HEXCEL CORP /DE/

Previous wording

Since 2022, the Commercial Aerospace market and our business has seen signs of recovery from the economic impacts of the COVID-19 pandemic, driven by growth in air travel and an increase in aircraft build rates. The post-recovery period continues to have many challenges across the markets Hexcel operates in, including delays in aircraft production rate ramps related to, among other impacts, global logistics, supply chain issues, economic conditions, inflationary pressures, and effects from geopolitical issues and conflicts. These challenges have had and may continue to have further negative impacts on our operations, supply chain, transportation networks and customers, all of which have and may continue to compress our financial results. The U.S. government's recently imposed tariffs, sanctions, and other restrictions on goods exported from or imported into the U.S. or countermeasures imposed in response to such governmental actions could increase the cost and availability of materials used to manufacture our products, reduce our ability to sell products globally or impact the margins on the products we sell. We do not yet know the impact of the recent government actions or the potential changes in global political conditions on our business due to uncertainties as the situation continues to evolve.

Current wording

Since 2022, the Commercial Aerospace market and our business have seen signs of recovery from the economic impacts of the COVID-19 pandemic, driven by growth in air travel and an increase in aircraft build rates. The post-recovery period continues to have many challenges across the markets Hexcel operates in, including delays in aircraft production rate ramps related to, among other impacts, global logistics, supply chain issues, economic conditions, inflationary pressures, and effects from geopolitical issues and conflicts. These challenges have had and may continue to have further negative impacts on our operations, supply chain, transportation networks and customers, all of which have and may continue to compress our financial results. As a result of the U.S. government's recently imposed tariffs, sanctions, and other restrictions on goods imported into the U.S.and similar measures imposed by governments outside the U.S., we are experiencing and expect to continue to experience impacts to our business. In particular, tariffs have increased the cost of materials used to manufacture our products, and may in the future reduce our ability to sell products globally and/or increase costs of domestic goods, energy, freight and other related costs. We are taking actions to mitigate these risks such as (i) seeking exemptions and alternative sourcing, where available, (ii) engaging in industry advocacy and (iii) implementing price increases, where feasible, but there can be no assurance that these actions will be effective.

Previous wording

The following table summarizes net sales to third-party customers by segment and end market for the quarters and six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes net sales to third-party customers by segment and end market for the quarters and nine months ended September 30, 2025 and 2024:

Previous wording

Composite Materials: Net sales of $393.2 million in the second quarter of 2025 decreased by $15.4 million or 3.8% from the prior year quarter. Commercial Aerospace sales decreased $22.7 million or 8.3% in the second quarter of 2025 as compared to the prior year quarter driven by declines in the major Airbus and Boeing programs. Defense, Space & Other net sales in the second quarter of 2025 increased $7.3 million or 5.4% primarily driven by military aircraft structures and launchers. Net sales for the segment in the first half of 2025 of $758.5 million decreased 3.8% compared to the same period last year.

Current wording

Composite Materials: Net sales of $363.2 million in the third quarter of 2025 decreased by $4.4 million or 1.2% from the prior year quarter. Commercial Aerospace sales decreased $19.7 million or 7.9% due to inventory destocking on certain Airbus and Boeing programs. Defense, Space & Other net sales in the third quarter of 2025 increased $15.3 million or 13.0% primarily driven by military aircraft structures. Net sales of $1,121.7 million for the first nine months of 2025 decreased 2.9% compared to the same period last year driven by lower sales in Commercial Aerospace.

Previous wording

Engineered Products: For the second quarter of 2025, net sales of $96.7 million increased $4.9 million or 5.3% as compared to the prior year quarter driven by growth in defense and space programs. Net sales of $187.9 million for the first six months of 2025 increased 1.8%compared to the same period last year.

Current wording

Engineered Products: For the third quarter of 2025, net sales of $93.0 million increased $4.1 million or 4.6% as compared to the prior year quarter. Net sales of $280.9 million for the first nine months of 2025 increased 2.7%compared to the same period last year. The increase for both the third quarter and nine months ended September 30, 2025 over the respective periods in the prior year was driven by growth in defense and space programs.

Previous wording

For the second quarter of 2025, Commercial Aerospace sales of $293.1 million decreased 8.6% as compared to the second quarter of 2024. Sales decreased year over year for each of the four major programs including the Airbus A350 and A320neo and the Boeing 787 and 737 MAX. Other Commercial Aerospace increased 5.1% for the second quarter of 2025 compared to the second quarter of 2024. Sales of $573.2 million decreased 7.5% for the first six months of 2025 compared to the first six months of 2024 as sales to all four major programs were lower, led by the 787 and A350. Other Commercial Aerospace increased 6.0% for the first six months of 2025 compared to the same period in 2024.

Current wording

For the third quarter of 2025, Commercial Aerospace sales of $274.2 million decreased 7.3% compared to the third quarter of 2024. The sales decrease was a result of inventory destocking, primarily on the Airbus A350 but also the Boeing 787. Other Commercial Aerospace sales for the third quarter of 2025 increased 9.3% compared to the third quarter of 2024 on strength in regional jets. Sales of $847.4 million decreased 7.5% for the first nine months of 2025 compared to the first nine months of 2024, primarily due to lower sales to the A350, 787 and 737 Max programs. Other Commercial Aerospace increased 7.1% for the first nine months of 2025 compared to the same period in 2024 due to higher regional jet sales.

Previous wording

Defense, Space & Other sales of $196.8 million increased 9.5% in the second quarter of 2025 as compared to the second quarter of 2024. Growth was driven by the CH-53K, two international fighter programs and space programs including launchers, rocket motors and satellites. Sales of $373.2 million increased 5.8% for the first six months of 2025 as compared to the first six months of 2024. Growth was broad based including military helicopters, fighters and space programs.

Current wording

Defense, Space & Other sales of $182.0 million increased 13.3% in the third quarter of 2025 as compared to the third quarter of 2024. Growth was broad-based including fighters, rotorcraft and space. Sales of $555.2 million increased 8.2% for the first nine months of 2025 as compared to the same period in 2024. Strength in fighter and space programs globally led to the increase.

Previous wording

Gross margin for the second quarter of 2025 was 22.8% compared to 25.3% in the second quarter of 2024 and 22.6% and 25.2% for the first six months of 2025 and 2024, respectively. The lower margins for both the second quarter and six months of 2025 compared to the prior year periods was primarily due to lower sales and inventory reduction actions which drove unfavorable cost leverage.

Current wording

Gross margin for the third quarter of 2025 was 21.9% compared to 23.3% in the third quarter of 2024 and 22.4% and 24.6% for the first nine months of 2025 and 2024, respectively. The lower margins for both the third quarter and nine months of 2025 compared to the prior year periods was primarily due to sales mix, tariffs, and inventory reduction actions which drove unfavorable cost leverage.

Previous wording

Selling, general and administrative expenses were higher for the second quarter of 2025 as compared to the prior year period primarily due to higher professional fees. Selling, general and administrative expenses were lower for the first six months of 2025 as compared to the same period of 2024 as lower employee-related costs more than offset the increase in professional fees. Research and technology expenses for the second quarter and first six months of 2025 decreased $0.4 million and $1.7 million, respectively, compared to the same periods of 2024. The decreases in both periods were due primarily to lower material and supplies expenses.

Current wording

Selling, general and administrative expenses were higher for the third quarter, but slightly lower for the first nine months of 2025 as compared to the respective periods in 2024. The increase in selling, general and administrative expenses for the third quarter of 2025 was primarily driven by higher professional fees. For the first nine months of 2025, lower employee-related costs more than offset the increase in professional fees. Research and technology expenses for the third quarter of 2025 were slightly higher than the comparable period in 2024, but lower for first nine months of 2025 as compared to the same period in 2024. The decrease in the first nine months of 2025 was primarily due to lower material and supplies and maintenance costs.

Previous wording

Other operating expenses for the second quarter and first six months of 2025, included restructuring charges of $24.2 million related to the closure of our Welkenraedt facility in Belgium. The six months ended June 30, 2025 also included a loss of $1.1 million for the divestiture of the Hartford, Connecticut business.

Current wording

Other operating expenses for the third quarter of 2025 included a loss of $3.4 million related to the divestiture of our Neumarkt, Austria plant, $3.9 million for a non-income tax charge related to the net value of a foreign entity and restructuring charges of $1.1 million primarily related to the previously announced closure of our facility in Belgium. The nine months ended September 30, 2025 included an additional $24.2 million of restructuring charges related to the closure of the facility in Belgium and also included a loss of $1.1 million for the divestiture of the Hartford, Connecticut business.

Previous wording

Operating income for the second quarters of 2025 and 2024 was $30.0 million and $71.8 million, respectively. Operating income for the first six months of 2025 was $74.2 million compared to $124.7 million for the same period last year. Overall, operating income for both the second quarter and six months of 2025 was negatively impacted by lower sales and margins as well as restructuring costs related to the Welkenraedt facility, as compared to the prior year periods.

Current wording

Operating income for the third quarters of 2025 and 2024 was $36.0 million and $52.5 million, respectively. Operating income for the first nine months of 2025 was $110.2 million compared to $177.2 million for the same period last year. Overall, operating income for both the third quarter and nine months of 2025 was negatively impacted by lower sales and margins, restructuring costs related to the Welkenraedt, Belgium facility and the loss on the divestiture of the Neumarkt facility, as compared to the prior year periods.

Previous wording

Interest expense for both the quarter and six months ended June 30, 2025 was higher compared to the prior year periods due to higher average debt levels.

Current wording

Interest expense for both the quarter and nine months ended September 30, 2025 was higher compared to the respective prior year periods primarily due to higher average borrowings under the Facility and higher interest rates related to the 5.875% Senior Unsecured Notes.

Previous wording

Liquidity: Cash on hand at June 30, 2025 was $77.2 million as compared to $125.4 million at December 31, 2024. As of June 30, 2025, total debt was $827.7 million as compared to $700.7 million at December 31, 2024.

Current wording

Liquidity: Cash on hand at September 30, 2025 was $90.5 million as compared to $125.4 million at December 31, 2024. As of September 30, 2025, total debt was $757.9 million as compared to $700.7 million at December 31, 2024.

Previous wording

Under the Facility, total borrowings at June 30, 2025 were $130.0 million, which approximated fair value. The Credit agreement permits us to issue letters of credit up to an aggregate amount of $50.0 million. As of June 30, 2025, there were no issued letters of credit under the Facility, resulting in undrawn availability under the Facility of $620 million. The weighted average interest rate for the Facility was 5.6% for the six months ended June 30, 2025.

Current wording

Under the Facility, total borrowings at September 30, 2025 were $60.0 million, which approximated fair value. The Credit Agreement permits us to issue letters of credit up to an aggregate amount of $50.0 million. As of September 30, 2025, there were no issued letters of credit under the Facility, resulting in undrawn availability under the Facility of $690.0 million. The weighted average interest rate for the Facility was 5.57% for the nine months ended September 30, 2025.

Previous wording

We expect to meet our short-term liquidity requirements (including capital expenditures) through net cash from operating activities, cash on hand and the Facility. As of June 30, 2025, long-term liquidity requirements consist primarily of obligations under our long-term debt obligations. We do not have any significant required debt repayments until February 2027 when our 3.95% Senior Unsecured Notes are due. For further information regarding debt, including our Facility, see Note 5, Debt, to the accompanying condensed consolidated financial statements of this Form 10-Q.

Current wording

We expect to meet our short-term liquidity requirements (including capital expenditures) through net cash from operating activities, cash on hand and the Facility. As of September 30, 2025, long-term liquidity requirements consisted primarily of obligations under our long-term debt obligations. We do not have any significant required debt repayments until February 2027 when our 3.95% Senior Unsecured Notes are due. For further information regarding debt, including our Facility, see Note 5, Debt, to the accompanying condensed consolidated financial statements of this Form 10-Q.

Previous wording

The remaining authorization under the 2024 Share Repurchase Plan at June 30, 2025 was $134.0 million. On July 24, 2025, our Board of Directors declared a quarterly dividend of $0.17 per share payable to stockholders of record as of August 8, 2025, with a payment date of August 15, 2025.

Current wording

On October 22, 2025, our Board of Directors declared a quarterly dividend of $0.17 per share payable to stockholders of record as of November 3, 2025, with a payment date of November 10, 2025.

Previous wording

Operating Activities: Net cash used for operating activities for the first six months of 2025 was $5.2 million compared to cash provided of $37.2 million for the same period last year. Working capital was a cash use of $124.5 million for the first six months of 2025 as compared to a use of $118.3 million in the same period in 2024. The increased working capital use in 2025 was driven by higher payments of accounts payable.

Current wording

Operating Activities: Net cash provided by operating activities for the first nine months of 2025 was $105.0 million compared to $127.3 million for the same period last year. Working capital was a cash use of $63.8 million for the first nine months of 2025 as compared to a use of $93.1 million in the same period in 2024 with the variance primarily attributable to a decrease in inventories.

Previous wording

Investing Activities: Net cash used for investing activities was $42.5 million and $51.6 million in the first six months of 2025 and 2024, respectively. Capital expenditures for the first six months of 2025 were $41.4 million as compared to $51.6 million for the same period last year. Payments related to the divestiture of the Hartford facility were $1.1 million in the first six months of 2025.

Current wording

Investing Activities: Net cash used for investing activities was $57.8 million and $68.4 million in the first nine months of 2025 and 2024, respectively. Capital expenditures for the first nine months of 2025 were $55.1 million as compared to $68.4 million for the same period last year. Payments related to the divestiture of the Neumarkt and Hartford facilities were $2.7 million in the first nine months of 2025.

Previous wording

Financing Activities: Net cash used for financing activities was $4.1 million for first six months of 2025 compared to net cash used of $136.0 million in the same period in 2024. Borrowings under the Facility during the first six months of 2025 were $160.0 million compared to $95.0 million in the prior year period. Repayments during the first six months of 2025 were $30.0 million. Quarterly dividend payments to shareholders were $27.5 million during the first six months of 2025 compared to $25.0 million in the prior year period. During the six months ended June 30, 2025, repurchases of common stock totaled $100.9 million compared to $201.8 million in the same period in 2024.

Current wording

Financing Activities: Net cash used for financing activities was $85.5 million for first nine months of 2025 compared to a net cash use of $187.8 million in the same period in 2024. Borrowings under the credit facility during the first nine months of 2025 and 2024 were $160.0 million. Repayments were $100.0 million during the first nine months of 2025 compared to $55 million in the prior year period. Quarterly dividend payments to shareholders were $41.0 million during the first nine months of 2025 compared to $37.2 million in the prior year period. During the nine months ended September 30, 2025, repurchases of common stock totaled $100.9 million compared to $252.2 million in the same period in 2024.

Previous wording

The quarter and six months ended June 30, 2025 included restructuring charges of $24.2 million related to the closure of our Welkenraedt facility in Belgium. The six months ended June 30, 2025 also included a loss of $1.1 million for the divestiture of the Hartford, Connecticut business. Amounts for the quarter and six months ended 2024 included restructuring costs.

Current wording

The quarter and nine months ended September 30, 2025 included charges related to the divestiture of our Neumarkt Austria plant, a non-income tax charge related to the net value of a foreign entity and restructuring charges related to the closure of the Welkenraedt facility in Belgium. The nine months ended September 30, 2025 also included a loss of $1.1 million for the divestiture of the Hartford, Connecticut business. The quarter and nine months ended September 30, 2024 included restructuring costs.

Previous wording

The quarter and six months ended June 30, 2025 included a gain of $0.9 million related to a lump-sum pension settlement. The six months ended June 30, 2025 also included debt extinguishment costs.

Current wording

The nine months ended September 30, 2025 included a gain of $0.9 million related to a lump-sum pension settlement as well as debt extinguishment costs.

Previous wording

Such forward-looking statements include, but are not limited to: (a) the estimates and expectations based on aircraft production rates provided by Airbus, Boeing and others and the revenues we may generate from an aircraft model or program; (b) expectations with regard to the impact of regulatory activity related to the Boeing 737 MAX on our revenues; (c) expectations with regard to raw material cost and availability, including any impact associated with quotas, duties, tariffs, taxes or other similar restrictions upon the import or export of materials; (d) expectations of composite content on new commercial aircraft programs and our share of those requirements; (e) expectations regarding revenues from space and defense applications, including whether certain programs might be curtailed or discontinued; (f) expectations regarding sales for industrial applications; (g) expectations regarding cash generation, working capital trends, and inventory levels; (h) expectations as to the level of capital expenditures, capacity, including the timing of completion of capacity expansions, and qualification of new products; (i) expectations regarding our ability to improve or maintain margins; (j) expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy; (k) projections regarding our tax rate; (l) expectations with regard to the continued impact of macroeconomic factors or geopolitical issues or conflicts; (m) expectations regarding our strategic initiatives, including our sustainability goals; (n) expectations with regard to the effectiveness of cybersecurity measures; (o) expectations regarding the outcome of legal matters or the impact of changes in laws or regulations; and (p) our expectations of financial results for 2025 and beyond.

Current wording

Such forward-looking statements include, but are not limited to: (a) the estimates and expectations based on aircraft production rates provided by Airbus, Boeing and others and the revenues we may generate from an aircraft model or program; (b) expectations with regard to the impact of regulatory activity related to the Boeing 737 MAX on our revenues; (c) expectations with regard to raw material cost and availability, including any impact associated with quotas, duties, tariffs, taxes or other similar restrictions upon the import or export of materials; (d) expectations of composite content on new commercial aircraft programs and our share of those requirements; (e) expectations regarding revenues from defense and space applications, including whether certain programs might be curtailed or discontinued, and government funding opportunities; (f) expectations regarding sales for industrial applications; (g) expectations regarding cash generation, working capital trends, and inventory levels; (h) expectations as to the level of research and technology investment, capital expenditures, capacity, including the timing of completion of capacity expansions, and qualification of new products; (i) expectations regarding our ability to improve or maintain margins; (j) expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy; (k) projections regarding our tax rate; (l) expectations with regard to the continued impact of macroeconomic factors or geopolitical issues or conflicts; (m) expectations regarding our strategic initiatives, including our sustainability goals; (n) expectations with regard to the effectiveness of cybersecurity measures; (o) expectations regarding the outcome of legal matters or the impact of changes in laws or regulations; and (p) expectations relating to our accelerated repurchase program and other share repurchases; and (q) our expectations of financial results for 2025 and beyond.

Previous wording

Such forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control, that may cause actual results to be materially different. Such factors include, but are not limited to, the following: the extent of the impact of macroeconomic factors or geopolitical issues or conflicts, including retaliatory actions taken in response to U.S. trade policy; reductions in sales to any significant customers, particularly Airbus or Boeing, including related to regulatory activity or public scrutiny impacting the Boeing 737 MAX; our ability to effectively adjust production and inventory levels to align with customer demand; our ability to effectively motivate, retain and hire the necessary workforce; the availability and cost of raw materials, including the impact of supply disruptions, inflation, and tariffs; our ability to successfully implement or realize our strategic initiatives, including our sustainability goals and any restructuring or alignment activities in which we may engage; changes in sales mix; changes in current pricing due to cost levels; changes in aerospace delivery rates; changes in government defense procurement budgets; timely new product development or introduction; our ability to install, staff and qualify necessary capacity or complete capacity expansions to meet customer demand; cybersecurity-related risks, including the potential impact of breaches or intrusions; currency exchange rate fluctuations; uncertainty related to governmental actions and changes in political, social and economic conditions, including the effect of change in global trade policies, tariff rates, economic sanctions and embargoes; work stoppages or other labor disruptions; our ability to successfully complete any strategic acquisitions, investments or dispositions; compliance with environmental, health, safety and other related laws and regulations, including those related to climate change; the effects of natural disasters or other severe weather events, which may be worsened by the impact of climate change, and other severe catastrophic events, including any public health crisis; and the unexpected outcome of legal matters or impact of changes in laws or regulations.

Current wording

Such forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control, that may cause actual results to be materially different. Such factors include, but are not limited to, the following: the extent of the impact of macroeconomic factors or geopolitical issues or conflicts, including retaliatory actions taken in response to U.S. trade policy; reductions in sales to any significant customers, particularly Airbus or Boeing, including related to regulatory activity or public scrutiny impacting the Boeing 737 MAX; our ability to effectively adjust production and inventory levels to align with customer demand; our ability to effectively motivate, retain and hire the necessary workforce; the availability and cost of raw materials, including the impact of supply disruptions, inflation, and tariffs; our ability to successfully implement or realize our strategic initiatives, including our sustainability goals and any restructuring or alignment activities in which we may engage; changes in sales mix; changes in current pricing due to cost levels; changes in aerospace build or delivery rates; any impact from a prolonged shutdown of the U.S. federal government; changes in government defense procurement or investment budgets; timely new product development or introduction; our ability to install, staff and qualify necessary capacity or complete capacity expansions to meet customer demand; the market prices of our common stock during the term and after the completion of the accelerated share repurchase period; the ability of the share repurchase counterparties to buy or borrow shares of our common stock; uncertainty regarding our ability to complete share repurchases within the proposed timing or at all; uncertainty regarding the amount and timing of future share repurchases and the source of funds used for such repurchases; cybersecurity-related risks, including the potential impact of breaches or intrusions; currency exchange rate fluctuations; uncertainty related to governmental actions and changes in political, social and economic conditions, including the effect of change in global trade policies, tariff rates, economic sanctions and embargoes; work stoppages or other labor disruptions; our ability to successfully complete any strategic acquisitions, investments or dispositions; compliance with environmental, health, safety and other related laws and regulations, including those related to climate change; the effects of natural disasters or other severe weather events, which may be worsened by the impact of climate change, and other severe catastrophic events, including any public health crisis; and the unexpected outcome of legal matters or impact of changes in laws or regulations.

Previous wording

Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. As a result, the foregoing factors should not be construed as exhaustive and should be read together with other cautionary statements included in this and other reports we file with the SEC. For additional information regarding certain factors that may cause our actual results to differ from those expected or anticipated, see the information under the caption “Risk Factors,” which is located in Item 1A of Part I of this report. We do not undertake any obligation to update our forward-looking statements or risk factors to reflect future events or circumstances, except as otherwise required by law.

Current wording

Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. As a result, the foregoing factors should not be construed as exhaustive and should be read together with other cautionary statements included in this and other reports we file with the SEC. For additional information regarding certain factors that may cause our actual results to differ from those expected or anticipated, see the information under the caption “Risk Factors,” which is located in Item 1A of Part I of this report. We caution you not to place undue reliance upon these forward-looking statements, which speak only as of the date they are made. We do not undertake any obligation to update our forward-looking statements or risk factors to reflect future events or circumstances, except as otherwise required by law.