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Hexcel (HXL) Q1 Earnings Beat Estimates, Sales Rise Y/Y

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Hexcel Corporation (HXL - Free Report) reported first-quarter 2022 adjusted earnings of 22 cents per share, which exceeded the Zacks Consensus Estimate of 17 cents by 29.4%.

The bottom line also improved from a loss of 10 cents per share incurred in the year-ago quarter.

In the quarter under review, the company posted GAAP earnings of 21 cents against the prior-year quarter’s loss of 17 cents.

Total Sales

Net sales during the first quarter totaled $390.6 million, which beat the Zacks Consensus Estimate of $362 million by 7.9%. Moreover, the top line witnessed an improvement of 25.9% from the year-ago quarter’s $310.3 million.

Operational Update

Hexcel's gross margin for the first quarter was 22.2% compared with 17.1% in the prior-year period, driven by higher sales and greater capacity utilization that led to improved cost absorption.

SG&A expenses rose 12.9%, whereas research and technology expenses for the first quarter of 2022 decreased by 6% year over year.

The company’s adjusted operating income amounted to $31.1 million in the quarter compared with $1.9 million incurred in the year-ago period.

Hexcel Corporation Price, Consensus and EPS Surprise

Hexcel Corporation Price, Consensus and EPS Surprise

Hexcel Corporation price-consensus-eps-surprise-chart | Hexcel Corporation Quote

Segmental Performance

Commercial Aerospace: Net sales increased by 48.3% year over year to $218.9 million, driven by higher narrowbody sales, increased Airbus A350 sales and higher business jet sales.

Space and Defense: Net sales increased by 5.8% year over year to $118.2 million. The increase can be attributed to growth in the Space, CH-53K and military jet programs.

Industrial: Net sales increased by 4.9% year over year to $53.5 million, primarily driven by the strength in recreation, consumer electronics and automotive.

Financial Details

As of Mar 31, 2022, cash and cash equivalents were $112.8 million compared with $127.7 million as of Dec 31, 2021.

Long-term debt totaled $857.5 million as of Mar 31, 2022, up from $822.4 million as of 2021-end.

In the first quarter of 2022, cash used in operating activities was $19 million compared with the cash outflow of $1.2 million in the prior year.

Hexcel’s adjusted free cash outflow in the first quarter of 2022 was $123.8 million compared to the free cash outflow of $6.1 million in the prior-year period.

2022 Guidance

The company reaffirmed its 2022 financial guidance.

Hexcel currently expects to generate sales in the range of $1.50-$1.63 billion in 2022. The Zacks Consensus Estimate for sales, pegged at $1.56 billion, is in line with the midpoint of the guidance range.

The company projects to generate adjusted earnings per share (EPS) in the range of $1.00-$1.24 in 2022. The Zacks Consensus Estimate for sales, pegged at $1.16, lies above the midpoint of the guidance range.

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

Lockheed Martin (LMT - Free Report) reported first-quarter 2022 earnings of $6.44 per share, which surpassed the Zacks Consensus Estimate of $6.22 by 3.5%. However, the bottom line declined by 1.8% year over year.

Lockheed Martin ended the first quarter of 2022 (on Mar 27, 2022) with $134.23 billion in the backlog compared with $135.36 billion at the end of the fourth quarter of 2021. LMT’s cash from operations at the end of the first quarter of 2022 amounted to $1.41 billion compared with $1.75 billion a year ago.

Raytheon Technologies’ (RTX - Free Report) first-quarter 2022 adjusted EPS of $1.15 beat the Zacks Consensus Estimate of $1.01 by 13.9%. Its sales of $15,716 million missed the Zacks Consensus Estimate of $15,799 million by 0.5%.

Raytheon Technologies had cash and cash equivalents of $6,040 million as of Mar 31, 2022, compared with $7,832 million as of Dec 31, 2021. RTX projects adjusted EPS in the range of $4.60-$4.80.

Upcoming Release

Spirit Aerosystems (SPR - Free Report) is set to announce its first-quarter results on May 4. Spirit Aerosystems has a Zacks Rank #3. It has a four-quarter average negative earnings surprise of 14.56%.

The long-term earnings growth rate of SPR stands at 8.5%. The Zacks Consensus Estimate for Spirit Aerosystems’ first-quarter sales is pegged at $1.09 billion.