Hexcel Q3 Profit Tops View, But Revenues Miss, Boosts 2013 EPS Outlook

(RTTNews) - Composite materials manufacturer Hexcel Corp. (HXL) reported Monday a profit for the third quarter that grew 22 percent from last year, boosted by improved margins and sales growth. Earnings per share topped analysts' expectations, while quarterly revenues missed their estimates. The company also raised its earnings forecast for the full-year 2013, but narrowed annual revenue guidance range.

"This was another strong quarter for Hexcel, as solid execution combined with increased sales to yield excellent results. For the quarter, our adjusted diluted EPS of $0.48 was 23% higher than last year on a 4% increase in constant currency sales. We are also particularly pleased that our adjusted operating income was 16.7% of net sales for the quarter, 140 basis points better than last year," CEO Nick Stanage said in a statement.

The Stamford, Connecticut-based company reported net income of $48.7 million or $0.48 per share for the third quarter, higher than $39.8 million or $0.39 per share in the prior-year quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to earn $0.46 per share for the third quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 5.3 percent to $412.30 million from $391.6 million in the same quarter last year, but missed fifteen Wall Street analysts' consensus estimate of $428.63 million. Meanwhile, net sales grew 4.2 percent in constant currency.

Segment-wise, commercial aerospace sales rose 11.9 percent or 11.5 percent in constant currency, to $262 million, boosted by new aircraft programs at Airbus and Boeing.

Industrial sales declined 16.4 percent or 19.0 percent in constant currency, to $56 million, while space & defense sales were up 4.2 percent or 2.9 percent in constant currency, to $94 million from last year.

Operating margin for the quarter expanded 140 basis points to 16.7 percent from last years 15.3 percent as gross margin improved 190 basis points to 27.2 percent, partially offset by higher expenses.

Looking ahead ahead to fiscal 2012, the company raised its adjusted earnings guidance to $1.80 to $1.86 pr share from the prior forecast of $1.73 to $1.83 pr share. Sales are now projected to be in the range of $1.655 billion to $1.685 billion, narrower than the earlier outlook between $1.64 billion and $1.74 billion.

Street is currently looking for full-year 2012 earnings of $1.82 per share, on annual revenue of $1.70 billion.

"While there is some concern that our customers will reduce year-end inventories, we expect aerospace sales (both Commercial Aerospace and Space & Defense) to continue their steady growth trend. Though challenging Industrial sales have limited our top line growth, strong operational performance allows us to raise our 2013 earnings guidance," Stanage added.

HXL closed Monday's regular trading session at $41.12, up $0.69 or 1.71% on a volume of 0.82 million shares.