Hexcel’s first quarter results for 2025 fell short of Wall Street expectations, with management attributing the shortfall mainly to weaker-than-anticipated demand from commercial aerospace customers, especially Airbus and Boeing. CEO Tom Gentile highlighted that ongoing supply chain disruptions and delayed production increases led to reduced sales, particularly for the A350 and 737 MAX programs, stating, “Production rate increases for commercial aircraft will not meet initial expectations due to ongoing supply chain disruption.” Gentile also noted that a power outage at the Decatur, Alabama facility contributed further to margin pressure this quarter.
Is now the time to buy HXL? Find out in our full research report (it’s free).
Hexcel (HXL) Q1 CY2025 Highlights:
- Revenue: $456.5 million vs analyst estimates of $472.4 million (3.3% year-on-year decline, 3.4% miss)
- Adjusted EPS: $0.37 vs analyst expectations of $0.42 (12.4% miss)
- Adjusted EBITDA: $75.1 million vs analyst estimates of $88.98 million (16.5% margin, 15.6% miss)
- The company dropped its revenue guidance for the full year to $1.92 billion at the midpoint from $2 billion, a 4.3% decrease
- Management lowered its full-year Adjusted EPS guidance to $1.95 at the midpoint, a 9.3% decrease
- Operating Margin: 9.7%, down from 11.2% in the same quarter last year
- Market Capitalization: $4.61 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Hexcel’s Q1 Earnings Call
- Sheila Kahyaoglu (Jefferies) asked about the potential impact of tariffs on profitability and margin improvement drivers. CEO Tom Gentile explained that while the direct impact is minimal, indirect effects are uncertain and not included in guidance, and margin improvement will depend on regaining operating leverage.
- Michael Ciarmoli (Truist) questioned Hexcel’s ability to offset tariff costs through contract pricing or productivity. Gentile noted that some contracts enable pass-through of tariff costs, and productivity initiatives are expected to mitigate some direct impacts.
- Myles Walton (Wolfe Research) probed whether the reduction in A350 rates was due to flattening production or inventory destocking. Gentile clarified that the lower guidance reflects both reduced demand and some destocking at Airbus.
- John McNulty (BMO Capital Markets) asked about Hexcel’s more aggressive approach to managing headcount and CapEx. Gentile responded that the company is taking a practical approach by aligning staffing with current demand and prioritizing only essential capital projects.
- Ken Herbert (RBC Capital Markets) inquired about inventory levels at Airbus and Hexcel’s capacity to support future rate increases. Gentile stated that current plans assume some inventory drawdown, and Hexcel has sufficient capacity to support higher production rates when the market recovers.
Catalysts in Upcoming Quarters
Over the coming quarters, the StockStory team will focus on (1) the trajectory of commercial aerospace production rates, particularly any changes in A350 and 737 MAX output from Airbus and Boeing; (2) the company’s ability to execute further cost reductions and operational efficiency initiatives; and (3) the evolving impact of new tariffs and related supply chain responses. Progress on divesting non-core assets and maintaining momentum in defense and space will also be closely watched as indicators of strategic execution.
Hexcel currently trades at $57.72, up from $50.49 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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