Release Date: January 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you discuss the Commercial Aerospace guidance for 2025, particularly regarding high-volume programs like the A350? A: Tom Gentile, Chairman, CEO, and President, explained that for 2025, Hexcel anticipates production rates for the Boeing 737 to average in the low 30s per month, with the 787 at about seven aircraft per month. For Airbus, the A320 is expected to be in the low 60s per month, and the A350 is projected at six to seven aircraft per month. These assumptions are conservative, allowing flexibility to meet higher demand if necessary.
Q: How should we model the quarterly progression for 2025, considering potential growth throughout the year? A: Patrick Winterlich, CFO, indicated that Hexcel expects a gradual ramp-up in production rates throughout 2025. The company anticipates growth in widebody and narrowbody aircraft production, with the Boeing 737 MAX potentially increasing from the 20s to the high 30s by year-end.
Q: What are the main factors driving the decline in Industrial sales for 2025? A: Patrick Winterlich noted that the planned divestiture of the Neumarkt, Austria facility, which contributes approximately $40 million in sales, is a significant factor. Additionally, there is a slight decline expected in the automotive subsegment within Industrial sales.
Q: Can you elaborate on Hexcel's strategy for improving profitability and returning to high-teens margins? A: Tom Gentile stated that Hexcel aims to regain operating leverage by increasing production rates to pre-pandemic levels, which will help absorb fixed costs. The company is also focused on productivity initiatives to offset inflationary pressures, with a target to return to high-teens margins over the next few years.
Q: How does Hexcel plan to engage more directly with defense primes, and what changes are expected in this strategy? A: Tom Gentile mentioned that Hexcel intends to strengthen relationships with defense primes by engaging more directly in their innovation and development processes, particularly concerning material systems. This approach aims to integrate Hexcel materials more comprehensively into defense programs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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