UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly Period Ended
or
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class |
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Outstanding at July 15, 2024 |
COMMON STOCK |
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HEXCEL CORPORATION AND SUBSIDIARIES
INDEX
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PART I. |
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3 |
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ITEM 1. |
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3 |
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Condensed Consolidated Balance Sheets — June 30 2024, and December 31, 2023 |
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Condensed Consolidated Statements of Cash Flows — The six months ended June 30, 2024 and 2023 |
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7 |
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ITEM 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 3. |
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ITEM 4. |
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23 |
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PART II. |
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23 |
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ITEM 1. |
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ITEM 1A. |
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ITEM 2. |
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ITEM 5. |
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ITEM 6. |
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2
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
Hexcel Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
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(Unaudited) |
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June 30, |
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December 31, |
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(In millions) |
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventories, net |
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Contract assets |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment |
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Less accumulated depreciation |
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Net property, plant and equipment |
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Goodwill and other intangible assets, net |
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Investments in affiliated companies |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Short-term borrowings |
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$ |
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$ |
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Accounts payable |
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Accrued compensation and benefits |
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Financial instruments |
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Accrued liabilities |
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Total current liabilities |
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Long-term debt |
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Retirement obligations |
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Deferred income taxes |
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Other non-current liabilities |
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Total liabilities |
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Stockholders' equity: |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Less – Treasury stock, at cost, |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Hexcel Corporation and Subsidiaries |
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Condensed Consolidated Statements of Operations |
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(Unaudited) |
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(Unaudited) |
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Quarter Ended June 30, |
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Six Months Ended June 30, |
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(In millions, except per share data) |
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2024 |
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2023 |
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2024 |
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2023 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross margin |
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Selling, general and administrative expenses |
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Research and technology expenses |
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Other operating expense |
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Operating income |
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Interest expense, net |
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Income before income taxes, and equity in earnings from affiliated companies |
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Income tax expense |
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Income before equity in earnings from affiliated companies |
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Equity in earnings from affiliated companies |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Basic net income per common share |
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$ |
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$ |
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$ |
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$ |
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Diluted net income per common share |
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$ |
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$ |
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$ |
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$ |
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Weighted-average common shares: |
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Basic |
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Diluted |
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Hexcel Corporation and Subsidiaries |
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Condensed Consolidated Statements of Comprehensive Income |
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(Unaudited) |
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(Unaudited) |
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Quarter Ended June 30, |
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Six Months Ended June 30, |
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(In millions) |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Currency translation adjustments |
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Net unrealized pension and other benefit actuarial losses and prior service credits (net of tax) |
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( |
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Net unrealized gains (losses) on financial instruments (net of tax) |
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( |
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Total other comprehensive (loss) income |
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( |
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( |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
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(Unaudited) |
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Six Months Ended June 30, |
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(In millions) |
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2024 |
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2023 |
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Cash flows from operating activities |
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Net income |
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$ |
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$ |
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Reconciliation to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization related to financing |
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Deferred income taxes |
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( |
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( |
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Equity in earnings from affiliated companies |
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Stock-based compensation |
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Restructuring expenses, net of payments |
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( |
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Impairment of assets |
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- |
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Changes in assets and liabilities: |
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Increase in accounts receivable |
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( |
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( |
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Increase in inventories |
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( |
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( |
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Increase in prepaid expenses and other current assets |
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( |
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( |
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Decrease in accounts payable/accrued liabilities |
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( |
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( |
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Other – net |
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( |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities |
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Capital expenditures |
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( |
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( |
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Proceeds from sale of investments |
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Net cash used for investing activities |
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( |
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( |
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Cash flows from financing activities |
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Borrowing from senior unsecured credit facility - 2028 |
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Repayment of senior unsecured credit facility - 2028 |
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( |
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Borrowing from senior unsecured credit facility - 2024 |
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Repayment of senior unsecured credit facility - 2024 |
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( |
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Issuance costs related to senior unsecured credit facilities |
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( |
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Repurchases of common stock |
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( |
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Proceeds (repayment) of finance lease obligation and other debt, net |
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( |
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Dividends paid |
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( |
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( |
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Activity under stock plans |
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( |
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Net cash (used for) provided by financing activities |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental data: |
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Accrual basis additions to plant, property and equipment |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
For the Quarters and Six Months ended June 30, 2024, and June 30, 2023
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Accumulated |
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Additional |
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Other |
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Total |
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Paid-In |
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Retained |
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Comprehensive |
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Treasury |
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Stockholders’ |
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(In millions) |
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Par |
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Capital |
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Earnings |
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Loss |
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Stock |
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Equity |
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Balance, December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Dividends on common stock ($ |
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— |
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— |
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( |
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— |
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— |
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( |
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Change in other comprehensive income– net of tax |
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— |
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— |
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— |
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— |
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Stock-based activity |
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— |
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— |
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— |
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( |
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Balance, March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Dividends on common stock ($ |
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— |
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— |
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( |
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— |
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— |
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( |
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Change in other comprehensive income– net of tax |
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— |
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— |
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— |
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— |
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Stock-based activity |
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— |
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— |
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— |
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( |
) |
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Balance, June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Paid-In |
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Retained |
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Comprehensive |
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Treasury |
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Stockholders’ |
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(In millions) |
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Par |
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Capital |
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Earnings |
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Loss |
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Stock |
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Equity |
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Balance, December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
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$ |
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||||
Net income |
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— |
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— |
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— |
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— |
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Dividends on common stock ($ |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Repurchases of common stock |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Change in other comprehensive (loss) income– net of tax |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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Stock-based activity |
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— |
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— |
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— |
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( |
) |
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||||||
Balance, March 31, 2024 |
|
$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
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$ |
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||||
Net income |
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— |
|
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
||||||
Dividends on common stock ($ |
|
— |
|
|
— |
|
|
|
( |
) |
|
— |
|
|
— |
|
|
|
( |
) |
||||
Repurchases of common stock |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
||||
Change in other comprehensive (loss) income– net of tax |
|
— |
|
|
— |
|
|
— |
|
|
|
( |
) |
|
— |
|
|
|
( |
) |
||||
Stock-based activity |
|
— |
|
|
|
|
|
— |
|
|
— |
|
|
|
( |
) |
|
|
|
|||||
Balance, June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
HEXCEL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 — Significant Accounting Policies
In these notes, the terms “Hexcel,” “the Company,” “we,” “us,” or “our” mean Hexcel Corporation and subsidiary companies. The accompanying condensed consolidated financial statements are those of Hexcel Corporation. Refer to Note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of our significant accounting policies.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared from the unaudited accounting records of Hexcel pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Certain information and footnote disclosures normally included in financial statements have been omitted pursuant to rules and regulations of the SEC. In the opinion of management, the condensed consolidated financial statements include all normal recurring adjustments as well as any non-recurring adjustments necessary to present fairly the statement of financial position, results of operations, cash flows and statement of stockholders’ equity for the interim periods presented. The Condensed Consolidated Balance Sheet as of December 31, 2023 was derived from the audited 2023 consolidated balance sheet. Interim results are not necessarily indicative of results expected for any other interim period or for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2023 Annual Report on Form 10-K.
Investments in Affiliated Companies
Note 2 — Net Income Per Common Share
|
|
Quarter Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(In millions, except per share data) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Basic net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income per common share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding — Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Plus incremental shares from assumed conversions: |
|
|
|
|
|
|
|
|
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|
|
|
||||
Restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding — Dilutive |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted net income per common share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total common stock equivalents of
7
Note 3 — Inventories
|
|
|
|
|
|
|
||
(In millions) |
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in progress |
|
$ |
|
|
|
|
||
Finished goods |
|
$ |
|
|
|
|
||
Total Inventory |
|
$ |
|
|
$ |
|
||
Note 4 — Retirement and Other Postretirement Benefit Plans
We maintain qualified and nonqualified defined benefit retirement plans covering certain current and former U.S. and European employees, retirement savings plans covering eligible U.S. and U.K. employees and certain postretirement health care and life insurance benefit plans covering eligible U.S. retirees. We also participate in a union sponsored multi-employer pension plan covering certain U.S. employees with union affiliations.
Defined Benefit Retirement Plans
Net Periodic Benefit Costs
Net periodic benefit costs of our defined benefit retirement plans for the quarters and six months ended June 30, 2024 and 2023 were as follows:
|
|
Quarter Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(In millions) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
U.S. Nonqualified Defined Benefit Retirement Plans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net amortization |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
(In millions) |
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
Amounts recognized on the balance sheet for U.S. nonqualified defined benefit retirement plans: |
|
|
|
|
|
|
||
Accrued liabilities |
|
$ |
|
|
$ |
|
||
Other non-current liabilities |
|
|
|
|
|
|
||
|
$ |
|
|
$ |
|
|||
|
|
Quarter Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(In millions) |
|
2024 |
|
|
2023 |
|
|
|||||||||