Program-rate outlook: puts and takes, guidance maintained

→ Amazon Stock Up 30%: Is AMZN Still a Buy Before Earnings?

Gentile said Hexcel continues to see evidence that higher production rates at aircraft OEMs are “taking hold,” and management maintained its full-year guidance. In response to a question from Wells Fargo’s David Strauss about whether commercial aerospace expectations were changing, Gentile said the company was holding to its plan while noting “some puts and takes” across platforms.

• Airbus A320:Gentile said that based on public announcements about engine availability, Hexcel now expects its A320 volumes to be at the lower endof its prior guidance range (previously described as low-to-mid 700s for the year).

• Airbus A350:He said channel destocking is “largely behind us,” production is aligning more closely with Airbus build rates, and Hexcel remains confident in an outlook of 80 units in 2026, “perhaps even with some upside.”

• Boeing 737 MAX:Gentile said Hexcel is seeing “tangible evidence of progress” in the ramp. He called the first quarter Hexcel’s “best quarter on the MAX in years,” with production “around 40 aircraft per month.” He added that Hexcel’s 2026 forecast had been in the mid-400sand “it looks like Boeing will exceed that.”

• Boeing 787:Gentile said the company continues to expect 90–100 unitsfor 2026.

When asked by TD Cowen’s Gautam Khanna to quantify shipment rates, Gentile offered rough figures, saying the A350 was “about seven, a little bit underneath seven,” the 787 was “a little bit above seven,” the A320 was “just under 60-ish,” and the MAX was “in the 40 range.” He noted Hexcel is typically four to six months ahead of OE assembly and that its estimates are based on production, not deliveries.

→ 3M Stock Pulls Back, But Catalysts Point to New Highs

Lenz said the company reaffirmed 2026 guidance, including adjusted EPS of $2.10 to $2.30, and clarified to Wolfe Research’s Myles Walton that management expects a “roughly even split” of EPS between the first and second half of the year.

Defense, space and portfolio actions

Defense, Space and Other sales were $169 millionin the first quarter. Gentile said the segment was impacted by the divestment of Hexcel’s Austrian facility, resulting in lower sales versus the prior year. Excluding the divestment effect, he said defense and space sales were up “low single digits,” helped by European fighter programs and U.S. and European military rotorcraft, offset by lower space volumes for launchers and rocket motors.

Lenz highlighted that year-over-year comparisons will be influenced through the third quarter due to the Austrian divestment. He also said Hexcel’s plan to cease industrial operations at its Leicester, U.K. site will create an additional year-over-year sales headwind, noting Leicester had generated “around $15 million annually.” Gentile said restructuring costs related to Leicester affected results in the quarter, while the company remains on track to transition the site from industrial applications to aerospace development.

On the outlook for defense, Jefferies’ Sheila Kahyaoglu asked when volumes could accelerate. Gentile described defense as “lumpy” and cited a pause in one space program (Vulcan) as an example of year-over-year variability. He said increased missile orders should begin to flow through more materially in the third and fourth quarterof the year.

Margins, operating leverage, and R&D spending

Management repeatedly pointed to operating leverage as commercial volume rises. Gentile said Hexcel is taking a measured approach to bringing capacity online so incremental costs stay aligned with sustained demand. He cited the company’s carbon fiber production in Salt Lake City, saying it has 14 linesand had mothballed fourduring most of the pandemic; one line was brought back at the end of last year and another is expected to come back this year.

Asked about margin performance, Gentile said the first quarter benefited from “strong volume performance,” some contract pricing actions, and a benefit from selling inventory built last year at lower cost. He also credited “operational discipline” and productivity initiatives.

Lenz reported adjusted operating income of $68 million, or 13.5%of sales, compared to $45 million, or 9.9%of sales, a year earlier. He also said foreign exchange became a headwind: first-quarter 2026 operating margin was negatively impacted by about 80 basis pointsfrom FX, versus a roughly 60 basis pointbenefit in the prior-year quarter.

On R&D, Deutsche Bank’s Scott Deuschle asked whether higher spending would continue. Lenz said overall R&D headcount was down year over year, but the quarter saw timing-related spending and some reclassification of costs from factory cost centers into R&D. Gentile added Hexcel is “stepping up R&D” to align with OEM work on next-generation aircraft, including testing new carbon fibers and resin systems and engaging with both airframe and engine OEMs.

Regarding timing for next-generation clean-sheet aircraft decisions, Gentile told RBC Capital Markets’ Ken Herbert that nothing had changed from OEM public timelines, describing decisions in “another couple of years,” a potential program launch “by the 2030 timeframe,” and entry into service in the “late 30s.”

Cash flow, balance sheet, capital returns, and leadership update

Hexcel generated $90 millionof net cash from operating activities in the quarter, compared with a $29 million usein the first quarter of 2025. Lenz said working capital was a cash use of $63 millionversus $98 milliona year earlier. Free cash flow was a $6 million use, compared with a $55 million uselast year, and Lenz noted the first quarter is typically a cash-use period for the company.

Management also highlighted balance sheet actions and shareholder returns. Gentile said Hexcel refinanced its $750 million revolver, extending maturity to 2031from 2028. Lenz said the refinancing slightly improved pricing and included no substantive covenant changes. He reported leverage (net debt to last 12 months adjusted EBITDA) of 2.6xat March 31, 2026, and said the company aims to return leverage to its targeted 1.5x to 2.0xrange during 2026.

Lenz said the accelerated share repurchase (funded by revolver borrowing in October 2025) concluded in early March, with about 4.5 million sharesrepurchased, or “almost 6%” of the outstanding float. He added that since the beginning of 2024, Hexcel has returned “over $800 million” to stockholders through dividends and share repurchases. The company did not repurchase shares in the first quarter of 2026; remaining authorization was $381 millionat quarter end. The board declared a $0.18quarterly dividend payable May 11 to stockholders of record May 4.

On M&A, Gentile told Wolfe Research that Hexcel is not planning acquisitions until leverage returns below 2x, and said future M&A would focus on advanced material science opportunities with an ROIC of 15% or greater.

Gentile also announced a leadership transition in finance, thanking Lenz for serving as interim CFO and stating that Jamie Cooganwill start as Hexcel’s next CFO on May 1, with Lenz supporting the transition.

Addressing macro risk, Gentile said Hexcel is monitoring the Middle East situation and highlighted mitigating actions, including long-term contracts for many inputs and hedging propylene for eight quarters. He also said the company has forward buying programs in Europe, including natural gas, and emphasized that more than 90% of inputs for U.S. and European production are sourced from the U.S. and Europe.

Looking ahead, Gentile said the company believes market fundamentals support sustained demand across commercial, defense and space, and reiterated confidence in Hexcel’s ability to benefit from improving operating leverage as production rates continue to rise.

About Hexcel (NYSE:HXL)

Hexcel Corporation is a global leader in advanced composite materials for aerospace and industrial applications. The company specializes in the development and manufacture of lightweight, high-performance products that enhance fuel efficiency, durability and structural strength. Its offerings are critical to the aerospace sector, where demand for lighter, more efficient aircraft drives continuous innovation in materials.

Hexcel's product portfolio encompasses carbon fiber reinforcements, pre-impregnated composites (prepregs), honeycomb core, engineered adhesives and structural film adhesives.

The article " Hexcel Q1 Earnings Call Highlights " was originally published by MarketBeat.