HXL · Hexcel Corporation

Hexcel Corporation delivered strong Q1 2026 results with net sales reaching $501.5 million, a 9.9% increase from $456.5 million in Q1 2025, driven primarily by an 18.8% surge in Commercial Aerospace sales to $332.7 million (66% of total), fueled by higher build rates on key programs like Airbus A350, A320, Boeing 787, and 737 MAX, plus growth in regional and business jets. Defense, Space & Other sales declined 4.3% to $168.8 million due to the prior divestment of the Austrian industrial business, though offset by gains in European fighter aircraft and military helicopters. Gross margin expanded to 26.9% from 22.4%, reflecting sales leverage, while adjusted operating margin improved to 13.5% from 9.9%, demonstrating significant operating leverage as capacity utilization rises. GAAP net income rose 28.7% to $37.2 million, with diluted EPS up 40% to $0.49; adjusted figures showed even stronger growth at 51.2% and 59.5%, respectively. CEO Tom Gentile highlighted execution amid rising aerospace rates and channel inventory normalization, expressing confidence in growth outlook despite geopolitical and supply chain headwinds, with higher oil prices reinforcing demand for lightweight composites. The company refinanced its $750 million revolver to 2031, enhancing liquidity, declared a $0.18 dividend, and holds $380.6 million in remaining buyback authorization. Unchanged 2026 guidance signals stability: $2.0-2.1 billion sales, $2.10-2.30 adjusted EPS, >$195 million free cash flow, and <$100 million capex. Operating cash flow turned positive at $19.0 million versus a prior use, with free cash flow improving to ($6.2) million from ($54.6) million, supporting capital returns amid balance sheet strength (cash $54.1 million, equity $1.27 billion). Segment details in Exhibit 99.2 show Composite Materials at $398.8 million and Engineered Products at $102.7 million for Q1.