Hexcel Reports Record 2013 Fourth Quarter and Full Year Results

  Hexcel Reports Record 2013 Fourth Quarter and Full Year Results

  *Fourth quarter adjusted diluted EPS of $0.46 was 28% higher than prior
    year of $0.36.
  *Fourth quarter sales of $427 million were 10.2% higher than last year
    (9.1% in constant currency) driven by Commercial Aerospace (up 20.6% in
    constant currency).

  *Full year sales of $1,678 million were 6.3% higher than 2012 (5.6% in
    constant currency) and were converted to $270.9 million of operating
    income, or 16.1% of sales (versus adjusted operating income of 15.2% in
    2012).
  *Full year adjusted diluted EPS of $1.85 was 19% higher than prior year of
    $1.56.

See Table C for reconciliation of GAAP and Non-GAAP operating income and net
income

Business Wire

STAMFORD, Conn. -- January 23, 2014

Regulatory News:

Hexcel Corporation (NYSE: HXL) (Paris:HXL):


              Quarter Ended                            Year Ended
                                                                                 
              December 31,                             December 31,
(In
millions,      2013      2012    %           2013        2012      %      
except per                                Change                                       Change
share data)
                                                                    
Net Sales     $   426.8     $   387.3     10.2   %     $   1,678.2     $   1,578.2     6.3    %
Net sales
change in                                 9.1    %                                     5.6    %
constant
currency
Operating         67.0          54.3      23.4   %         270.9           248.8       8.9    %
Income
Net Income        47.1          36.9      27.6   %         187.9           164.3       14.4   %
Diluted net
income per    $   0.46      $   0.36      27.8   %     $   1.84        $   1.61        14.3   %
common
share
                                                                                       
Non-GAAP
Measures
for
comparisons
(see Table
C):
Adjusted
Operating     $   67.0      $   54.3      23.4   %     $   270.9       $   239.3       13.2   %
Income
As a % of         15.7  %       14.0  %                    16.1    %       15.2    %
sales
Adjusted          47.1          36.9      27.6   %         188.5           159.0       18.6   %
Net Income
Adjusted
diluted net  $  0.46    $  0.36    27.8   %   $  1.85      $  1.56      18.6   %
income per
share
                                                                                       

Hexcel Corporation, today reported results for the fourth quarter of 2013. Net
sales during the quarter were $426.8 million, 10.2% higher than the $387.3
million reported for the fourth quarter of 2012. Operating income for the
period was $67.0 million, compared to $54.3 million last year. Net income for
the fourth quarter of 2013 was $47.1 million, or $0.46 per diluted share,
compared to $36.9 million or $0.36 per diluted share in 2012.

Chief Executive Officer Comments

Mr. Stanage commented, “This was another strong quarter that completed another
great year for Hexcel. For the year, sales were up 5.6% in constant currency,
while our adjusted operating income was up 13% and our adjusted EPS was up
nearly 19%. Led by Commercial Aerospace sales (up 20.6% for the quarter and
14.5% for the year in constant currency), this was our best fourth quarter
(and full year) in history for sales, gross margin, operating income and
adjusted net income. We are also particularly pleased that our adjusted
operating income for the year increased to 16.1% of sales, 90 basis points
better than last year, and we generated free cash flow of $78 million even
with $195 million of capital expenditures.”

Looking ahead, Mr. Stanage said, “The large backlog of orders at our major
customers suggests we are well positioned for 2014 and beyond. We remain
highly focused on delivering earnings leverage and cash on anticipated higher
sales in the coming years, driven by both increasing composite-intensive
aircraft and production rates.”

Markets

Commercial Aerospace

  *Commercial Aerospace sales of $283.6 million increased 21.1% (20.6% in
    constant currency) for the quarter as compared to the fourth quarter of
    2012. Revenues attributed to new aircraft programs (A380, A350, B787,
    B747-8) increased 30% over the same period last year. Sales for Airbus and
    Boeing legacy aircraft were up over 15% compared to the fourth quarter of
    2012, and were about the same run rate as the first half of 2013.
  *Fourth quarter sales to “Other Commercial Aerospace”, which include
    regional and business aircraft customers, were up about 9% compared to the
    same period last year.
  *For the full year 2013, Commercial Aerospace sales were up 14.5% in
    constant currency, with new program sales up about 25%, legacy sales up
    12% and Other Commercial Aerospace sales about the same as last year.
    Combined sales to Airbus and Boeing and their subcontractors accounted for
    85% of Commercial Aerospace sales.

Space & Defense

  *Fourth quarter Space & Defense sales of $88.8 million were 4.9% lower
    (6.0% in constant currency) than the fourth quarter of 2012, primarily due
    to the expected lower V22 production rates and reductions in customers’
    inventories at year-end. For the year, Space & Defense sales were up 4.5%
    in constant currency. We continue to benefit from participating in a wide
    range of programs, in the US, Europe and Asia, including rotorcraft,
    transport, fixed wing and satellite programs.

Industrial

  *Total Industrial sales of $54.4 million for the fourth quarter of 2013
    were 8.9% lower (11.4% in constant currency) than the fourth quarter of
    2012. Wind sales declined by less than 10% in constant currency from the
    fourth quarter of 2012, and sales for each of the four quarters of 2013
    were about the same level. For the year, Industrial sales were down nearly
    23% in constant currency, including the wind submarket which was down over
    25% from 2012. Wind sales are expected to increase mid-single digits in
    2014, which would return sales to 2011 levels.

Operations

  *Growth, sales mix and continued improvement in operating performance
    resulted in gross margin of 26.5% as compared to 24.7% in the fourth
    quarter of 2012. For the year, gross margin of 27.1% was 130 basis points
    higher than 2012. Selling, General and Administrative expenses for the
    year were $141.4 million or 7.7% higher than 2012 in constant currency,
    reflecting added infrastructure to support growth and higher variable
    incentive compensation. For the year, Research and Technology expenses
    were $41.7 million as compared to $36.7 million last year. The higher
    spending is in line with our expectations and reflects the increased
    efforts on new product and process developments.
  *For the full year, 2013 adjusted operating income leverage was 34% on the
    incremental sales after adjusting for the impact of exchange rates, driven
    by sales mix and continued improvement in operating performance.

Tax

  *The tax provision was $18.8 million for the fourth quarter of 2013
    resulting in an effective tax rate of 28.7%. This quarter benefitted
    primarily from the release of reserves for uncertain tax positions. Last
    year’s fourth quarter tax provision was $15.6 million, an effective tax
    rate of 29.7%. For the 2013 full year, our effective tax rate was 28.9%,
    down from 2012’s effective tax rate of 31.2%. Excluding discrete items
    impacting this year’s provision, our adjusted effective tax rate for 2013
    would have been 30.7%.

Cash and other

  *In 2013, we generated $78 million of free cash flow (defined as cash
    provided from operating activities less cash paid for capital
    expenditures) versus a use of $31 million in 2012, reflecting lower
    capital expenditures, higher earnings and lower working capital usage.
  *In December 2013, we invested $40 million to buy back Hexcel shares,
    bringing the total buyback for the year to $90 million. We have $110
    million remaining under our currently authorized share repurchase program.
    Total debt, net of cash as of December 31, 2013 was $229.5 million, an
    increase of $5.5 million from December 31, 2012.

2014 Outlook

We reaffirm our 2014 outlook, which was previously issued on December 16,
2013. Our 2014 outlook:

  *Sales of $1,800 to $1,880 million
  *Adjusted diluted earnings per share of $2.00 to $2.12
  *Free cash flow of $25 to $75 million, with the typical use of cash in the
    first quarter
  *Accrual basis capital expenditures of $225 to $250 million

                                    *****

Hexcel will host a conference call at 10:00 A.M. ET, tomorrow, January 24,
2014 to discuss the fourth quarter results and respond to analyst questions.
The telephone number for the conference call is (719) 457-2645 and the
confirmation code is 7511822. The call will be simultaneously hosted on
Hexcel’s web site at www.hexcel.com/investors/index.html. Replays of the call
will be available on the web site for approximately three days.

                                    *****

Hexcel Corporation is a leading advanced composites company. It develops,
manufactures and markets lightweight, high-performance structural materials,
including carbon fibers, reinforcements, prepregs, honeycomb, matrix systems,
adhesives and composite structures, used in commercial aerospace, space and
defense and industrial applications such as wind turbine blades.

                                    *****

Disclaimer on Forward Looking Statements

This press release contains statements that are forward looking, including
statements relating to anticipated trends in constant currency for the markets
we serve (including changes in commercial aerospace revenues, the estimates
and expectations based on aircraft production rates provided or publicly
available by Airbus, Boeing and others, the revenues we may generate from an
aircraft model or program, the impact of delays in new aircraft programs, the
outlook for space & defense revenues and the trend in wind energy, recreation
and other industrial applications, including whether certain programs might be
curtailed or discontinued or customers’ inventory levels reduced); our ability
to maintain and improve margins in light of the current economic environment;
the success of particular applications as well as the general overall economy;
our ability to manage cash from operating activities and capital spending in
relation to future sales levels such that the company funds its capital
spending plans from cash flows from operating activities, but, if necessary,
maintains adequate borrowings under its credit facilities to cover any
shortfalls; and the impact of the above factors on our expectations of
financial results for 2014 and beyond. The loss of, or significant reduction
in purchases by Airbus, Boeing, Vestas, or any of our other significant
customers could materially impair our business, operating results, prospects
and financial condition. Actual results may differ materially from the results
anticipated in the forward looking statements due to a variety of factors,
including but not limited to changes in currency exchange rates, changing
market conditions, increased competition, inability to install, staff and
qualify necessary capacity or achievement of planned manufacturing
improvements, conditions in the financial markets, product mix, achieving
expected pricing and manufacturing costs, availability and cost of raw
materials, supply chain disruptions, work stoppages or other labor disruptions
and changes in or unexpected issues related to environmental regulations,
legal matters, interest expense and tax codes. Additional risk factors are
described in our filings with the SEC. We do not undertake an obligation to
update our forward-looking statements to reflect future events.

Hexcel Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
                    Unaudited
                     Quarter Ended               Year Ended
                                               
                     December 31,                December 31,
(In millions,
except per share      2013      2012      2013        2012    
data)
Net sales            $  426.8    $  387.3     $  1,678.2    $  1,578.2
Cost of sales         313.7     291.7     1,224.2     1,171.5 
                                                                     
Gross margin             113.1         95.6          454.0           406.7
% Gross margin           26.5  %       24.7  %       27.1    %       25.8    %
                                                                     
Selling, general
and administrative       35.7          31.3          141.4           130.7
expenses
Research and
technology               10.4          10.0          41.7            36.7
expenses
Other operating       —         —         —           (9.5    )
income (a)
                                                                     
Operating income         67.0          54.3          270.9           248.8
                                                                     
Interest expense,        1.6           1.8           7.3             10.0
net
Non-operating         —         —         1.0         1.1     
expense (b)
                                                                     
Income before
income taxes and
equity in earnings       65.4          52.5          262.6           237.7
from affiliated
companies
Provision for         18.8      15.6      76.0        74.1    
income taxes
                                                                     
Income before
equity in earnings       46.6          36.9          186.6           163.6
from affiliated
companies
Equity in earnings
from affiliated       0.5       —         1.3         0.7     
companies
                                                                     
Net income          $  47.1    $  36.9    $  187.9     $  164.3   
                                                                     
                                                                     
Basic net income     $   0.47     $   0.37     $   1.88       $   1.64    
per common share:
                                                                     
Diluted net income   $   0.46     $   0.36     $   1.84       $   1.61    
per common share:
                                                                     
                                                                     
Weighted-average
common shares:
                                                                     
Basic                    99.7          100.4         100.0           100.2
Diluted               101.9     102.2     102.1       102.0   
                                                                             

(a) Other operating income for the year ended December 31, 2012 includes
income from a $9.6 million business interruption insurance settlement related
to a prior year claim, a $4.9 million gain on the sale of land and a $5.0
million charge for additional environmental reserves primarily for remediation
of a manufacturing facility sold in 1986.

(b) Non-operating expense is the accelerated amortization of deferred
financing costs and the deferred expense on interest rate swaps related to
repaying the term loan and refinancing our revolving credit facility in June
2013. In 2012, the 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 of the Company’s 6.75% senior subordinated notes.

Hexcel Corporation and Subsidiaries

Condensed Consolidated Balance Sheets
                                           Unaudited
                                                 December 31,     December 31,
(In millions)                                               
                                                 2013             2012
Assets                                                      
Current assets:
Cash and cash equivalents                      $ 65.5           $ 32.6
Accounts receivable, net                         232.4            229.0
Inventories, net                                 265.3            232.8
Prepaid expenses and other current assets     93.2          81.3      
Total current assets                             656.4            575.7
                                                                  
Property, plant and equipment                    1,661.2          1,459.2
Less accumulated depreciation                 (593.8    )    (544.8    )
Property, plant and equipment, net               1,067.4          914.4
                                                                  
Goodwill and other intangible assets, net        61.0             57.8
Investments in affiliated companies              23.3             22.6
Deferred tax assets                              10.3             15.4
Other assets                                  17.7          17.2      
Total assets                                 $ 1,836.1      $ 1,603.1   
                                                                  
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities of        $ 3.0            $ 16.6
capital lease obligations
Accounts payable                                 135.9            115.7
Accrued liabilities                           129.8         103.0     
Total current liabilities                        268.7            235.3
                                                                  
Long-term notes payable                          292.0            240.0
Other non-current liabilities                 115.0         133.7     
Total liabilities                                675.7            609.0
                                                                  
Stockholders' equity:
Common stock, $0.01 par value, 200.0
shares authorized, 104.0 shares issued at        1.0              1.0
December 31, 2013 and 102.4 shares issued
at December 31, 2012
Additional paid-in capital                       642.3            617.0
Retained earnings                                636.1            448.2
Accumulated other comprehensive income        10.7          (31.9     )
(loss)
                                                 1,290.1          1,034.3
                                                                            
Less – Treasury stock, at cost, 5.1 shares
at December 31, 2013 and 2.5 shares at        (129.7    )    (40.2     )
2012
Total stockholders' equity                    1,160.4       994.1     
Total liabilities and stockholders' equity   $ 1,836.1      $ 1,603.1   
                                                                  

Hexcel Corporation and Subsidiaries                  
Condensed Consolidated Statements of Cash Flows
                                                       Unaudited
                                                       Year to Date Ended

                                                       December 31,
(In millions)                                         2013       2012     
                                                                  
Cash flows from operating activities
Net income                                             $ 187.9      $ 164.3
                                                                      
Reconciliation to net cash provided by operating
activities:
Depreciation and amortization                            59.3         57.2
Amortization of debt discount and deferred financing     2.1          3.1
costs and call premium expense
Deferred income taxes                                    16.4         30.9
Equity in earnings from affiliated companies             (1.3   )     (0.7   )
Stock-based compensation                                 18.9         15.8
Gain on sale of land                                     —            (4.9   )
Excess tax benefits on stock-based compensation          (5.3   )     (6.8   )
                                                                      
Changes in assets and liabilities:
Decrease (increase) in accounts receivable               6.4          (28.1  )
Increase in inventories                                  (28.4  )     (15.2  )
(Increase) decrease in prepaid expenses and other        (3.3   )     0.7
current assets
Increase in accounts payable/accrued liabilities         19.2         20.3
Other – net                                            1.0       (4.2   )
Net cash provided by operating activities (a)          272.9     232.4  
                                                                      
Cash flows from investing activities
Capital expenditures and deposits for capital            (194.9 )     (263.7 )
purchases (b)
Proceeds from sale of surplus real estate              —         5.3    
Net cash used in investing activities                  (194.9 )   (258.4 )
                                                                      
Cash flows from financing activities
Borrowings from senior secured credit facility           309.0        87.0
Issuance costs related to new Senior Secured Credit      (2.4   )     (0.6   )
Facility
Repayments of Capital lease obligations and other        (3.8   )     (0.5   )
debt, net
Repayment of senior secured credit facility              (17.0  )     —
Repayment of senior secured credit facility – term       (85.0  )     (7.5   )
loan
Repayment of previous senior secured credit facility     (165.0 )     —
Purchase of stock                                        (90.0  )     —
Repayment of 6.75% senior subordinated notes             —            (73.5  )
Call premium payment for 6.75% senior subordinated       —            (0.8   )
notes
Activity under stock plans                             7.0       4.1    
Net cash provided by (used in) financing activities    (47.2  )   8.2    
                                                                      
Effect of exchange rate changes on cash and cash       2.1       0.9    
equivalents
Net increase (decrease) in cash and cash equivalents     32.9         (16.9  )
Cash and cash equivalents at beginning of period       32.6      49.5   
Cash and cash equivalents at end of period            $ 65.5     $ 32.6   
                                                                      
Supplemental Data:
Free cash flow (a)+(b)                                 $ 78.0       $ (31.3  )
Cash interest paid                                       7.6          12.6
Cash taxes paid                                          49.0         23.4
Accrual basis additions to property, plant and         $ 206.5      $ 241.3
equipment
                                                                             

Hexcel Corporation and Subsidiaries                                
Net Sales to Third-Party Customers by Market
Quarters Ended December 31, 2013 and 2012           (Unaudited)     Table A
(In           As Reported                          Constant Currency (a)
millions)
                                                         FX                     B/(W)
Market          2013       2012     B/(W) %              2012    
                                                         Effect                 %
                                                         (b)
Commercial    $  283.6    $  234.2    21.1      $  1.0     $   235.2    20.6
Aerospace
Space &            88.8          93.4      (4.9  )       1.1          94.5      (6.0  )
Defense
Industrial      54.4       59.7     (8.9  )    1.7       61.4     (11.4 )
Consolidated  $  426.8    $  387.3    10.2    $  3.8     $  391.1    9.1   
Total
Consolidated
% of Net        %          %                           %        
Sales
Commercial         66.5          60.5                                 60.1
Aerospace
Space &            20.8          24.1                                 24.2
Defense
Industrial      12.7       15.4                        15.7     
Consolidated    100.0      100.0                       100.0    
Total
                                                                      
                                                                      
Years Ended December 31, 2013 and 2012              (Unaudited)     Table A
(In           As Reported                          Constant Currency (a)
millions)
                                                         FX                     B/(W)
Market          2013       2012     B/(W) %              2012    
                                                         Effect                 %
                                                         (b)
Commercial     $   1,084.5   $   944.1     14.9      $   3.3      $   947.4     14.5
Aerospace
Space &            375.9         357.0     5.3           2.8          359.8     4.5
Defense
Industrial      217.8      277.1    (21.4 )    5.0       282.1    (22.8 )
Consolidated  $  1,678.2  $  1,578.2  6.3     $  11.1    $  1,589.3  5.6   
Total
Consolidated
% of Net        %          %                           %        
Sales
Commercial         64.6          59.8                                 59.6
Aerospace
Space &            22.4          22.6                                 22.6
Defense
Industrial      13.0       17.6                        17.8     
Consolidated    100.0      100.0                       100.0    
Total
                                                                                

(a) To assist in the analysis of our net sales trend, total net sales and
sales by market for the quarter and year ended December 31, 2012 have been
estimated using the same U.S. dollar, British pound and Euro exchange rates as
applied for the respective period in 2013 and are referred to as “constant
currency” sales.

(b) FX effect is the estimated impact on “as reported” net sales due to
changes in foreign currency exchange rates.

Hexcel Corporation and Subsidiaries                                
Segment Information                                (Unaudited)      Table B
                        Composite       Engineered   Corporate &
(In millions)          Materials (b)  Products    Other         Total
                                                     (a)(b)
Fourth Quarter 2013                                          
Net sales to external $ 324.8         $ 102.0      $ —           $   426.8
customers
Intersegment sales     16.2          0.6        (16.8   )     —       
Total sales             341.0           102.6        (16.8   )       426.8
Operating income        68.5            15.5         (17.0   )       67.0
(loss)
% Operating margin      20.1      %     15.1    %                    15.7    %
                                                                     
Depreciation and        15.4            1.2          —               16.6
amortization
Stock-based             1.4             0.3          2.5             4.2
compensation expense
Accrual based
additions to capital   81.4          3.2        —            84.6    
expenditures
Fourth Quarter 2012                                            
Net sales to external $ 298.1         $ 89.2       $ —           $   387.3
customers
Intersegment sales     12.0          0.8        (12.8   )     —       
Total sales             310.1           90.0         (12.8   )       387.3
Operating income        53.6            12.2         (11.5   )       54.3
(loss)
% Operating margin      17.3      %     13.6    %                    14.0    %
                                                                     
Depreciation and        13.0            1.2          —               14.2
amortization
Stock-based             0.8             0.2          1.7             2.7
compensation expense
Accrual based
additions to capital   62.4          4.2        —            66.6    
expenditures
                                                                     
                                                            
Full Year 2013                                               
Net sales to external $ 1,286.9       $ 391.3      $ —           $   1,678.2
customers
Intersegment sales     68.0          1.8        (69.8   )     —       
Total sales             1,354.9         393.1        (69.8   )       1,678.2
Operating income        276.3           58.9         (64.3   )       270.9
(loss)
% Operating margin      20.4      %     15.0    %                    16.1    %
                                                                     
Depreciation and        54.5            4.7          0.2             59.4
amortization
Stock-based             5.7             1.2          12.0            18.9
compensation expense
Accrual based
additions to capital   194.6         11.9       —            206.5   
expenditures
Full Year 2012                                                 
Net sales to external $ 1,230.9       $ 347.3      $ —           $   1,578.2
customers
Intersegment sales     56.8          2.0        (58.8   )     —       
Total sales             1,287.7         349.3        (58.8   )       1,578.2
Operating income        257.3           50.6         (59.1   )       248.8
(loss)
% Operating margin      20.0      %     14.5    %                    15.8    %
                                                                     
Other operating         (14.5     )     —            5.0             (9.5    )
(income) expense (b)
Depreciation and        52.6            4.5          0.1             57.2
amortization
Stock-based             4.5             0.9          10.4            15.8
compensation expense
Accrual based
additions to capital   228.6         12.5       0.2          241.3   
expenditures
                                                                             

(a) We do not allocate corporate expenses to the operating segments.

(b) Other operating (income) expense for the year ended December 31, 2012
includes income from a $9.6 million business interruption insurance settlement
related to a prior year claim, a $4.9 million gain on the sale of land and a
$5.0 million charge for additional environmental reserves primarily for
remediation of a manufacturing facility sold in 1986.

Hexcel Corporation and Subsidiaries
Reconciliation of GAAP and Non-GAAP Operating Income    Table C
and Net Income
                          Unaudited
                          Quarter Ended            Year Ended
                                                
                          December 31,             December 31,
(In millions)                2013    2012          2013      2012  
                                                                   
GAAP operating income     $   67.0     54.3        $     270.9     $   248.8
- Other operating income     —       —             —         (9.5  )
(a)
Adjusted Operating Income $   67.0     54.3        $     270.9     $   239.3
% of Net Sales                15.7  %  14.0  %           16.1  %       15.2  %
- Stock Compensation      $   4.2      2.7         $     18.9      $   15.8
Expense
- Depreciation and           16.6    14.2          59.4      57.2  
Amortization
Adjusted EBITDA           $   87.8    71.2      $    349.2   $  312.3 
                                                                             

                           Unaudited
                            Quarter Ended December 31,
                            2013                    2012                    
(In millions, except per   As Reported  EPS       As Reported  EPS
diluted share data)
                                                             
GAAP net income            $    47.1   $  0.46  $  36.9    $  0.36  
Adjusted net income        $    47.1   $  0.46  $  36.9    $  0.36  
                            Unaudited
                            Year Ended December 31,
                            2013                    2012                    
(In millions, except per   As Reported  EPS       As Reported  EPS
diluted share data)
                                                                   
GAAP net income             $     187.9   $  1.84   $   164.3     $  1.61
- Other operating income          —           —          (6.0  )       (0.06 )
(net of tax) (a)
- Non-operating expense        0.6      0.01    0.7       0.01  
(net of tax) (b)
Adjusted net income        $    188.5  $  1.85  $  159.0   $  1.56  
                                                                   

(a) Other operating income for the year ended December 31, 2012 includes
income from a $9.6 million business interruption insurance settlement related
to a prior year claim, a $4.9 million gain on the sale of land and a $5.0
million charge for additional environmental reserves primarily for remediation
of a manufacturing facility sold in 1986.

(b) Non-operating expense in 2013 is the accelerated amortization of deferred
financing costs and the deferred expense on interest rate swaps related to
repaying the term loan and refinancing our revolving credit facility in June
2013. Non-operating expense in 2012 is the accelerated amortization of
deferred financing costs and expensing of the call premium from redeeming
$73.5 million in June 2012 of the Company’s 6.75% senior subordinated notes.

Management believes that adjusted operating income, adjusted EBITDA, adjusted
net income and free cash flow (defined as cash provided by operating
activities less cash payments for capital expenditures), which are non-GAAP
measurements, are meaningful to investors because they provide a view of
Hexcel with respect to ongoing operating results excluding special items.
Special items represent significant charges or credits that are important to
an understanding of Hexcel’s overall operating results in the periods
presented. In addition, management believes that total debt, net of cash,
which is also a non-GAAP measure, is an important measure of Hexcel’s
liquidity. Such non-GAAP measurements are not recognized in accordance with
generally accepted accounting principles and should not be viewed as an
alternative to GAAP measures of performance.

Hexcel Corporation and Subsidiaries 
Schedule of Net Income Per Common    Table D
Share
                            Unaudited
                             Quarter Ended               Year Ended
                                                       
                             December 31,                December 31,
(In millions, except per    2013       2012         2013       2012
share data)
                                                                 
Basic net income per
common share:
Net income                   $   47.1    $   36.9        $   187.9   $   164.3
Weighted average common       99.7     100.4      100.0    100.2
shares outstanding
                                                                         
Basic net income per        $  0.47   $  0.37     $  1.88   $  1.64
common share
                                                                         
Diluted net income per
common share:
Net income                   $   47.1    $   36.9        $   187.9   $   164.3
Weighted average common          99.7        100.4           100.0       100.2
shares outstanding – Basic
                                                                         
Plus incremental shares
from assumed conversions:
Restricted stock units           0.8         0.7             0.7         0.8
Stock Options                 1.4      1.1        1.4      1.0
Weighted average common
shares                        101.9    102.2      102.1    102.0
outstanding–Dilutive
                                                                         
Diluted net income per      $  0.46   $  0.36     $  1.84   $  1.61
common share
                                                                         

Hexcel Corporation and                                        
Subsidiaries
Schedule of Total Debt, Net of Cash                              Table E
                                   Unaudited
                                   December 31,   September 30,   December 31,
(In millions)                     2013         2013          2012       
                                                                   
Notes payable and current
maturities of capital lease        $    3.0       $     4.8       $    16.6
obligations
Long-term notes payable and          292.0       262.0      240.0 
capital lease obligations
Total Debt                              295.0           266.8          256.6
Less: Cash and cash equivalents      (65.5 )      (59.7 )     (32.6 )
Total debt, net of cash           $   229.5   $    207.1   $   224.0 
                                                                             

Contact:

Hexcel Corporation
Michael Bacal, 203-352-6826
michael.bacal@hexcel.com
 
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