Hexcel Corp.: Solid Q1 Earnings Leave Little Room for Nitpickers

Hexcel Corporation (HXL), today reported results for the first quarter of 2007:

Net sales for the quarter were $328.7 million, 9.1% higher than the $301.2 million reported for the first quarter of 2006. Operating income for the first quarter was $33.7 million compared to $29.1 million for the same quarter last year. Net income from continuing operations for the first quarter of 2007 was $16.5 million, or $0.17 per diluted common share compared to $14.0 million or $0.14 per diluted common share in 2006. Net income was $23.5 million, or $0.24 per diluted common share compared to $14.5 million or $0.15 per diluted common share in 2006. Net income includes net income from discontinued operations of $7.0 million after reflecting a $6.8 million gain on the sale of Hexcel's architectural business.

Analysts were expecting the company to post $0.15 in EPS on $307 million in sales, both of which were handily beaten. Guidance for 2007 is unchanged, which nitpickers could construe as a reduction of guidance for the remaining quarters given the beat in the first. Judging from the gain in the shares during and after normal trading hours yesterday, however, there appear to be few nitpickers.

The balance sheet looks solid and cash flows were negative due to seasonal factors.

Hexcel develops, manufactures and markets lightweight, high-performance structural materials, including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems, adhesives and composite structures, used in commercial aerospace, space and defense and industrial applications. It is a subcontractor for both Boeing (BA) and Airbus -- which helps insulate the company from market share shifts between the two.