QUOTE AND NEWS
SeekingAlpha  Feb 18  Comment 
ByAngel Stoychev: 1. Business overview Hexcel Corp (HXL) engages in the development, manufacture and marketing of lightweight and high-performance structural materials with commercial aerospace and defense and industrial applications. Its...
SeekingAlpha  Jan 24  Comment 
Hexcel (HXL) Q4 2013 Earnings Call January 24, 2014 10:00 am ET Executives Wayne C. Pensky - Chief Financial Officer and Senior Vice President Nick L. Stanage - Chairman of The Board, Chief Executive Officer and President ...
StreetInsider.com  Jan 23  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Hexcel+Corp.+%28HXL%29+Reports+In-Line+Q4+EPS/9083015.html for the full story.
SeekingAlpha  Jan 16  Comment 
By Markus Aarnio: In this article, I will feature one industrial stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria: The stock was sold by three or...
DailyFinance  Dec 16  Comment 
Hexcel Corporation (NYSE: HXL)(Paris: HXL), today provided its guidance for 2014 and reaffirmed its outlook and targets through 2017. 2014 Guidance Mr. Nick Stanage, Hexcel’s Chief Executive Officer, summarizing the ...
Benzinga  Dec 4  Comment 
Hexcel Corporation (NYSE: HXL) announced today that, effective January 1, 2014, Hexcel's Board of Directors has elected Mr. Nick L. Stanage as Chairman of the Board. Mr. Stanage will also continue to be President & Chief...
Market Intelligence Center  Nov 1  Comment 
After closing Thursday at $42.31, Hexcel (HXL) presents an attractive opportunity to get a 4.68% return in just 232 days, which is an annualized return of 7.37% (for comparison purposes only). To enter this trade, sell one Jun. '14 $40.00 call for...
StreetInsider.com  Oct 21  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Hexcel+Corp.+%28HXL%29+Tops+Q3+EPS+by+2c/8794917.html for the full story.
Market Intelligence Center  Oct 11  Comment 
After closing Thursday at $39.41, Hexcel (HXL) presents an attractive opportunity to get a 2.61% return in just 162 days, which is an annualized return of 5.88% (for comparison purposes only). To enter this trade, sell one Mar. '14 $35.00 call for...
Benzinga  Oct 10  Comment 
In a report published Thursday, Canaccord Genuity analyst Ken Herbert initiated coverage on Hexcel Corporation (NYSE: HXL) with a Buy rating and $46.00 price target. In the report, Canaccord Genuity noted, “We are initiating coverage of HXL...




 
TOP CONTRIBUTORS

Hexcel (NYSE:HXL), is an advanced composites company that makes everything from skis to aircraft parts, and is one of the largest producers of carbon fiber in the US. Hexcel decided to focus exclusively on the advanced composites industry in 2007, and as such divested its ballistics, electronics, and architectural product lines to focus on carbon fiber products, a market that is expected to grow to nearly $10 billion in 2010.[1] Part of this potential is realized in the commercial aerospace market.

Ever since airlines suffered from $140 a barrel of oil in mid-2008, airlines have demanded more efficient aircraft to cope with rising fuel costs. As a result, the aerospace industry is becoming increasingly dependent on carbon fiber composites, which are lighter and stronger than conventional metals,[2] making them perfect materials for lighter, fuel-efficient jets. The increase in aerospace demand for composites is evident in the make-up of the latest aircraft models, like Boeing's 787 Dreamliner and Airbus's A350 XWB. Both models have about 50% of their weight content as composites.[3][4] At the end of May in 2008, Hexcel was awarded a contract to supply composite materials for A350 XWB aircraft through 2025.[5]

Company Overview

Hexcel is an advanced composites company that makes everything from recreational equipment like bikes and skis to aircraft, satellites, and wind turbine blades. The aerospace industry remains its most important customer, however, as half of all sales in 2009 were to the aerospace industry.[6] Other industries that HXL sells to include the Space and Defense industries as well as the general industrial marketplace.

Business and Financial Metrics

During 2009, HXL had total sales of $1.1 billion, a decline from the previous year of $1.3 billion.[7] The decline in sales in 2009 reflects the volume declines in Commercial Aerospace and Industrial markets. However, HXL was able to partially reduce the impact this had on its net earnings by also cutting its costs. As a result, HXL's net income declined from $111 million in 2008 to $56 million in 2009.[7]

Business Segments

HXL breaks its operations into two segments: i) Composite Materials, and ii) Engineered Products.

Composite Materials (77.3% of net sales in 2009)

Hexcel produces its own carbon fiber, which is the main raw material for all its other products. At the end of 2009, Hexcel’s carbon fiber production capacity was 7000 tons.[8] In addition to carbon fiber, this segment of Hexcel also produces reinforcement fabrics, pre-impregnated materials, structural adhesives, and honeycomb structures. Applications for these products include skis, bikes, wind turbine rotor blades, aeroengines and yachts. In 2009, this segment earned $856.5 million in sales.[9]

Engineered Products (22.7% of net sales in 2009)

This segment of Hexcel produces composite structures and machined honeycomb that are used almost exclusively for aircraft structures and components. The primary end-uses for the products of this segment include wing panels, flight deck panels, helicopter blades, door liners, flaps, and wings. In 2009, this segment earned $251.8 million in net sales.[9]

Key Trends and Forces

Rising prices for oil and natural gas increase demand for carbon composites

Increases in the price of crude oil is driving up fuel prices. To make their products more fuel-efficient, manufacturers of planes and automobiles are turning to carbon composites as the alternative to traditional steel and aluminum parts.[10] Carbon composites are lighter and non-corroding,[11] which has led to the growth in the "Very Light Jet" market, which is trending toward all-composite airframes.

Very Light Jet" market

The Very Light Jet, or VLJ, is becoming an increasingly popular alternative for corporate fliers. The VLJ is half as expensive as the traditional corporate jet[12] and more cost-effective than commercial airlines because of lower fuel costs and the use of lighter composites materials.[13] The price of VLJs range from $1 to $3 million.[14] Although some manufacturers continue to use aluminum frames and composites for secondary structures, many others are proceeding to produce VLJs with all-composite airframes, expanding the market for carbon fiber materials (like those made by Hexcel).[14]

Hexcel benefits from the high price of carbon fiber

Due to strong demand from the aerospace industry[15], the price of carbon fiber has been rising.[16] In comparison, the price for aluminum is about $1.30 per pound.[17] However, comparisons by weight are misleading since carbon composites are 15 times stronger than aluminum.[18][19]

Since Hexcel produces its own carbon fiber, it is insulated from high prices and even benefits by selling carbon fibers that it does not use to third parties. While strong demand will drive prices up, it is also expected to drive increases in production, which will eventually bring prices back down. The output in 2010 is expected to be 53,000 tons.[20] In comparison, Hexcel has production capacity of 7,000 tons by the end of 2009.

Competition

The leading carbon fiber companies include:

  • Cytec Industries (CYT) – Cytec’s Engineered Materials division produces carbon composites for aerospace applications.[21]
  • Mitsubishi Rayon Co., Ltd. – Produces carbon fibers, intermediate materials, and fabricated composite products. [22]
  • SGL Technologies – Produces oxidized fiber, partially carbonized fiber, and heavy-tow carbon fiber.[23]
  • Toho Tenax Co., Ltd. – Mass-produces polyacrylonitrile based fibers.[24]
  • Toray Industries Inc (TRYIY) – One of Toray’s business segment is Carbon Fiber Composite Materials.[25]
  • Zoltek (ZOLT) – Zoltek has 85% of the commercial aircraft brake pad market.[26]

Toray, Mitsubishi Rayon and Teijin, Ltd. have 70% of the world's carbon fiber market share.[27] Toray alone has 30% of the world's carbon fiber market share.[27]

References

  1. Growth Opportunities in the Carbon Fiber Market 2004-2010: Summary
  2. Fibre reinforced composites in aircraft construction
  3. Boeing 787 Dreamliner will provide new solutions for airlines, passengers
  4. Airbus A350 XWB long-range, extra-wide-bodied airliner
  5. Hexcel to Supply Carbon Fiber Composites for Airbus A350 XWB Primary Structures
  6. HXL 10-K 2009 Item 1 Pg. 6
  7. 7.0 7.1 HXL 10-K 2009 Item 6 Pg. 27
  8. Hexcel opens first carbon fiber plant in Spain
  9. 9.0 9.1 HXL 10-K 2009 Item 7 Pg. 31
  10. Recyclable Carbon Fiber: Extreme Fuel-Efficiency
  11. Advantages of Carbon Composites
  12. Feeling the Need for Speed
  13. Very Light Jets Creating A Demand For Composites
  14. 14.0 14.1 Very Light Jets Are Taking Off from Ultralight Living
  15. Why Bike Prices Are Shifting Higher
  16. Zoltek Rewards True Believers
  17. Metal Prices & News on the Internet
  18. Here comes the everyday carbon fiber car
  19. Wood, Alumnium, Steel and Composites
  20. Carbon fiber makers see broad use of it in cars
  21. Cytec Engineered Materials
  22. Mitsubishi Rayon Co., Ltd. Fibers
  23. SGL Carbon Aktiengesellschaft Company Profile
  24. Toho Tenax
  25. Carbon Fiber Composite Materials
  26. Zoltek Rewards True Believers
  27. 27.0 27.1 Carbon fiber makers see broad use of it in cars
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