Hexcel Eyes Sustained Aerospace Rebound After Challenging 2025, Outlines Growth Plan
STAMFORD, Conn. – Hexcel Corporation (NYSE: HXL), a leading supplier of advanced composite materials, struck a cautiously optimistic tone for the coming year, telling investors that the commercial aerospace sector is finally poised for a sustained recovery after navigating a turbulent 2025.
On its fourth-quarter and full-year 2025 earnings call, company leadership acknowledged the past year's headwinds—including original equipment manufacturer (OEM) destocking, program delays, and persistent supply chain constraints—but pointed to a significant commercial order backlog as the foundation for a multi-year ramp-up in production.
"The fundamentals supporting elevated production rates over an extended period are firmly in place," said Chairman, CEO, and President Tom Gentile. He cited International Air Transport Association (IATA) data indicating a record commercial aircraft backlog exceeding 17,000 units, with a delivery shortfall of at least 5,300 aircraft. "This isn't just pent-up demand; it's a structural shift towards newer, more fuel-efficient fleets, which rely heavily on the lightweight composites we provide."
For the full year 2025, Hexcel reported sales of $1.894 billion, with adjusted earnings per share of $1.76 and free cash flow of $157 million. The results were weighed down by schedule changes on the Airbus A350 program and the industry-wide destocking phenomenon. The fourth quarter saw sales of approximately $492 million, with commercial aerospace sales reaching roughly $300 million.
Interim CFO Mike Lenz noted improved operating leverage in Q4, with adjusted operating income rising to $65 million (13.3% of sales) from $57 million a year prior. He highlighted foreign exchange as a temporary headwind but emphasized ongoing cost discipline. In response to the softer 2025 environment, Hexcel exited non-core industrial markets, rationalized its manufacturing footprint, and reduced headcount by approximately 330 positions.
Looking ahead, management provided 2026 guidance for sales between $2.0 billion and $2.1 billion, with adjusted EPS projected in the range of $2.10 to $2.30. Free cash flow is expected to exceed $195 million. The outlook assumes improving build rates across key Airbus and Boeing programs, with commercial aerospace sales growth forecast in the low- to mid-double digits.
"Our planning assumes a prudent, sequential recovery in build rates," Gentile stated, noting that as a materials supplier, Hexcel's production cycle typically runs 4–6 months ahead of the OEMs. He described potential for "mid-30% incremental margins" as volumes increase.
In a show of confidence, the board approved a 6% increase in the quarterly dividend to $0.18 per share. Since early 2024, Hexcel has returned over $800 million to shareholders through dividends and buybacks, including a $350 million accelerated share repurchase initiated last October.
Beyond commercial aerospace, the company noted robust defense demand and is bolstering its team to capitalize on opportunities in unmanned systems and missiles. Gentile also highlighted ongoing work with OEMs on next-generation manufacturing technologies aimed at reducing production cycle times.
Analyst & Investor Commentary:
"The guidance is finally reflecting the backlog reality we've all been watching," said Marcus Thorne, a portfolio manager at AeroGrowth Capital. "Hexcel's leverage to the A320 and 787 ramp is clear, and their cost-cutting during the downturn should pay dividends as volumes return. The margin walkway looks achievable."
"I'm skeptical about the 'sustained ramp' narrative until I see consistent monthly delivery data from the airframers," commented Dr. Lena Vance, an independent aerospace analyst. "The supply chain is still fragile. One major supplier stumbling could delay this entire recovery. Hexcel's optimism feels a quarter or two premature."
"Another quarter, another excuse," snapped Rick Dalton, a vocal retail investor on online forums. "Destocking, FX, mix... when do we just execute? The share buyback at these levels is the only bright spot. Management needs to deliver on these 2026 targets without moving the goalposts."
"The strategic exit from industrial markets like wind energy sharpens their focus squarely on aerospace and defense, which is where their highest margins are," observed Priya Sharma, a senior research associate at Horizon Strategic Advisors. "The Leicester site refocus and selective hiring plans show they're preparing the infrastructure for growth, not just hoping for it."
Hexcel Corporation is a global leader in advanced composite materials, including carbon fiber, reinforcements, and engineered adhesives, essential for manufacturing lighter and more fuel-efficient aircraft.