travel and an increase in aircraft build rates. The post-recovery period continues to have many challenges across the markets Hexcel operates in, including delays in aircraft production rate ramps related to, among other impacts, global logistics, supply chain issues, economic conditions, inflationary pressures, and effects from geopolitical issues and conflicts. These challenges have had and may continue to have further negative impacts on our operations, supply chain, transportation networks and customers, all of which have and may continue to compress our financial results. The U.S. government's recently imposed tariffs, sanctions, and other restrictions on goods exported from or imported into the U.S. or countermeasures imposed in response to such governmental actions could increase the cost and availability of materials used to manufacture our products, reduce our ability to sell products globally or impact the margins on the products we sell. We do not yet know the impact of the recent government actions or the potential changes in global political conditions on our business due to uncertainties as the situation continues to evolve.

### Financial Overview

### Results of Operations

*(In millions, except per share data)*

|  | Quarter Ended March 31, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: |
| Net sales | **$456.5** | $472.3 | (3.3)% |
| Operating income | **$44.2** | $52.9 | (16.4)% |
| As a percentage of net sales | **9.7%** | 11.2% |  |
| Net income | **$28.9** | $36.5 | (20.8)% |
| Diluted net income per common share | **$0.4** | $0.4 | (18.6)% |

18

#### Net Sales

The following table summarizes net sales to third-party customers by segment and end market for the quarters ended March 31, 2025 and 2024:

*(In millions)*

|  | Quarter Ended March 31, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: |
| **Consolidated Net Sales** | **$456.5** | **$472.3** | **(3.3)%** |
| Commercial Aerospace | 280.1 | 299.3 | (6.4)% |
| Defense, Space & Other | 176.4 | 173.0 | 2.0% |
| **Composite Materials** | **$365.3** | **$379.5** | **(3.7)%** |
| Commercial Aerospace | 241.8 | 251.5 | (3.9)% |
| Defense, Space & Other | 123.5 | 128.0 | (3.5)% |
| **Engineered Products** | **$91.2** | **$92.8** | **(1.7)%** |
| Commercial Aerospace | 38.3 | 47.8 | (19.9)% |
| Defense, Space & Other | 52.9 | 45.0 | 17.6% |

### Sales by Segment

***Composite Materials:*** Net sales of $365.3 million in the first quarter of 2025 decreased by $14.2 million or 3.7% from the prior year quarter. Commercial Aerospace sales decreased $9.7 million or 3.9% in the first quarter of 2025 and Defense, Space & Other sales decreased $4.5 million or 3.5% as compared to the prior year quarter.

***Engineered Products:*** For the first quarter of 2025, net sales of $91.2 million decreased $1.6 million or 1.7% as compared to the prior year quarter. The decline was driven by lower Commercial Aerospace sales, which decreased $9.5 million or 19.9% in the first quarter of 2025 as compared to the same period in 2024, partially offset by higher Defense, Space & Other sales of $7.9 million, or 17.6%.

### Sales by Market

Beginning with the first quarter of 2025, sales are being reported for two markets, including Commercial Aerospace, unchanged from past practice, and a new sales category titled Defense, Space & Other, which combines the previous Space & Defense market and Industrial market. Prior period sales amounts have been reclassified for comparative purposes.

Commercial Aerospace sales of $280.1 million decreased 6.4% for the first quarter of 2025 compared to the first quarter of 2024 as result of continued delays in production rate ramps. Lower Boeing 787 and MAX sales drove the year-over-year decrease. Airbus A350 sales were nominally lower year-over-year. Other Commercial Aerospace sales increased 7.1% for the first quarter of 2025 as compared to the same period in the prior year on strong international demand.

Defense, Space & Other sales of $176.4 million increased 2.0% for the quarter as compared to the first quarter of 2024, including 2.9% sales growth for the Defense & Space market, partially offset by a sales decrease of 1.8% in Industrial. The Defense & Space growth was driven by the CH-53K, Black Hawk, classified programs, a number of Space programs and an international fighter program. Within Industrial, Automotive grew year-over-year whereas Wind weakened further and Recreation was soft as compared to the prior year period.

#### Gross Margin

*(In millions)*

|  | Quarter Ended March 31, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: |
| Gross margin | **$102.4** | $118.2 | (13.4)% |
| Percentage of sales | **22.4%** | 25.0% |  |

Gross margin for the first quarters of 2025 and 2024 was 22.4% and 25.0%, respectively. The lower gross margin in the current year reflects the impact of lower sales leverage.

#### Operating Expenses

*(In millions)*

|  | Quarter Ended March 31, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: |
| SG&A expense | **$43.3** | $49.0 | (11.6)% |
| Percentage of sales | **9.5%** | 10.4% |  |
| R&T expense | **$13.8** | $15.1 | (8.6)% |
| Percentage of sales | **3.0%** | 3.2% |  |

Selling, general and administrative expenses were lower for the three months ended March 31, 2025 compared to the same period in 2024 primarily due to lower employee-related expenses. Research and technology expenses for the quarter ended March 31, 2025 decreased when compared to the prior year period primarily due to lower material and supplies and employee-related expenses.

#### Operating Income

*(In millions)*

|  | Quarter Ended March 31, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: |
| Consolidated operating income | **$44.2** | $52.9 | (16.4)% |
| Operating margin | **9.7%** | 11.2% |  |
| Composite Materials | **54.6** | 63.7 | (14.3)% |
| Operating margin | **14.2%** | 15.8% |  |
| Engineered Products | **5.1** | 12.9 | (60.5)% |
| Operating margin | **5.6%** | 13.9% |  |
| Corporate & Other | **(15.5)** | (23.7) | 34.6% |

Operating income for the first quarter of 2025 and 2024 was $44.2 million and $52.9 million, respectively. The decrease in operating income for the first quarter of 2025 compared to the same period last year was driven by the lower gross margin partially offset by favorable operating expenses.

#### Interest Expense, Net

*(In millions)*

|  | Quarter Ended March 31, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: |
| Interest expense, net | **$7.8** | $6.5 | 20.0% |

Net interest expense for the first quarter ended March 31, 2025 was higher compared to the first quarter of 2024 due to higher average borrowings and interest rates.

#### Provision for Income Taxes

*(In millions)*

|  | Quarter Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Income tax expense | **$7.1** | $9.9 |
| Effective tax rate | **19.6%** | 21.3% |

The tax expense for the quarter ended March 31, 2025 was $7.1 million compared to $9.9 million for the quarter ended March 31, 2024.

### Financial Condition

***Liquidity:*** Cash on hand at March 31, 2025 was $89.2 million as compared to $125.4 million at December 31, 2024. As of March 31, 2025, total debt was $787.2 million as compared to $700.7 million at December 31, 2024.

Under the Facility, total borrowings at March 31, 2025 were $90.0 million, which approximates fair value. The Credit Agreement permits us to issue letters of credit up to an aggregate amount of $50.0 million. As of March 31, 2025, there were no issued letters of credit under the Facility, resulting in undrawn availability under the Facility of $660.0 million. The weighted average interest rate for the Facility was 5.7% for the three months ended March 31, 2025.

We expect to meet our short-term liquidity requirements (including capital expenditures) through net cash from operating activities, cash on hand and the Facility. As of March 31, 2025, long-term liquidity requirements consisted primarily of obligations under our long-term debt obligations. We do not have any significant required debt repayments until February 2027 when our 3.95% Senior Unsecured Notes are due. For further information regarding debt, including our Facility, see Note 5, Debt, to the accompanying condensed consolidated financial statements of this Form 10-Q.

The remaining authorization under the Share Repurchase Program at March 31, 2025 was $184.5 million. On April 21, 2025, our Board of Directors declared a quarterly dividend of $0.17 per share payable to stockholders of record as of May 2, 2025, with a payment date of May 9, 2025.

***Operating Activities:*** Net cash used for operating activities for the first three months of 2025 was $28.5 million compared to $7.0 million for the same period last year. Working capital was a cash use of $97.7 million for the first three months of 2025 compared to a use of $84.5 million in the same period in 2024. The higher working capital use in the current year was primarily driven by higher payments of accounts due.

***Investing Activities:*** Net cash used for investing activities was $27.2 million and $28.7 million in the first three months of 2025 and 2024, respectively. Payments on the previously announced divestiture of the Hartford facility were $1.1 million in the first three months of 2025.

***Financing Activities:*** Net cash provided by financing activities was $18.2 million for first three months of 2025 compared to net cash used of $104.3 million in the same period in 2024. Borrowings under the Facility during the first quarter of 2025 were $90.0 million compared to $15.0 million in borrowings for the same period in 2024. Quarterly dividend payments to shareholders were $13.8 million during the first quarter of 2025 compared to $12.6 million in the first quarter of 2024. Share repurchases for the quarter ended March 31, 2025 totaled $50.4 million as compared to $100.7 million in the first quarter of 2024. During the three months ended March 31, 2025, financing fees paid related to the issuance of the 5.875% Senior Unsecured Notes due in 2035 were $3.9 million.

***Financial Obligations and Commitments:*** The next significant scheduled debt maturity will not occur until 2027, when the 3.95% Senior Unsecured Notes mature. Certain sales and administrative offices, data processing equipment, vehicles and manufacturing equipment, and facilities are leased under operating leases.

### Critical Accounting Estimates

Our Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect reported amounts of assets, liabilities, revenues, expenses and related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors management believes to be relevant at the time our Condensed Consolidated Financial Statements are prepared. On a regular basis, management reviews accounting policies, assumptions, estimates and judgments to ensure our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results may differ from our assumptions and estimates, and such differences could be material.

We describe our significant accounting policies and critical accounting estimates in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

#### Commitments and Contingencies

We are involved in litigation, investigations and claims arising out of the normal conduct of our business, including those relating to commercial transactions, environmental, employment and health and safety matters. We estimate and accrue our liabilities resulting from such matters based upon a variety of factors, including the stage of the proceeding; potential settlement value; assessments by internal and external counsel; and assessments by environmental engineers and consultants of potential environmental liabilities and remediation costs. We believe we have adequately accrued for these potential liabilities; however, facts and circumstances may change, such as new developments, or a change in approach, including a change in settlement strategy or in an environmental remediation plan, or in our existing insurance coverage, that could cause the actual liability to exceed the estimates, or may require adjustments to the recorded liability balances in the future. For further discussion, see Note 11, Commitments and Contingencies, to the accompanying Condensed Consolidated Financial Statements of this Form 10-Q.

### Non-GAAP Financial Measures

The Company uses non-GAAP financial measures, including sales and expenses measured in constant dollars (prior year sales and expenses measured at current year exchange rates); operating income, net income and earnings per share adjusted for items included in operating expense and non-operating expenses; and free cash flow. Management believes these non-GAAP measures are meaningful to investors because they provide a view of Hexcel with respect to ongoing operating results and comparisons to prior periods. These adjustments can represent significant charges or credits that we believe are important to an understanding of Hexcel’s overall operating results in the periods presented. Such non-GAAP measures are not determined in accordance with generally accepted accounting principles and should not be viewed in isolation or as an alternative to or substitutes for GAAP measures of performance. Our calculation of these measures may not be comparable to similarly titled measures used by other companies, and the measures exclude financial information that some may consider important in evaluating our performance. Reconciliations to adjusted operating income, adjusted net income, adjusted diluted net income per share and free cash flow are provided below.

*(In millions)*

|  | Operating Income Quarter Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| GAAP operating income | **$44.2** | $52.9 |
| Other operating expense (a) | **1.1** | 1.2 |
| Adjusted operating income (non-GAAP) | **$45.3** | $54.1 |

*(In millions, except per diluted share data)*

|  | Quarter Ended March 31, 2025 Net Income | Diluted Net Income Per Share | 2024 Net Income | Diluted Net Income Per Share |
| --- | ---: | ---: | ---: | ---: |
| GAAP net income | **$28.9** | **$0.35** | $36.5 | $0.43 |
| Other operating expense, net of tax (a) | **0.9** | **0.01** | 0.9 | 0.01 |
| Other expense, net of tax (b) | **0.3** | **0.01** | - | - |
| Adjusted net income (non-GAAP) | **$30.1** | **$0.4** | $37.4 | $0.4 |

(a) The quarter ended March 31, 2025 included a loss of $1.1 million for the previously announced divestiture of the Hartford, Connecticut business. The quarter ended March 31, 2024 included restructuring costs.

(b) The quarter ended March 31, 2025 included debt extinguishment costs.

*(In millions)*

|  | Quarter Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash used for operating activities | **$(28.5)** | **$(7.0)** |
| Less: Capital expenditures | **(26.1)** | **(28.7)** |
| Free cash flow (non-GAAP) | **$(54.6)** | **$(35.7)** |

### Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to future prospects, developments and business strategies. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “seek,” “target,” “would,” “will” and similar terms and phrases, including references to assumptions. Such statements are based on current expectations, are inherently uncertain and are subject to changing assumptions.

Such forward-looking statements include, but are not limited to: (a) the estimates and expectations based on aircraft production rates provided by Airbus, Boeing and others and the revenues we may generate from an aircraft model or program; (b) expectations with regard to the impact of regulatory activity related to the Boeing 737 MAX on our revenues; (c) expectations with regard to raw material cost and availability, including any impact associated with quotas, duties, tariffs, taxes or other similar restrictions upon the import or export of materials; (d) expectations of composite content on new commercial aircraft programs and our share of those requirements; (e) expectations regarding revenues from space and defense applications, including whether certain programs might be curtailed or discontinued; (f) expectations regarding sales for industrial applications; (g) expectations regarding cash generation, working capital trends, and inventory levels; (h) expectations as to the level of capital expenditures, capacity, including the timing of completion of capacity expansions, and qualification of new products; (i) expectations regarding our ability to improve or maintain margins; (j) expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy; (k) projections regarding our tax rate; (l) expectations with regard to the continued impact of macroeconomic factors or geopolitical issues or conflicts; (m) expectations regarding our strategic initiatives, including our sustainability goals; (n) expectations with regard to the effectiveness of cybersecurity measures; (o) expectations regarding the outcome of legal matters or the impact of changes in laws or regulations; and (p) our expectations of financial results for 2025 and beyond.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control, that may cause actual results to be materially different. Such factors include, but are not limited to, the following: the extent of the impact of macroeconomic factors or geopolitical issues or conflicts, including retaliatory actions taken in response to U.S. trade policy; reductions in sales to any significant customers, particularly Airbus or Boeing, including related to regulatory activity or public scrutiny impacting the Boeing 737 MAX; our ability to effectively adjust production and inventory levels to align with customer demand; our ability to effectively motivate, retain and hire the necessary workforce; the availability and cost of raw materials, including the impact of supply disruptions, inflation, and tariffs; our ability to successfully implement or realize our strategic initiatives, including our sustainability goals and any restructuring or alignment activities in which we may engage; changes in sales mix; changes in current pricing due to cost levels; changes in aerospace delivery rates; changes in government defense procurement budgets; timely new product development or introduction; our ability to install, staff and qualify necessary capacity or complete capacity expansions to meet customer demand; cybersecurity-related risks, including the potential impact of breaches or intrusions; currency exchange rate fluctuations; uncertainty related to governmental actions and changes in political, social and economic conditions, including the effect of change in global trade policies, tariff rates, economic sanctions and embargoes; work stoppages or other labor disruptions; our ability to successfully complete any strategic acquisitions, investments or dispositions; compliance with environmental, health, safety and other related laws and regulations, including those related to climate change; the effects of natural disasters or other severe weather events, which may be worsened by the impact of climate change, and other severe catastrophic events, including any public health crisis; and the unexpected outcome of legal matters or impact of changes in laws or regulations.

Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. As a result, the foregoing factors should not be construed as exhaustive and should be read together with other cautionary statements included in this and other reports we file with the SEC. For additional information regarding certain factors that may cause our actual results to differ from those expected or anticipated, see the information under the caption “Risk Factors,” which is located in Item 1A of Part I of this report. We do not undertake any obligation to update our forward-looking statements or risk factors to reflect future events or circumstances, except as otherwise required by law.

## Market risk

As filed, 166 characters.

There have been no material changes in our market risk from the information provided in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

## Controls and procedures

As filed, 1,341 characters.

### Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of March 31, 2025, and with the participation of the Company's management have concluded that these disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

### Changes in Internal Control over Financial Reporting

Our Chief Executive Officer and Chief Financial Officer have concluded that there have not been any changes in our internal control over financial reporting during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 405 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition or future results. There have been no material changes in the Company's risk factors from the aforementioned Form 10-K.

Filed Apr 21, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-056328. Last ingested by Listed: Oct 29, 2026, 04:32 ET. No prices; not investment advice.