Hexcel's Q3 Earnings Miss Estimates, Sales Beat, '25 EPS View Lowered

Hexcel Corporation HXL reported third-quarter 2025 adjusted earnings of 37 cents per share, which declined 21.3% from the year-ago quarter’s figure of 47 cents. The bottom line also missed the Zacks Consensus Estimate of 38 cents by 2.6%.

The company reported GAAP earnings of 26 cents per share, which declined 46.9% from the year-ago quarter’s figure of 49 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 third quarter, the company’s net sales totaled $456.2 million, which beat the Zacks Consensus Estimate of $449 million by 1.6%. However, the top line fell 0.1% from the year-ago quarter’s reported sales of $456.5 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 third quarter was 21.9%, which contracted 140 basis points from the prior-year quarter. The decline in the gross margin can be attributed to inventory reduction actions and a sales mix that led to unfavorable cost leverage.

Selling, general and administrative (SG&A) expenses increased 3.3% year over year to $41.1 million in the third quarter. Research and technology expenses for the third quarter of 2025 rose 1.4% year over year to $14 million.

HXL’s adjusted operating income was $44.8 million in the quarter compared with $52.9 million in the year-ago period.

HXL’s Contribution From Different Markets

Commercial Aerospace: Net sales decreased 7.3% year over year to $274.2 million due to the result of inventory destocking, primarily on the Airbus A350 but also the Boeing 787.

Space and Defense: Net sales rose 13.3% year over year to $182 million. This year-over-year growth was broad-based, including fighters, rotorcraft and space.

HXL’s Financial Details

As of Sept. 30, 2025, Hexcel’s cash and cash equivalents were $90.5 million compared with $125.4 million as of Dec. 31, 2024.

The company’s long-term debt totaled $757.9 million as of Sept. 30, 2025, up from $700.6 million as of 2024-end.

During the first nine months of 2025, HXL’s cash provided by operating activities was $105 million compared with the cash inflow of $127.3 million in the year-ago period.

Hexcel’s adjusted free cash flow as of Sept. 30, 2025 was $49.9 million compared with adjusted free cash flow of $58.9 million in the year-ago period.

Hexcel’s 2025 Guidance

Hexcel now expects to generate sales of around $1.88 billion compared to the previous band of $1.88-$1.95 billion in 2025. The Zacks Consensus Estimate, pegged at $1.90 billion, lies above the company's guidance.

HXL now expects its adjusted earnings per share in the range of $1.70-$1.80 in 2025 compared to the previous band of $1.85-$2.05. The Zacks Consensus Estimate, pegged at $1.88, lies above the company's guidance range.

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

HXL’s 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

RTX Corporation’s RTX third-quarter 2025 adjusted earnings per share (EPS) of $1.70 beat the Zacks Consensus Estimate of $1.42 by 19.7%. The bottom line also improved 17.2% from the year-ago quarter’s level of $1.45.

RTX’s third-quarter sales totaled $22.48 billion, which surpassed the Zacks Consensus Estimate of $21.48 billion by 4.6%. The top line also surged a solid 11.9% from $20.09 billion recorded for the third quarter of 2024.

Lockheed Martin Corporation LMT reported third-quarter 2025 adjusted earnings of $6.95 per share, which outpaced the Zacks Consensus Estimate of $6.33 by 9.8%. The bottom line increased 2.2% from the year-ago quarter's reported figure of $6.80.

Net sales were $18.61 billion, which beat the Zacks Consensus Estimate of $18.56 billion by 0.3%. The top line also inched up 8.8% from $17.10 billion reported in the year-ago quarter.

Northrop Grumman Corporation NOC reported third-quarter 2025 adjusted earnings of $7.67 per share, which outperformed the Zacks Consensus Estimate of $6.49 by 18.2%. The bottom line also increased 9.6% from $7 registered in the prior-year quarter.

NOC’s total sales of $10.42 billion in the third quarter missed the Zacks Consensus Estimate of $10.72 billion by 2.8%. However, the top line rose 4.3% from $10 billion reported in the year-ago quarter.

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

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