Hexcel Corporation (HXL - Free Report) reported first-quarter 2020 adjusted earnings of 64 cents per share, which missed the Zacks Consensus Estimate of 67 cents by 4.5%.
In the reported quarter, the company’s GAAP earnings came in at 50 cents compared with the prior-year quarter’s 84 cents.
The year-over-year deterioration can be attributed to the continued grounding of the Boeing (BA - Free Report) 737 MAX and effects of the COVID-19 pandemic.
Total Sales
Net sales totaled $541 million, surpassing the Zacks Consensus Estimate of $524 million by 3.3%. However, the top line witnessed a decline of 11.3% from the year-ago quarter’s $609.9 million.
While stalled production of 737 Max affected sales, temporary closures at a number of Hexcel’s plants as well as customer plants led by the pandemic resulted in reduced quarterly sales.
Operational Update
Hexcel's gross margin was 26% in the first quarter, reflecting year-over-year contraction of 140basis points.
The company’s operating incomeamounted to $65.7 million in the quarter compared with the previous year’s $102.8 million. The deterioration was mainly caused by non-recurring advisory and professional fees and expenses that the company incurred on account of its recently terminated merger with Woodward (WWD - Free Report) .
Quarterly Performance
Commercial Aerospace: Net sales were down 12.7% year over year to $362.9 million. The grounding and subsequent production halt of 737 Max and end of the A380 program resulted in this unit’s poor top-line performance.
Space and Defense: Net sales rose 3.5% year over year to $111.6 million, primarily driven by improved sales from rotorcraft, particularly the Black Hawk program, and a number of Space programs.
Industrial: Net sales declined 23.2% year over year to $66.5 million, primarily due to soft wind energy sales on account of temporary plant closures in China and Austria arising from the COVID-19 pandemic.
Financial Details
As of Mar 31, 2020, cash and cash equivalents were $329.3 million compared with $64.4 million as of Dec 31, 2019.
Long-term debt totaled $1,389.5 million as of Mar 31, 2020, up from$1,050.6 million as of 2019-end.
At the end of first-quarter 2020, cash generated from operating activities was $8.6 million compared with $45.9 million in the prior year.
The effective tax rate for the firstquarter of 2020 was 21.9% compared with 22.7% in the year-ago period. The firstquarter of 2020was favorably impacted by deductions associated with share-based compensation payments.
The company used $25million to repurchase shares of its common stock during the first quarter. The remaining authorization under the share repurchase program as of Mar 31, 2020 was $217million. However, Hexcel has temporarily suspended its share repurchase program and quarterly dividend payouts, in light of the current market volatility.
Free cash outflow for the first quarter of 2020 was $18.6 million compared with$15.2 million in the first quarter of 2019.
2020 Guidance
Hexcel has withdrawn its previously provided 2020 and mid-term financial guidance due to market uncertainties as a result of the pandemic.
Zacks Rank
Hexcel currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Defense Release
Another defense stock, General Dynamics Corp. (GD - Free Report) is set to release its first-quarter 2020 result on Apr 29.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Hexcel Corporation (HXL - Free Report) reported first-quarter 2020 adjusted earnings of 64 cents per share, which missed the Zacks Consensus Estimate of 67 cents by 4.5%.
In the reported quarter, the company’s GAAP earnings came in at 50 cents compared with the prior-year quarter’s 84 cents.
The year-over-year deterioration can be attributed to the continued grounding of the Boeing (BA - Free Report) 737 MAX and effects of the COVID-19 pandemic.
Total Sales
Net sales totaled $541 million, surpassing the Zacks Consensus Estimate of $524 million by 3.3%. However, the top line witnessed a decline of 11.3% from the year-ago quarter’s $609.9 million.
While stalled production of 737 Max affected sales, temporary closures at a number of Hexcel’s plants as well as customer plants led by the pandemic resulted in reduced quarterly sales.
Operational Update
Hexcel's gross margin was 26% in the first quarter, reflecting year-over-year contraction of 140basis points.
The company’s operating incomeamounted to $65.7 million in the quarter compared with the previous year’s $102.8 million. The deterioration was mainly caused by non-recurring advisory and professional fees and expenses that the company incurred on account of its recently terminated merger with Woodward (WWD - Free Report) .
Quarterly Performance
Commercial Aerospace: Net sales were down 12.7% year over year to $362.9 million. The grounding and subsequent production halt of 737 Max and end of the A380 program resulted in this unit’s poor top-line performance.
Space and Defense: Net sales rose 3.5% year over year to $111.6 million, primarily driven by improved sales from rotorcraft, particularly the Black Hawk program, and a number of Space programs.
Industrial: Net sales declined 23.2% year over year to $66.5 million, primarily due to soft wind energy sales on account of temporary plant closures in China and Austria arising from the COVID-19 pandemic.
Financial Details
As of Mar 31, 2020, cash and cash equivalents were $329.3 million compared with $64.4 million as of Dec 31, 2019.
Long-term debt totaled $1,389.5 million as of Mar 31, 2020, up from$1,050.6 million as of 2019-end.
At the end of first-quarter 2020, cash generated from operating activities was $8.6 million compared with $45.9 million in the prior year.
The effective tax rate for the firstquarter of 2020 was 21.9% compared with 22.7% in the year-ago period. The firstquarter of 2020was favorably impacted by deductions associated with share-based compensation payments.
The company used $25million to repurchase shares of its common stock during the first quarter. The remaining authorization under the share repurchase program as of Mar 31, 2020 was $217million. However, Hexcel has temporarily suspended its share repurchase program and quarterly dividend payouts, in light of the current market volatility.
Free cash outflow for the first quarter of 2020 was $18.6 million compared with$15.2 million in the first quarter of 2019.
2020 Guidance
Hexcel has withdrawn its previously provided 2020 and mid-term financial guidance due to market uncertainties as a result of the pandemic.
Zacks Rank
Hexcel currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Defense Release
Another defense stock, General Dynamics Corp. (GD - Free Report) is set to release its first-quarter 2020 result on Apr 29.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on BA - FREE
Get the latest research report on GD - FREE
Get the latest research report on HXL - FREE
Get the latest research report on WWD - FREE