Hexcel’s third quarter saw flat sales year over year, but market reaction was notably positive after the company reported revenue ahead of analysts’ expectations. Management credited underlying strength in the defense and space segments, which offset continued destocking in commercial aerospace, particularly on the Airbus A350 program. CEO Thomas Gentile highlighted that slower seasonal demand and supply chain normalization weighed on commercial aerospace, while defense platforms such as fighters and rotorcraft drove segment growth. Gentile acknowledged, “This quarter was challenging due to slower seasonal sales and continued destocking by the commercial OEMs,” but maintained that the company is beginning to see sustained production ramp-ups from key customers.
Is now the time to buy HXL? Find out in our full research report (it’s free for active Edge members).
Hexcel (HXL) Q3 CY2025 Highlights:
- Revenue: $456.2 million vs analyst estimates of $443.1 million (flat year on year, 3% beat)
- Adjusted EPS: $0.37 vs analyst estimates of $0.38 (in line)
- Adjusted EBITDA: $75.7 million vs analyst estimates of $77.34 million (16.6% margin, 2.1% miss)
- The company dropped its revenue guidance for the full year to $1.88 billion at the midpoint from $1.92 billion, a 1.8% decrease
- Management lowered its full-year Adjusted EPS guidance to $1.75 at the midpoint, a 10.3% decrease
- Operating Margin: 7.9%, down from 11.5% in the same quarter last year
- Market Capitalization: $5.78 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 From Hexcel’s Q3 Earnings Call
- Myles Walton (Wolfe Research) asked about the impact of inflation on long-term contracts and incremental margin potential. CEO Thomas Gentile explained margins are temporarily suppressed by about 200 basis points but should recover to historical levels as production ramps.
- Michael Ciarmoli (Truist Securities) sought clarity on dilution from the accelerated share repurchase. CFO Patrick Winterlich clarified that the ASR should have a net positive effect on 2026 earnings as debt is repaid with cash flow.
- Gavin Parsons (UBS) questioned whether margins can exceed 2024 levels as commercial aerospace recovers. Gentile confirmed the goal is to improve margins with volume growth, while cost controls and contract negotiations continue.
- Scott Mikus (Melius Research) inquired about sharing productivity gains in contract renegotiations. Gentile said Hexcel aims to retain more of the benefits but must balance customer collaboration and mutual investment.
- Peter Skibitski (Alembic Global) asked about growth prospects in the defense segment. Gentile emphasized strong European defense demand and multiyear contracts, particularly with the Rafale and CH-53K programs.
Catalysts in Upcoming Quarters
In future quarters, StockStory analysts will monitor (1) the pace of commercial aerospace production rate increases and corresponding OEM order activity, (2) Hexcel’s ability to manage inventory and staffing as build rates rise, and (3) progress on contract renegotiations to improve pricing and cost pass-throughs. Ongoing defense market strength and the impact of tariffs on margins will also be important variables to watch.
Hexcel currently trades at $72.63, up from $63.78 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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