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increase in revenue:FY2023 sales were $1,789 million, an increase of 13.4% from $1,578 million in FY2022.
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Adjusted profit: Adjusted diluted EPS for 4Q 2023 increased to $0.43 from $0.40 in 4Q 2022, resulting in adjusted diluted EPS for 2023 of $1.81, an increase of 41.4%.
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Changes in net income:Q4 2023 GAAP diluted EPS was $(0.21), down from $0.43 in Q4 2022, impacted by non-cash pension expense.
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free cash flow:FY2023 free cash flow was strong at $149 million, including $7.5 million in cash dividends from joint ventures.
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dividend increase: Quarterly dividend increased by 20% to $0.15 per share.
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strategic sale:Sold 50% interest in the Boeing/Hexcel 50:50 ACM joint venture to Boeing in the fourth quarter of 2023.
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Outlook for 2024: Double-digit revenue growth is expected with revenue of $1.925 billion to $2.025 billion and adjusted EPS of $2.10 to $2.30.
On January 24, 2024, Hexel Corporation (NYSE:HXL) released its 8-K report detailing its fourth quarter and full year 2023 financial performance. The company, a global leader in advanced lightweight composite materials technology, reported its full year of results. Strategic actions such as the acquisition of pension plans and the sale of joint venture interests impacted financial results.
Founded in 1948, Hexcel designs and manufactures high-performance composite materials for commercial aerospace, defense, and industrial markets. Known for their light weight and stiffness, the company's products are essential to a variety of aircraft components and subassemblies. Airbus and Boeing are among Hexcel's largest customers, underscoring the company's importance to the aerospace and defense industry.
Financial performance and challenges
Hexcel's fiscal 2023 revenue increased 13.4% to $1,789 million compared to $1,578 million in the prior year. Adjusted diluted EPS for fiscal year 2023 increased significantly by 41.4% to his $1.81. However, the company faced a setback in the fourth quarter of 2023, resulting in GAAP diluted EPS of $0.21. This was primarily due to non-cash charges of $70.5 million related to the strategic acquisition of a UK defined benefit pension scheme. Nevertheless, adjusted diluted EPS for the fourth quarter of 2023 increased to $0.43 from $0.40 in the fourth quarter of 2022.
The challenges faced by Hexcel, including the acquisition of a pension scheme and the sale of an interest in the Aerospace Composites Malaysia joint venture, reflect the company's proactive approach to managing long-term debt and focusing on its core business. These strategic decisions are intended to strengthen Hexcel's financial position and operational readiness for future growth, while impacting short-term profitability.
Key financial indicators
Hexcel's financial results in 2023, including strong free cash flow of $149 million and a 20% increase in quarterly dividends, support the company's commitment to creating shareholder value and maintaining a strong cash position. These results are particularly important in the aerospace and defense industry, where long-term contracts and capital-intensive projects require a strong financial foundation.
Important indicators in financial statements include:
|
financial indicators |
2023 |
2022 |
% change |
|---|---|---|---|
|
net sales |
$1.789 billion |
$1,577.7 million |
13.4% |
|
Operating income |
$215.3 million |
$175.2 million |
22.9% |
|
Net income |
$105.7 million |
$126.3 million |
(16.3%) |
|
Adjusted net income |
$154.8 million |
$108.8 million |
42.3% |
|
free cash flow |
$148.9 million |
$96.8 million |
53.8% |
These metrics are very important as they reflect a company's operational efficiency, profitability, and liquidity, all of which are essential for maintaining growth and competitiveness in the market.
Management commentary
Chairman, CEO and President Nick Stanage commented on the company's performance, highlighting 17% growth in both the commercial aerospace and space and defense markets. He emphasized that despite short-term margin pressures, the company is focused on preparing its operations for expected growth. CFO Patrick Winterlich noted that the strategic pension plan transfer has eliminated the company's future liabilities.
“Based on a record commercial aircraft order backlog and increased production rates expected by our customers, we expect to see double-digit sales growth again in 2024. EPS growth is expected in 2024, with operating margins expected to continue to expand, supporting another strong year. – Nick Stanage, Chairman, CEO, and President, Hexcel Corp.
Looking to the future
For 2024, Hexcel expects continued sales growth and operating margin expansion, with revenue of $1.925 billion to $2.025 billion and adjusted diluted EPS of $2.00. doing.
For more information, see Hexcel Corp's full 8-K earnings release here.
This article first appeared on GuruFocus.
