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Hexcel Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: April 25, 2011 04:21PM
Hexcel Corp. (HXL) filed Quarterly Report for the period ended 2011-03-31. Hexcel Corp. has a market cap of $1.93 billion; its shares were traded at around $19.69 with a P/E ratio of 25.24 and P/S ratio of 1.64.
Highlight of Business Operations:
We expect to spend $150 to $175 million on capital additions in 2011, as we ramp-up for the expected growth ahead. Accrual basis additions to capital expenditures were $25.2 million in the first quarter of 2011 as compared to $6.9 million during the first quarter of 2010.
Free cash flow (defined as cash provided by operating activities less capital expenditures) for the first quarter was a use of $19 million as compared to a use of $10 million for the quarter of 2010 primarily due to higher capital expenditures in 2011.
The tragedy in Japan has not impacted either our core markets or supply chain to-date, and we are not aware of any significant problems going forward. However, we remain cautious until customers confirm there will not be transitory negative impacts in future periods. Nevertheless, due to the strong start to the year, we are increasing our adjusted diluted EPS guidance to $0.95 - $1.05 (from $0.90 - $0.98). We are also raising our sales guidance for the year by $50 million to $1,275 million - $1,350 million.
Commercial Aerospace: Net sales increased $45.6 million, or 30.0% (same in constant currency) to $197.6 million for the first quarter of 2011. Revenues attributed to new aircraft programs (A380, A350, B787 and B747-8) more than doubled versus the same period last year and now comprise more than 25% of Commercial Aerospace sales. Airbus and Boeing legacy aircraft related sales for the quarter were up about 5% as compared to the first quarter of 2010. Regional and business aircraft sales, which account for less than 20% of sales for this market, were the highest since the first quarter of 2009 and more than 40% above the first quarter of 2010.
Gross margin percentage was essentially flat as compared to the prior-year quarter. The benefit of higher volume in the current quarter was partially offset by an increase in raw material costs. The impact from exchange rates was slightly favorable as compared to first quarter of last year. Depreciation and amortization expense, included in cost of sales during the quarter increased $1.8 million to $12.2 million.
Excluding the $5.7 million curtailment gain, adjusted operating margin was 12.5%. Operating margin in 2010 included a $3.5 million environmental charge related to a previously sold manufacturing site; our adjusted 2010 operating margin was 10.4%. The year over year increase in operating margin percentage was due to the higher sales and good cost control efforts.
Stocks Discussed: HXL,