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A month has gone by since the last earnings report for Hexcel (HXL). Shares have lost about 9.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hexcel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hexcel's Q4 Earnings Surpass Estimates, Revenues Improve Y/Y
Hexcel Corporation reported fourth-quarter 2024 adjusted earnings of 52 cents per share, which improved 20.9% from the year-ago quarter’s figure of 43 cents. The bottom line also surpassed the Zacks Consensus Estimate of 51 cents by 2%. The bottom line also surpassed the Zacks Consensus Estimate of 46 cents by 2.2%.
The company reported GAAP earnings of 7 cents per share, which surpassed the year-ago quarter’s loss of 21 cents per share.
HXL reported 2024 adjusted earnings of $2.03 per share, which were higher than the year-ago figure of $1.81. The year-over-year bottom-line improvement can be attributed to higher net sales and net income compared with the prior-year quarter.
HXL’s Total Sales
The company’s net sales totaled $473.8 million, which beat the Zacks Consensus Estimate of $471 million by 0.6%. The top line also witnessed an improvement of 3.6% from the year-ago quarter’s figure of $457.5 million.
The company reported sales of $1.90 billion in 2024, which were higher than $1.79 billion reported in 2023. The year-over-year improvement can be attributed to sales growth in the Commercial Aerospace and Space & Defense markets.
Hexcel’s Operational Update
Hexcel's gross margin was 25%, which increased 250 basis points from the prior-year quarter. The improvement can be attributed to favorable cost leverage driven by higher sales.
Selling, general and administrative (SG&A) expenses increased 14.3% year over year to $47.9 million. Meanwhile, research and technology expenses rose 11.6% year over year to $13.5 million.
HXL’s adjusted operating income was $8.9 million compared with $47.6 million in the year-ago period.
Contribution From Different Markets
Commercial Aerospace: Net sales increased 4% year over year to $278.3 million, driven by sales growth from Airbus A320neo and Boeing 787 programs. This market contributed 58.7% to total revenues in the quarter.
Space and Defense: Net sales increased 7.2% year over year to $163.3 million, driven by sales growth from Sikorsky CH-53K and Lockheed F-35 programs as well as domestic and international space sales. This market contributed 34.5% to total revenues in the quarter.
Industrial: Net sales decreased 14.6% year over year to $32.2 million due to a decline witnessed in sub-markets. This market contributed 6.8% to total revenues in the quarter.