Hexcel Corporation, reported results for the fourth quarter of 2013. Net sales during the quarter were $426.8 million, 10.2% higher than the $387.3 million reported for the fourth quarter of 2012.

Operating income for the period was $67.0 million, compared to $54.3 million last year. Net income for the fourth quarter of 2013 was $47.1 million, or $0.46 per diluted share, compared to $36.9 million or $0.36 per diluted share in 2012.

Highlights:

- Fourth quarter adjusted diluted EPS of $0.46 was 28% higher than prior year of $0.36.

- Fourth quarter sales of $427 million were 10.2% higher than last year (9.1% in constant currency) driven by Commercial Aerospace (up 20.6% in constant currency).

- Full year sales of $1,678 million were 6.3% higher than 2012 (5.6% in constant currency) and were converted to $270.9 million of operating income, or 16.1% of sales (versus adjusted operating income of 15.2% in 2012).

- Full year adjusted diluted EPS of $1.85 was 19% higher than prior year of $1.56.

Chief Executive Officer Comments

Mr. Stanage commented, “This was another strong quarter that completed another great year for Hexcel. For the year, sales were up 5.6% in constant currency, while our adjusted operating income was up 13% and our adjusted EPS was up nearly 19%.

"Led by Commercial Aerospace sales (up 20.6% for the quarter and 14.5% for the year in constant currency), this was our best fourth quarter (and full year) in history for sales, gross margin, operating income and adjusted net income. We are also particularly pleased that our adjusted operating income for the year increased to 16.1% of sales, 90 basis points better than last year, and we generated free cash flow of $78 million even with $195 million of capital expenditures.”

Looking ahead, Mr. Stanage said, “The large backlog of orders at our major customers suggests we are well positioned for 2014 and beyond. We remain highly focused on delivering earnings leverage and cash on anticipated higher sales in the coming years, driven by both increasing composite-intensive aircraft and production rates.”

Markets

Commercial Aerospace

Commercial Aerospace sales of $283.6 million increased 21.1% (20.6% in constant currency) for the quarter as compared to the fourth quarter of 2012. Revenues attributed to new aircraft programs (A380, A350, B787, B747-8) increased 30% over the same period last year. Sales for Airbus and Boeing legacy aircraft were up over 15% compared to the fourth quarter of 2012, and were about the same run rate as the first half of 2013.

Fourth quarter sales to “Other Commercial Aerospace”, which include regional and business aircraft customers, were up about 9% compared to the same period last year.

For the full year 2013, Commercial Aerospace sales were up 14.5% in constant currency, with new program sales up about 25%, legacy sales up 12% and Other Commercial Aerospace sales about the same as last year. Combined sales to Airbus and Boeing and their subcontractors accounted for 85% of Commercial Aerospace sales.

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