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Hexcel Reports 2012 Second Quarter Results

(b) Non-operating expense is the accelerated amortization of deferred financing costs and expensing of the call premium from redeeming $73.5 million in June 2012 and $150 million in February 2011 of the Company’s 6.75% senior subordinated notes.

(c) Provision for income taxes for the quarter ended June 30, 2011 includes a release of $5.5 million of reserves primarily for uncertain tax positions as a result of an audit settlement.

Hexcel Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

 

Unaudited

(In millions)

  June 30, 2012   December 31, 2011
Assets  
Current assets:
Cash and cash equivalents $ 32.6 $ 49.5
Accounts receivable, net 250.4 199.3
Inventories, net 242.2 215.7
Current deferred tax assets and other current assets     66.4       59.8  
Total current assets 591.6 524.3
 
Property, plant and equipment 1,324.7 1,223.5
Less accumulated depreciation     (516.2 )     (501.4 )
Property, plant and equipment, net 808.5 722.1
 
Goodwill and other intangible assets, net 57.4 57.4
Investments in affiliated companies 22.8 21.7
Deferred tax assets 22.1 33.0
Other assets     14.9       17.6  
Total assets   $ 1,517.3     $ 1,376.1  
 
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities of capital lease obligations $ 19.2 $ 12.6
Accounts payable 121.3 141.7
Accrued liabilities     100.9       93.2  
Total current liabilities 241.4 247.5
 
Long-term notes payable and capital lease obligations 280.7 238.3
Other non-current liabilities     100.7       88.1  
Total liabilities 622.8 573.9
 
Stockholders' equity:
Common stock, $0.01 par value, 200.0 shares authorized, 102.2 shares issued at June 30, 2012 and 101.0 shares issued at December 31, 2011 1.0 1.0
Additional paid-in capital 609.2 589.2
Retained earnings 371.5 283.9
Accumulated other comprehensive loss     (48.1 )     (39.8 )
933.6 834.3
Less – Treasury stock, at cost, 2.5 shares and 2.2 shares at June 30, 2012 and December 31, 2011, respectively     (39.1 )     (32.1 )
Total stockholders' equity     894.5       802.2  
Total liabilities and stockholders' equity   $ 1,517.3     $ 1,376.1  
Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
  Unaudited
Year to Date Ended

June 30,

(In millions)   2012   2011
 
Cash flows from operating activities
Net income $ 87.6 $ 63.8
 
Reconciliation to net cash provided by operating activities:
Depreciation and amortization 28.3 27.9
Amortization of deferred financing costs and call premium expense 2.1 5.9
Deferred income taxes 15.3 6.7
Equity in earnings from affiliated companies (0.7 ) (0.7 )
Share-based compensation 10.5 8.8
Gain on sale of land (4.9 )
Pension curtailment gain (5.7 )
Excess tax benefits on share-based compensation (5.4 ) (3.6 )
 
Changes in assets and liabilities:
Increase in accounts receivable (54.4 ) (25.4 )
Increase in inventories (28.7 ) (31.5 )
(Increase) decrease in other current assets 1.5 (3.1 )
Increase in accounts payable and accrued liabilities 28.0 36.0
Other – net     (5.4 )     (1.8 )
Net cash provided by operating activities (a)     73.8       77.3  
 
Cash flows from investing activities
Proceeds from sale of land 5.3
Capital expenditures (b)     (144.4 )     (67.8 )
Net cash used for investing activities     (139.1 )     (67.8 )
 
Cash flows from financing activities
Borrowings from senior secured credit facility 121.0 135.0
Repayments of capital lease obligations and other debt, net 4.1 (3.5 )
Issuance costs related to senior secured credit facility (0.6 )
Call premium payment for 6.75% senior subordinated notes (0.8 ) (3.4 )
Repayment of senior secured credit facility – term loan (2.5 ) (2.5 )
Repayment of 6.75% senior subordinated notes (73.5 ) (150.0 )
Repayment of senior secured credit facility (60.0 )
Activity under stock plans     2.5       7.4  
Net cash provided by (used in) financing activities     50.2       (77.0 )
 
Effect of exchange rate changes on cash and cash equivalents     (1.8 )     6.2  
Net decrease in cash and cash equivalents (16.9 ) (61.3 )
Cash and cash equivalents at beginning of period     49.5       117.2  
Cash and cash equivalents at end of period   $ 32.6     $ 55.9  
 
Supplemental Data:
Free cash flow (a)+(b) $ (70.6 ) $ 9.5
Accrual basis additions to property, plant and equipment $ 114.5 $ 55.1
Hexcel Corporation and Subsidiaries
Net Sales to Third-Party Customers by Market Segment
Quarters Ended June 30, 2012 and 2011   (Unaudited) Table A
(In millions)   As Reported   Constant Currency (a)
Market Segment   2012   2011   B/(W) %   FX

Effect (b)

  2011   B/(W)

%

Commercial Aerospace   $ 233.5   $ 207.8   12.4   $ (3.3)   $ 204.5   14.2
Space & Defense 88.1 81.7 7.8 (1.8) 79.9 10.3
Industrial     77.6     64.2   20.9     (3.7)     60.5   28.3
Consolidated Total   $ 399.2   $ 353.7   12.9   $ (8.8)   $ 344.9   15.7
Consolidated % of Net Sales   %   %             %    
Commercial Aerospace 58.5 58.7 59.3
Space & Defense 22.1 23.1 23.2
Industrial     19.4     18.2               17.5    
Consolidated Total     100.0     100.0               100.0    
Six Months Ended June 30, 2012 and 2011   (Unaudited)  
(In millions)   As Reported   Constant Currency (a)
Market Segment   2012   2011   B/(W) %   FX

Effect (b)

  2011   B/(W)

%

Commercial Aerospace   $ 475.8   $ 405.4   17.4   $ (5.1)   $ 400.3   18.9
Space & Defense 173.0 161.4 7.2 (2.5) 158.9 8.9
Industrial     150.5     118.5   27.0     (4.9)     113.6   32.5
Consolidated Total   $ 799.3   $ 685.3   16.6   $ (12.5)   $ 672.8   18.8
Consolidated % of Net Sales   %   %             %    
Commercial Aerospace 59.5 59.1 59.5
Space & Defense 21.7 23.6 23.6
Industrial     18.8     17.3               16.9    
Consolidated Total     100.0     100.0               100.0    

(a) To assist in the analysis of our net sales trend, total net sales and sales by market for the quarter and six months ended June 30, 2011 have been estimated using the same U.S. dollar, British pound and Euro exchange rates as applied for the respective period in 2012 and are referred to as “constant currency” sales.

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