Hexcel (HXL) Stock Down Following Q4 Earnings Beat, Sales Up

The share price of Hexcel Corporation HXL dropped 4.2% to reach $49.30 on Jan 27, 2022, following its fourth-quarter 2021 and full-year results released on Jan 26.   

The company reported fourth-quarter 2021 adjusted earnings of 16 cents per share, which exceeded the Zacks Consensus Estimate of 12 cents by 33.3%.

The bottom line also improved from a loss of 18 cents per share incurred in the year-ago quarter.

In the quarter under review, the company posted GAAP earnings of 22 cents against the prior-year quarter’s loss figure of 23 cents.

For full-year 2021, Hexcel posted adjusted earnings of 27 cents per share, which exceeded the Zacks Consensus Estimate of 23 cents by 17.4%. The bottom line also improved 8% from the year-ago figure.

Hexcel Corporation Price, Consensus and EPS Surprise

Hexcel Corporation price-consensus-eps-surprise-chart | Hexcel Corporation Quote

Total Sales

Net sales during the fourth quarter totaled $360.3 million, which beat the Zacks Consensus Estimate of $342 million by 5.5%. Moreover, the top line witnessed an improvement of 21.8% from the year-ago quarter’s $295.8 million.

For full-year 2021, the company generated sales worth $1.33 billion, which beat the Zacks Consensus Estimate of $1.32 billion by 0.8%. Moreover, the top line witnessed a decline of 11.8% from the year-ago quarter’s $1.50 billion.

Operational Update

Hexcel's gross margin for the fourth quarter was 19.2% compared with 10.3% in the prior-year period, driven by increased sales.

Selling, general and administrative expenses rose 24.7%, whereas research and technology expenses for the fourth quarter of 2021 increased 9.4% year over year.

The company’s adjusted operating income amounted to $25.2 million in the quarter against an adjusted operating loss of $6.1 million incurred in the year-ago period.

Segmental Performance

Commercial Aerospace: Net sales increased 57.6% year over year to $199.7 million, driven by higher narrowbody sales, increased Airbus A350 sales and higher business jet sales.

Space and Defense: Net sales declined 11.5% year over year to $105.9 million. The decrease can be attributed to lower military and civilian rotorcraft sales and lower Space sales.

Industrial: Net sales increased 10.7% year over year to $54.7 million, primarily driven by strength in the automotive and recreation markets as well as other industrial markets.

Financial Details

As of Dec 31, 2021, cash and cash equivalents were $127.7 million compared with $103.3 million as of Dec 31, 2020.

Long-term debt totaled $822.4 million as of Dec 31, 2021, down from $925.5 million as of 2020-end.

At the end of 2021, cash generated from operating activities was $151.7 million compared with $264.3 million in the prior year.

Hexcel’s adjusted free cash outflow at the end of 2021 was $123.8 million compared with $213.7 million at the end of 2020.

2022 Guidance

The company provided its 2022 financial guidance.

Hexcel currently expects to generate sales in the range of $1.50-$1.63 billion during 2022. The Zacks Consensus Estimate for sales, pegged at $1.59 billion, lies above the mid-point of the guidance range.

The company projects to generate adjusted earnings per share in the range of $1.00-$1.24 in 2022. The Zacks Consensus Estimate for sales, pegged at $1.34, lies above the guidance range.

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.

Recent Defense Releases

Lockheed Martin LMT reported fourth-quarter 2021 adjusted earnings of $7.24 per share, which surpassed the Zacks Consensus Estimate of $7.23 by 0.1%. Its net sales amounted to $17.73 billion, which outpaced the Zacks Consensus Estimate by 0.4%.

Lockheed Martin ended 2021 (on Dec 31, 2021,) with $135.36 billion in backlog compared with $147.13 billion at the end of 2020. Its cash from operations at the end of 2021 amounted to $9.22 billion compared with $8.18 billion a year ago.

Raytheon Technologies’ RTX fourth-quarter 2021 adjusted earnings per share (EPS) of $1.08 beat the Zacks Consensus Estimate of $1.01 by 6.9%. Its sales of $17,044 million missed the Zacks Consensus Estimate of $17,215 million by 1%.

Raytheon Technologies had cash and cash equivalents of $7,832 million as of Dec 31, 2021, compared with $8,802 million as of Dec 31, 2020. The company currently projects adjusted EPS in the range of $4.60-$4.80 for 2022.

Boeing BA incurred an adjusted loss of $7.69 per share for fourth-quarter 2021, much wider than the Zacks Consensus Estimate of a loss of 9 cents. Its revenues amounted to $14.79 billion, which missed the Zacks Consensus Estimate of $16.96 billion by 12.8%.

Boeing’s backlog at the end of fourth-quarter 2021 increased to $377.50 billion from $363.40 billion at the end of 2020. The company’s operating cash outflow at the end of 2021 was $3.42 billion compared with $18.41 billion at the end of 2020.

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