Hexcel (HXL) 26 Jul 222022 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Hexcel Q2 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator my turn now to call Mr. pleasure is today's to over It Financial Winterlich, Officer. Patrick Chief go please Sir, ahead.

Good Hexcel XXXX Corporation's Brent. second Thanks, morning, quarter earnings everyone. conference Welcome to call.

Litigation night's remind cover to call related by page forward-looking may and Act uncertainties in within to this this of statements variety judgments Reform of during forward-looking could statements filings Relations are I assumptions, let call. harbor be news that will from make the call any the the may last cause constitute the materially actual course beginning, the safe forward-looking caused statements on They our release. outcomes a or A me want Before in Private XXXX. the of meaning factors Investor Such this SEC to involve the everyone detailed we results replay Certain about provisions contained factors website. Securities available formalities. of today. of of our future statements estimates, company's differ and

is be being cannot and copyrighted Corporation is recorded express Hexcel by It call without or material. permission. rebroadcast recorded this our Lastly,

yesterday. XXXX and our detailed are The constitutes participation With and today Your to results news Chairman, the call Nick of issued President; purpose our Vice Goddard, CEO quarter that in Stanage, review call consent Kurt President second me of our Relations. request. on your this Investor release to is our

call over turn Nick. the let Now me to

aircraft for carried supply The into solid of is overcoming us second more backlogs year-over-year, remain as aerodynamic sales quarter fuel-efficient results. and year to that consistent, macroeconomic XXXX grow aircraft results, aerospace that Thanks, older strong delivered momentum composites With with the almost lightweight constraints for Patrick. the advanced and second rich inflation. and Aerospace that the challenges, lighter, with our for significant very continue Commercial aircraft growth strength performance the parked technology. Good post-pandemic we confident are and innovative We XX% news. share for pull are forward morning, is content including we next-generation good while where Hexcel you and our in today muddle and chain our everyone, recovery quarter. sustained thank started joining great

We build are experiencing strong Space in strengthening. upticks throughout The pandemic has aerospace and business Defense jets. of is remained signs rates commercial market showing in the and & robust further

confident recreational tight to facilities I'm new We materials ahead. with the a labor for our costs and our some seeing with and higher however, in headwinds demand to not constrained with markets. employees, to this extensive for prices, unique exceptionally chain time, uncertainties in are energy also exciting are combined manage raw the there are to Composite our supply market Hexcel, strong less production the logistical growing same through Materials demand. industrial faced experienced efforts At rising challenges. challenges These global Along are ability and meet in times resulting

to for excellence processes, more productivity drive As work know, is a well operational and Hexcel efficiently. focus you core streamline

the have teams significant through for our for our cost years, of During delivered and reduction improvement Hexcel. recent projects benefit continuous customers

immediate are Europe and and levels to US high inflation it We yet aggressive process historically offset rapidly enhancements. is in actions, productivity continuing at with the challenging impacts the inflationary through

on aligned and customers with agile work face, as suppliers address alignment with success now even remains our us never the competitive pandemic our situation keys and and on giving committed delivering will current throughout to However, advantage focused relax address we our its to remain overcome The these our ability remain as well continued Hexcel dictate. as markets and we tremendous pivot as our and headwinds. every uncertainties. as commitments. our transparency in We'll aftermath and the staying we efforts and through to flex With our we a our customers and vigilant

turn let's to in our release specifics reported Now earnings some last night.

compared Second about of to XXXX. QX currency quarter higher $XXX XX% sales in constant million were

Second of AXXXneo were diluted year. was of currency sales the to quarter fourth in programs. Commercial Aerospace. consecutive growth compared XXX the by in $X.XX sales in last XX.X% about $XXX up $X.XX Aerospace growth led EPS adjusted is MAX constant Commercial million and AXXX, This quarter double-digit

our recovers, When relentless and As XX% for growth see our we continue compared jets it of continued to regional second quarter to penetration comes and partner composite with the well as of from benefits the the serve quarter commitment customers. sales more Hexcel second market Business lightweight materials XXXX the business for to Hexcel. than to aircraft XXXX. increased as of jets,

some business Our cabin the composite content new that Dassault large announced reaffirms long-term our in FXXX the $XXX,XXX Reflective business cabin fiber partnership jets strong rich agreement of range the disclosed of to prepreg jet. supply to on is for carbon large with month recent we previously falls of It Dassault. the this $XXX,XXX.

reduced milestone program represents are advanced the is always incorporate we in Solutions, particular to of business, new for announce Also, XXX at enhanced the couple service While the The high-performance, planned pleased and during Hexcel wing quarter. performance to maximum a Carbon drag Fiber of made me carbon composites high-speed aircraft fiber is other first to Thanks of let Falcon it a the weight enter highlights that minimum to wide Dassault this manufacture wings. in the to selection mention efficiency. its and business jet will end fuel be leading strength, XXXX.

CFM the completed the the produced composite-rich AXXXneo LEAP achieving Grande, recognized June, it excellence. newest performance the our year, materials is Hexcel aerospace with & largest honeycomb For supplier In silver and producer is for Achievement flight. with for chain supply as been world's superior celebrated variation the Pratt well has Award for advanced geared Arizona much Casa and third maiden powering in Grande supplier Casa of at as Boeing of engines Airbus family. major XXXXLR we Hexcel by aircraft this a Whitney site. a its as our its composite the consecutive turbofan industry at team is

provide weight fuel reduce well Our emissions savings as lightweight composite performance long-term enhancements as and that consumption maintenance and costs. materials

& about of to a Sales increase currency. $XXX Defense. constant represented million Turning X% in Space

rotor with is Currently, experiencing million also the first of whether parts of expected supply where new provide delivery helicopter to including leadership the CH-XXK complexity King we Hexcel's in lift $X.X Hexcel aft-kit for the the award space and on CH-XXK supply fiber honeycomb shipset ramp announced heavy are programs structures continued for a value expands number blades our The composite In blades producing program. Under Stallion prepregs, content this growth these in Sikorsky at we our helicopter, programs. and production CH-XXK. Kent, to and structures new heavy will Hexcel's between we high agreement, aircraft June, cargo are composite carbon the structures on depending $X.X XXXX. components supplies We composite those in-house and lift built site. the recognizes award the international or for long-term aircraft a agreement by Washington This million Sikorsky. of advanced significantly

released production plans this the You and will work of Kent see ongoing first to the transition a transition. composite NASA XXXX, James images in and recall is to advanced is additional more Telescope how announced by and this Space we programs set also representative successful higher and want that taken value-add of Webb by I growth mention it to month. full-color exciting toward

with its the the Hawk outlook & favorable Defense. and US Western sharing both composite global not for adds demand partner We space. sales Northrop As and the increased over ever you the and know, in includes including by momentum acquire for foreign it as X,XXX Grumman accomplishment. US materials it to launched Black and the nations. And congratulate Hexcel also more spending from and most the by purposes launched hundreds is military the powerful the This Current trend that of finally, Space both only this our Defense space Department as of rocket complex advanced further plans critical remarkable for the on the but Ariane Army to its cost telescope largest NASA eight well F-XXs the demand recent the structure, emerging for program international the adds onboard most we're defense support Nations F-XX. own order

Sales decrease was declined the the much second by well sales Turning as offset X.X% to during on Industrial. quarter the of although sales, automotive lower consumer in energy submarkets strengthening as wind electronics. recreation and

other compared value-adding contributors solutions Our Industrials in Hexcel over as that a doing solid with energy markets $X.XX last markets the almost of constant be is Year-to-date time, to such to job total this from existing as Hexcel's and $X.XX have currency in and growth well as negative identifying momentum. reflects marine XX% wind forward the where provide year-over-year is potential growth can year, Hexcel team new business replacing terrific up strong EPS at and applications. are a performance all which select-energy time sales

Now the over turn Patrick to provide more the on let numbers. details to me call

you, Thank Nick.

a of dollars. As sales denominated majority is in reminder, the our

a base a Europe. manufacturing and mix as Euros Dollars, presence of is significant our pounds cost have However, British in we

had lower while when As headwind costs the translate protect recent the and our a dollar the our We exposure during dollar The hedge and horizon margins. our leading euro a also currency tailwind to the to pound to net pound, margins. a second of versus XX-quarter results. a negative sales translate our a financial Conversely, providing to a while impact result this to quarter, to strengthens benefit weak our euro sales over our the a lower, dollar operating against is the strengthening income.

year-over-year which removes our are reminder, exchange provide sales the comparisons, foreign sales. I will currency impact in a the As to constant thereby

Aerospace sales. Turning represented quarter to our three second of Commercial XX% approximately total markets.

XX.X%, sales second Space, from quarter Airbus compared business quarter legacy second Industrial totaled sales growth Space with decreasing program primarily $XX.X the sales continued from rotorcraft sales. represented sales second XXXX. Defense softening Hawk quarter million on the of quarter military Commercial AXXX heavy growth Growth The to million the platforms. of that increasing the in quarter $XXX.X of lift sequentially to and grow growth X% XX% of Industrial quarter $XXX.X million platforms. Commercial of the XXXX XXXX based and jets. narrowbodies, compared number international X.X%, in Second XXXX XX% including comprised and drivers & by strong helicopter the period Also totaled XXXX. Aerospace of same of some included noteworthy increased programs, was is and second CH-XXK in Aerospace to sales Black first a of V-XX. offset the to

compared While automotive of quarter consumer boosting of greater for XXXX. is are taken sales. principally we reducing industrial gross quarter continued represented to second the year-over-year utilization On across electronics than by including under the and within this just gross margin our variety absorption saving back Wind a operating sales. in pandemic consolidated XX.X% also margin of The lower wind fixed a the higher business, XX.X% of as strength sales capacity. was second second offset energy results. experienced leverage energy quarter more grow XX% recreation, actions the markets during we below reflects and The was improved the cost our into and costs, volume basis, capacity

manage same to delays the at and cost continue inflationary We pressures global customers. delivery time while challenges to our minimizing logistics

As our previously time to material hedges long-term minimize changes designed to volatility many pricing explained are we by have protected financial purchases over raw layer earnings. that contracts in quarterly largest and are or of

energy as inflationary experience packaging such certain some to cost with costs. raw impacts continue higher consumables logistics materials, materials and We costs,

a the of current second XX.X% expenses percentage quarter in administrative selling, As and expenses the to sales, in quarter XXXX. XX.X% compared were R&D and of general

control improved we cost percentage on decreasing focused of sales this efficiencies. and As illustrates, remain

approximately second Hexcel time, generated the XX to quarterly adjusted have higher since XX.X% quarter is double-digit team the rate costs that was exchange again the rates of than points. a business. pleased the million, The for the Adjusted in by of second So, sales. year-over-year the favorable $XX.X impact quarter operating a operating to in pandemic. first grow margin or our The return beginning income basis sales at of was

the challenges. issues a pressures of training challenging chain as and consistent supply previously We This managing some in through facing, as and well inflationary includes employee are sustained are environment. all performance face mentioned delivering we near-term logistical the new

We our as gain will through employees experience. work this,

to challenges the and on it for guidance in an ability more our However, not adjusted confidence one maintaining operating full continue have These target the team we that are our is execute year managing. to is excuse, our XXXX. based double-digit we XXXX and of headwind are margin

for million the comprised X.X%. businesses comparable deferred margin, tax engineered compared Now strengthening period XX% a period in a Composite our of the generated and Net year-to-date and adjusted of turning two cash $XX.X future to Lake Defense activities the million being liability our research technology California. applications. gain support cash of in for are Commercial in quarter months structures next-generation to million Engineered building capital million the six a site Aerospace six $XX.X on first much capital utilization in and XX% support sales. expand XXXX and to as this Capital increases discrete was accrual operating and included prior million. is the into Morocco XX% which XX% operating the comparable we adjusted as City R&D Dublin, on $X.X innovation of in jurisdiction. to have higher technology in the the core of of XXXX, to aircraft months second of six a $XX.X margin. Working the an a first period. compared net Capital operating the replaces the tax research XXXX of Materials sales, compares cash total re-measurement represented on increasing the Utah as the our center utilization of This million operating provided We for capacity of in XX.X%. $XX.X foreign to a for XXXX quarter CapEx operating of basis million XXXX. increasing CapEx This segments, $XX.X $X.X by expenditures sales expenditures was new quarter sale margin XXXX. The and prior in segment XXXX sold smaller first the that support state-of-the-art the industrial second well as The was use center, year use represented innovation prior rate effective million tax adjusted adjusted higher and of of to center charge California XX% we second production to capacity working XX.X% total tax a was higher a related $XX.X half generated months margin and recognized maintenance year Salt were and our markets, the which growth The Products compared on in segment, plus to was in of first year

The six equipment proceeds included move compared comparable down $XX.X the cash million, we calculation. in sale the XXXX pay Salt months free buyer, $XX.X were not however to cash prepared the flow million used have year short-term a of Free negative from We lease a our positive as flow for revolver, period. to to the the in to first was prior are testing City. Lake property

is and As chain much protect as year. world discussed, or possible the generation quarter, macro safety we us are support buffer the the inventory during supply the of holding cash last the help of half inventory stresses, customers challenges The stock typically referenced today. more second global our facing previously prevailing levels weighted environment flow we from our to than Due logistics with towards free higher normal would will times. as we

for situation the as more this persist of Depending severity persisting, previously cash logistics remainder headwinds free expect cash we timing least XXXX. may the We on uses generation, experience expected. flow the and to than some to inventory issues of at

and XXXX now limit, terms with facility million. under are exception the agreement $XXX of the the operating revolver conditions is original We now for the which

end. Our be leverage, measured each XX-month or EBITDA, X.X at gross by at debt trailing as measured adjusted below to times quarter must

the share was of program repurchase Board stock leverage authorization not any million. dividend this that, turn repurchase record was at XX during of The comfortably to XX, of of $XXX With the a Nick. date XXXX, stockholders remaining a payable to declared quarterly with of second payment X, $X.XX quarter did The of yesterday, Directors let XX. call back As under XXXX. June common below June We our the as August me August level.

Thanks, Patrick.

to cash focused see We delivery. on-time durable encouraged pull in the our we parts Throughout remainder levels remain the of grow. labor Hexcel on the many world customers to the composites nearing strong must travel for will and continues strengths of especially move passenger and pre-pandemic are stay advanced on and lightweight, air XXXX, and performance, and quality the forward. uncertainty, market. Amid vigilant in stresses efficiency overall productivity, management recognize the supply and We we as chain from

inflationary for we suppliers, are underlying for keenly such but know means are new pressures, prices those factors not objectives. those sustainability causing composites At also a oil that mitigate the pressures meet for crude greater help same from costs that only We aware, time, airlines but also that to as the industry a that run lighter-weight for also look whole. efficiently, only macroeconomic and not more solutions incentivize made also as to aircraft pull

and is for Our Hexcel. transparency customers a commitment to collaboration with our key differentiator

and is availability in key products. material for finished contact team aligned Our and our demand constant customers, with customer ensure are raw that with we to suppliers

will continue innovation for products, We lightweight focus our always on heavyweight next-generation solutions.

fact, AeroSystems production we aircraft. technologies aircraft sustainable joined of is composite ago, high-volume future Europe its at with for to manufacturing aircraft processes, Center couple next-generation weeks In announced designed for a Hexcel production, that more including Aerospace in manufacturing Scotland Spirit develop Innovation of

remains from earlier unchanged. message this year Our

through all Brent, we growth that we'll to you significant remain our fundamentals it the to that take value. full is turn take over of on team now Our strong ensure and and questions. ahead, strong, lies challenges focused deliver driving advantage the shareholder to

the [Operator Sheila with Instructions]Your line first Kahyaoglu Jefferies. of question from comes

is open. line Your

don't you trending How do but in thank quarter. we had to we for about companies and much exit about margins half think costs headwinds, and could in guide think strong them the and think time. Patrick forward? if know Maybe and pretty about as guys Nice we morning good we takeout. go you I second quarter. the as Hey talk How margins you that the you've permanent about is now spoken And of in do $XXX million you year? supply previously as chain cost the profitability,

Sheila. Hi Yes.

in it of for seen you can full and mean think and year year-to-date in that. kind margin just I under Obviously, let say still back for is I again into and QX those margins the the aiming me XXXX of So, operating adjusted you've terms which now we're double-digits. and QX double-digit position comments,

quarters of another solid sort we're to out. to So, couple of strong looking close

You're inflationary very chain mitigate working team hard to got very we've We've standing we're pressures, the They can that. target. absolutely the hard, you our real we're is but that double-digit supply as challenges, right. working got are and imagine by

the millions In of all takeout, $XXX overhead to of million said we've grows we're along as cost adding of grow business and the topline, as hundreds the cost will back back. I think the sort terms

can portion we to a but definitely to on the is A sort compared as at level this sort back, as objective our our possible. to to that's hold leverage we're possible long-term hold but as come depreciation that you of when hold QX. to Now, headwind of out that revenue as were of hard of large large going will in as a like it going work see to we and of call overcome on margin to chunk number, minimize on if that that we much to I'm did as opportunity to essentially specific objective to historically. not

you. Thank great. Okay,

the of Your next question with line Strauss David from is Barclays.

is open. line Your

morning. you. Thank Good

Good morning David.

Nick. Hey

we it's would sequentially looks Defense in year here full relatively the for flat a maybe Aero I implying better guidance bit currency, and little the and or revenue Commercial gets as flat. that from relatively go half. Industrial your Is assume second like So,

revenue talk side? you about half So, second versus just half the first can on

Clearly, answer So, our a wide that. built on had David way bit the midpoint guess and a both uncertainties and of today, in on little is this chain our caution topline and energy and Clearly our in it there perhaps EPS and indicating. what conservatism what -- see I'll seeing range I'll I in we've of the simply we inflationary because with supply higher based guidance issues. what we're the of the demand than is our pressures

the overcome deliver to challenges are the we us So, that would provided beyond we're able hope in certainly expect of and opportunity to the front have to midpoint.

tailwind And about I kind or a two, would you a seen dollar here for from Thanks. which two EPS guys you we future. look impact out strengthening of standpoint. year Patrick out years we've just two? Can you about commented talk what pretty should margin be on half hedging the a the know currency But over and a move significant in like in Okay. that and as the next

sure. Yes

XX We layer So a the absolutely mean we hedge process. hedged. I lot of already large hedges into In recognized and exposure XXXX, was a of quarter-by-quarter. We correctly in coming over follow a as quarters. strict you sort portion further guideline our year

the would the XXXX benefit dollar today the it we're what XXXX. year. in points dollar doing continue basis I quarter. And so will was obviously strong you very And rates of in through for is saw about and the think marginal. strong call into And is I what now locking XX That tailwind

And so a time kind but it's smoothing that look giving ourselves we in really over out. as benefit strong, of we're

us. So we going get overtime, spread out that help to benefit will it's

result that You're of not in just some really policy. I a our to don't have to anyone going is smoothing dramatic margins. expectation want boost see

position, the quarters. benefit tailwind we're and a strong good over a in we're definitely So going dollar a is coming to

very Thanks much. Great.

next is Your Epstein of with Bank of Ron from question line America. the

open. line Your is

mean big, about the your Yeah. mean, Defense you I of the growth go that picture I Hi. areas? just when bigger Good are for morning think remarks it's you won question, maybe to could you. new growth? growth in see getting Commercial I business drive you how do for business that ultimately, where you pushed airplane indefinitely. out like looking in get mean, Boeing you mentioned guys. do prepared looking Where to in Maybe and you work your a from going other Space. with a see

where a we're have converting parts. with customers areas with metal working on new respect growth to less our airplane we always opportunities So

to that come envelope to -- evolving technologies aircraft push given development that on new along. the continue to as improvements new well are efficiencies new performance does the are, the as drive that Given evolving when

So composites the aircraft Commercial And require will of will a and there's virtually day. today wider in lot work the for portion going airplane, prepare that lot production-ready. that Aerospace a develop materials going at advanced of more be composites new to assuming next the it there's on clearly of producible get so and end work all a customers of composite on to with position our that those of they're

On even exciting the area we on that to basically in and of modifications perhaps more Space & organization we're an areas Defense the point years to that's at where considering didn't see focused we looking really various growth. concentrate past. our And be in some

the or with increases. on FLRAA and those. electric, technology to the be FARA or helicopters Western hope spending whether or what continue on advanced working budgets what to unmanned optimistic all we new see based platforms we various they're and And and So see manned, we're on

go, contribution what's it. how when if mean, got an AXXX about for then you maybe that the company? it, Got And this, more could disclose think program guys can on is we broadly where the meaningful or you it I for

to target speak to my XX memory XX if the going by years. supply is looking obviously the it's as high and the shipset as is around a with to up as we Airbus Airbus, aircraft. $XXX,XXX X,XXX Clearly $XXX,XXX. at And in get correct ramping are content backlog, to out up mid-XXXX Well, is is chain

is content we times you kind it on those the level production well. is as shipset which that of up to math of MAX volumes into do back meaningful do for years type very prior So grows a out in the types as expect Hexcel as XXX it the if

one one can, could I XXX Got your production we see double-digit sense what's if you. maybe when then And on last at back rate?

going I have but they that rather that hope and week don't than lot elaborate that after talking it tomorrow. momentum a sooner it chain on later. peers to various of and seems be I'll at say it's supply there's ball, the Farnborough, crystal to spending to would just a a when like energy I to Well potentially Boeing leave report and

All Thanks, Yes. right. guys.

we Brent do welcome. You’re another question? have

is Michael line question the of from next Truist Securities. Your with Ciarmoli

is line open. Your

for morning. taking Good Nice Thanks question. guys. the Hey, results.

within margins the give guide know quarter going Products margin Just may of the segment sequentially? of there the I year I sort remainder And are the you Engineered there sequentially can any towards & sort and Defense Space not but for dipping you're the guess I have of us color to on the same and Black the out in think V-XX. called the step revenues, down Hawk you

Just wondering declines that the there? the revenue driver in for sequential if was

Yes.

coming think to is kind It's Products. with historically, Engineered we or we would range. So update bottom and be thereabout. Engineered end We're future in I normal strong, Engineered range QX start we're for I that. mean of is lumpy. I there time state through. of the said it XX% of doubt to QX I I that the kind said Products. mean if I honest I a no again. I was mean bit mean think at the particularly mean – in kind have of I Products before tooling to I I program-specific get from time XX% but

So mean mean Space currency. I is up, constant Defense up can still lumpy. think especially Space in here with were & supply itself coming I inventory the quarter-to-quarter of it a going I some we with Year-over-year Defense is similarly, as sort playing and down and be bit chain with and X% there. quarters of and lumpy programs bulk

essentially our up with over in of wouldn't So hung get for quarter too one I honestly, And that's on line year. the kind of guidance another. the sequentiality

idled, right now Is what XXX said to sort maybe going right Boeing the But you're one have any now? contributions any from XXX? expectations, was Ron Where asking. on tomorrow. you last just And it. all are guys to I know the do Got line wait or or on you at you of that totally

Well, low a Boeing. rate we're very at with aligned

our So shipping running their stays line. fluid, they're

going the up with foreseeable get they from clearance fairly soon five as quick on the high in a probably will to ramp as think FAA, future. the I is announcement increase as expectation follow they their as

Hexcel's a pretty I just what today, say very off running Boeing on So production aligned it's much low production with line. could their part are

Got it. Thanks, guys.

Thanks, Michael.

is from line John with of Markets. McNulty the Capital question BMO next Your

Your line is open.

Yes. Thanks for taking my question.

guess the should related that you drivers? inflationary I them? going the that you it that? to some regard all the front, levers just or what seeing, of be first with to Do about internal is self-help have how are have be Like kind on any offset to So you're the of be pressures would thinking revenue one we

help we'll, Hi. ourselves for efficiency some raw overcome I some mean key on I can obviously sort have inflationary do we levers materials on John. input we contracts as can these to always long-term cost continuous and of our pressures. much improvement I if Yes. We like there. we're of have mean pricing. costs good start as working

passing and were rolls through that we space, industrial Our lag. already that Aerospace helped. and in through a of In there's many more instances

contracts as if review will difficult are as push that and annual into points we there to which our we like of with of move check sort XXXX. can are as Some go points have on. much But many you others we

zero. hard. not have as ability pushing Aerospace. flexible where we're Not Industrial some It's we as So pricing in

possibly equation, the sides So And the we levers can we're pricing you opportunity. in control. working we helping as of it ourselves we as the where it's push as put much on and have both will our

question. And a helpful. just guess That's it. then I Got second

off luckily about around guess I But region? on any coming any And pop side. you speak concerns with might raw from avoid can Germany big how might setting or on maybe you of some with shut into off? half not issues the have, cut really up, the we you Do much the do if the gas material front, have Germany that constraints be, of get footprint European and you issues yourself to guess, as up that risk the potential kind I exposure the raws You exposure a -- there. spigots, might back year that get being of

Yes, John.

we I'd industry. the tell uptime conversion They're hope their And have some we we and term energy has sites. output I at, could primary in in we with fungible. Stade, options impact a miss something, something look to there. Airbus our wouldn't we're that of the limit large Germany, raw that remember area And to again have say, flexible. assets the customers broader can't short good site be, our to we With ripple through could we're currently the predict limit So and benefit happened they're doing the are forced, do just would to we monitoring, the one is being to to. that that impact that even materials to and chemical if Germany and of respect I could on again, Germany in beat can other have with. very what ones and/or And what presence reallocate a and pretty supports you have chemicals, companies. basically, if on big that. And their production deal And indirect impact that respect we don't I a if

for Thanks enough. color. the Fair Got it.

Thank you, John.

with Your next Alembic Global. Skibitski Pete question from is

line Your open. is

Hi, morning, guys. good

morning. Good

the some before outlook kind the for the or you F-XX? there the ramp matches expected be of of additive for would guys, for we that revenue rate again. few related next there, Hi, are guys, years, updated you for or revenues outlook F-XX Should spares guys production that think to for flat that kind

extra of terms Amesbury in going noise our fundamentally, parts -- sort of a bit and But right. we But single little headline little F-XX. like so spare have and XXX we're a the things pushouts business Fundamentally, the with outlook aftermarket to the we track or thereabouts for occasionally. plus think, I there of of that, will there XXX sort rate bit with digits plays or or of sort track inventory of minus the pull-ins

Thank Okay. Appreciate it. you

Robert question next of with the from is Your line Spingarn Melius Research.

Your is open. line

good Hi, morning.

Good morning, Robert.

Nick that do. you be about three wanted upside used of AXXX, could that skin there, talked for XX-foot Tomorrow to a ready ask I about looking recently out-of-autoclave years. you the and you can to two could specifically content Wing things for in portfolio, across Spirits long the it commented produced be they composite And constantly

wanted on be the with you general, rewinging of lot to a programs of composites. see, And work I talking Tomorrow? might are what your type Wing about these So what -- in doing of

all itself? of is much an opportunity how by wings, So

built. But based layout I been think various parallel, So, the because want new same we're see scale, on, Airbus, the processing, to the demonstrator being where time excited technologies. keep that solution the and a We've launched. in working are several was they Airbus technology time them first scale wing afford economic best and technologies different aircraft to ramp that the overall best on in to when at the smaller manufacturers is the there the flexibility up will for best full the with wing, long worked go

different demonstrator. technology. infusion technology technology, and tested Wing in high laydown So, being of rate technology, and Tomorrow proven Those used the and technology out-of-autoclave are fiber all Airbus, resin

jet that technology. the tell countries, the very a they're that So whether we narrowbody in Airbus with was our -- And business just it's preparing ongoing new phase other I their new are rotorcraft. with pursuits are can of and to next that it's you, customers, platform in aligned one advanced a for or many demonstrator a programs various or closely how just support on new program

then And Okay. quickly Patrick for you. just

On be content organic would of M&A. growth that, the via that back inorganic

better, how under on you repo some sheet share balance end more there markets here Do do the deployment? or more the about toward with the improves capital and valuations M&A look environment now think side? As out you the get pressure

a be to going it's balance. Well,

and of we we've the flagged. year already I as next come out into So, think go year,

leave that's we that. remain as will on will disciplined some. of that But something in M&A. agenda. propositions technology bring looking if can see at criteria our sort repurchase, imagine us we exactly generate to you we do share we're We under $XXX of sustaining years. or to start our forthcoming way are levels going Hexcel subdued sort going to cash, for definitely, Think which to, CapEx in do And be a value-add position our meet to I some million definitely of And our about will the absolutely, so say that value

do So a sort XXX% along balance, be share coming inorganic of one include expect other will it It's some the buyback. of part but to or a I will there process, the growth, not XXX% year be M&A. with

might would you vertical be M&A – where you And for this can Nick, would be or horizontal M&A, add? how

XXXX, is Well, back were in I pretty as Woodward we with direction don't open – moving. lens XXXX we I think our demonstrated the

as So material composite upstream penetration. I what can tell you, looking advancing our enhance our downstream business and are team, through well offering value penetration, can to products proposition or as our customers total adjacent development

you, Okay. Thank both.

you. Thank

Partners. Safran question Your with next Seaport Richard Research from is

Your line open. is

Nick, morning. you? Kurt, How Patrick, good are

morning. Good

Good morning.

I if it want and this to and it missed And I already ask you mentioned about mix. about you've talked apologize. I

intersegment quarter-over-quarter Now things, the might I sometimes but Is effective was be indicates in improvement here? you products? thought different higher-margin of mix know volume mix if expecting higher just correct this by discuss, a bit be that the trends a wrong, me, I'm can more case I we simply your should with from how better. but mix

part Yeah. I leverage mean, is it. right volume seeing we're step-up mix mean, is the of a I biggest now.

put we've margins base we're that's cost we some guess of cost the line driving strong margin step to through going incremental more we slightly sales, up. be play really savings and bottom what's variable we've talked through I variable about in the the place. probably So is the has and and bring as tend Mix that have overall, sort Yeah, has that pronounced. less overhead a bring bringing the as against fairly margin, we through margin to

I lot lot a us days through, mix the acceleration. coming of and strong really in that about of quite We think in talked XXXX. fiber a get early helped quite had a sort we

businesses. level I I think one going off. to probably mean, sales our are talked overall wind coming margins probably was the about that We've lower-margin variable at steady down. of our

perhaps may only sort Obviously of some there. helps. sales, a benefit marginal industrial value-add XX% get industrial the So sales, all but it more is XX%, as grow of we of we our

wouldn't I mix. overplay So the

I putting can and fiber increases today. think getting the have. a lot that through of as to pattern Hexcel mixed through think pull a And continue then margins going sort carbon we best this year we're steady-state I is we of that But and we're we the it's leverage the if increase give forward. and overhead to growth really that's as double-digit to mix to drive line now, sort top go over us

Okay. you then more, market. one a labor comment just you further. Nick, tight mentioned And would if

How the could that curious I How expectations employment, labor wanted employment cost if that ask you're think you expect do there. expect and And workforce? of if is to grow issue? much about you – levels inflation to comment progressing So and you you kind to an become starting towards goal? on I'm

we and the being more other site, and recruiting a challenging say, mix. than today. a labor it's areas few XX and on the We some new UK where can months. on grow curve say, the to would demand we We're to need see going to I up and But to path. I we're pretty I on to areas, little respect impacts and learning we getting we our attracting, the be in brought of employees the on assets, through depends location. So, with been we're efficiency to level we're tight continue of has we have. the up It deliver the hiring hiring we're in would I one as the ramp next output for aggressively bigger where would training that and the going pre-pandemic, that say that is journey. the successful their team of were say, that Obviously,

that gives We will increases time. have on improvement how an history that happen that as us growth volume confidence over and

XXXX and ready we it our drive historically. us new in which successful, was as I attribute currently shows the redefine And inflation, now, products, higher what very we've get unknown time to attractive for our to out I'm to culture, marketplace. been labor, and labor we've on but data what planning. competitiveness. seeing an Hexcel's an So, just clearly respect adjustments we'll been attract based are next recruit and much, as and that's talent year. we is right the to be see zero continue we in it's had of to towards labor real We'll year monitor that innovation, required, and to all higher sustainability make our had With go area this on going it how to future, But than how I the anticipate

Thank you very much.

you. Thank

Berenberg. line next the question Paretosh of Your from Misra is with

Your line is open.

about curious what but just are big it's what's growth was are electronics electronics know exactly I making? of a slowdown, you morning. consumer many good seeing driving of your companies business. Because your I and just so the wondering Thanks Hexcel? portfolio, not part for a

carbon where decent been circuit of honestly, quite fiber, of Hi, sort the directing of and into been stiffness. carbon laptops of lightweight sort sort It's fiber, market a Yeah. they some has fiber strength of want boards of really pandemic, carbon and adopting what out Paretosh. our some coming the

quite been success a lot there's directing material there. So, of

the think So, strong consumer has electronics. these demand of I been for some

We us. will business But see it's going forward. certainly good a for been to-date,

if Thanks, Patrick, more. could just And ask interesting. I one

your You but in related covered are might that half or you restocking assuming much? second to have any so earlier not guidance, AXXX

hopefully by restocking, half in guidance to the I to family The take XXX. be AXXX our very is comes mean, guess down. I the programs. default. of across gradual a sort restocking it's process terms It's of Yes. -- now it's sorry, a the AXXX whether or number going the clear hand second our all But, destocking over the MAX of place will is be The abrupt. second mean It years. or I quickly. and

five XXX the will come restocking in we're year of point to this half to and there's six program on, I be specific as second definitely the supply wouldn't to to at if gradual process. say that into yes, And freight they it's hopefully the a next specific we be going going year. and anything from up those built but see chains, then specifically early to some seven, moves talk So to

you. Thank Understood. it. Got

next question from RBC. is Your with Herbert Ken

open. is Your line

and Nick Patrick. Good morning,

Good morning, Ken.

looks I capital. like. guess, The working I wanted you've about on it invested last $XXX quarters Patrick, of ask million to couple

called year support in this maybe comfortable need you of do capital from is to What half supply increase? comments. you of you lower this on in a out your think to source feel point bit? it maybe to factors chain see a there build can here you cash? see or aside And other that when the do a that just need rate little working second to I What becomes

Yes.

shipping current the feed delays, think, guys environment, looking in sort before on ramp-up buy. dramatically I improves. shipping lots who I'm raw of at be I to pressures the world think chemical constraints XXXX we're honest, about I of the really talking the into we Ken, mean, materials

objective little the far inventory, successful that's this to bit is maintain seen be day hugely anything clearly working any to persist. a to to material sourcing have to to And know and the on like just forward. I our that raw thus so been a us the to of cautious it and team in, day have of that hold going get our But team it's mean, out I are that's don't battle safe buffer that, this. credit and part think I going

going year a we're do. of some for think hold but get confidence, to I be in end what want do it the improvement. the some our see my we this said have very customers. comments to best do XXXX. think through working little We to And I to if into that's we Hopefully, we capital of that, bit I will

the point moderate on either strong year you've half programs XXX you that obviously And growth some maybe That's does outlook the I Okay. could done the customers? as business jet if Can in about with helpful. this or or opportunity anniversary the of to second Falcon other point there. on replicate challenging other perhaps what more talk And comps? at growth start what you next at year on to

thing jets, the content are to the of there are, nice be tend volumes about different lot up. going jets platforms are little business business and lower a So, a

the strong the GXXX. GXXX specific has business combination Gulfstream of So there's penetration really on composite new envelope the segment. market not content and GXXX wide that content have a drives on set. entire the very and that It's jets, the pushing to Clearly, program respect the we strong and a been with

and XXX, great the have on the also challenger list on. the positions We on goes the Falcon, Embraer

and inventory and up. to you continuing based year's level If flight from based based look it's on go tight quarter-over-quarter hours on grew virtually last on every backlogs, platform that's it's

lightweight or So, the it's airplanes time, primary if place narrowbody more or Falcon a make a business and it's of widebody penetration materials as And It more doesn't jet. clearly, efficient. until the did structures, matter, XXX. a more into takes it on just matter

I'm So, excited.

have our position City, teams with strategy, have actually great meeting We we in and a opportunity bizjet with a today customers Salt it's there. our customers on growth great Lake and

Great. Thanks, Nick

Fargo. question Sison with Your comes Wells line from final of Mike the

line Your is open.

Mike. Well,

question go just only Okay. more one it's one just we could Brent, final to and please. if

Certainly, from Khanna Cowen. final question, your comes with Gautam next question

Your open. line is

underlying the Hi, Boeing? either was If assembly there's wondering you're there's any which if guys. sounded rates it any so, there's with misaligned I are where at program Airbus you or but one? or like misaligned – if guys destocking program XXX, And --

what think a significant. platforms for said that of was public I customers, understanding, from on and high we level a disclosure chain stabilized. job very was Patrick that what abrupt. inventories been from the good period It that very we're aligned. sure at held to make our lower rates We -- we the of again destocking most off triangulate a our supply a a side, Today, time, are very given of we've it's on it the their And has they're do being content line, running by from production lines. know top shipset as

we all with virtually aligned visibility that very programs and that to. we're tracking think I have we're

in I So, misalignment that's don't supply any our chain. see material

everybody our some locations. chains or remind Now I XX to would, of XX supply have ship that have to

that's same going locations think days, we the is at rate, that's Aerospace supply single customers. supply that a And and supplier be the poor and why, to chain exact would various level same some not to ship lumpiness in chain in our how works. to around the even build that So, Commercial assumption. that inventory every it in exact the And of be see

call. gentlemen thank participation. and concludes for your This you Ladies today's conference

may now disconnect. You