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Hexcel (HXL) Q4 Earnings Surpass Estimates, Revenues Miss

Hexcel CorporationHXL reported fourth-quarter 2018 adjusted earnings of 82 cents per share, surpassing the Zacks Consensus Estimate of 80 cents by 2.5%. Further, the bottom line improved 17.1% from the prior-year figure of 70 cents.

In the reported quarter, the company's GAAP earnings came in at 76 cents compared with the prior-year quarter's 96 cents.

For 2018, Hexcel's earnings were $3.05 per share, up 14% from $2.68 registered in the year-ago period. The full-year earnings figure surpassed the Zacks Consensus Estimate of $3.03 by 0.7%.

Total Revenues

Net sales totaled $561 million, which missed the Zacks Consensus Estimate of $562 million by 0.18%. However, the top line witnessed an increase of 9.6% from the year-ago quarter's $511.7 million.

In 2018, total revenues increased 10.9% year over year to $2.19 billion. The full-year revenues figure surpassed the Zacks Consensus Estimate of $2.18 billion by a whisker.

Operational Update

Hexcel's gross margin was 26.8% in the fourth quarter, reflecting a year-over-year contraction of 100 basis points. The contraction was owing to unfavorable acrylonitrile prices, wind energy resin prices and tariffs.

The company's operating expenses amounted to $54.6 million in the quarter compared with the previous year's $49 million. Selling, general and administrative expenses were down 12.2%, while Research and technology expenses were up 17.8%.

Hexcel Corporation Price, Consensus and EPS Surprise

Hexcel Corporation Price, Consensus and EPS Surprise | Hexcel Corporation Quote

Quarterly Performance

Commercial Aerospace : Net sales were up 6.7% year over year to $385.4 million. The uptick can be attributed to the new generation narrow-body and wide-body commercial aircraft programs, particularly strong growth from the sale of Airbus A320neo and Boeing 737 MAX jets.

Space and Defense : Net sales rose 1.3% year over year to $97.7 million, primarily owing to growth across a number of military and civil rotorcraft programs along with the F-35 Joint Strike Fighter (JSF) program.

Industrial : Net sales surged 43.7% year over year to $77.9 million, driven by high wind energy sales.

Financial Details

As of Dec 31, 2018, cash and cash equivalents were $32.7 million compared with $60.1 million as of Dec 31, 2017.

Long-term debt totaled $947.4 million as of Dec 31, 2018, up from $805.6 million as of Dec 31, 2017.

At the end of 2018, cash generated from operating activities summed $421.4 million compared with $428.7 million in the prior year.

Other Financial Updates

The effective tax rate for the fourth quarter of 2018 was 24.2% compared with tax benefit of 2% in the fourth quarter of 2017, as it was favorably impacted by the Tax Cuts and Jobs Act legislation. The company used $358 million to repurchase shares of its common stock during 2018. The remaining authorization under the share repurchase program on Dec 31, 2018 was $385 million.

2019 Guidance

The company currently expects 2019 sales to be in the range of $2.375-$2.475 billion. Also, it projects adjusted diluted earnings per share to be $3.38-$3.52 next year.

Moreover, Hexcel forecasts its free cash flow to exceed $250 million and accrual basis capital expenditures to remain between $170 - $190 million in 2019.

Zacks Rank

Hexcel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Upcoming Sector Releases

L3 Technologies LLL is expected to report fourth-quarter 2018 results on Jan 29. The company has a Zacks Rank #3.

General Dynamics Corp. GD is expected to report fourth-quarter 2018 results on Jan 30. The company has a Zacks Rank #3.

Huntington Ingalls Industries HII is expected to report fourth-quarter 2018 results on Feb 14. The company has a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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