Hexcel Corporation

Second quarter 2026 sales were $529 million, up 8% year over year, and adjusted EPS was $0.66. Gross margin was 26.1%, up from 22.8% last year, and adjusted operating margin was 13.9% versus 11.1% in Q2 2025. Commercial aerospace sales were $346.6 million, up 18.3%, while Defense, Space & Other sales were $182.7 million, down 7%; on a constant-currency basis sales grew 8.1%. For 2026, Hexcel raised sales guidance to $2.025 billion-$2.125 billion from $2.0 billion-$2.1 billion and adjusted EPS guidance to $2.30-$2.40 from $2.10-$2.30. Free cash flow guidance remains greater than $195 million and capex remains less than $100 million.

Tom Gentile said the quarter reflected stronger operating leverage as commercial aircraft production ramps continue, calling the outlook for commercial aerospace, especially the A350, "bright." He emphasized that Hexcel is shipping ahead of OEM assembly and is seeing demand through purchase orders and bottom-up planning, while also highlighting long-term growth opportunities in Defense & Space and regional/business jets. His tone was constructive and confident, with repeated references to capacity, productivity, and a path to 18% operating margin before the end of the decade.

Jamie Coogan highlighted Q2 gross margin of 26.1% versus 22.8% a year ago and adjusted operating income of $74 million, or 13.9% of sales, versus $54 million and 11.1% last year. He noted six-month adjusted EBITDA of $216 million with a 21% margin, up from $173 million and 18.2%, and said cash from operations was $97 million for the first half versus a use of $5 million a year earlier. He also cited leverage of 2.3x at June 30, 2026, down from just under 2.7x at year-end, the issuance of $400 million of unsecured senior notes due 2031, quarterly dividend of $0.18, and continued focus on debt reduction and disciplined capital allocation.

Analysts focused on the second-half margin reset, with management saying hiring, restarting a carbon fiber line in Salt Lake City, seasonality, oil-price caution, and some Middle East conservatism explain the lower implied back-half EPS. Questions also centered on A350 upside and capacity: management said current A350 output support is at least 80 shipsets in 2026, with capacity today able to support 13 aircraft per month and any further expansion needing about a three-year lead time. Other questions covered FX, where management said a weaker dollar is a headwind, defense mix and margins, where Tom Gentile said defense could grow to 40%-50% of sales over time and is sold on commercial terms, and long-term agreements, where Hexcel said pricing has been improving on renewals.