January Hexcel. All rights reserved.

Transcription

1 January

2 Risks, Uncertainties and Other Factors with Respect to Forward-Looking Statements Disclaimer Certain statements contained in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Such statements that are not of historical fact constitute forward-looking statements and accordingly, involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the Forward Looking Statements and Risk Factors sections of the Company s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and its third quarter 2018 quarterly report on Form 10-Q filed with the Securities and Exchange Commission. We do not undertake an obligation to update our forward-looking statements to reflect future events. 2

3 HEXCEL IS A GLOBAL LEADER IN ADVANCED COMPOSITES TECHNOLOGY Technology leader with a broad range of materials/products/qualifications Leading, sole source positions in key markets with high barriers to entry Sustainable competitive advantage Excellent customer relationships 2018 Sales $2.2 billion Commercial Aerospace 70% Space & Defense 17% Industrial 13% Growing share of long-term growth markets Long history of creating shareholder value 3

4 REASONS TO INVEST IN HEXCEL Investing in Innovation Achieving Operational Excellence Growing Shareholder Return Leadership in Attractive Markets Culture of Innovation Operational Excellence Increasing Shareholder Value Unrivaled product portfolio Investments in markets with long-term growth potential Technology and innovation for sustained growth Driving productivity through optimized performance ROIC well above cost of capital 50% increase in quarterly dividends since 2015 >50% of net income returned to shareholders 4 Proven execution, strong earnings growth, exceptional cash generation

5 INDUSTRY-LEADING MARKET POSITIONS Our technology enables sole source positions with high barriers to entry We offer innovative, high-value materials and products Composite content is growing in technology-intensive markets Ramp-up in build rates for compositeintensive programs creates growth COMMERCIAL AEROSPACE Airbus and Boeing Engines/Nacelles Regional/Business SPACE & DEFENSE Rotorcraft Military Aircraft Launch Vehicles Satellites 70% 17% 13% INDUSTRIAL Wind Energy Automotive Recreation Other 2018 Sales Growth fueled by composite penetration and technology innovation 5

6 WE HAVE AN UNRIVALED RANGE OF PRODUCTS Everything from carbon fibers and reinforcement fabrics to prepregs, honeycomb core, tooling materials and more... from raw materials to fly-away parts... vertical integration is a strength and a differentiator. PAN Polyacrylonitrile precursor CARBON FIBER A320neo sharklets LEAP fan blades/case F-35 wings REINFORCEMENTS Aerospace primary and secondary structures Aircraft radomes 787 stringers CARBON PREPREGS Aerospace primary and secondary structures A350 fuselage and wings GE90 fan blade GLASS PREPREGS Wind turbine blades Aerospace wing-to-body fairings Aerospace secondary structures HONEYCOMB Rotorcraft blades Aircraft flooring Nacelle structures Acousti-Cap ENGINEERED PRODUCTS Structural assemblies Additive manufacturing Machine/shaped core Tooling system Compression molded parts Pultruded profiles Strong stiff lightweight fatigue resistant corrosion resistant 6

7 WE DELIVER WHAT OUR CUSTOMERS WANT Advanced composite solutions that are stronger, lighter and tougher providing optimized long term value. Carbon fiber is 5x stronger than aluminum Carbon fiber is 30% lighter than aluminum Our products are tougher, stiffer and more durable 7

8 WE INVEST IN TECHNOLOGY TO GROW OUR CAPABILITIES We expand our horizons with strategic acquisitions and investments JANUARY 2019: Acquisition Custom RF / EMI and microwave absorbing composite materials for military, aerospace and industrial applications MARCH 2018: Collaboration Thermoplastic composite aerospace solutions combining Hexcel carbon fiber expertise with Arkema PEKK expertise DECEMBER 2017: Acquisition Additive manufacturing to produce 3D printed parts for Commercial Aerospace and Space and Defense OCTOBER 2017: Acquisition Strengthens development capability and technologies for next-generation aerospace and industrial applications MAY 2016: Investment Carbon fiber recycling to produce aerospace and industrial parts to create a full lifecycle solution JANUARY 2016: Acquisition Non-crimp fabric technology, lightweight carbon fiber multi-axials, highly engineered carbon and glass fiber fabrics, dry reinforcements 8

9 COMMERCIAL AEROSPACE COMPOSITES PENETRATION Composite content percentage by weight Continued secular penetration with next-generation: Primary structure Secondary structure Engines and nacelles $1.5M 9

10 70% COMMERCIAL AEROSPACE Commercial Aviation Engines/Nacelles Other Commercial Aerospace Growing composites secular penetration Strong global demand eight-year backlog (Airbus & Boeing) Growing build rates for narrow body programs; increased shipset content for A320neo and B737 MAX over legacy programs $ millions $1,429 $1,410 $1,525 $1,215 $1,286 $1, Airbus and Boeing Other Commercial Aerospace 10

11 AIRBUS AND BOEING BACKLOG Backlog is worth approximately $10 billion to Hexcel A220/320 single aisle 6,536 A330 twin aisle 295 A350 twin aisle 659 A380 jumbo single aisle 4, jumbo , 767 twin aisle , 777x twin aisle twin aisle Single Aisle Legacy Single Aisle New Widebody Legacy Widebody New Jumbo 11

12 17% SPACE & DEFENSE Rotorcraft Fighters Launch Vehicles Transport $ millions Well-positioned, diverse applications Hexcel carbon fiber is the industry standard Rotorcraft are ~50% of sales Hexcel content is significant on key programs such as JSF F-35, A400M, V22, CH-53K, and Black Hawk $376 $376 $337 $322 $344 $

13 13% INDUSTRIAL Wind Energy Automotive Recreation Infrastructure Marine $ millions Broad range of performance applications Wind energy comprises ~50% of the total Experiencing continued strong growth in 2019 Multi-year contract with Vestas Automotive accelerating composite adoption $218 $264 $238 $253 $220 $

14 $2,189 PROVEN PERFORMANCE SALES ADJUSTED OPERATING INCOME ADJUSTED DILUTED EPS Record results and well positioned for growth $ millions, except EPS FREE CASH FLOW TOTAL DEBT / ADJUSTED EBITDA RETURN ON CAPITAL 14

15 2019 GUIDANCE $ millions, except EPS CUSTOMER SALES COMMERCIAL AEROSPACE High-single digit growth LOW $2,375 HIGH $2,475 SPACE & DEFENSE Double-digit growth INDUSTRIAL Double-digit growth ADJUSTED DILUTED EPS CAPITAL EXPENDITURES FREE CASH FLOW LOW $3.38 HIGH $3.52 LOW $170 HIGH $190 >$250 RETURN TO SHAREHOLDERS >50% OF NET EARNINGS Growing Sales and Strong Free Cash Flow Generation 15

16 2019 GUIDANCE ADDITIONAL DETAILS Incremental $20 million depreciation on capex to support growth 24% tax rate cash taxes up $30 million from 2018 Q1 cash usage expected as usual Working capital is seasonal SG&A higher in Q (versus Q2-Q4) by ~$8 million Timing of stock incentive compensation expense R&T spend up double digits - investing in innovation and qualifications FX exposure to 2019 operating income is about 75% hedged Strong dollar vs. Euro/GBP is an advantage 5% movement is ~$3 million operating income impact in 2019, net of hedges 2019 hedge rate is higher than the 2018 level 16

17 THE JOURNEY FROM CASH INVESTMENT TO CASH GENERATION Invest in leading-edge technology built assets to deliver future revenue growth generate strong ROIC and growing free cash flow CAPEX FREE CASH FLOW 17 On track to deliver $1 billion of free cash flow from

18 SUMMARY Expect 2019 to be a record year for sales, operating income, EPS and cash generation Hexcel remains a proven leader and a great investment in an attractive seculargrowth industry with few competitors and high barriers to entry We have a growing leadership position in attractive markets Our innovation, technology and vertical integration are differentiators We are committed to Shareholder Return Record-setting cash generation expected to continue for years to come Return to shareholders of >50% of net earnings Growing dividends increased three times since initiated in Long-term growth with strong financial performance drives investor return