HXL - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Emily, and I will be your conference operator today. At this time I would like to welcome everyone to the Hexcel Q1 2019 Earnings Call. [Operator Instructions] Patrick Winterlich, Chief Financial Officer, you may begin your conference.

Patrick Winterlich

Thank you. everyone. morning Good Corporation's Hexcel XXXX Conference Earnings Welcome First Call. to Quarter

me Before cover let formalities. the beginning

future course want of the of I estimates today. provisions release. variety statements during constitute Reform filings or statements factors any Harbor page everyone Act detailed a call actual this by will the our cause from related statements results night's A forward-looking call. judgments to could forward-looking may in the assumptions Private caused contained make Litigation in call Relations this may statements Such First of website. involve be materially we differ remind news uncertainties of to XXXX of and last to SEC outcomes on within that that about available forward-looking Investor this are and Certain meaning of replay the the our company's Safe Securities factors the

by this copyrighted recorded Lastly and cannot permission. express without is It recorded is material. call or our rebroadcast being Hexcel Corporation be

The is on Nick first in Your is that of XXXX With President to request. constitutes our President; news Investor consent our call our issued results Kurt your today Vice of Relations. call release CEO, the Goddard our me and to Chairman, Stanage review this and detailed purpose quarter participation yesterday.

Now call to let the turn me Nick. over

Nick Stanage

we and with we XXXX and year especially our strongest for with quarters per you strengthens confidence our us in joining you as reaffirm share. as shared for and everyone, the that our January. to history thank was It momentum earnings year and you. full It results guidance Good first a our share on one in morning our quarter sales Thanks terrific builds Patrick. we start of the

EPS of in $XXX were delivered margin of first was over and year-over-year and QX Diluted higher XX% XXXX. income operating to results provide of up and of which let an XX.X% income was million about an in year quarter almost details compared the $X.XX XX.X% XX% the We numbers. in will the then highlight of increase XX.X% operating some constant million in some last XXXX. $XXX up quarter on is resulted First the Patrick currency. Sales first quarter me which than XX.X%

spend I me us markets, Before helped few about deliver that our on each these shareholders to results time of quarter. let our factors this talk a

are successful our are growth of Yet First, qualified and are way the XXXX our integrations now newest of and many the Morocco we from our some of us all employees that assets none strong of to contributing performance. our influenced results that benefiting our us in now factors from of at acquisitions headwinds we these Moreover, Roussillon the do. and markets. experiencing challenged and in behind our are

lead say You've leverage am to when before their team and truly I to well will to teams to in other's heard how years Employee proud commitment margin ahead. drive impress me efficiencies productivity of it enhanced cost and operational excellence. through me throughout the improvements, our innovations as to and business drive continue and excellence strengths each quality as months generate the that they savings comes

XXXMAX is are program. tragedies two crashes to Flight deepest is everyone's in the lives XXX. something extend the of on talk loss are We us here Like absolute them These and on believe those intend stay friends capable more their of supply to mind the base trust closely supplier, aligned our that pause me air put it monitoring in and investigation that were grieving including Flight our on needs XXX ones travel to following and important with heavily is about loss entire safety clear safe. Ethiopian who we strategic the is that believe make of Let industry XXX that do its other families who we and because the who than and Hexcel to nothing the Airlines we news. the Lion those to weigh program course Air of that. sympathies board involving every and We that of Boeing Boeing loved just

our As supply Boeing. materials suppliers nacelles and going to Tier in a ahead. flexible to structures ours MAX the that about chain you one-third have agile we sell respond of already staying their including any to profile and for will shipset while know, to to more changes are in months of XXXMAX Boeing customers one broad $XXX,XXX and we demand includes we which requirements engines, than great for continue of suppliers meet the sales

we as would process prepared up. we support expect is throughout as responding period to you a to running range sure a service demand As multiple This as scenarios make ramp to of aircraft's and we return are supply potential anticipated to complicated signals. the uncertain well XXXMAX this the are are support chain

For hand example per starting announced some rate continue publicly rate decrease temporary per a month Boeing at XX XX plan has they a now. producing on planes that while to to are suppliers key month of stating the other

all the impact reductions meet announced are the continue and the repurpose in at offsetting we materials today We'll from for of of XXXX guidance broader market other the our And reiterate we seen to based to we're any on be short-term that our see time potential this no supply material us. XXXMAX annual taking vast little take As throughout before the rate manufacturing have majority we for Boeing's of after to strength demand very demands capacities able made we changes Boeing just to will chain in have we into there confident any in revenues account and advantage commercial to if point XXXMAX if opportunities. impact see reduction.

Other with increase the up body Strike a quarter Sales programs generate regional to reflected Joint X% were X.X% Commercial QX. particularly Space X.X% me and let Boeing by strong currency. in continued and AXXXneo was which Aerospace with markets. XXXMAX and narrow we strength XX.X% experienced Bulk wide Airbus rotorcraft. XXX sales Commercial the year's in quarter the XX.X% program In the in in our to strong which military or includes of $XXX continued $XXX versus last jets AXXX and in an Now to increase of for turn were continued Aerospace Defense reflecting along or was QX body programs constant grow first business currency. primarily Fighter driven constant & of and in F-XX sales. million an Boeing million strong primary three sales Both

that for that quarter revenue our and technologies sales to first our of I'm ownership. report this business excellent was results addition and the from In first delivered quarter our well the pleased performed includes of acquisition

to were constant sales in turning XX.X% currency. for Finally million QX $XX which Industrial or XX.X% an was of increase

from We XX% now in energy wind more continue which our strong benefit of sales. Industrial to represents demand than

wind began blades. sales fact late In demand not currency also in XXXX were reflects a up for increasing up constant in that which for but only ramp turbine wind materials XX% composite

Arkema I March the joint few it and share laboratory a will a like with this open announced In we to Before Patrick I'd research month. back that quarter. highlights development from turn to

well. to evaluation strategic as alliance leading ago along with and we for the year Hexcel year. remember composite aerospace You that a both alliance a anticipate for supplying announced growing sector innovators that later customers team moving Arkema are we about and this products very is are market thermoplastic thermoplastics the solutions excited develop may and our in aerospace we for to

Sikorsky in Washington, teams is delivery, strong cost our of recently for how by Salt focus Kent, to operational who our congratulations impacting Next Utah Pennsylvania status is example Pottsville, our Lake and This on in XXXX best-in-class, supplier performance with elite City are our quality. achieving customers. excellence positively recognized and another on-time

let a mentioned of Finally, ARC yet say more. Technologies, I've already acquisition me the little

business we then remember, announced XXXX and acquire intent January. to will you our the in deal the close As in

high team's will XXX In the this continuing month Space and summary, this ramps our this business which creation Boeing at I smooth year. results a XX together shareholders. Defense AXXX demonstrate believe Aerospace that work and are generation expect ensure Our & without evidence to process our the the is Commercial are we quarter year closely results and growth going XX well. by disrupting we value the in integration per single-digit growth, for to expect cash In driven to

and to we flexible and ability challenges And and strong we of remain year our contribute again to into in another will and entry in our around to remain the want reassure XXXX I Boeing in developments is as on for extremely you that service expect the confident its to potential see our Boeing new guidance. to program vigilant XXXX. XXXMAX begin financial deliver XXXX to address the we response the growth growth it approaches We AXXXneo our to expected XXXX

and We and supported for expect year growth in F-XX by our Defense Space & addition strong double-digit military for XXXX anticipate strong to growth the market sales we double-digit rotorcraft Technologies' wind portfolio. by another XXXX sales products ARC programs with of in growth And Industrial in of double-digit energy. the driven

our this again say deliver value I of they penetration in and positions me quarter Let our to Hexcel be and that performance to secular shareholders. couldn't leading the any on with has we future opportunities and how our team by executed the proud investing by objectives by by and delivering are operational on staying And achieving commitments to strong customers. focusing backlogs solid growth. in disciplined continually and market excellence

discuss quarter's Now let over to me Patrick, of turn financial the more details. the call to

Patrick Winterlich

Nick. you, Thank

First year-over-year. million XX.X% XXXX quarter of increase $XXX an sales totaled

to an Our million was for will as as quarter of diluted these constant was impact first XXXX. the in free year-over-year Free XXXX. our quarter markets $XX currency. provide the flow This usual use sales effects of EPS quarter $X.XX the first first the of now compared of and the and we seasonal growth a in for compares working capital are of I XX.X% comparisons generation quarter million first increase of expected. cash a $X of reflecting to flow cash review

and influence our currency not a in As intuitive. reminder this may The sales reported be of majority is our denominated impact some results dollars. movements of

mix base cost and significant as of dollars, in a a pounds Europe. euros presence our is we have manufacturing British However

Accordingly to the euro also translate higher a higher British in dollar costs net margins. a prefer our translate but to headwind a when dollar. result, the strong dollar As our weakens sales and pound weak against a we resulting the

hedging layers smoothing to In we impact currency rate that XX-quarter horizon terms currency in fluctuations. a disciplined on hedging a employ hedges over of leading a strategy

Commercial to sales. turning performance, XX% market to represented & Space Commercial million compared Aerospace X.X% represented sales of XXXX. Defense the $XXX first increased our first of XX% Now first of quarter total quarter Aerospace sales. of quarter

included XX.X% is material Technologies quarter period the XXX $XX we to ARC from revenues Hexcel driven XX.X% XXXX. Activity first first of of Note wind acquired & early The sales. on million first by XX% and increased was period. increase results the was different than which which compared XX% same XXXX the million totaled more the energy in increasing the that, $XXX platforms. strength XXXX. prior-year totaled quarter Space broad-based in For quarter XXXX Defense sales sales Industrial in year-over-year. comprised Industrial and

strong basis comparative year-over-year XX.X% the of driving first of continue XXXX. compared although XXXX. adoption in this margin of quarter sales magnitude consolidated became wind latest XXXX to lessen the forecast XX.X% for growth We to growth the wind half quarter the a significant basis was first more On second during of growth the as gross turbines will the a energy generation in on in

with execution solid action higher our to Our $X.X to business benefits prior-year period reflects due of increased some first the on sales. to depreciation of year-over-year obsolete XXXX the by in quarter improvement a depreciation capital leveraging the continued expense million Total compared by combined one-time the investment accelerate supported tooling.

continue with increased up in level the of first one-time this action of increase taken quarterly depreciation we $X to $XX million, a guidance excluding to expense the quarter. the XXXX or annual million in roughly forecast Our step

general first administrative the and For selling expenses quarter increased year-over-year. X.X%

of X.X% to the X.X% expenses general sales quarter and $X.X of Research of sales the compared first administrative million expenses leverage selling and represented technology total the for year-over-year. and continue growth benefits total XXXX of XXXX. in quarter or of X% increased We to first

as enhancing to continue well invest both as processes in that We supports and for internal technologies operations innovation new our existing customers. for and products

Products the impact or to of XXXX. million or for the due our income For rates XXXX approximately of as The sales of favorable the margin total margin segment first margin our operating quarter year-over-year as The to an and which and compared was core first engineered of sales comprised increased Engineered hedging is in program. first represented being XX.X% income in sales Products currency reported generated structures quarter XXXX a operating prior-year represented of Note of quarter business million sales quarter Technologies segment. XX% is recent of is Materials XX.X% our XX.X% of generated an by for margin XX% XX Composite the $XX.X basis to for the of period. XX.X% of $XXX.X a first first segment operating to compared to within ARC XX.X% XXXX. quarter Engineered acquisition the XX.X% exchange compared of of The the XX.X% points of income and total

composite first operating requires The strong the a level quarter segment material return While for XXXX Products XX.X%. on tax the much invested of capital. of was is investment margin lower Engineered than rate the effective lower generating

support in capital for million to during on $XX in quarter sales represented quarter first adding the schedule free the accrual flow growth the receivable fiber of quarter for and use of rate which an XXXX Working facility negative We working increase Capital a Decatur are forecast million majority increased leading basis. continue post-XXXX we of XXXX to our the to of million remaining cash is growth. to $XX.X $XX.X first Accounts tax the compared meet PAN $XX.X capital. of underlying million. the the XXXX Construction to of carbon additional in quarters XXXX. effective strong forecasted at in continuing an a lines first cash and XX% were on Alabama expenditures of

the quarter acquisition leverage a of debt target end At ratio was to ratio first XXXX and the to X.X the between financing of times reflecting increase ARC X.X EBITDA gross for the times. continuing Technologies. our January X with of are times leverage of XXXX We the

We We quarter X and expect share of common first to target our next return million $XX stock repurchase of million program. the repurchased times less of within quarters. approximately to our the under have than $XXX during couple remaining XXXX range

investing capital of to than and greater through remain returning targeted Our by allocation stock to buybacks. we and and followed priorities be organic to shareholders income growth disciplined M&A in continue net committed dividends XX% our

stated year is As our guidance reaffirmed. Nick full XXXX

be forecasted of is the to relatively forecasted expect the second the and first EPS in half adjusted and that, the to turn the of years prior to second free Nick. cash We expected compared stronger flow whereas free XXXX first let flow the with me same balanced back sales the cash relation profile half diluted have in half to as year. call to With

Nick Stanage

and staying we By control demand costs excellence customer with and forefront to Thanks full Patrick. strong aligned while track year keeping are our on a deliver the under quarter guidance. we delivered at operational first

work develop our composites position program continuously advanced We to growth. benefit and to products well continued adoption our aircraft internal efforts and ups from demand ourselves and strong of innovative ramp continue as from secular more for as processes efficiently improve new

markets Our strong continued growth expected. with long-term are

opportunities ongoing of while and excellence innovation take to throughout to grow results shareholder advantage focus be every sustainable achieve continuing strong operational and to will financial create to Our XXXX value. drive and

any will to to XXXMAX respond decisive with headwinds impacts. mitigate actions any Boeing the We negative including

Finally of to we join next Day. you forward our several us month look Investor for having

the take by their we For providing respective of those our ready join via not us and presentations morning areas. day wrap your today. midterm share several and our guidance. leaders Thank growth webcast innovation are are person tour for expectations time perspectives again that growth questions will we up our our of now. and who in you to we our a outlining Emily, you to of joining in a on you'll hear hope After us

you. we'll to turn it So, over

Operator

Gautam the and line Cowen of [Operator Khanna with first Your question Company. from Instructions] comes

line open. is Your

Gautam Khanna

if so way could wondering if how suppliers could ultimate risk aircraft time? down to provide just the Any - there sort destock split we supply - to get is it lead perspective closed XXXMAX maybe close any it some how the of a of into chain can supply supplies sense was any Hexcel that you is on versus you longer I many surface. into what much where for delivered sort and road delivery that it delivery different diverse

Nick Stanage

chain. Xs to and have scheduling what even their at engine materials respect production for further keep shipping basically that's down chain the to you and program. Yes. said and is to And assembly their to having various the in What nacelles and supply to which builds like multiple then intent AXXX. it to Certainly supply airframe obviously publicly for the the the that, lead the air but MAX is not to ship sites plants on for at and only is we've XXXMAX frame. But nothing products mind matrix others components shipped we're seen We we we support the engines, schedule. follow and directly, under it's sub-components still the our know time for Tier sites multiple timing least is Boeing to Boeing subassemblies the ship for on with being Boeing the

we the was So knows came to per as to ramp the we year, month into everyone as during the XX. at and year about intent were XX up

The operate. a and supply was and chain there continued grounding to accident second the happened

and any behind. As been our airframe. nacelles a to specifically We adjust I Those areas certainly quicker around little and various will we demand changes the may expect have seen signals. some our perspective mentioned, bit that not than from have engines

to deliveries and the are approve and will yet determined. ultimately to being And a up anticipation So training build an those a that of lift use changes ramp will stock regulators supply a much to rate reviewed. opportunity in that I will grounding the start of proposed production the the the bit of bit some be will fix base time as back think this and recovery, buffer some the

investigation not are Tier everyone's supply it. the moving but and chain. on and just and the the it they based relative we're to Boeing going to sure So best, what MAX Xs obviously do Certainly monitoring and as to plan about make current we're stay to only we supplying needs their on

Gautam Khanna

in there did XXXMAX Two-third, in give one-third follow-up a how to the on As the any airframe the you of content you you stock was the past? described versus stuff mention the was ballpark is engine there much related nacelle unique us goes I wondering split airframe can just to that's or...? and guys to relative versus terms engine

Nick Stanage

The think fibers nacelles business But going the noise we have got abatement. and pre-pregs into going it split interior providing of business nacelles, then also certainly we don't engines of into that Winnipeg. engines ships out Boeing amount we've structures, nacelles and and components, And exactly. significant for we and secondary directly Acousti-Cap I and to our and Boeing have to structures some core

is fact So and And changed again, it those us diversified. it's signal do assets and in be the capacity to programs. we see quickly are mixed, very over deployable if for divert that gives a can easy other

Operator

Our the comes Mike KeyBanc. next question with line from Sison of

is line open Your

Mike Sison

win, given cost us much And Nick thought maybe you're the support you where if would of fast how little having Vestas there you the be more has. to to? can backlog that capacity give is to add a in us about a growth it to terms you growing, how need can bit talk and the market may of

Nick Stanage

Yes.

they're is in all demand. turbines put technology part driving turbine wind the getting the bottom improved, down significantly, wind are we've able getting that are getting this to from areas. of but which And is come speed efficient it has lower thing before, turbines more line wind They're first the cost wind farms generated efficient. has So more energy because said longer, and blades of

the dollars single at turbine in of gigawatts, gigawatts look at billion the Vestas the of Mike. XXXX, over XX.X of increased or and backlog every quarter, both €XX If backlog course short year you just end of

growth of So generate sales of U.S. XX% Vestas and in to continued continue we U.S. farms. not with that where penetration. they wind the of well-positioned turbine and their obviously Vestas there's just almost Obviously but interest positioned, taking advantage the in the well outside are wind is

Mike Sison

you then when just if go supply ahead, one on I chain one does the the you nine supply If to whole that supply quick it -- actually six MAX down feel And they to adjust, months XX? does should chain given guess?

Nick Stanage

tent the thing, lead They're shorter business in much I'd and on Well, are XXXMAX shorter. structures lengthy. is our times and say they first that are Mike the not especially our

whatever think and within taking that is area further structures, eight there engines, it's relatively would quickly see or we would relatively a to would rates on quickly. four I a delay if for signal adjust So demand or weeks, nacelles whether down

Operator

comes of line John from Your the Markets. Capital McNulty next with question BMO

Your line is open.

John McNulty

what regard of along. offsets kind that you've go With to throughout those there you're or the guess, in obviously you XQ thinking those with And where things some some surprises about relative MAX as to were surprises give the year? I to to as headwind Can progress some us color they were? expecting of got, you're help businesses kind how respective

Nick Stanage

Technologies continued strength than pretty John. jumped opportunities were the but relative in thanks on It I'd segment program and & Obviously, and out. maybe expected. thermal broad-based. and our a stronger had QX for we then continued say wasn't had Defense to originally sales continues plastic that. just particular commercial incremental ARC from fiber well was we opportunities forecasted stronger honestly quite was And strong opportunity. we Industrial Well, than aero, Space little question sampling very and our there to one had anticipated, wind perform around that in

will impact So based more we're in business. what broad-based, other commitment again be modeled aspects an right, a seeing offset in guidance our maintaining impact on XXXMAX. and And you're negative the by exactly growth the robust in it our forecast we see certainly -- confidence we was than pretty in and of on that our the and have

Patrick Winterlich

not did the a in on see negative first the we quarter. John clarify XXX impact to Just

John McNulty

the we acrylonitrile through I had then follow-up allergies, on them a the a some well obviously weathered guess bunch as And quarter. fielded of pretty of you questions

some us whether remind place least can hedged any a program as also there hedge new well? how issues because relatively have to guess, your with or seeing as I supply us you're at know and you I that color you give So in

Nick Stanage

issues so supply of directly over and a any hedging has related surrogate, buy acrylonitrile a are our formula going our an propylene us. front eight we which out have been think -- affected. price to sort as quarter seen haven't supplier mentioned to we not We polypropylene smooth the pricing We on as now is period related in of I

guidance So we variances expect don't because of to variance.

good a surprising us story quite the really AN surprises. at on for So moment no no surprise and

Operator

from next question Your Canaccord. comes Ken Herbert with

is Your line open.

Ken Herbert

the nice whether the year. to about margins in in anything the course keep of your you from fourth aside had be know really even about new And quarter facility you seeing first fact in could here? obviously estimate thinking last wind would pricing be and my I this a quarter to or that of should assumptions the broader You mind Is you're faced this longer third that Nick or there resins else MAX from AN XX%. in incremental uncertainty year should we step that ramp, eluded on that issues? imply second the Anything impact cycle incremental it no and headwinds we by margins down lot potentially

Nick Stanage

raw were inputs facilities our material headwinds all element your of continue. make most has and I there's and emphasize our and mentioned want sure to talked and and to productivity that and through been But about So now volume again would see one expect on startups sites. relative them you leveraging to teams sales the known focus plants momentum them answer our our fantastic. we've behind are I and question to that our I us to And

that with plants program With year. and we today. We've topline out. up our and growth headwind We're I program the coverage with But on AN, I good. predict good feel not with position in are we startups be MAX overall some XXX protection the will implemented today. that good we're strong Obviously now there can't any our about dealing running. very hedging to we're plays based the last respect where the Obviously got unknowns. how really on stand feeling negative and

Ken Herbert

adjustment of words of And you like of fair you're said I year through it maybe think around in to but the say than that putting the at more risk first lack quarter mouth strength Nick assumptions in MAX. offsets the sounds sort guidance Is the the in? and year also your there you the thinking for around quarter could how we're that year Or full this some in fact the one obviously the on current the with the the But just guidance what your just full seeing are reflects MAX? just still see it you MAX? now to be about quarter risk

Nick Stanage

this Well, a really story quarter. next you same along there It for guidance. saw it about the out is with quarter and our at different be and we'll wasn't quarter good again you will have we certainly Hopefully feel hanging ready I change ready lines point. just one MAX just we weren't the this to a make

Operator

Instructions] question Research. Wolfe Your Hunter next comes with [Operator Keay from

open. Your line is

Hunter Keay

partnering a little for me question guaranteed issue? but price please a understand exchange guys help as PFS you marketed of MAX here we potentially this are with complicated this was now sort in big of the about Can backdrop for up think filling how is with And to basically and volumes relative not rate under MAX everyone PFS think then? be you this you've your But sort would with of signed PFS Boeing chain how guys altered to these this Thanks. might situation long-term you in the umbrella. that's the as since fast context supply clause should have occurred How of argue as agreements about case. thought we success

Nick Stanage

points Well, a there. of couple

guaranteed remember we Again are volume. that of First full sourced. a our it's most have very rare materials

we program win demand what on is. customer get So the we depending the end program when the sales

Airbus. it you doing forever. there's really PFS call to cost you and we name it UTC's have guarantees expect in been you do could GE's would Productivity you could name and that it could we've to it PFS volume call continue call forever So call here. improvement could no that I

our of that to of and or chain to our so ultimate meet end take factories cost customers objectives them our that more B) So out turbines make A) is competitive their wind that to their so our customer. sell can we and airplanes out supply cost focus take help share they

and to further part we're for respect customers not price our drive direction. operating We're growth. with to of our that going included. business don't MAX So going our contracts productivity it's continue going what on see to of don't continue And improvement with changing operational provide them is changing any excellence. incentivize focus And or changing. to and see productivity penetration I that certainly Boeing are that our and as how and I to to secular through the Boeing we

Hunter Keay

just And you talk about a comment to the you but me just from second? first AXXX our Airbus incremental all cost, pressure of out I to kind dovetail prior overall content about lot exposure of remind Obviously Thanks driving late? a you your high-level of can and to any then constantly drive that can appreciate cost made the shipset you XXX of talk if it. for about getting

Nick Stanage

clear to or you XXX the said XXX? just be Hunter

Hunter Keay

exposure I'm some of that with the talking have about program XXX you capacity right?

Nick Stanage

We're before working combined we're increase declared with working haven't expand position. shipset not the we our that our we're today Obviously our we are monthly Airbus. just at with going yet to volume but It's optimistic content. deal not low insignificant have to the the Airbus. and Yes looking we that with multiple XXX, content program. but opportunities with on We Bombardier were provided

nice and achieve working on their some are have production plane U.S. at So supply cost continues think to we incremental share materials Airbus their starts opportunities they scale in to as broader overall out is objectives. opportunity a have and help to in looking them chain to XXX. they the you could we'll the imagine on And as and on plant up ramp grow the

Operator

Your of Konrad the question comes with next from line Greg Jefferies.

Your line is open.

Greg Konrad

Just think QX Boeing felt quick two you on forward going to is announced as rate in one at this ones, XX-month the that just XXX they about rate? safe quarters it that from the the assume morning were XX-month we impact

Patrick Winterlich

progresses. believe you bigger can but impact QX we’re as going much I to we saw the tell year in impact see some

ramp to and quarter on for up more the XX significantly So we two half rate. certainly second expect us the

Greg Konrad

over mean also F-XX. any of And then the ramp Defense's and the that's frame size Space the in that to be seems to chain but your at and rates? where think you I you've there of the F-XX the different kind supply maybe on programs out I given are secondary that way XXX Is program many & called

Nick Stanage

it's So our good of I ones and our that's seeing AXXXM but F-XX going And mean remains we’re very one program signals of us is strong one which the big steady for big a to three. the program it's a okay. and continue. another top held V-XX is

to a our in continuing I yesterday there. you support strength program know supply on that from some Obviously on on before. there's really at the But the look Maryland provided We're or demand day see the up. into concern see F-XX call to signals get in it to sequentially they really we information U.S. defer year-over-year their If JSF great and in the the of Turkey interest lot declines potential the is I'd of or concern going more overall with Lockheed detail demand from the Military. international chain there and

through year lot think to continue JSF to a forecast. I is going that So of the on the or certainly our ahead there's and grow it's of excitement

Operator

Your the Krishna next question Vertical of from with comes Sinha line Research.

is open. Your line

Krishna Sinha

that in if on that happen you're currently? rate as re-purpose to experience to ability your you in remarks rate there MAX margin indeed and just capacity you there that lines would puts sort of regards mentioned be have those earlier the some Or you should same you'll the that margins? some re-purpose the getting that takes will repurposing MAX adjustments. But some is occur at So if

Nick Stanage

our we're Demand so are carbon up. - fiber very is quite go specifically year to of this one continuing reasons our with is why opportunities strong. our sales growth Well, honestly the

fiber So we MAX for margins. It be another wouldn't have to repurposing basically noticeable. would assets opportunity similar be

significantly, than even look again assets. engineered to some able faster we are core at core, If you where business just honeycomb growing our another in put it's is area

assets comparable look I said wind wind if support you and in before, be or aerospace margins. differences would can to into So these have are of you the business. you it business. Where And the core transition you are would turbine And quickly diver again if our we that very margins honeycomb at tell comparable. look none business, we've our redeployed wind

very from little but overall from we take sell and harder longer that little strong. from harder the overall shipset to sell. A of business, where structures a engineered value matrix portion core, MAX a would bit it a fibers, to So a is easy it's demand a that quick on the just and backfill

Krishna Sinha

and there preclude different some And agreement guys that you at structure why just then month up I have with other Spirit. seems or capital who to you that? why is going from a working is the sort Spirit come flow some suppliers you of all a say with what impact the would to similar agreement MAX Is as the anything would a on agreement staying Boeing. like couldn't anything AeroSystems Boeing having or continue aero do about to opposed having delivering to mean to reason there a XX of you similar mentioned to

Nick Stanage

multiple it's you different. that we I if shipping ship have you mean and diversity and to online little you're of I we the think we've our to with a the products about are materials our agreement don't the locations, read to if of Well, an referencing locations, think think what similar types bit Boeing.

those orders and Boeing their drop signal and Xs fulfilling close when to Our they close staying is to basically staying Tier orders.

the think we're build Tier if the Xs about materials aircraft Boeing and to assembly. the components to So final or their ultimately for raw providing you it, support for

Operator

Epstein America the of with Lynch. comes question of Merrill from Ron next Bank Your line

open. Your is line

Kristine Liwag

the seems Boeing's Liwag. like XXXMAX of could on Kristine It middle the the delay aircraft. decision market delays XMX It's

AXXXneo right a the that that in to happen there's gets possible So if either a pushed the doesn't chance also near term.

should With which What for about the that CapEx get would will get medium the generating? these you from you and to uses things means that investments cash in think term? near and you right, the cash we of to from also how you're pushed right possibly with you do

Nick Stanage

new materials to and tell one about Airbus now, of and material cycle whether said again efforts and is you that Because be know down long organic don't as launched respect So a has slowed we when where need to ball growth and to incremental internally that, and years it not happen. two to to you cycle cash development our there is, pull, from and these remains Boeing at the seen. so secular as for to those fiber technologies that's further thermoplastics talked going we've bit. them. and remains have declare not we that on relative We'll a plane to I support invest penetration. the demand as solutions when platforms, to in OEs couple new develop strong certainly crystal even development, year both And going respond or and look our very can can programs, and regardless that's long Having are how that we comments, find our can now programs. priorities What a fiber qualify I I the programs win from present those opportunity we assets have their changed will next And it not. be of is with will having

position opportunistic buybacks. our within our targets shareholders to that be to in at dividends of markets. and look technology, portfolio, continue existing allow return and fit better will our and to broader through then solutions our even range to that we'll M&A And share we that customers expand us Second, and last

it for again forecasted you would So real-time that plans we new M&A. do in nothing know no we'll there, as the program content capacity or and evolves. win and we as as We the had just monitor

Operator

Walton question UBS. comes Your of next Myles the from line with

is open. line Your

Lou Raffetto

for Lou Myles. is on This Raffetto

margins, you briefly covered know So them I earlier.

has but related margins return have guys curious strong know thought so guess there that just Just be any I metrics I and based accretive I there? composite were costs would disclosed materials EBITDA in still the I'm to less on little ARC really one-time engineered Because a good that for ARC business you them.

Patrick Winterlich

pretty because through would was one and expenses have you other from QX. burden would rolling is three the of What I good year to have say separate a in we of say actually - quarter OpEx it the terms a I our quarters Yes. quarter Myles heavier

can for at XX% you good if look you that well result if nice it Engineered look of in up I completely in segment. actually it's above at sequentially we quite And a sort looks that's that Products. down QX a So for had but year-over-year it step get coming it like pretty

ARC that as and segment the the on, What within goes QX that any I performer strong I've will of get So the the range. before heavier year still of XX%, to should range will can't nudge be it the point sort to XX% towards one-time say ARC costs. is I OpEx, and is And burden additional out would if whole up stronger. think valid a us called that without anything in I

Lou Raffetto

clarification on And then on that depreciation, mostly did is fall one-time Or it one Materials? just the action spread? Composite into

Patrick Winterlich

associated. It that relates end the a they sort to some we depreciation Composite yes. as of just periodically do of its good Materials, program reached accelerated was and It

Operator

from the Loop comes question final of Your line Chris Kapsch with Capital.

open. line Your is

Chris Kapsch

- programs. downside you're little and then a your you reaffirmation you the the the of Q&A of in scenarios a in on formal XXX you I wanted guidance - in evaluating said clarify you factor said comments to in did think the number I

your the that wondering are by - though haven't just you some based current the guidance assuming I'm programs? XXX, in on tied So that are demand - you you of guidance to had your is signals shipments reduced other there so even offset that

Nick Stanage

Absolutely.

Chris Kapsch

that of just supply an is that airframe engines catch can versus bottlenecks magnitude, Or there. quantify this of going nacelles just in order of maybe at that keep It Is towards And an engine in skewed sounds you chain of the may all? to don't sounds nacelles and just but more given was quantified the magnitude there content magnitude of on from up order plane. asked - and that order have you content? per sort it your like content know I part if been terms like the XX%

Patrick Winterlich

we But things. yes, Chris out shipset. specifically specify laid was a that out - the to have you the and of across they Nick called of mean was we I as nacelles would MAX don't mean increase shipped $XXX,XXX structures and have clearly the program. also reengineering and I we of but we nacelle Yes. secondary per an engine driven XXX tertiary $XXX,XXX are we from shipset increase significant Legacy was because when $XXX,XXX before sort We that engines went airframe it expect as most

overall nacelles and portion engines that So clearly shipset. significant of a are

Chris Kapsch

And is efficient much along secular is intriguing sorts autoclave but if far I development story targeted epoxy. thermoset it can versus and nascent like thermoplastic presumably the just how these is and helps in is broader I'm market? and of more about add lot opportunity this avoid of or just manufacturer therefore sounds commercial peak a Or an an one that's This how curious primarily efforts including commercialization on airliner the as understanding My to for a programs. automotive? the

Nick Stanage

Well, thermoplastics big prevalent many, and automotive. for and have very around many years in been

lower throughput, to your Our are where you focused opportunities efforts and you obviously aerospace. on primarily simpler parts metals. into starting displace point avoid today smaller can additional And they're offer to laying basically with can improve cost

win like So I our Arkema relationship I that's good. We've going penetrate more different said and our forms. line running with and we couldn't very visited looking development our It's And look it thermoplastic any materials. more very our sharing really got site multiple where with on have focuses excited. to be focus. we I'm And we to as front forward material better. programs. you continue

Operator

call. conference today's concludes This

You disconnect. may now

Hexcel (HXL) 24 Apr 192019 Q1 Earnings call transcript