Dépêches

Hexcel Reports 2011 Second Quarter Results

Dépèche transmise le 25 juillet 2011 par Business Wire

STAMFORD, Conn.--(BUSINESS WIRE)--Regulatory News:


	Quarter Ended June 30,								Six Months Ended June 30,

(In millions, except per share data)		2011			2010		% Change			2011			2010		% Change

Net Sales	$	353.7		$	305.1		15.9	%	$	685.3		$	568.1		20.6	%
Net sales change in constant currency							11.9	%							18.4	%
Operating Income		49.4			40.5		22	%		96.6			64.3		50	%
Net Income		37.4			23.1		62	%		63.8			38.9		64	%
Diluted net income per common share	$	0.37		$	0.23		61	%	$	0.63		$	0.39		62	%

Non-GAAP Measures for y-o-y comparisons:
Adjusted Operating Income (table C)	$	49.4		$	40.5		22	%	$	90.9		$	67.8		34	%
As a % of sales		14.0	%		13.3	%				13.3	%		11.9	%
Adjusted Net Income (table C)		31.9			23.1		38	%		57.2			37.6		52	%
Adjusted diluted net income per share	$	0.32		$	0.23		39	%	$	0.57		$	0.38		50	%

Hexcel Corporation (NYSE: HXL), today reported results for the second quarter of 2011. Net sales during the quarter were $353.7 million, 15.9% higher than the $305.1 million reported for the second quarter of 2010. Operating income for the period was $49.4 million, compared to $40.5 million last year. Net income for the second quarter of 2011 was $37.4 million, or $0.37 per diluted share, compared to $23.1 million or $0.23 per diluted share in 2010. Excluding the $5.5 million impact of a tax settlement (Table C), adjusted diluted net income for the second quarter of 2011 was $0.32 per share compared to $0.23 per share in 2010.

Chief Executive Officer Comments

Mr. Berges commented, “This was another strong quarter, especially in commercial aerospace as we benefited from increased airplane build rates and the ramp-up of new programs. Solid gross margin performance coupled with our good operating expense control efforts, resulted in a 14% operating margin (our highest in history) and a 39% increase in adjusted diluted EPS compared to last year.”

Looking ahead, Mr. Berges said, “Thanks to the strong first half of the year and our current outlook, we are increasing our 2011 adjusted diluted EPS guidance to $1.05 - $1.12 (from $0.95 - $1.05). We are also raising our sales guidance for the year to $1,325 million - $1,375 million (from $1,275 million - $1,350 million).”

Markets

Commercial Aerospace

Commercial Aerospace sales of $207.8 million increased 29.1% (26.7% in constant currency) for the quarter as compared to the second quarter 2010. Revenues attributed to new aircraft programs (A380, A350, B787, B747-8) increased more than 30% versus the same period last year and continue to comprise more than 25% of Commercial Aerospace sales. Airbus and Boeing legacy aircraft related sales for the quarter were up over 25% compared to the second quarter of 2010 as we see the additional demand of upcoming line-rate increases.
Sales to “Other Commercial Aerospace,” which include regional and business aircraft customers, were up over 20% compared to the same period last year, maintaining their improved level of the first quarter of 2011. We are encouraged with the modest recovery in this sub-market.

Space & Defense

Space & Defense sales of $81.7 million were 2.9% higher (0.2% in constant currency) than the second quarter of 2010. We continue to benefit from rotorcraft related growth as new programs and blade retrofit programs are increasingly composites based.

Industrial

Total Industrial sales of $64.2 million for the second quarter of 2011 were 0.8% lower (8.9% in constant currency) than the second quarter of 2010. Wind sales were down about 10% from the same period last year, but up more than 10% sequentially and remained in line with the average of the last twelve months.

Operations

Gross margin was 24.6% of net sales for the quarter as compared to 25.7% in the second quarter of 2010. This year’s results include increased spending for new line start-ups, higher acrylonitrile costs and the disruption caused by April’s Decatur, Alabama tornado. Selling, general and administrative expenses were flat compared to last year, but were 4% lower in constant currency. Combined with the higher sales volume, adjusted operating income was 14% for the quarter compared to 13.3% for the second quarter of 2010.

Tax

The tax provision was $9.3 million for the second quarter of 2011, an effective tax rate of 20%. The current quarter included the release of $5.5 million of reserves primarily for uncertain tax positions as a result of an audit settlement. Excluding this benefit, our effective tax rate would have been 31.8%, in line with our guidance for the year. Last year’s second quarter tax provision was $10.6 million, a 31.7% effective tax rate.

Cash and other

Free cash flow for the first half of 2011 was $9.5 million versus $11.6 million in the first half of 2010, as higher earnings and lower working capital increases were offset by increased capital spending. Free cash flow is defined as cash provided from operating activities less cash paid for capital expenditures. Total debt, net of cash as of June 30, 2011 was $195.5 million, a decrease of $19.5 million from December 31, 2010. Our accrual based capital expenditures were $55.1 million for the first half of 2011, and we still expect these expenditures for 2011 to be $150 - $175 million. We target free cash flow to be break-even by the end of the year.
Interest expense for the second quarter was $2.9 million compared to $7.1 million last year. The decrease reflects the lower borrowing rate as a result of the July 2010 refinancing and the February 1, 2011 bond redemption, as well as lower outstanding debt.

Hexcel will host a conference call at 10:00 A.M. ET, tomorrow, July 26, 2011 to discuss the second quarter results and respond to analyst questions. The telephone number for the conference call is (719) 325-2271 and the confirmation code is 2511234. The call will be simultaneously hosted on Hexcel’s web site at www.hexcel.com/investors/index.html. Replays of the call will be available on the web site for approximately three days.

Hexcel Corporation is a leading advanced composites company. It develops, manufactures and markets lightweight, high-performance structural materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures, used in commercial aerospace, space and defense and industrial applications such as wind turbine blades.

Disclaimer on Forward Looking Statements

This press release contains statements that are forward looking, including statements relating to anticipated trends in constant currency for the market segments we serve (including changes in commercial aerospace revenues, the estimates and expectations based on aircraft production rates made publicly available by Airbus and Boeing, the revenues we may generate from an aircraft model or program, the impact of delays in new aircraft programs, the outlook for space & defense revenues and the trend in wind energy, recreation and other industrial applications); our ability to maintain and improve margins in light of the changes in product mix, efficiency improvements, continued cost reduction efforts and the current economic environment; outcome of legal matters; and the impact of the above factors on our expectations of 2011 financial results. Actual results may differ materially from the results anticipated in the forward looking statements due to a variety of factors, including but not limited to changing market conditions, increased raw material costs, competition, product mix, inability to achieve planned manufacturing improvements and cost reductions, supply chain disruptions, conditions in the financial markets and changes in currency exchange rates, interest rates, governmental and environmental regulations and tax codes. Additional risk factors are described in our filings with the SEC. We do not undertake an obligation to update our forward-looking statements to reflect future events.

Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
	Unaudited

		Quarter Ended June 30,							Six Months Ended June 30,
(In millions, except per share data)			2011			2010			2011			2010
Net sales		$	353.7		$	305.1		$	685.3		$	568.1
Cost of sales			266.7			226.7			515.3			423.6

Gross margin			87.0			78.4			170.0			144.5
% Gross margin			24.6	%		25.7	%		24.8	%		25.4	%

Selling, general and administrative expenses			29.7			29.6			62.6			61.0
Research and technology expenses			7.9			8.3			16.5			15.7
Other operating (income) expense (a)			—			—			(5.7	)		3.5

Operating income			49.4			40.5			96.6			64.3

Interest expense, net			2.9			7.1			7.1			13.7
Non-operating expense (b)			—			—			4.9			—

Income before income taxes and equity in earnings from affiliated companies			46.5			33.4			84.6			50.6
Provision for income taxes (c)			9.3			10.6			21.5			12.1

Income before equity in earnings from affiliated companies			37.2			22.8			63.1			38.5
Equity in earnings from affiliated companies			0.2			0.3			0.7			0.4

Net income		$	37.4		$	23.1		$	63.8		$	38.9



Basic net income per common share:		$	0.38		$	0.24		$	0.65		$	0.40

Diluted net income per common share:		$	0.37		$	0.23		$	0.63		$	0.39


Weighted-average common shares:

Basic			98.6			97.5			98.4			97.4
Diluted			100.7			99.7			100.5			99.6

(a)				Other operating income for the six months ended June 30, 2011 is a $5.7 million benefit from the curtailment of a pension plan. For the six months ended June 30, 2010 other operating expense is for an increase in environmental reserves for remediation of a manufacturing facility sold in 1986.
(b)				Non-operating expense is the accelerated amortization of deferred financing costs and expensing of the call premium from redeeming $150 million of 6.75% senior subordinated notes.
(c)				Provision for income taxes for the quarter ended June 30, 2011 includes a release of $5.5 million of reserves primarily for uncertain tax positions as a result of an audit settlement. Provision for income taxes for the six months ended June 30, 2010 includes $3.5 million of New Clean Energy Manufacturing Tax Credits awarded in January 2010 for qualifying capital investments made in our U.S. wind energy facility in 2009.