Hexcel Corp. (NYSE: HXL) reported Q4 EPS of $0.86, $0.02 better than the analyst estimate of $0.84. Revenue for the quarter came in at $564.3 million versus the consensus estimate of $591.91 million.

• Q4 2019 GAAP diluted EPS was $0.86, an increase of 13% above Q4 2018 GAAP diluted EPS and an increase of 5% above Q4 2018 Adjusted diluted EPS of $0.82.
• Q4 2019 Sales were $564 million, compared to $561 million in the fourth quarter 2018.
• FY 2019 GAAP diluted EPS was $3.57 vs FY 2018 at $3.11. FY 2019 adjusted diluted EPS was $3.54, an increase of 16% above adjusted diluted EPS of $3.05 for FY 2018.
• FY 2019 Sales were $2,356 million, an increase of 8% compared to FY 2018 (+9% in constant currency).
• Record FY 2019 free cash flow generated of $287 million.
• Providing FY 2020 financial guidance

Chairman, CEO and President Nick Stanage said: “The fourth quarter of 2019 completed a strong year for Hexcel, returning $0.86 of diluted EPS and $172 million of free cash flow. Revenue for the full year was $2,356 million, up 8.6% in constant currency compared to 2018, with adjusted diluted EPS for the year coming in 16% above 2018 at $3.54. Free cash flow for 2019 was $287 million, an increase of 21% over 2018. Our team continues to deliver productivity and efficiency improvements across the business, as evident in our strong 2019 annual performance. Turning to 2020, we are staying close to Boeing, and all our customers, as we monitor the uncertainty regarding the timing of the 737 MAX’s return to service and expected production levels. In consideration of the production cuts that affected total year sales in 2019, we have included our best assumptions in our 2020 guidance. With an exciting year ahead of us, we remain confident in the outlook for Hexcel, our healthy cash flow generation and our ability to deliver exceptional shareholder value.”

The Merger of Hexcel and Woodward

Last month, Hexcel announced a definitive agreement to combine in an all-stock merger of equals with Woodward Inc. to create a premier integrated systems provider serving the aerospace and industrial sectors. Mr. Stanage said, “We are extremely excited about the prospects of bringing these two great companies together to drive even stronger investment in innovation and shareholder return in the future. Ahead of the deal closing, our focus is clear, and we will continue to drive Hexcel performance and value creation.”

2020 Guidance

Chairman, CEO and President Nick Stanage said: “As I look to 2020, the fundamentals of our business are positive, despite the headwinds from the Boeing 737 MAX. We continue to see the strong trend of secular penetration for composites onto modern aircraft and are well-positioned to win significant market share on new programs. In relation to the Boeing 737 MAX, our intent is to continue working very closely with Boeing and all of our 737 MAX program customers to meet their demand needs. As you will be aware, there continues to be considerable uncertainty in terms of the number of 737 MAX planes to be produced in 2020. To provide clarity on our guidance, we have assumed that we will sell material for 200 737 MAX aircraft in 2020. As the actual demand becomes clearer as we move through the year we will adjust guidance accordingly.”

Mr. Stanage continued, “Given our assumption for the 737 MAX we are forecasting flat-to-low-single-digit revenue growth for 2020 and low-to-mid-single-digit EPS growth. Our cash generation cycle continues to gain momentum and we forecast over $300 million of Free Cash Flow in 2020, demonstrating continued disciplined execution and our focus on Operational Excellence.”

Guidance is as follows:

• Sales: Flat-to-low-single-digit growth
• Adjusted diluted earnings per share: Low-to-mid-single-digit growth
• Free cash flow greater than $300 million.
• Accrual basis capital expenditures of $100 million to $120 million.
• Underlying effective tax rate is estimated at 23.0%.

Market-Specific Sales Outlook

• Commercial Aerospace: Down low-to-mid-single-digit
• Space & Defense: Up high-single-digit
• Industrial: Up mid-single-digit

For earnings history and earnings-related data on Hexcel Corp. (HXL) click here.