- Q1 2019 diluted EPS was $0.84 compared to Q1 2018 diluted EPS of $0.68, a 23.5% year-over-year increase.
- Q1 2019 Sales were $609.9 million, an increase of 12.9% over first quarter 2018 (14.9% increase in constant currency).
- Free Cash Flow* for Q1 2019 was negative $15.2 million compared to positive $3.1 million in Q1 2018.
- Full year 2019 guidance is reaffirmed.
*Free cash flow is operating cash flow less cash paid for capital expenditu
Hexcel Corporation (NYSE: HXL) today reported first quarter 2019 results including net sales of $609.9 million and diluted EPS of $0.84.
Nick Stanage, Chairman, CEO and President said: “Our results this quarter reflect a strong start to the year and reaffirm our confidence in our guidance for 2019. Hexcel generated its highest ever quarterly sales with growth across all of our markets, and our diluted earnings per share increased by over 23% compared to Q1 2018. With strong sales growth and most of the headwinds that challenged us in 2018 now behind us, margins have stepped up year over year as we forecasted. Reflecting robust revenue growth in the period there was a $15 million use of cash in the first quarter related to working capital, in line with expectations. The integration of our latest acquisition, ARC Technologies, continues on track with strong first quarter performance. As we take this momentum forward into the year, we remain focused on innovation to support next-generation composite solutions for our customers, operational excellence and continued cash generation.”
Markets
Sales for the first quarter of 2019 were $609.9 million, an increase of 12.9% (14.9% in constant currency) compared to the first quarter of 2018.
Commercial Aerospace
- Commercial Aerospace sales of $415.5 million increased 8.6% (9.6% in constant currency) for the first quarter of 2019 as compared to the prior year period. The quarter saw positive growth for most programs with particularly strong performance for the A320neo and B737 MAX as well as continued growth for the Boeing 787 and Airbus A350 widebody programs. Despite obvious uncertainties related to the B737 MAX, overall demand remains strong globally and provides confidence in the Company’s projected growth for the year.
- Sales to “Other Commercial Aerospace” which includes regional and business aircraft, were up 7% for the first quarter of 2019 as compared to 2018, driven primarily by business jets.
Space & Defense
- Space & Defense sales of $107.8 million increased 19.6% (21.8% in constant currency) for the quarter as compared to the first quarter of 2018. Revenue from ARC Technologies, acquired in January 2019, is now included in Space & Defense sales. Growth in the F-35 Joint Strike Fighter was the primary driver in the quarter along with continued strength in military rotorcraft. Rotorcraft now accounts for just over 40% of Space & Defense sales compared to about 50% previously, with the change attributable to the acquisition of ARC Technologies which strengthens the Company’s position in military programs.
Industrial
- Total Industrial sales of $86.6 million for the first quarter of 2019 increased 28.7% (36.8% in constant currency) as compared to the first quarter of 2018. Wind energy sales (the largest sub-market in Industrial) increased 78.0% in constant currency compared to Q1 2018 which preceded a rate ramp up that began in mid-2018.
Consolidated Operations
- Gross margin for the first quarter of 2019 was 27.4% compared to 26.4% in the first quarter of 2018. The year-over-year improvement reflects strong operational execution combined with the decline in a number of operational headwinds, including acrylonitrile (AN) pricing and wind energy resin pricing, resulting in a robust improvement in margin intensity. The Company’s newest plant in Roussillon, France is fully operational and producing qualified precursor and aerospace-grade carbon fiber to help meet growing demand in the region.
- Operating expenses for the first quarter were in line with Company expectations, although higher than Q1 2018 due to an increase in product qualifications and R&T expenditures, both of which reflect the Company’s continued focus on innovation and growth. Selling, General and Administrative expenses were up 6.7%, and Research & Technology expenses were up 8.0%.
- Operating income in the first quarter of 2019 was $102.8 million, or 16.9% of sales, compared to $82.4 million, or 15.3% of sales, in 2018. Exchange rates, after taking hedges into account, favorably impacted the first quarter by approximately 50 basis points compared to 2018.
Cash and Other
- The tax provision was $20.6 million for the quarter, based on an effective tax rate of 22.7%, compared to 18.9% in 2018. Both periods benefitted from deductions associated with share-based compensation payments, as this activity is typically highest in the first quarter. The underlying effective tax rate is expected to be 24% for the remaining quarters of the year.
- Free cash flow in the first quarter of 2019 was a usage of $15.2 million compared to the generation of $3.1 million in the first quarter of 2018, an $18.3 million year-over-year decrease. Working capital was a use of $78.4 million in the first quarter of 2019 compared to a $46.2 million use in the first quarter of 2018. The majority of the increase was driven by increased accounts receivable. Capital expenditures (accrual basis) were $57.5 million in first quarter 2019 compared to $45.3 million in first quarter 2018. Free cash flow is defined as cash provided from operating activities less cash paid for capital expenditures.
- The Company used $11 million to repurchase shares of its common stock during the first quarter of 2019 and has $374 million remaining under the authorized share repurchase program.
- As announced today, the Board of Directors declared a quarterly dividend of $0.15 per share payable to stockholders of record as of May 3, 2019, with a payment date of May 10, 2019.
2019 Guidance (unchanged)
- Sales of $2.375 billion to $2.475 billion
- Adjusted diluted earnings per share of $3.38 to $3.52
- Free cash flow greater than $250 million
- Accrual basis capital expenditures of $170 million to $190 million
* The Company is not providing a quantitative reconciliation of our non-GAAP guidance to the corresponding GAAP information because the GAAP measures that we exclude from our non-GAAP guidance are difficult to predict and are primarily dependent on future uncertainties.
Quelle: Hexcel
