Hexcel Corp. of Stamford reported first-quarter results, with diluted earnings per share of 70 cents on net sales of $478.8 million – 2.6 percent less in constant currency than the first quarter of 2016.
“Although reductions in certain build rates and customer inventory adjustments lowered sales for the quarter, we are fully committed to meeting our adjusted diluted EPS guidance for the year as we continue to prepare for the production ramp up of new programs, led by commercial aerospace,” said Nick Stanage, chairman, CEO and president of the company.
Commercial aerospace represented 73 percent of Hexcel’s first-quarter sales, totaling $347.2 million. That represents a 0.9 percent decline from the first quarter of 2016. The sales growth of the A350 and the new narrow-body airliners were in line with expectations. However, the growth was offset by declines in certain legacy wide-body sales, such as the A380, B777 and B747. Sales to “Other Commercial Aerospace,” which include regional and business aircraft customers, were down modestly from the first quarter of 2016 and just above the fourth quarter of 2016.
Gross margin for the just-ended quarter was 28 percent, slightly down from the first quarter of 2016’s 28.7 percent. Operating income in the first quarter of 2017 was $78.6 million or 16.4 percent of sales as compared to $83.9 million or 16.9 percent of sales in 2016. Depreciation and amortization was $2.7 million higher this quarter, on a constant currency basis, than a year ago. The 2017 operating income percentage as compared to 2016 was nearly 40 basis points higher due to exchange rates.
Hexcel to focus on cost control
Looking ahead, Stanage said the company is “focused on productivity and cost control as we respond to some softness with our sales. We remain confident in achieving our 2017 guidance of adjusted diluted EPS of $2.64 to $2.76 and free cash flow of more than $100 million. We are also on track with the startups of our previously announced new greenfield sites in France and Morocco as the company`s focus in 2017 continues to be driving manufacturing throughput, capacity expansion and innovation.”
Hexcel develops, manufactures and markets lightweight, high-performance structural materials including carbon fibers and specialty reinforcements for use in commercial aerospace, space and defense and industrial applications.