Hexcel Corporation Reports Decline in Revenue and Profitability in Q1 2025

Hexcel Corporation reported its financial results for the first quarter of 2025, revealing a decline in both revenue and profitability compared to the same period in 2024. The company generated net sales of $456.5 million, a decrease of 3.3% from $472.3 million in the prior year. Operating income also fell by 16.4%, from $52.9 million to $44.2 million, resulting in an operating margin of 9.7%, down from 11.2%. Net income for the quarter was $28.9 million, or $0.35 per diluted share, compared to $36.5 million, or $0.43 per diluted share, in the first quarter of 2024.

The decline in revenue was primarily attributed to a 6.4% decrease in sales within the Commercial Aerospace segment, which brought in $280.1 million, down from $299.3 million. This drop was influenced by ongoing production delays, particularly affecting Boeing's 787 and MAX aircraft. Conversely, the Defense, Space & Other segment saw a slight increase in sales, rising 2.0% to $176.4 million, driven by growth in defense programs. The Composite Materials segment reported net sales of $365.3 million, a decrease of 3.7%, while Engineered Products sales fell by 1.7% to $91.2 million.

Operationally, Hexcel's gross margin decreased to 22.4% from 25.0% in the previous year, reflecting the impact of lower sales leverage. Selling, general, and administrative expenses were reduced to $43.3 million from $49.0 million, primarily due to lower employee-related costs. Research and technology expenses also decreased to $13.8 million from $15.1 million. The company reported net cash used for operating activities of $28.5 million, compared to $7.0 million in the same period last year, indicating increased working capital needs.

In terms of strategic developments, Hexcel continued its share repurchase program, buying back 835,162 shares at a cost of $50.4 million during the quarter. The company has approximately $184.5 million remaining under its current repurchase authorization. Additionally, Hexcel is exploring strategic options for its operations in Austria, which have been classified as held for sale due to declining demand in the wind energy market. The company’s total debt increased to $787.2 million from $700.7 million at the end of 2024, with total cash on hand reported at $89.2 million.

Looking ahead, Hexcel anticipates ongoing challenges in the aerospace market, including supply chain disruptions and inflationary pressures. The company remains focused on managing its operational efficiency and maintaining liquidity to navigate these uncertainties. Hexcel's management expressed cautious optimism regarding future growth, particularly in the defense sector, while acknowledging the potential impacts of geopolitical tensions and regulatory changes on its business operations.