Exhibit 99.1
Hexcel Reports 2007 First Quarter Results
STAMFORD, Conn.--(BUSINESS WIRE)--April 23, 2007--Hexcel
Corporation (NYSE: HXL):
First Quarter 2007 Highlights
-- Sales from continuing operations of $328.7 million up $27.5
million or 9.1% year-on-year (up $19.2 million or 6.2% in
constant currency)
-- Net income from continuing operations of $16.5 million ($0.17
per diluted share), a 17.9% increase year on year
-- Net income from discontinued operations of $7.0 million, or
$0.07 per diluted share, includes an after-tax gain of $6.8
million on the sale of the Company's Architectural business
See Statements of Operations and Reconciliation of GAAP and
Non-GAAP Measures (Table F) for profitability comparisons for the
quarter.
Hexcel Corporation (NYSE: 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.
Chief Executive Officer Comments
Mr. Berges commented, "The quarter was a good start to the year
for Hexcel despite the significant impact of the A380 delay. Space &
Defense revenues rebounded even more strongly than anticipated with
revenues up 16.6% (14.6% in constant currency). Commercial Aerospace
sales growth was in line with our expectations and reflected solid
growth from Boeing and their subcontractors, as well as from sales to
regional aircraft, engines and nacelle applications."
"We again demonstrated healthy gross margin leverage of 30% from
the year over year incremental sales, and expanded operating income
despite a $2 million increase in R&T for critical new program
qualifications. We still expect our portfolio actions, restructuring
program and increased carbon fiber capacity to contribute to good
margin expansion this year.
"We completed the sale of our Architectural business in France
during the quarter and received $25 million in gross cash proceeds. We
still target a conclusion on the remaining elements of the portfolio
review this quarter."
In closing, Mr. Berges noted, "Following our reorganization into a
single business we have made changes in the reporting of our operating
and market segments. In addition, in response to requests from our
investors and analysts, we are providing additional details of the
drivers of our segment performance as well as new aircraft program
information in this release. We hope this will be useful in
understanding both our performance and our prospects."
Operating Segments and Markets
-- With effect from January 1, 2007, Hexcel has revised its
operating segments to reflect its strategic and operational
realignment and focus on advanced structural materials. Hexcel
has eliminated its three former global business units and
consolidated all our composites related activities into a
single organization. The reinforcement product lines, for
which the Company is exploring its strategic alternatives,
including potential divestiture, are being managed as a
separate business. Hexcel will now report three operating
segments:
-- Composite Materials. The development, manufacture and sale
of advanced composite materials including carbon fiber,
reinforcements for composites, honeycomb and matrix
(prepregs and other polymer systems) products. The segment
is more capital intensive and typically has long product
development and qualification cycles. Operating income
margin for the first quarter was 15.4% compared to 15.0%
for the same quarter last year.
-- Engineered Products. The development and fabrication of
finished and semi-finished structures manufactured from
composite materials. This segment includes machined and
shaped honeycomb core, structural products for helicopter
blades and aircraft, finishing operations for products
from our Asian joint ventures as well as our new
AcoustiCap(TM) noise dampening system and our new HexMC(R)
parts product lines. This segment is more labor and
inventory intensive. In the near term, we expect an
increased level of spending on R&T and tooling in response
to the strong market acceptance of our new products in
this segment. Operating income margin for the quarter was
9.2%, down from 11.8% last year primarily due to increased
R&T spending on qualifications for the Boeing 787.
-- EBGI Reinforcements. This segment captures Hexcel's U.S.
operations related to its electronics, ballistics and
general industrial reinforcement product lines. This
business is being reported as a separate segment called
EBGI Reinforcements. The segment is characterized by high
material content, short term pricing and volume swings.
Operating income of 8.1% was up from 3.1% last year due to
the effects of restructuring activities and increased
sales of ballistic reinforcement fabrics.
-- In integrating its business operations, the Company has
reclassified certain of its reinforcement for composites
product sales between its market segments to reflect
improvements in the tracking of sales to market applications.
The comparisons of sales by market provided below and in Table
A reflect these reclassifications. Details of the revised
operating segments and the reclassified sales by market for
the calendar years of 2005 and 2006 have been provided in
Table B. Details for 2006 by calendar quarter have been posted
to the investor news section of Hexcel's web site.
Commercial Aerospace
-- Commercial aerospace sales grew for the quarter by 5.5% (3.3%
in constant currency). The growth during the quarter was led
by revenues to Boeing and their subcontractors, reflecting
increased aircraft production, growth in demand by aircraft
engine and nacelle manufacturers, as well as the new 787.
Sales to Boeing commercial aircraft have exceeded sales to
Airbus commercial aircraft for both of the last two quarters.
-- Sales to the A380 program were at the lowest quarterly level
in over two years. As a result, total sales to Airbus and its
subcontractors were lower in the first quarter of 2007 than in
the first quarter of 2006. The A380 delay is expected to
effect year-on-year revenue comparisons for much of 2007.
However, we expect other Airbus build rate increases and the
start of development materials for the A350 XWB to mitigate
the impact.
-- The reclassification of certain reinforcement for composite
revenues resulted in the movement of about $17 million of
commercial aerospace sales to industrial and space & defense
markets for first quarter of 2006. This reclassification did
not impact our previously reported Airbus and Boeing
commercial aircraft sales. The remaining portion of our
commercial aerospace sales, which includes sales to regional
and business aircraft, represented 25% of the segment and saw
mid-teen growth in the quarter.
Industrial
-- Industrial sales were up 9.9% for the quarter (5.6% constant
currency) led by growth in revenues from wind energy
applications and increased demand for ballistic reinforcement
fabrics used in the production of soft body armor.
-- Revenues from the EBGI Reinforcements segment are related to
the Industrial market. EBGI sales were 12.7% higher compared
to the first quarter of 2006, reflecting the benefit of
increased ballistics sales.
-- Sales from auto, recreation and other industrial markets were
slightly lower in the first quarter of 2007 compared to last
year.
Space & Defense
-- Space & Defense sales for the quarter were up 16.6% over last
year (14.6% in constant currency) Demand from military fixed
wing and rotor craft applications was strong, and the
inventory corrections noted last year appear to have been
completed.
Operations
-- Gross margins increased to 23.8% in the quarter compared to
23.2% in the first quarter of 2006. The gross margin on the
incremental sales of $27.5 million compared to the first
quarter of 2006 was 30%, consistent with prior trends.
-- As previously announced, the Company completed its expansion
of a precursor line and the first of two new carbon fiber
lines ahead of schedule. Full design capability has now been
demonstrated and sales of production essentially offset the
initial startup costs. We expect to reach full rate production
by the end of the second quarter and have also begun the
aerospace qualification process.
-- SG&A expenditures in the quarter of $33.4 million were $3.1
million higher than the first quarter of 2006. Non-cash stock
compensation expense was up $1.5 million for the quarter but
is expected to be in line with our guidance for the full year
of 2007. SG&A expenses for the quarter also included $0.3
million of transaction costs that are being expensed as
incurred related to our divestiture activities.
-- R&T spending increased $2.0 million in the quarter reflecting
expenditures related to new product development and
qualification efforts for new aircraft programs. Most of the
increase was within our Engineered Products operating segment
as a result of certification testing of Boeing 787 components
made from our new HexMC system.
-- Operating income for the quarter, excluding business
consolidation and restructuring expense and transaction costs
related to the divestitures, was $35.6 million or 10.8% of
sales (see Table F).
Program Activities
-- Boeing 787 revenue potential for Hexcel is expected to average
between $1.0 to $1.3 million per aircraft on early versions of
the aircraft. The engine selected by the ordering airline will
influence the revenue we generate from each aircraft sale -
the GE engine offering has a significantly higher composite
content. An extensive range of Hexcel products such as
prepregs, specialty reinforcements, honeycomb core, resin
systems, structural components, including HexMC(R) products,
have been selected by a diverse group of suppliers to the
aircraft. Active weight reduction programs and new products
provide the opportunity for increased participation on future
variants of the aircraft. At anticipated full production
rates, Hexcel annual revenues for the Boeing 787 are likely to
approximate the annual revenues Hexcel will realize from the
A380.
-- Airbus A350 XWB carbon fiber composite system selection
process is well underway given the long cycle for primary
structure development. The final selection, manufacturing
trials, engineering testing, freezing of the specification
definition and qualification activities may take many months
and may involve competing products. We expect development
trial materials will result in Hexcel sales this year.
Income Taxes
-- As of January 1, 2007, the Company adopted FIN 48, Accounting
for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109, Accounting for Income Taxes.
-- The Company's effective income tax rate for the first quarter
2007 was 41.5%, as compared to 39.4% for the first quarter of
2006. The increase in the effective income tax rate was
primarily as a result of the adoption of FIN 48. It is
expected that FIN 48 will increase the volatility of the
effective tax rate.
Total Debt, Net of Cash
-- Total debt, net of cash increased by $1.5 million in the
quarter to $388.1 million as of March 31, 2007. During the
quarter, the Company received $25.0 in gross cash proceeds
from the sale of its Architectural business.
-- Inventories as of March 31, 2007 grew by $17 million in
constant currency compared to December 31, 2006 and $31
million in constant currency compared to March 31, 2006.
-- The growth in inventories has been driven by a number of
factors, including building tooling to mold finished parts
using the new HexMC(R) materials and processes for the 787,
bridge inventory for the closure of the Livermore, CA plant,
increases in aircraft production and normal seasonality.
Despite these requirements for additional inventory, Hexcel
continues to seek opportunities to improve its inventory
turnover.
Portfolio Review Update
-- On February 28, 2007, Hexcel completed the sale of its
Architectural business and recorded an after-tax gain of $6.8
million or about $0.07 per diluted common share.
-- The remaining non-core assets under review and subject to
potential divestiture are the Company's electronics,
ballistics and general industrial reinforcement product sales
now reported under the EBGI Reinforcements operating segment.
The external revenues for this segment in the first quarter of
2007 were $46.1 million compared to $40.9 million for the
first quarter of 2006.
Guidance
-- See Hexcel's press release dated December 12, 2006 for details
of our guidance for 2007.
Hexcel will host a conference call at 10:00 A.M. ET, tomorrow,
April 24, 2007 to discuss the first quarter results and respond to
questions. The telephone number for the conference call is (913)
312-1270 and the confirmation code is 4929178. The call will be
simultaneously hosted on Hexcel's web site at
www.hexcel.com/investors/index.html. Replays of the call will be
available on the web site for approximately three days.
Hexcel Corporation is a leading advanced structural materials
company. It 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.
Disclaimer on Forward Looking Statements
This press release contains statements that are forward looking,
including statements relating to anticipated trends in constant
currency for the market segments we serve (including growth in
commercial aerospace revenues, the estimates and expectations based on
aircraft production rates made publicly available by Boeing and
Airbus, the revenues we may generate from a aircraft model or program,
the impact of the push-out in A380 deliveries, the outlook for space &
defense revenues including rotorcraft applications and the trend in
ballistic revenues from military soft body armor applications), our
focus on maintaining and improving margins and the scope and timing of
potential divestitures. Actual results may differ materially from the
results anticipated in the forward looking statements due to a variety
of factors, including but not limited to changing market conditions,
increased competition, product mix, inability to achieve planned
manufacturing improvements and cost reductions, conditions in the
financial markets and changes in currency exchange rates. Additional
risk factors are described in our filings with the SEC. We do not
undertake an obligation to update our forward-looking statements to
reflect future events.
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
- ----------------------------------------------------------------------
Unaudited
---------------
Quarter Ended
March 31,
(In millions, except per share data) 2007 2006
- ----------------------------------------------------------------------
Net sales $328.7 $301.2
Cost of sales 250.4 231.2
- ----------------------------------------------------------------------
Gross margin 78.3 70.0
% Gross Margin 23.8% 23.2%
Selling, general and administrative expenses (a) 33.4 30.3
Research and technology expenses 9.6 7.6
Business consolidation and restructuring expenses 1.6 3.0
- ----------------------------------------------------------------------
Operating income 33.7 29.1
Interest expense 6.8 7.8
Non-operating expense, net (b) 0.4 -
- ----------------------------------------------------------------------
Income from continuing operations before income
taxes, equity in earnings and discontinued
operations 26.5 21.3
Provision for income taxes 11.0 8.4
- ----------------------------------------------------------------------
Income from continuing operations before equity in
earnings and discontinued operations 15.5 12.9
Equity in earnings of affiliated companies 1.0 1.1
- ----------------------------------------------------------------------
Net income from continuing operations 16.5 14.0
Income from discontinued operations, net of tax 0.2 0.5
Gain on sale of discontinued operations, net of tax 6.8 -
- ----------------------------------------------------------------------
Net income $ 23.5 $ 14.5
- ----------------------------------------------------------------------
Basic net income per common share:
Continuing operations $ 0.18 $ 0.15
Discontinued operations 0.07 0.01
- ----------------------------------------------------------------------
Basic net income per common share $ 0.25 $ 0.16
Diluted net income per common share:
Continuing operations $ 0.17 $ 0.14
Discontinued operations 0.07 0.01
- ----------------------------------------------------------------------
Diluted net income per common share $ 0.24 $ 0.15
Weighted-average common shares:
Basic 94.0 92.9
Diluted 96.1 95.1
- ----------------------------------------------------------------------
(a) 2007 includes $0.3 million of transaction costs associated with
divestiture activities. 2006 includes $1.2 million of transaction
costs associated with the March 2006 secondary offering.
(b) Non-operating expense is the accelerated amortization of deferred
financing costs as a result of prepayments of the Company's bank term
loan with the net proceeds from asset sales.
Hexcel Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
- ----------------------------------------------------------------------
Unaudited
--------------------------
March 31, December 31,
(In millions, except per share data) 2007 2006
- ----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 33.5 $ 25.7
Accounts receivable, net 202.3 181.5
Inventories, net 189.5 171.5
Prepaid expenses and other current assets
(a) 29.5 36.6
Assets of discontinued operations - 10.5
- ----------------------------------------------------------------------
Total current assets 454.8 425.8
Property, plant and equipment 825.8 834.7
Less accumulated depreciation (449.0) (464.3)
- ----------------------------------------------------------------------
Net property, plant and equipment 376.8 370.4
Goodwill and other intangibles, net 76.0 75.9
Investments in affiliated companies 14.2 11.1
Deferred tax assets 103.1 101.5
Other assets 20.8 22.3
Assets of discontinued operations - 5.9
- ----------------------------------------------------------------------
Total assets $1,045.7 $1,012.9
- ----------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities of
capital lease obligations $ 2.2 $ 2.5
Accounts payable 98.1 104.0
Accrued liabilities (b) (c) 111.0 106.6
Liabilities of discontinued operations - 6.2
- ----------------------------------------------------------------------
Total current liabilities 211.3 219.3
Long-term notes payable and capital lease
obligations 419.4 409.8
Other non-current liabilities 82.0 80.8
Liabilities of discontinued operations - 1.4
- ----------------------------------------------------------------------
Total liabilities 712.7 711.3
Stockholders' equity:
Preferred stock, no par value, 20.0 shares
authorized, no shares issued or outstanding - -
Common stock, $0.01 par value, 200.0 shares
authorized, 96.0 shares issued at March 31,
2007, 95.4 shares issued at December 31,
2006 1.0 1.0
Additional paid-in capital 489.4 479.3
Accumulated deficit (135.3) (157.1)
Accumulated other comprehensive loss (0.6) (1.8)
- ----------------------------------------------------------------------
354.5 321.4
Less - Treasury stock, at cost, 1.8 shares
at March 31, 2007 and 1.7 shares at
December 31, 2006 (21.5) (19.8)
- ----------------------------------------------------------------------
Total stockholders' equity 333.0 301.6
- ----------------------------------------------------------------------
Total liabilities and stockholders' equity $1,045.7 $1,012.9
- ----------------------------------------------------------------------
(a) Included in prepaid expenses and other current assets as of March
31, 2007 are deferred tax assets of $0.7 million related to
discontinued operations.
(b) Included in accrued liabilities as of March 31, 2007 are retained
liabilities of $6.8 million related to discontinued operations.
(c) Effective January 1, 2007, the Company adopted FIN 48. Recorded
accrued liabilities related to the adoption of FIN 48 for uncertain
tax positions, including interest, were $16.1 million.
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
- ----------------------------------------------------------------------
Unaudited
---------------
Quarter Ended
March 31,
(In millions) 2007 2006
- ----------------------------------------------------------------------
Cash flows from operating activities
Net income $ 23.5 $ 14.5
Income from discontinued operations, net of tax (7.0) (0.5)
---------------
Net income from continuing operations 16.5 14.0
Reconciliation to net cash provided by operating
activities:
Depreciation and amortization 10.8 11.3
Amortization of debt discount and deferred financing
costs 0.4 0.4
Deferred income taxes (benefit), including reversal
of valuation allowance 6.4 5.5
Business consolidation and restructuring expenses 1.6 3.0
Business consolidation and restructuring payments (2.6) (1.1)
Equity in earnings of affiliated companies (1.0) (1.1)
Dividends from affiliated companies - 0.8
Share-based compensation 4.9 3.4
Loss on early retirement of debt 0.4 -
Changes in assets and liabilities:
Increase in accounts receivable (19.4) (35.2)
Increase in inventories (17.1) (4.1)
Decrease in prepaid/other current assets 1.7 0.5
Decrease in accounts payable/accrued liabilities (10.7) (1.6)
Changes in other non-current assets and long-term
liabilities (0.8) (4.8)
- ----------------------------------------------------------------------
Net cash used for operating activities (8.9) (9.0)
- ----------------------------------------------------------------------
Cash flows from investing activities
Capital expenditures (16.3) (22.3)
Deposits for capital purchases - (1.8)
Proceeds from sale of discontinued operations 25.0 -
Investment in affiliated companies (2.0) -
- ----------------------------------------------------------------------
Net cash used for investing activities 6.7 (24.1)
- ----------------------------------------------------------------------
Cash flows from financing activities
Proceeds from senior secured credit facility -
revolver, net 45.0 30.0
Repayments of senior secured credit facility - term
B loan (35.8) -
Proceeds from capital lease obligations and other
debt, net - 2.9
Activity under stock plans 3.2 3.6
- ----------------------------------------------------------------------
Net cash provided by financing activities 12.4 36.5
- ----------------------------------------------------------------------
Net cash (used by) provided by operating activities,
discontinued operations (2.9) 0.2
Net cash used for financing activities, discontinued
operations - (0.1)
Effect of exchange rate changes on cash and cash
equivalents 0.5 (0.6)
- ----------------------------------------------------------------------
Net increase in cash and cash equivalents 7.8 2.9
Cash and cash equivalents at beginning of period 25.7 21.0
- ----------------------------------------------------------------------
Cash and cash equivalents at end of period $ 33.5 $ 23.9
- ----------------------------------------------------------------------
Supplemental Data:
Cash paid during the year for interest $ 11.0 $ 10.5
Cash paid during the year for taxes $ 2.6 $ 2.4
- ----------------------------------------------------------------------
Net Sales to Third-Party Customers by Market
Segment
Quarters Ended March 31, 2007 and 2006 (Unaudited) Table A
- ----------------------------------------------------------------------
(In millions) As Reported Constant Currency
(a)
- ----------------------------------------------------------------------
FX
B/(W) Effect B/(W)
Market Segment 2007 2006 % (b) 2006 %
- ----------------------------------------------------------------------
Commercial Aerospace $144.0 $136.5 5.5 $2.9 $139.4 3.3
Industrial 120.2 109.4 9.9 4.4 113.8 5.6
Space & Defense 64.5 55.3 16.6 1.0 56.3 14.6
- ----------------------------------------------------------------------
Consolidated Total $328.7 $301.2 9.1 $8.3 $309.5 6.2
- ----------------------------------------------------------------------
Consolidated % of Net Sales % % %
- ----------------------------------------------------------------------
Commercial Aerospace 43.8 45.3 45.0
Industrial 36.6 36.3 36.8
Space & Defense 19.6 18.4 18.2
- ----------------------------------------------------------------------
Consolidated Total 100.0 100.0 100.0
- ----------------------------------------------------------------------
(a) To assist in the interpretation of our net sales trend, total net
sales and sales by market for the quarter ended March 31, 2006 have
been estimated using the same U.S. dollar, British pound and Euro
exchange rates as applied for the respective period in 2007 and are
referred to as "constant currency" sales.
(b) FX effect is the estimated impact on "as reported" net sales due
to changes in foreign currency exchange rates.
Years Ended December 31, 2006 and 2005 (Unaudited) Table B
- ----------------------------------------------------------------------
(In millions) As Reported
- ----------------------------------------------------------------------
Market Segment B/(W)
2006 2005 %
- ----------------------------------------------------------------------
Commercial Aerospace $547.3 $470.5 16.3
Industrial 423.7 449.1 (5.7)
Space & Defense 222.1 219.9 1.0
- ----------------------------------------------------------------------
Consolidated Total $1,193.1 $1,139.5 4.7
- ----------------------------------------------------------------------
Consolidated % of Net Sales % %
- ----------------------------------------------------------------------
Commercial Aerospace 45.9 41.3
Industrial 35.5 39.4
Space & Defense 18.6 19.3
- ----------------------------------------------------------------------
Consolidated Total 100.0 100.0
- ----------------------------------------------------------------------
The Company has reclassified certain of its reinforcement product
sales between its market segments to reflect improvements in the
tracking of sales to market applications. The comparison of
reclassified sales by market is provided above.
Hexcel (Unaudited) Table C
Corporation and
Subsidiaries
Segment Data
- ----------------- ---------- ---------- ----------- --------- --------
(In millions) Composite Engineered EBGI (b) Corporate Total
Materials Products & Other
(a) (c)
- ----------------- ---------- ---------- ----------- --------- --------
First Quarter
2007
- ----------------- ---------- ---------- ----------- --------- --------
Net sales to
external
customers $230.1 $52.5 $46.1 $- $328.7
Intersegment
sales 9.9 0.7 0.8 (11.4) -
- ----------------- ---------- ---------- ----------- --------- --------
Total sales 240.0 53.2 46.9 (11.4) 328.7
Operating
income (loss) 36.9 4.9 3.8 (11.9) 33.7
% Operating
margin 15.4% 9.2% 8.1% 10.3%
Depreciation
and
amortization 8.8 0.9 1.0 0.1 10.8
Business
consolidation
and
restructuring
expenses 1.3 (0.2) 0.5 - 1.6
Stock-based
compensation
expense 1.7 0.3 0.1 2.8 4.9
Capital
expenditures
and deposits
(d) 14.3 0.5 0.7 0.8 16.3
- ----------------- ---------- ---------- ----------- --------- --------
First Quarter
2006
- ----------------- ---------- ---------- ----------- --------- --------
Net sales to
external
customers $213.6 $46.7 $40.9 $- $301.2
Intersegment
sales 7.1 (0.2) 0.4 (7.3) -
- ----------------- ---------- ---------- ----------- --------- --------
Total sales 220.7 46.5 41.3 (7.3) 301.2
Operating
income (loss) 33.0 5.5 1.3 (10.7) 29.1
% Operating
margin 15.0% 11.8% 3.1% 9.7%
Depreciation 8.3 0.9 2.2 - 11.4
Business
consolidation
and
restructuring
expenses 0.9 0.1 2.1 (0.1) 3.0
Stock-based
compensation
expense 1.1 0.2 0.4 1.7 3.4
Capital
expenditures
and deposits
(d) 22.7 0.2 - 1.2 24.1
- ----------------- ---------- ---------- ----------- --------- --------
(a) The Company has concluded it will likely retain the manufacture of
electronic and general industrial reinforcement fabrics at its
European facilities and therefore has classified such revenues in its
Composite Materials segment.
(b) EBGI Reinforcements segment is the U.S. operations related to the
electronic, ballistics, and general industrial reinforcement product
lines.
(c) We do not allocate corporate expenses to the operating segments.
(d) Includes deposits for capital purchases.
Hexcel Corporation and Subsidiaries (Unaudited)Table D
Schedule of Net Income Per Common Share
- ----------------------------------------------------------------------
Quarter Ended
March 31,
(In millions, except per share data) 2007 2006
- ----------------------------------------------------------------------
Basic net income per common share:
Net income $23.5 $14.5
Weighted average common shares outstanding 94.0 92.9
Basic net income per common share (a) $0.25 $0.16
- ----------------------------------------------------------------------
Diluted net income per common share:
Net income $23.5 $14.5
Weighted average common shares outstanding -
Basic 94.0 92.9
Plus incremental shares from assumed conversions:
Restricted stock units 0.5 0.3
Stock options 1.6 1.9
- ----------------------------------------------------------------------
Weighted average common shares outstanding-Dilutive 96.1 95.1
- ----------------------------------------------------------------------
Diluted net income per common share (b) $0.24 $0.15
- ----------------------------------------------------------------------
(a) Includes basic net income per common share from discontinued
operations of $0.07 and $0.01 for the quarters ended March 31, 2007
and 2006, respectively.
(b) Includes diluted net income per common share from discontinued
operations of $0.07 and $0.01 for the quarters ended March 31, 2007
and 2006, respectively.
Hexcel Corporation and Subsidiaries (Unaudited) Table E
Schedule of Interest Expense
- ----------------------------------------------------------------------
Quarter Ended
March 31,
(In millions) 2007 2006
- ----------------------------------------------------------------------
Interest on debt instruments $6.6 $7.3
Capitalized interest (a) (0.7) (0.3)
Banking, commitment and other fees (b) 0.5 0.4
Amortization of financing costs and discounts
(non-cash) 0.4 0.4
- ----------------------------------------------------------------------
Interest Expense $6.8 $7.8
- ----------------------------------------------------------------------
(a) Interest expense capitalized in connection with our carbon fiber
expansion program.
(b) Includes interest of $0.2 related to uncertain tax positions.
Hexcel Corporation and Subsidiaries (Unaudited)Table F
Reconciliation of GAAP and Non-GAAP Measures
- ----------------------------------------------------------------------
Quarter Ended
March 31,
(In millions) 2007 2006
- ----------------------------------------------------------------------
GAAP operating income from continuing operations $33.7 $29.1
- - Business consolidation and restructuring expense 1.6 3.0
- - Expenses associated with divestiture activities 0.3 -
- - Secondary offering transaction costs - 1.2
- ----------------------------------------------------------------------
Non-GAAP operating income from continuing operations 35.6 33.3
- ----------------------------------------------------------------------
Includes:
- - Stock compensation expense $4.9 $3.4
- ----------------------------------------------------------------------
Management believes that operating income and net income before
special items, which are non-GAAP measurements, are meaningful to
investors because they provide a view of Hexcel with respect to
ongoing operating results. Special items represent significant charges
or credits that are important to an understanding of the Hexcel's
overall operating results in the periods presented. In addition,
management believes that total debt, net of cash, which is also a
non-GAAP measure, is an important measure of the Hexcel's liquidity.
Such non-GAAP measurements are not recognized in accordance with
generally accepted accounting principles and should not be viewed as
an alternative to GAAP measures of performance.
Hexcel Corporation and Subsidiaries (Unaudited) Table G
Schedule of Total Debt, Net of Cash
- ----------------------------------------------------------------------
(In millions) March 31, December March
2007 30, 31,
2006 2006
- ----------------------------------------------------------------------
Notes payable and current maturities of
capital lease obligations $2.2 $2.5 $6.5
Long-term notes payable and capital lease
obligations 419.4 409.8 446.3
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Total Debt 421.6 412.3 452.8
Cash and cash equivalents 33.5 25.7 23.9
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Total debt, net of cash $388.1 $386.6 $428.9
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CONTACT: Hexcel Corporation
Investors:
Stephen C. Forsyth, 203-969-0666 ext. 425
stephen.forsyth@hexcel.com
or
Media:
Michael Bacal, 203-969-0666 ext. 426
michael.bacal@hexcel.com