Composite materials manufacturer Hexcel Corp. (HXL) reported Wednesday an 80% year-over-year drop in profit for the fourth quarter, reflecting charges, lower margins as well as a 7.9% decline in quarterly sales. Excluding items, non-GAAP earnings per share for the quarter decreased 31%, but topped analysts' expectations by two cents. The company also noted that it foresees flat to slightly declining revenue on a constant currency basis for the full year 2010, with the first quarter being the weakest.
In a statement, chairman and chief executive officer, David Berges said, "Our fourth quarter performance was consistent with our expectations in light of the challenging sales environment. Our sales were slightly higher than the third quarter on a constant currency basis and we made modest sequential improvements in gross and operating margins."
The Stamford, Connecticut-based company reported net income of $5.7 million or $0.06 per share for the fourth quarter, lower than $28.3 million or $0.29 per share in the prior-year quarter.
The results for the latest quarter include $5.6 million or $0.06 per share of one-time charge related to a license agreement, settling a previously disclosed legal matter. The year-ago quarter results included $12.6 million or $0.13 per share of benefit from the reversal of valuation allowances against U.S. deferred tax assets.
Excluding special items, non-GAAP net income for the quarter declined to $11.3 million or $0.11 per share from $15.7 million or $0.16 per share in the year-ago quarter. On average, 13 analysts polled by Thomson Reuters expected the company to earn $0.09 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter declined 7.9% to $266.6 million from $289.50 million in the same quarter last year, but topped ten Wall Street analysts' consensus estimate of $257.60 million. Meanwhile, net sales in constant currency declined 11.8%.
Segment-wise, commercial aerospace sales declined 4.3% or 7.2% in constant currency, to $137.1 million, industrial sales dropped 18.4% or 25.6% in constant currency, to $56.5 million, and space & defense sales were down 5.3% or 7.2% in constant currency, to $73.0 million from last year.
Operating income for the fourth quarter dropped 51.0% to $14.5 million from $29.3 million in the prior-year quarter. Excluding items, non-GAAP operating income was 22.0 million, down 28% from the year-ago quarter's $30.6 million.
Gross margin for the quarter was $56.3 million, down from $61.9 million in the year-ago quarter, while gross margin percentage edged down 30 basis points to 21.1% from last year's 21.4%, due principally to lower volumes and 100 basis points headwinds from exchange rates, nearly offset by year-over-year operational improvements.
The company ended the fourth quarter with cash and cash equivalents of $110.1 million, compared to $50.9 million at end of the prior-year quarter.
For fiscal 2009, Hexcel reported net income of $56.3 million or $0.57 per share, about 49% lower than $111.2 million or $1.14 per share in the prior year. Excluding special items, non-GAAP net income for the year declined about 22% to $61.9 million $0.63 per share from $79.7 million $0.82 per share last year. Analysts expected the company to earn $0.61 per share for fiscal 2009.
Net sales for the full year decreased 16.3% to $1.11 billion from $1.32 billion in the previous year. The Street is looking for full-year 2009 revenues of $1.10 billion. Meanwhile, net sales in constant currency declined 14.4%.
Looking ahead, "......we believe next year sales will be flat to slightly declining as compared to 2009. We will continue to aggressively reduce the number of days worked at selected facilities in an effort to balance our output with the current demand environment while retaining skills for the long term," Berges added.
The company noted that it foresees flat to slightly declining revenue on a constant currency basis for the full year 2010, with the first quarter being the weakest, particularly when compared to 2009's relatively strong first quarter. The company also remains encouraged by the demand shift to larger, more composite-intensive aircraft that will benefit it in 2010 and beyond. Capital spending for 2010 capital spending is projected to be less than $75 million.
HXL closed Wednesday's regular trading session at $12.43, up $0.19 or 1.55% on a volume of 0.48 million shares, lower than the three-month average volume of 0.69 million shares.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.