Hexcel Corporation, a leading advanced composites company, posted 0.6 per cent growth in net sales to $564.3 million in Q4 FY19 compared to same quarter last year. The quarter ended on December 31, 2019. For the full year, net sales rose 8 per cent to $2,356 million. Free cash flow for Hexcel in FY19 increased 21 per cent to $287 million compared to FY18.

 

In Q4, commercial aerospace sales decreased 1.5 per cent to $379.8 million compared to same period last year. Company reported that lower sales to legacy narrowbody programmes without offsetting growth in the Boeing 737 Max, and the A380 cessation caused the downside, partially mitigated by higher sales related to the Boeing 787 and 777X programmes.

 

Sales to "other commercial aerospace," which include regional and business aircraft, increased over 20 per cent in constant currency in fourth quarter. The business jet category was the largest growth contributor of the various size classes in this market, as reported.

 

Space & defense sales increased 18 per cent to $115.3 million in Q4. 

 

Total Industrial sales decreased 11.2 per cent to $69.2 million in Q4. Company reported that the wind energy sales (the largest submarket in industrial), which had increased substantially throughout the year, posted a softer fourth quarter with some inventory alignment towards the end of 2019. 

 

Selling, general and administrative expenses in Q4 FY19 were higher than the prior year period, reflecting the acquisition of ARC Technologies. R&T costs were lower as a result of timing related to qualification costs. Adjusted operating income in Q4 was $97.4 million or 17.3 per cent of sales, compared to $103.5 million or 18.4 per cent of sales, in 2018. 

 

For the full year, commercial aerospace sales increased 4.8 per cent to $1,597.7 million. Growth was driven by higher narrowbody build rates and the transition away from legacy platforms to the latest generation platforms with higher shipset values, and growth in the Airbus A350 and Boeing 787 programmes. Sales to "other commercial aerospace," increased approximately 13 per cent in 2019, driven by higher business jet sales.

 

Space & defense sales increased 20.2 per cent to $444.7 million in FY19 compared to FY18.

 

Total Industrial sales for the year increased 6.5 per cent to $313.3 million compared to 2018. The launch of a number of new wind turbine platforms utilising the latest generation Hexcel composites led to an increase in wind energy sales of approximately 25 per cent in constant currency compared to 2018.

 

Selling, general and administrative expenses for the year were approximately 11 per cent higher in constant currency than the prior year to support growth including Arc technologies. Research and technology expenses for the year increased approximately 3 per cent in constant currency compared to 2018, reflecting continued investment in innovative composite products and processes to support customers and next-generation applications. Adjusted operating income for 2019 was $425.2 million, or 18 per cent of sales, compared to $378.9 million, or 17.3 per cent of sales, in 2018.

 

In January 2020, Woodward and Hexcel Corporation announced a definitive agreement to combine in an all-stock merger of equals to create a premier integrated systems provider serving the aerospace and industrial sectors. The combined company will be named Woodward Hexcel.

 

For upcoming fiscal 2020, Hexcel reported that the fundamentals of their business are positive, despite the headwinds from the Boeing 737 MAX. Company continues to see the strong trend of secular penetration for composites onto modern aircraft and consider themselves well-positioned to win significant market share on new programmes. For Boeing 737 MAX, company's intent is to continue working very closely with Boeing and all of their 737 Max programme customers to meet their demand needs. The company has forecasted flat-to-low-single-digit revenue growth for 2020.