Hexcel Corporation Q2 sales increase 5.9%

Operating income for the period was $71.9 million compared to $73.9 million last year. Net income for the second quarter of 2013 was $48.5 million or $0.48 per diluted share, compared to $48.0 million or $0.47 per diluted share in 2012.

Highlights:

-Sales of $422.6 million were 5.9% higher than last year (5.2% in constant currency) driven by Commercial Aerospace (up 15.1% in constant currency).

-Adjusted net income of $49.1 million was up 15%, resulting in $0.48 per adjusted diluted share, versus $42.7 million and $0.42 last year, respectively.

-Adjusted operating income was $71.9 million, 17.0% of sales, as compared to $64.4 million, 16.1% of sales in 2012.

- Additional $150 million share repurchase authorized.

Chief Executive Officer Comments

Mr. Berges commented, “This was another strong quarter for Hexcel, as solid execution combined with increased sales to yield excellent results. For the quarter, our adjusted diluted EPS of $0.48 was 14% higher than last year on a 5% increase in constant currency sales.

"We are also particularly pleased that our adjusted operating income was 17.0% of net sales for the quarter, 90 basis points better than last year. This quarter also marked the first flight of the A350 XWB the newest Airbus offering with over 50% composite structure. The A350 XWB will be a key contributor to Hexcel’s future and involves shipments to over 40 customers in 14 different countries.”

Looking ahead, Mr. Berges said, “Assuming the scheduled ramp-up of the Boeing 787 is sustained, we expect aerospace sales (both Commercial Aerospace and Space & Defense) to continue their steady growth trend. Though seasonal effects typically result in slightly lower margins in the second half, and our industrial markets remain challenged, strong operational performance allows us to reaffirm our 2013 earnings guidance.”

Markets

Commercial Aerospace

Commercial Aerospace sales of $270.0 million increased 15.6% (15.1% in constant currency) for the quarter as compared to the second quarter of 2012. Combined revenues attributed to new aircraft programs (A380, A350, B787, B747-8) increased over 20% versus the same period last year and comprise over 30% of Commercial Aerospace sales.

Sales for Airbus and Boeing legacy aircraft were up over 10% compared to the second quarter of 2012, and were just lower than the first quarter of 2013.

Sales to “Other Commercial Aerospace,” which include regional and business aircraft customers, were down about 5% compared to the same period last year.

Space & Defense

Space & Defense sales of $96.7 million were 9.8% higher (9.3% in constant currency) than the second quarter of 2012. Growth was again led by rotorcraft, which accounted for nearly 60% of Space & Defense sales for the quarter.

Industrial

Total Industrial sales of $55.9 million for the second quarter of 2013 were 28.0% lower (28.8% in constant currency) than the second quarter of 2012, but up sequentially versus the first quarter of 2013. As expected, wind sales were down over 35% from the record level in the second quarter of 2012.

Hexcel