American public industrial materials company Hexcel Corporation reported net sales of $457 million in the third quarter (Q3) of fiscal 2024, ended September 30, witnessing an increase of 8.8 per cent over Q3 2023 sales of $420 million (8.3 per cent increase in constant currency). Sales for the first nine months (9M) of 2024 were $1,429.2 million compared to $1,331.5 million in the same period of 2023, a 7.3 per cent increase.

Commercial Aerospace sales for Q3 2024 reached $295.9 million, with an increase of 17.5 per cent (17.0 per cent in constant currency) from Q3 2023. For 9M 2024, this category’s sales reached $915.9 million, a 14.4 per cent increase (14.3 per cent in constant currency) compared to the same period in 2023.

Sales in Space & Defense segment reached $128.2 million which was relatively unchanged (0.9 per cent lower in constant currency) in Q3 2024. However, for 9M 2024 period, sales touched $406.2 million increasing 3.5 per cent (3.4 per cent in constant currency) as compared to the first nine months of 2023.

The Industrial sales of $32.4 million in Q3 2024 dropped by 16.5 per cent (17.3 per cent in constant currency) compared to the same period in 2023 due to declines in all sub-markets. Meanwhile in the first nine months of 2024, the segment’s total sales of $107.1 million decreased 22.6 per cent (22.8 per cent in constant currency) compared to the 9M 2023.

The gross margin for Q3 2024 was 23.3 per cent compared to 21.8 per cent in the previous year, while in 9M 2024 period it was 24.6 per cent compared to 24.8 per cent in the prior year period.

As a percentage of sales, selling, general and administrative expenses for Q3 2024 were 8.7 per cent compared to 8.4 per cent for the third quarter in 2023 and for 9M 2024 it was 9.0 per cent compared to 9.2 per cent for 9M 2023.

Registrars and transfer (R&T) expenses as a percentage of sales were 3.0 per cent for Q3 2024 compared to 3.2 per cent for Q3 2023 and for 9M 2024, the category’s sales were 3.1 per cent compared to 3.0 per cent for 9M 2023.

Adjusted operating income in Q3 2024 was $52.9 million or 11.6 per cent of sales, compared to $42.8 million, or 10.2 per cent of sales in Q3 2023. For 9M 2024 the same was $179.0 million or 12.5 per cent of sales, compared to $167.6 million or 12.6 per cent of sales in same period in 2023.

Other operating expense (income) for the 9M period of 2024 and 2023 included restructuring costs and for 9M 2023 it also includes a pre-tax net gain of $0.8 million from the sale of a facility in Windsor, Colorado. The impact of exchange rates on operating income as a percentage of sales was favourable by approximately 30 basis points in the first nine months of 2024 compared to same period in 2023.

The company reported adjusted diluted earnings per share (EPS) of $0.47 in Q3 2024, reflecting significant growth from $0.38 in Q3 2023. Generally accepted accounting principles (GAAP) diluted EPS for Q3 2024 was $0.49, an increase from Q3 2023's EPS of $0.45.

For full fiscal 2024, the company anticipates sales in the range of $1.90-1.98 billion. The guidance for adjusted diluted EPS is projected between $2.02 and $2.18. The free cash flow is expected to be approximately $200 million. The capital expenditures are projected to be under $100 million, consistent with earlier guidance. All these figures are unchanged from earlier projections. The effective tax rate has been revised down to around 19 per cent from the previous forecast of 22 per cent.

Chief executive officer (CEO) and president Tom Gentile said, “Hexcel saw 9 per cent growth in total revenue year over year, driven by a robust 17 per cent growth in Commercial Aerospace. Year-to-date (YTD) Commercial Aerospace is now up 14 per cent. Air traffic continues to grow post pandemic leading to record demand for aircraft that use Hexcel lightweight materials, but supply chain challenges in the global aerospace industry continue to delay planned production rate increases at our major customers. Our customers are currently indicating that production rates will increase in 2025. We will continue to monitor our cost and labour training position to meet those projected production rate increases as schedules firm.”