Hexcel Corporation reported results for the first quarter of 2008. Net sales from continuing operations during the quarter were $344.5 million, 21.9% higher than the $282.6 million reported for the first quarter of 2007.
Operating income for the first quarter was $36.4 million, compared to $29.9 million for the same quarter last year. The 2008 operating income included $2.7 million of pension settlement expense associated with the termination of Hexcel's U.S. defined benefit pension plan.
Net income from continuing operations for the first quarter of 2008 was $23.2 million, or $0.24 per diluted share, compared to $14.8 million or $0.15 per diluted share in 2007.
Adjusted net income from continuing operations for the first quarter of 2008 was $0.23 per share, which excludes the one-time items of the termination of Hexcel's U.S. defined pension plan and the $2.5 million reversal of valuation allowances against U.S. deferred tax assets (see table D).
Chief Executive Officer Comments:
Mr. Berges commented, "This was a strong start for 2008 and continues the momentum from the second half of 2007. Sales and adjusted operating income for the quarter were again at record levels, and we're well on our way to hitting our full year guidance as our adjusted diluted earnings per share (excluding the one-time items) for the quarter was a solid $0.23, as compared to $0.15 last year."
"Sales for commercial aerospace were up sharply across the board, a total of 29.6% in constant currency over the first quarter of 2007; limiting our ability to serve other industrial markets for the third quarter in a row.
We are accelerating our plans for adding capacity to support what we now see as the continued strong demand. We are now making first fiber on our new Spanish line, and have begun to qualify product from our new German and French prepreg plants. We expect each of them to cover their incremental costs in the second half of this year.
The new China prepreg plant for wind energy and our next carbon fiber line are expected to begin production by October.
We are now targeting the remaining tranche of our previously announced carbon fiber and precursor capacity to come on line in the second half of next year versus the original 2010 target."
"We are in discussions with all of our customers who serve the B787 to understand their demand plans for the coming quarters.
While it's too early to comment on the impact of the delay to our sales, we have updated our estimated sales content per B787 to now be in the $1.3 - $1.6 million range, up from prior estimates of $1.0 - $1.3 million.
A380 sales continued their steady recovery though they are still below the levels in the first half of 2006. Despite the recent negative news about U.S. airline profitability and the economy in general, Airbus and Boeing continue to expand their huge backlog with reported first quarter orders exceeding deliveries by 2.5 times."
"We are reaffirming all of our guidance targets including operating margins of 12 - 12.5% even though sales inflated bycurrent exchange rates could depress the ratio and the B787 schedule impact is likely to reduce our near term outlook for that program. We now expect our full year earnings to be at the high end of the $0.90-$0.95 range."
