HEXCEL CORP /DE/

Previous wording

Recent growth in global air travel and an increase in aircraft build rates has favorably impacted both the Commercial Aerospace market and our business. While our recent performance has benefitted from the positive drivers of air travel demand, we have, in the last several years, been impacted by delays in aircraft production rates, related to, among other factors, global logistics, supply chain destocking and other supply chain constraints. Hexcel has also been negatively impacted by macroeconomic and geopolitical conditions, including inflationary pressures, tariffs, and global conflicts. While these challenges have had and may continue to have further negative impacts on our operations and financial results, we see indicators for a long-term positive outlook in commercial aircraft production and strong demand in the defense and space market as global defense budgets continue to increase as a result of an uncertain geopolitical environment and the development of new platforms. Following the conflict escalation in the Middle East, we are actively monitoring the markets and taking actions to mitigate the near-term impact to our cost base. Currently, we have limited direct exposure, but a prolonged conflict is likely to precipitate cost and logistic pressures as well as inventory challenges.

Current wording

Recent growth in aircraft build rates has favorably impacted our business. We have, however, in the last several years been impacted by delays in aircraft production rates, related to, among other factors, global logistics, supply chain destocking and other supply chain constraints. Hexcel has also been negatively impacted by macroeconomic and geopolitical conditions, including inflationary pressures, tariffs, and global conflicts. While these challenges have had and may continue to have further negative impacts on our operations and financial results, we see indicators for a long-term positive outlook in commercial aircraft production and strong demand in the defense and space market as global defense budgets continue to increase as a result of an uncertain geopolitical environment and the development of new platforms. As a result of the Middle East conflict, we are actively monitoring the markets and are taking actions to mitigate near-term impact to our cost base. Currently, we have limited direct exposure, but a prolonged conflict is likely to precipitate cost and logistic pressures as well as inventory challenges.

Previous wording

The following table summarizes net sales to third-party customers by segment and end market for the quarters ended March 31, 2026 and 2025:

Current 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, 2026 and 2025:

Previous wording

Composite Materials: Net sales of 398.8million in the first quarter of 2026 increased by $33.5 million or 9.2% from the prior year quarter. Commercial Aerospace sales increased $39.4 million or 16.3% in the first quarter of 2026 and Defense, Space & Other sales decreased $5.9 million or 4.8% as compared to the prior year quarter due in part to the September 30, 2025 divestment of the Austrian-based industrial business which impacted the Other category.

Current wording

Composite Materials: Net sales of $421.5 million in the second quarter of 2026 increased by $28.3 million or 7.2% from the prior year quarter. Commercial Aerospace sales increased $39.3 million or 15.7% in the second quarter of 2026 as compared to the prior year quarter driven by higher sales to Boeing and Airbus. Defense, Space & Other net sales in the second quarter of 2026 decreased $11.0 million or 7.7% primarily driven by the September 30, 2025 divestment of the Austrian-based industrial business. Net sales for the segment in the first half of 2026 of $820.3 million increased 8.1% compared to the same period last year.

Previous wording

Engineered Products: For the first quarter of 2026, net sales of $102.7 million increased $11.5 million or 12.6% as compared to the prior year quarter led by higher Commercial Aerospace sales of $13.2 million.

Current wording

Engineered Products: For the second quarter of 2026, net sales of $107.8 million increased $11.1 million or 11.5% as compared to the prior year quarter driven by higher Commercial Aerospace sales. Net sales of $210.5 million for the first six months of 2026 increased 12.0%compared to the same period last year.

Previous wording

Selling, general and administrative expenses were higher for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to higher employee-related costs and professional fees. Research and development expenses for the quarter ended March 31, 2026 increased when compared to the prior year period primarily due to higher employee-related expenses and higher material and supplies costs. Other operating expense for the three months ended March 31, 2026 included restructuring expenses related to the expected shutdown of industrial manufacturing at the Leicester, UK facility and fees for a legal matter.

Current wording

Selling, general and administrative expenses were higher for both the second quarter and six months ended June 30, 2026 as compared to the prior year periods primarily due to higher employee-related costs. Research and development expenses for the second quarter and first six months of 2026 increased compared to the same periods of 2025 primarily due to higher employee-related expenses and material and supplies costs.

Previous wording

Operating income for the first quarter of 2026 and 2025 was $57.6 million and $44.2 million, respectively. The increase in operating income for the first quarter of 2026 compared to the same period last year was driven by the higher sales and gross margin.

Current wording

Operating income for the second quarters of 2026 and 2025 was $72.6 million and $30.0 million, respectively. Operating income for the first six months of 2026 was $130.2 million compared to $74.2 million for the same period last year. Overall, operating income for both the second quarter and six months of 2026 was favorably impacted by the higher sales and gross margins.

Previous wording

Net interest expense for the first quarter ended March 31, 2026 was higher compared to the first quarter of 2025 due to higher average borrowings under the Facility.

Current wording

Interest expense for both the quarter and six months ended June 30, 2026 was higher compared to the prior year periods due to higher average borrowings for the first six months of 2026.

Previous wording

Liquidity: Cash on hand at March 31, 2026 was $54.1 million as compared to $71.0 million at December 31, 2025. As of March 31, 2026, total debt was $998.1 million as compared to $993.0 million at December 31, 2025.

Current wording

Liquidity: Cash on hand at June 30, 2026 was $62.2 million as compared to $71.0 million at December 31, 2025. As of June 30, 2026, total debt was $959.4 million as compared to $993.0 million at December 31, 2025

Previous wording

On March 31, 2026, the Company entered into a new credit agreement (the “Credit Agreement”) to refinance its senior unsecured credit facility (the “Facility”). Under the terms of the Credit Agreement the borrowing capacity will remain at $750 million. The

Current wording

On March 31, 2026, the Company entered into a new credit agreement (the “Credit Agreement”) to refinance its senior unsecured credit facility (the “Facility”). Under the terms of the Credit Agreement the borrowing capacity remained at $750 million. For further discussion, see Note 5, Debt, to the accompanying condensed consolidated financial statements.

Previous wording

Under the Facility, total borrowings at March 31, 2026 were $300.0 million, which approximates fair value. The Credit Agreement permits us to issue letters of credit up to an aggregate amount of $50.0 million. As of March 31, 2026, there were no issued letters of credit under the Facility, resulting in undrawn availability under the Facility of $450.0 million. The weighted average interest rate for the Facility was 5.0% for the three months ended March 31, 2026.

Current wording

Under the Facility, total borrowings at June 30, 2026 were $265.0 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, 2026, there were no issued letters of credit under the Facility, resulting in undrawn availability under the Facility of $485.0 million. The weighted average interest rate for the Facility was 4.77% for the three months ended June 30, 2026.

Previous wording

Short-term liquidity requirements consist primarily of normal recurring operating expenses and working capital needs, capital expenditures, dividend payments, debt obligations and debt service requirements. We expect to meet our short-term liquidity requirements through net cash from operating activities, cash on hand and the Facility. 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

Short-term liquidity requirements consist primarily of normal recurring operating expenses and working capital needs, capital expenditures, dividend payments, debt obligations and debt service requirements. We expect to meet our short-term liquidity requirements through net cash from operating activities, cash on hand and the Facility. We do not have any significant required debt repayments until March 2031 when the Facility matures. For further information regarding debt, including the Facility, see Note 5, Debt, to the accompanying condensed consolidated financial statements of this Form 10-Q.

Previous wording

The remaining authorization under the Share Repurchase Program at March 31, 2026 was $380.6 million. On April 22, 2026, our Board of Directors declared a quarterly dividend of $0.18 per share payable to stockholders of record as of May 4, 2026, with a payment date of May 11, 2026.

Current wording

There were no repurchases of shares during the second quarter of 2026. The remaining authorization under the 2025 Share Repurchase Plan at June 30, 2026 was $380.6 million. On July 29, 2026, our Board of Directors declared a quarterly dividend of $0.18 per share payable to stockholders of record as of August 10, 2026, with a payment date of August 17, 2026.

Previous wording

Operating Activities: Net cash provided by operating activities for the first three months of 2026 was $19.0 million compared to a net cash use of $28.5 million for the same period last year. Working capital was a cash use of $63.1 million for the first three months of 2026 compared to a use of $97.7 million in the same period in 2025. The lower working capital use in the current year was primarily driven by lower cash payments for payables and accruals compared to the same period in the prior year.

Current wording

Operating Activities: Net cash provided by operating activities for the first six months of 2026 was $96.7 million compared to cash use of $5.2 million for the same period last year. The improvement compared to the prior year period was due to the higher net income and lower working capital cash use during the first six months of 2026. Working capital was a $72.2 million use of cash for the first six months of 2026 as compared to a use of $124.5 million for the same period in 2025. The 2026 decrease in use of working capital as compared to 2025 was driven by higher payables and accruals, partially offset by higher accounts receivable and inventory balances.

Previous wording

Investing Activities: Net cash used for investing activities was $25.2 million and $27.2 million in the first three months of 2025 and 2025, respectively. Payments on the divestiture of the Hartford, Connecticut business were $1.1 million in the first three months of 2025.

Current wording

Investing Activities: Net cash used for investing activities was $44.9 million and $42.5 million in the first six months of 2026 and 2025, respectively. Capital expenditures for the first six months of 2026 were $44.9 million as compared to $41.4 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.

Previous wording

Financial Obligations and Commitments: The next significant scheduled debt maturity will not occur until 2027, when the 3.95% Senior Unsecured Notes mature. Certain sales and administrative offices, data processing equipment, vehicles and manufacturing equipment, and facilities are leased under operating leases.

Current wording

Financial Obligations and Commitments: The next significant scheduled debt maturity will not occur until 2031, when both the Facility and the 4.9% Senior Unsecured Notes mature. Certain sales and administrative offices, data processing equipment, vehicles and manufacturing equipment, and facilities are leased under operating leases.

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 or the Middle East conflict; (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 development 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 or restructuring or alignment activities; (l) expectations with regard to the continued impact of macroeconomic factors or geopolitical issues or conflicts, including the Middle East conflict; (m) expectations regarding our strategic initiatives, including our sustainability goals and restructuring activities; (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; (p) expectations relating to our accelerated share repurchase program and dividends; and (q) our expectations of financial results for 2026 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 or the Middle East conflict; (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 development 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 or restructuring or alignment activities; (l) expectations with regard to the continued impact of macroeconomic factors or geopolitical issues or conflicts, including the Middle East conflict; (m) expectations regarding our strategic initiatives, including our sustainability goals and restructuring or alignment activities; (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; (p) expectations relating to our share repurchase program and dividends; and (q) our expectations of financial results for 2026 and beyond.