Hexcel Q2 Earnings Beat Estimates, Sales Decline Y/Y

Hexcel Corporation’s HXL share price dropped 2% to reach $61.11 on July 25, following the company’s latest quarterly release.

Hexcel reported second-quarter 2025 adjusted earnings of 50 cents per share, which declined 16.7% from the year-ago quarter’s figure of 60 cents. However, the bottom line surpassed the Zacks Consensus Estimate of 46 cents by 8.7%.

The company reported GAAP earnings of 17 cents per share, which declined 71.7% from the year-ago quarter’s figure of 60 cents.

The year-over-year bottom-line decline can be attributed to lower net sales and operating income compared with the prior-year quarter.

HXL’s Total Sales

In the second quarter, the company’s net sales totaled $489.9 million, which beat the Zacks Consensus Estimate of $471 million by 4%. However, the top line fell 2.1% from the year-ago quarter’s reported sales of $500.4 million.

The year-over-year decline can be attributed to lower sales from the Commercial Aerospace market.

Hexcel’s Operational Update

Hexcel's gross margin in the second quarter was 22.8%, which contracted 250 basis points from the prior-year quarter. The decline in the gross margin can be attributed to lower sales, and inventory reduction actions drove unfavorable cost leverage.

Selling, general and administrative (SG&A) expenses increased 7.8% year over year to $43 million in the second quarter. Meanwhile, research and technology expenses for the second quarter of 2025 dropped 2.7% year over year to $14.3 million.

HXL’s adjusted operating income was $54.2 million in the quarter compared with $72 million in the year-ago period.

HXL’s Contribution From Different Markets

Beginning from the first quarter of 2025, Hexcel’s sales are reported for two markets, which include Commercial Aerospace and Defense, Space & Other (which combines the previous Space & Defense market and Industrial market).

Commercial Aerospace: Net sales decreased 8.6% year over year to $293.1 million due to lower sales from each of the four major programs, including the Airbus A350 and A320neo and the Boeing 787 and 737 MAX.

Space and Defense: Net sales rose 9.5% year over year to $196.8 million. This increase was led by strong sales volume from the Sikorsky CH-53K, two international fighter programs and space programs, including launchers, rocket motors and satellites.

HXL’s Financial Details

As of June 30, 2025, Hexcel’s cash and cash equivalents were $77.2 million compared with $125.4 million as of Dec. 31, 2024.

The company’s long-term debt totaled $827.7 million as of June 30, 2025, up from $700.6 million as of 2024-end.

During the first six months of 2025, HXL’s cash used in operating activities was $5.2 million against the cash inflow of $37.2 million in the year-ago period.

Hexcel’s adjusted free cash outflow as of June 30, 2025 was $46.6 million compared with adjusted free cash outflow of $14.4 million in the year-ago period.

Hexcel’s 2025 Guidance

Hexcel reiterated its guidance for 2025. The company still expects to generate sales in the band of $1.88-$1.95 billion in 2025. The Zacks Consensus Estimate, pegged at $1.91 billion, lies just below the midpoint of the company's guidance range.

HXL still expects its adjusted earnings per share in the range of $1.85-$2.05 in 2025. The Zacks Consensus Estimate, pegged at $1.87, lies near the lower end of the company's guidance range.

Hexcel still expects to generate free cash flow of approximately $190 million in 2025. Its capital expenditure outlook still remains less than $90 million.

HXL’s Zacks Rank

Hexcel currently carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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