Hexcel Corp.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 22 April 2026: press release. Guidance figures: 4 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Sales rose 9.9 percent: Net sales were $501.5 million, up 9.9% from $456.5 million, or 8.8% in constant currency. Source
• Adjusted diluted EPS rose 59.5%: Adjusted diluted EPS was $0.59 against $0.37 a year earlier. GAAP diluted EPS was $0.49 against $0.35. Source
• Commercial aerospace sales rose 18.8%: Commercial Aerospace sales were $332.7 million, up 18.8% (19.0% in constant currency), and 66% of year-to-date sales. All four major programs grew. Source
• Gross margin widened to 26.9%: Gross margin was 26.9% against 22.4%, which management attributed to higher sales leverage. SG&A was 9.9% of sales and R&D 3.5%. Source
• Operating cash flow turned positive: Operating cash flow was $19.0 million, against a $28.5 million use in the first quarter of 2025. Source
• Middle East uncertainty and cost mitigation: Management said the company believes it is well positioned to mitigate a substantial portion of the near-term impact of higher oil and energy prices on its cost base. Source

“rising commercial aerospace build rates supported by the normalization of channel inventory”

Tom Gentile, Chairman, CEO and President

Guidance

What changed from last quarter

• Guidance kept: The company kept all four 2026 guidance figures from the prior quarter: sales, adjusted diluted EPS, free cash flow and capital expenditures. Source
• New: The company entered a $750 million unsecured revolving credit facility maturing in 2031, replacing its prior $750 million revolver due in 2028. Source
• New: The company expects to shut down industrial-oriented manufacturing at its Leicester, UK facility and recorded restructuring expense and professional fees in the quarter. Source

Results and growth drivers

• Sales rose 9.9 percent: Net sales were $501.5 million, up 9.9% from $456.5 million, or 8.8% in constant currency. Source
• Adjusted diluted EPS rose 59.5%: Adjusted diluted EPS was $0.59 against $0.37 a year earlier. GAAP diluted EPS was $0.49 against $0.35. Source
• Adjusted operating margin rose to 13.5%: Adjusted operating income was $67.5 million, up 49.0% from $45.3 million, equal to 13.5% of sales against 9.9%. Source

Commercial aerospace and defense markets

• Commercial aerospace sales rose 18.8%: Commercial Aerospace sales were $332.7 million, up 18.8% (19.0% in constant currency), and 66% of year-to-date sales. All four major programs grew. Source
• Defense and space sales fell: Defense, Space & Other sales were $168.8 million, down 4.3% (6.9% in constant currency), reflecting the divestment of the Austrian industrial business. Source
• Defense sales grew, space softened: Within Defense & Space, sales rose for European fighter aircraft and military helicopters. Space sales declined on softer launchers and rocket motors. Source
• Other commercial aerospace grew 15.6%: Other Commercial Aerospace sales rose 15.6%, with increases in both regional jets and business jets. Source

“We remain confident in our growth outlook and we are reaffirming our full year 2026 guidance despite geopolitical uncertainty in the Middle East and lingering commercial aerospace supply chain challenges.”

Tom Gentile, Chairman, CEO and President

Costs, margins and currency

• Gross margin widened to 26.9%: Gross margin was 26.9% against 22.4%, which management attributed to higher sales leverage. SG&A was 9.9% of sales and R&D 3.5%. Source
• Currency cut operating margin 80 basis points: Exchange rates reduced operating income as a percentage of sales by about 80 basis points compared with the first quarter of 2025. Source
• Leicester shutdown and professional fees: Other operating expense of $9.9 million included $5.5 million of restructuring for the Leicester, UK shutdown and $4.1 million of non-recurring professional fees. Source

Cash flow and working capital

• Operating cash flow turned positive: Operating cash flow was $19.0 million, against a $28.5 million use in the first quarter of 2025. Source
• Free cash flow was negative: Free cash flow was ($6.2) million against ($54.6) million. Cash capital expenditures were $25.2 million, against $26.1 million a year earlier. Source
• Working capital still absorbed cash: Working capital was a cash use of $63.1 million, against $97.7 million a year earlier. Accounts receivable rose to $291.0 million from $249.3 million. Source

“Our first quarter sales increased ten percent and earnings per share grew at a significantly higher rate, underscoring the benefit from significant operating leverage as we grow back into existing capacity.”

Tom Gentile, Chairman, CEO and President

Capital, debt and shareholder returns

• No share repurchases in the quarter: The company bought back no shares in the first quarter. $380.6 million remained under the repurchase authorization at March 31, 2026. Source
• Dividend declared at $0.18: The board declared a quarterly dividend of $0.18 per share, the same rate paid since the January increase. Source
• Debt net of cash rose: Total debt net of cash was $944.0 million at March 31, 2026, against $922.0 million at December 31, 2025, with cash at $54.1 million. Source

Middle East, oil and supply chain

• Middle East uncertainty and cost mitigation: Management said the company believes it is well positioned to mitigate a substantial portion of the near-term impact of higher oil and energy prices on its cost base. Source
• Fuel efficiency reinforces composite case: Management said higher oil prices place greater emphasis on fuel efficiency in aerospace, which it said reinforces the value of lightweight composite material. Source
• Execution priority as rates ramp: Management said its priorities remain execution and operational discipline as it supports customers' production rate ramps. Source

Coming up, as management said on 22 April 2026

• Dividend payment on May 11: The $0.18 quarterly dividend is payable to holders of record as of May 4, 2026, with payment on May 11, 2026. Source

Figures management reported

Risks management discussed

• External: Management cited geopolitical uncertainty in the Middle East and lingering commercial aerospace supply chain challenges as conditions it is monitoring. Source
• External: Higher oil and energy prices affect the company's cost base, which management said it expects to mitigate in a substantial part. Source
• Financial: Exchange rates reduced operating income as a percentage of sales by about 80 basis points compared with the first quarter of 2025. Source

Earlier plans management reported on

• Not stated: Management said it is reaffirming full-year 2026 guidance, which it had given in the prior quarter. No status beyond reaffirmation was stated. Source

Other quarters

• Q2 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.