Hexcel Q1 Earnings and Revenues Miss, 2025 Guidance Lowered

Hexcel Corporation HXL reported first-quarter 2025 adjusted earnings of 37 cents per share, which declined 15.9% from the year-ago quarter’s figure of 44 cents. The bottom line also lagged the Zacks Consensus Estimate of 43 cents by 14%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The company reported GAAP earnings of 35 cents per share, which declined 18.6% from the year-ago quarter’s figure of 43 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 first quarter, the company’s net sales totaled $456.5 million, which lagged the Zacks Consensus Estimate of $475 million by 3.8%. The top line also fell 3.3% from the year-ago quarter’s reported sales of $472.3 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 first quarter was 22.4%, which contracted 260 basis points from the prior-year quarter. The decline in the gross margin can be attributed to lower sales leverage.

Selling, general and administrative (SG&A) expenses decreased 11.6% year over year to $43.3 million in the first quarter. Meanwhile, research and technology expenses for the first quarter of 2025 dropped 8.6% year over year to $13.8 million.

HXL’s adjusted operating income was $45.3 million in the quarter compared with $54.1 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 6.4% year over year to $280.1 million due to lower Boeing 787 and MAX sales.

Space and Defense: Net sales rose 2% year over year to $176.4 million. This increase was led by strong sales volume from the CH-53K and Black Hawk helicopter programs and classified programs, a number of Space programs and an international fighter program. Sales growth for automotive also contributed to sales growth for HXL from the Space and Defense market.

HXL’s Financial Details

As of March 31, 2025, Hexcel’s cash and cash equivalents were $89.2 million compared with $125.4 million as of Dec. 31, 2024.

The company’s long-term debt totaled $787.1 million as of March 31, 2025, up from $700.6 million as of 2024-end.

In the first quarter of 2025, HXL’s cash used in operating activities was $28.5 million compared with cash used of $7 million in the year-ago period.

Hexcel’s adjusted free cash outflow as of March 31, 2025 was $54.6 million compared with adjusted free cash outflow of $35.7 million in the year-ago period.

Hexcel’s 2025 Guidance

Hexcel lowered its guidance for 2025. The company now expects to generate sales in the band of $1.88-$1.95 billion in 2025 compared with the previous band of $1.95-$2.05 billion. The Zacks Consensus Estimate, pegged at $1.97 billion, is higher than the company's new guidance range.

HXL now expects its adjusted earnings per share in the range of $1.85-$2.05 in 2025, lower than its prior guidance band of $2.05-$2.25. The Zacks Consensus Estimate, pegged at $2.10 per share, is higher than the company's guidance range.

Hexcel now expects to generate free cash flow of approximately $190 million in 2025 compared to the prior guidance of generating more than $220 million. Its capital expenditure outlook is now less than $90 million, which is also lower than its prior outlook of less than 100 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.

Upcoming Q1 Defense Releases

General Dynamics Corporation GD is set to report first-quarter 2025 results on April 23, before market open. The Zacks Consensus Estimate for GD’s first-quarter earnings is pegged at $3.47 per share, which indicates an improvement of 20.5% from the prior year quarter’s figure.

The Zacks Consensus Estimate for GD’s first-quarter sales is pegged at $11.95 billion, which implies an improvement of 11.4% from the prior-year quarter’s figure.

L3Harris Technologies LHX is scheduled to report first-quarter 2025 results on April 24, before market open. The Zacks Consensus Estimate for LHX’s first-quarter earnings is pegged at $2.41 per share.

The Zacks Consensus Estimate for LHX’s first-quarter sales is pegged at $5.23 billion, which implies an improvement of 0.4% from the prior-year quarter’s figure.

Textron Inc. TXT is slated to report first-quarter 2025 results on April 24, before market open. The Zacks Consensus Estimate for TXT’s first-quarter earnings is pegged at $1.17 per share.

The Zacks Consensus Estimate for TXT’s first-quarter sales is pegged at $3.25 billion, which indicates an improvement of 3.5% from the prior-year quarter’s figure.

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