Hexcel Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
July 30, 2026

Key Takeaways

  • Positive Sentiment: Hexcel raised its 2026 guidance, increasing sales expectations to $2.025–$2.125 billion and adjusted EPS to $2.30–$2.40, while maintaining free cash flow guidance above $195 million.
  • Positive Sentiment: Commercial aerospace sales rose 19% year over year to $347 million, led by the A350 and 787, with growth also across the A320, 737 MAX, and A220 programs. Management cited firm A350 orders supporting at least 80 ship sets in 2026 and potential upside.
  • Positive Sentiment: Operating leverage drove adjusted operating margin up to 13.9% from 11.1% a year earlier, while first-half adjusted EBITDA increased 25% on 9% sales growth. Management reiterated a path toward an 18% adjusted operating margin by the end of the decade as aerospace and defense production ramps.
  • Neutral Sentiment: Hexcel plans to hire roughly 400 employees and restart a carbon-fiber line in Salt Lake City earlier than planned to prepare for expected 2027 demand. These actions will create near-term hiring and startup costs, contributing to lower implied second-half EPS and margins.
  • Negative Sentiment: Defense, space, and other sales declined 8% year over year to $183 million, primarily because of industrial-business divestitures and restructuring, while some defense programs experienced timing-related softness. Net leverage improved to 2.3 times but remains above the company’s 1.5–2.0 times target range, keeping debt reduction a capital-allocation priority.
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Earnings Conference Call
Hexcel Q2 2026
00:00 / 00:00

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Operator

Thank you for standing by, and welcome to Hexcel's second quarter 2026 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. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Kurt Goddard, Vice President, Investor Relations. Sir, please go ahead.

Kurt Goddard
Kurt Goddard
VP of Investor Relations at Hexcel

Hello, everyone. Welcome to Hexcel Corporation's second quarter earnings conference call. Before beginning, let me cover the formalities. I would like to remind everyone about the safe harbor provisions related to any forward-looking statements we may make during the course of this call. Certain statements contained in this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They involve estimates, assumptions, judgments, and uncertainties caused by a variety of factors that could cause future results or outcomes to differ materially from our forward-looking statements today. Such factors are detailed in the company's SEC filings and earnings release. A replay of this call will be available on the investor relations page of our website. Lastly, this call is being recorded by Hexcel Corporation and is copyrighted material. It cannot be recorded or rebroadcast without our express permission.

Kurt Goddard
Kurt Goddard
VP of Investor Relations at Hexcel

Your participation on this call constitutes your consent to that request. With me today are Tom Gentile, our chairman, CEO, and president, and Jamie Coogan, our Chief Financial Officer. The purpose of the call is to review our second quarter 2026 results, detailed in our news release issued yesterday. Now, let me turn the call over to Tom. Tom?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Thanks, Kurt. Hello, everyone, and thank you for joining us today for Hexcel's second quarter 2026 earnings call. With us today for his first Hexcel earnings call is our new Chief Financial Officer, Jamie Coogan, who joined Hexcel in early May. Jamie brings extensive financial leadership and broad experience across aerospace & defense, as well as industrial manufacturing. We are excited to have him on board as we grow Hexcel. Jamie has hit the ground running, visiting our global operations and meeting with investors, analysts, banks, and getting up to speed with our customers and supply chain, many at last week's Farnborough Airshow. You will hear from Jamie shortly. As you read in the earnings release we issued yesterday, Hexcel delivered another strong quarter with solid performance across the company.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

With the ramp-up in commercial aircraft production across all the major programs now firmly taking hold, our operating leverage continues to strengthen from higher volumes combined with strong execution from our team, which is leading to higher margins and stronger cash flow. Coming out of the Farnborough Airshow last week, the near-, mid-, and longer-term commercial aerospace trajectory looks bright. Industry fundamentals remain compelling with a backlog of commercial aircraft at more than 18,000 units, according to data from IATA, including an estimated unmet demand of more than 5,000 aircraft because of the post-pandemic supply-demand imbalance. Air traffic across most global regions continues to be strong despite the conflicts in Iran. At their Investor Day at the Farnborough Airshow, Airbus was particularly bullish on the A350, Hexcel's largest program. Against this backdrop, airlines continue to need newer, more fuel-efficient aircraft, and that aligns directly with Hexcel's value proposition.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

With fuel costs remaining elevated and volatile, lightweighting is even more critical in driving fuel efficiency, directly supporting demand for advanced lightweight composite materials. Before turning to our second quarter results, I want to briefly address the situation in the Middle East. We continue to monitor developments closely and remain in regular contact with our customers and suppliers. To date, the impact on our business has been minimal. Our hedging strategy and disciplined approach to managing key cost inputs have helped mitigate near-term input price volatility, and we will continue to take prudent steps to protect the business going forward as we all hope for a timely resolution to the Iran conflict. Turning to our second quarter results. Hexcel generated sales of $529 million in the second quarter, up 8% from the same quarter last year. Adjusted earnings per share of $0.66.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Gross margin improved again year-over-year as higher sales volume generated greater operating leverage through improved cost absorption, which resulted in adjusted operating margins of 13.9% compared to 11.1% in Q2 2025. In our commercial aerospace market, sales were $346.6 million for the quarter, an 18.3% increase over the second quarter of 2025. Rising volumes on the A350 and 787 programs drove growth in this market, while narrowbody sales also increased year-over-year with the Boeing 737 MAX, the Airbus A320, and the A220 programs all increasing. Sales from other commercial aerospace increased 3.7% over the same period last year, led by regional jets. As we look across the business at this point in the year, we are clearly experiencing strong demand for our lightweight carbon fiber as the recovery in OEM production rates continue.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Recent production data reported by Airbus and Boeing highlights steady progress in output across the major programs, even as the supply chain environment remains dynamic. The rising production rates reinforce our confidence that the industry is moving forward toward a more sustained production ramp. As we have discussed before, as an upstream material supplier, Hexcel is generally shipping around four to six months ahead of OEM aircraft assemblers. So we manage the business based on production demand, not reported deliveries. The purchase orders we are receiving, together with our bottoms-up demand planning, continue to support our outlook. When Airbus and Boeing ultimately achieve their publicly stated peak build rates on the major commercial programs, that will generate $500 million in incremental annual sales for Hexcel from our existing contracts. In addition, we expect about $200 million in incremental sales in defense and space before the end of the decade.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

This continued recovery in commercial and military production rates will create improved buying leverage for Hexcel. We have a path to 18% adjusted operating margin as the OEM and defense primes reach their target production levels for each program before the end of the decade. On the A350 program specifically, we continue to see demand signals that support our outlook of 50, or excuse me, 80 ship sets in 2026. While there can be a perceived disconnect at times between our order profile and current OEM deliveries, our demand is tied to production activity in the supply chain, and we remain confident in our 2026 A350 guidance of at least 80 aircraft. During the Farnborough Airshow earlier this month, Airbus publicly confirmed that they are producing at a rate between eight and nine aircraft per month.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

We do see some potential upside to our 80 aircraft guide based on purchase orders we've already received and in relation to the continuing dialogue we are having with Airbus. We now have firm orders from Airbus through the end of 2026 that confirm at least the 80 ship sets for the A350. To meet increasing demand for Hexcel's advanced lightweight composite material in the second half of 2026, we will be accelerating hiring and bringing back online carbon fiber lines previously idle during the pandemic. Additional volume improves utilization of our existing asset base and drives further operating leverage, supporting margin expansion and the path to 18% operating margin before the end of the decade. Turning to the defense space and other markets, sales were $182.7 million in the quarter, or lower by 7%.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

This sales decrease is primarily a result of lower industrial volume given the strategic actions we have taken over the past year to de-emphasize this portion of our portfolio with the divestiture of our business in Austria and the restructuring of our industrial business in Leicester, England. As we noted in our first quarter call, the defense space and other markets can be choppy quarter-to-quarter due to the nature of defense and space spending and production timing, particularly for high-value but low-volume platforms. That said, defense and space remains a significant priority for Hexcel and a priority market for organic growth. We have existing positions on most current military programs that utilize lightweight composite materials and long-established relationships with leading global defense contractors. We are continually engaging new entrants in the defense market as well as what are commonly referred to as new space entrants.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

This is a burgeoning market where advanced lightweight composite materials provide the necessary performance characteristics for those platforms to operate in extreme environments. Our advanced composite materials play a critical role in enabling greater payload, extended range, and enhanced performance characteristics, including low observability across defense and space platforms. With our vertically integrated global footprint, Hexcel is uniquely positioned to support this market across regions. We are the only vertically integrated U.S.-domiciled manufacturer of high-strength aerospace-grade composite materials for commercial aircraft and defense and space platforms. Our vertically integrated operations across Europe provide access to ITAR-free capabilities as well as secure and sovereign access to advanced lightweight composite materials for customers outside the U.S.. For all these reasons, we are optimistic about the long-term prospects in the defense and space market.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

We expect growth from Defense and Space along with regional and business jets provide Hexcel with an estimated $200 million of incremental sales growth this decade. Longer term, we see accelerating growth in our Defense and Space market. With that, turning to capital allocation and guidance, our balance sheet and liquidity position remained solid in the second quarter and our capital allocation priorities remain unchanged. We intend to continue paying down debt with the goal of returning Hexcel's leverage to our targeted ratio of 1.5x-2x net debt -to-adjusted EBITDA. We remain committed to paying a dividend and after we return to the targeted leverage level, we are committed to returning cash to stockholders absent any inorganic opportunities that meet our strategic thresholds and return targets.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Given the continued recovery in production rates, we announced in yesterday's earnings release that we are increasing our full-year 2026 guidance for sales and adjusted earnings per share. We now expect sales in the range of $2.025 billion-$2.125 billion compared with our previous range of $2 billion-$2.1 billion. We are also raising adjusted EPS guidance to a range of $2.30-$2.40 compared with our previous range of $2.10-$2.30. Our guidance for free cash flow remains unchanged at greater than $195 million and CapEx remains unchanged at less than $100 million. The sales increase reflects expected upside to some of the commercial aerospace platforms, including the A350 and the 737 MAX. We are raising guidance with an appropriate degree of balance.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

The second half of the year will include typically seasonality in the third quarter as well as some increased hiring and startup costs as we accelerate bringing additional capacity back online. Even with those considerations, the underlying demand profile and the operating leverage in front of us support a stronger outlook for the year. We will continue hiring in the second half of the year and will start up an additional carbon fiber line to be ready for the production rate increases that we expect in 2027. Turning to some notable events for Hexcel during the second quarter. Our team received recognition from a number of customers that highlight the value we deliver and the strength of our long-term customer relationships. Embraer named Hexcel its Best Supplier of the Year in its Standards and Materials category for the second consecutive year.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Airbus recognized Hexcel with its Accredited Supplier Award, the highest distinction within the Airbus Supply Chain & Quality Improvement Program. [inaudible] recognized Hexcel with the Supplier of the Year award. We are honored to receive these recognitions from our customers. This recognition reflects the dedication of the Hexcel team and our continued focus on quality delivery and operational excellence. During the quarter, we made a number of significant announcements. In May, we announced the groundbreaking of the Hexcel Application Center at Wichita State University's National Institute for Aviation Research, NIAR. Excuse me. The new center expands our longstanding collaboration with NIAR and supports innovation in composite materials, automated processing, and aerospace manufacturing, which are all foundational research and development areas to grow composite adoption across aerospace platforms.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

In June, we announced a long-term industrial partnership and supply agreement with Deutsche Aircraft for advanced composite solutions for their next-generation regional turboprop, the D328eco. Last week, our team attended the Farnborough International Airshow, where we had the opportunity to engage with the industry, including customers, partners, and other key stakeholders. During the air show, we made a couple of key announcements. First, we announced a series of new and extended Long-Term Agreements with Boeing, reinforcing our collaboration with them across commercial, defense, and space programs. In addition, we announced that we have completed qualification for our HexPly M91 carbon fiber-reinforced epoxy prepreg system through the National Center for Advanced Materials Performance, NCAMP, an initiative through NIAR that makes this product available more broadly. The NCAMP database is particularly helpful to new A&D entrants, as they can readily access the performance data to assist in their material selection.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Overall, we are encouraged by the demand we see for Hexcel's advanced lightweight material solutions across commercial aerospace, defense, and space. Our broad product portfolio, technical expertise in innovation, customer relationships, and the vertical integration across multiple regional positions enables Hexcel to serve these markets well as volumes continue to rise. Against this backdrop, we are confident in the strategic priorities we have set for the company: executing on the commercial rate increases for our OEM customers, investing in innovation to secure positions on next-generation aircraft, capturing organic growth opportunities in defense and space, and deploying capital in a disciplined way. Our team is well-positioned to deliver for our stakeholders. I want to thank the entire Hexcel team for an outstanding second quarter. With that, I'll turn the call over to our new CFO, Jamie Coogan, to discuss the second quarter financials in more detail. Jamie?

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Thank you, Tom. I'm excited to be participating on my first Hexcel earnings call. I've been here about three months now. I'm quite impressed with the team, the industry reputation of Hexcel, the innovation, and most importantly, the growth opportunities ahead. I visited four of our sites at this point, with plans to visit every facility in the near future. I've been actively meeting with various stakeholders, and as Tom mentioned, just returned from the Farnborough Airshow. I've now personally met many of you on this call. I look forward to our continued engagement. My priorities are fully aligned with Tom and the Hexcel leadership team as we focus on execution, strengthening the balance sheet, and driving margin expansion through organic growth and cost control.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Hexcel is in a period of strong cash generation. I will be working closely with Tom and the board to ensure a disciplined capital allocation strategy. Now for the financial results. Second quarter 2026 sales of $529 million grew 8.1% in constant currency as commercial aircraft build rates ramp. Strong commercial aerospace growth was partially offset by lower defense, space, and other sales following the divestment of the Austrian industrial business on September 30, 2025 and the winding down of the industrial business at our Leicester, U.K., site as disclosed last quarter. As a side note, I will refer to constant currency percentage change for the remainder of my comments. By market, commercial aerospace second quarter sales totaled $347 million, increasing 19% compared to the second quarter of 2025 and comprised approximately 66% of our total quarterly sales.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Growth was led by wide-body A350 and 787 platforms, while narrow bodies, A320, 737 MAX, and A220 all increased year-over-year as well. Overall, we are pleased to see the stability and growing demand from our commercial aerospace customers. Sales for other commercial aerospace in the second quarter increased 4% year-over-year from growth in regional jets. Defense, space, and other second quarter sales totaled $183 million and represented approximately 34% of sales. Second quarter sales decreased 8% on lower industrial sales following the divestment of the Austrian industrial business last year. As I mentioned in my previous comment, we have now ceased industrial operations at our Leicester, U.K., site, effective June 30th. Annual sales at this site were around $15 million, and this site will continue to work on aerospace R&D projects.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

In terms of our defense and space business only, second quarter 2026 sales were unchanged compared to the second quarter of 2025. Strength in fixed wing, both in the U.S. and internationally, along with strength in international helicopters and growth in satellite sales, were offset by temporary softness in some other programs, including launchers and rocket motors. Remember that production volumes of many defense and space programs are low, so some quarters can be impacted by temporary timing issues and customer schedule shifts. The other category for industrial sales now comprises just under 5% of our total sales. Gross margin of 26.1% in the second quarter of 2026 increased from 22.8% in the second quarter of 2025 on improved operating leverage and price realization.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

We continue to grow back into our existing capacity, and as we restart idle assets, the overhead absorption benefit is meaningful, as illustrated in our second quarter results. Prior portfolio pruning actions were a modest tailwind to margins. Unlike the first quarter of 2026, which saw favorable one-time benefits, there was no meaningful one-time contributors to call out for the second quarter. In terms of higher oil prices and their impact on the business, our purposeful strategy of reducing the volatility of input prices through our hedging and procurement contracts has generally insulated the business during the second quarter. Sequentially from the first quarter of 2026 to the second quarter of 2026, the combined spend for utilities, including natural gas and electricity, plus the spend from acrylonitrile, or AN, the primary raw material used in the production of carbon fiber, increased only minimally.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

If oil prices remain elevated, the impact to energy and AN costs will be layered into the business over time. As a percentage of sales, selling, general, and administrative expenses were 8.9% in the second quarter of 2026, compared to 8.8% in the comparable period in the prior year, increasing nominally on higher employee-related expenses. R&D expenses were 3.3% in the second quarter of 2026, compared to 2.9% in the second quarter of 2025. Foreign exchange remained a headwind due to the weaker dollar. Second quarter 2026 operating margin was negatively impacted by approximately 90 basis points from foreign exchange. In contrast, the second quarter 2025 had a favorable impact of approximately 10 basis points from the foreign exchange. Adjusted operating income in the second quarter was $74 million, or 13.9% of sales, compared to $54 million, or 11.1% of sales, in the comparable prior year period.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Turning to adjusted EBITDA for the six-month period, adjusted EBITDA totaled $216 million for the six months ended June 30th, 2026, and an adjusted EBITDA margin of 21%. This compares to $173 million for the six months ended June 30th, 2025, and an adjusted EBITDA margin of 18.2%. This is a 25% increase in adjusted EBITDA, whereas year-to-date sales increased just 9%, illustrating the operating leverage within the business. For comparison, in our peak year of 2019, adjusted EBITDA totaled $585 million with an adjusted EBITDA margin of 24.8%. As we target returning to prior adjusted operating margin of 18%, we are also targeting a return to this prior adjusted EBITDA margin of approximately 25%. As a reference, trailing 12 months adjusted EBITDA through June 30th, 2026, was $390 million. Turning to our two segments.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

The Composite Materials segment represented 80% of total second quarter sales and generated an adjusted operating margin of 16.8%. This compares to an adjusted operating margin of 14.1% in the prior year period. The Engineered Products segment, which is comprised of our structures and engineered core businesses, represented 20% of total sales and generated an adjusted operating margin of 15%. This compares to an adjusted operating margin of 10.9% in the prior year period. Moving to cash flow, net cash provided by operating activities in the first six months of 2026 was $97 million, compared to a use of $5 million in the first six months of 2025. Working capital was a cash use of $72 million in the first six months of 2026, compared to a cash use of $125 million in the first six months of 2025.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Capital expenditures on an accrual basis for the first six months of 2026 was $37 million, compared to $32 million in the comparable prior year period. Free cash flow in the six months ended June 30th, 2026, was $52 million, compared to a use of $47 million in the six months ended June 30th, 2025. Following our first quarter earnings call, and just before I started, the team completed the issuance of $400 million of unsecured senior notes maturing in May 2031, with the proceeds used to pay off $400 million of unsecured senior notes maturing in February of 2027. This financing improves our debt maturity profile with our earliest debt maturity now in 2031. Leverage, defined as net debt-to-last 12 months adjusted EBITDA, was 2.3x at June 30th, 2026, which compares favorably to our December 31st, 2025 leverage of just under 2.7x.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Although our leverage remains elevated following our revolver borrowing in October 2025 to finance an accelerated share repurchase, we have made meaningful progress year-to-date to reduce leverage, and we reaffirm that we remain committed to a disciplined financial policy and to returning leverage to the targeted range of 1.5x to 2.0x during 2026. Given our focus on debt reduction, we did not repurchase any shares of common stock in the second quarter of 2026. The remaining authorization under the Share Repurchase Program as of June 30th, 2026, was $381 million. The Board of Directors declared an $0.18 quarterly dividend yesterday. The dividend is payable to stockholders of record as of August 10th, with a payment date of August 17th. Before handing the call back to Tom, I would like to add some additional commentary regarding the revised 2026 guidance.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Remember, the third quarter sales seasonality as some of our customers enjoy extended summer holidays. The seasonally lower third quarter sales impacts operating leverage and margin as well. Implied second half adjusted EPS is somewhat lower than the first half, reflecting the Q3 seasonality, higher employee costs, including more hiring in the back half of this year to support production rate increases in 2027, some conservatism around oil prices and the impact they could have later in the year, and expenditures related to restarting one of our carbon fiber lines at the end of this year rather than in 2027 in preparation for the 2027 rate ramps. We continue to forecast interest expense in the low $50 million range as faster revolver repayment than originally anticipated in the first half of the year has been offset by the higher rates on the refinanced senior notes.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Lastly, cash conversion should exceed 100% in 2026 and for a period of time thereafter, as capital expenditures are expected to remain subdued, subject to significant new contract wins. With that, let me turn the call back to Tom.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Thanks, Jamie. Overall, we remain encouraged by the continued strengthening in commercial aerospace production rates and the strong demand fundamentals we see across commercial, defense, and space markets. Airbus was especially bullish on the outlook for our largest program, the A350, in their remarks last week at Farnborough. As production rates increase, our focus remains on disciplined execution, driving operating leverage, and delivering consistent performance for our customers and stockholders. With our strong market position, broad differentiated product portfolio, and global manufacturing footprint, Hexcel is well-positioned to capture the opportunities ahead of us. With that, we are now ready to take the questions.

Operator

At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again. In order to provide an opportunity for as many participants as possible, we kindly ask that you limit yourself to one question and one follow-up for today's call. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Gavin Parsons with UBS. Please go ahead.

Gavin Parsons
Gavin Parsons
Analyst at UBS

Thank you. Morning.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Morning.[crosstalk]

Gavin Parsons
Gavin Parsons
Analyst at UBS

In the prepared remarks, you talked about the potential to recover the 18% EBIT margin before the end of the decade. Should I think of that as aligned with the timeline for the $500 million of Aero recovery and $200 million of Defense revenue? How are you thinking about your ability to offset cost inflation as you get to that 18%?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Right. That's exactly right, Gavin, is we are targeting the 18% in line with getting up to the target production rate. That's the $500 million on commercial and then the $200 million on defense and space and other. In terms of offsetting the cost, in this industry, I always say you have to run fast to stand still. That's normal routine business. We have to always offset the increase in cost through our productivity initiative. We have a very extensive, what we call our Next Generation Factory Initiative, along with a margin improvement program that's designed to do exactly that. It's pricing as our contracts come due, but it's also driving a continuous improvement and then driving and implementing digitization improvement plans throughout our operations, engineering, and administrative functions.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

It's a combination of all those things to offset the cost inflation that we're going to see, which is normal course of business.

Gavin Parsons
Gavin Parsons
Analyst at UBS

Got it. You called out Airbus talking about potentially going higher in rate on A350 above the 12 per month they'd previously talked about. When would you need visibility to support that higher ramp, and what's your facility capacity currently?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Right. Well, if you go back to the 2018-2019 time frame, we were capacitized to support 13 aircraft per month for the A350 program. Obviously, that capacity is still there, but we can grow into that. Now, in practice, with the increase in mix of the A350-1000s and also the freighter, those take more material. That puts a little bit of pressure on it. At the same time, we've driven productivity, so we can still do 13. Above that, we would have to be considering capacity. It needs about a three-year lead time, and we would work very closely with Airbus on that to determine how we put that capacity into place. One thing I want to make absolutely clear is the A350 is our biggest program.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Airbus is a great partner. We will absolutely support them with whatever decision they decide to make with regard to the A350 production rate.

Gavin Parsons
Gavin Parsons
Analyst at UBS

Great. Thank you very much.

Operator

Your next question comes from the line of Ken Herbert with RBC Capital Markets. Please go ahead.

Ken Herbert
Ken Herbert
Analyst at RBC Capital Markets

Yeah. Hi, good morning, Tom, Jamie and Kurt. Jamie, maybe just wanted to follow up on your comments regarding the 2026 guide and second half, because the guide implies, as you referenced lower EPS and a significant deceleration or step down in the incremental margins. You called out headwinds around hiring oil prices, restarting at least one line, and some conservatism. Maybe how do we think about those, or can you get any more granular on the respective impacts? It sounds like hiring and restarting the line, probably bigger headwinds, maybe any incremental detail as you walk through those would be helpful.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yeah. I think you hit the nail on the head. We're trying to be thoughtful as we think about back half performance and positioning the business to be able to execute on the expected increase in rates as we move into 2027. We put our hiring plans together here. We're looking to pull that line in. That is going to be a bigger driver of the overall margin headwinds. Some of the conservatism around the Middle East, we're just watching the situation very closely. We baked in some minimal, incremental expense in the back half associated with that. It's also important to remember the seasonality. Given the lower sales volume that we typically see in the third quarter, as our European partners here take some extended time away, that does sort of go the other way for us on the operating leverage.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

It's historically done so, as we look back at the way that seasonality impacts the business. All in all, though, we're very well positioned to execute and finish the year strong. I think with the raise in the guide, we see the potential incremental margins actually step up from our prior expectations as we move into the full-year results, we want to make sure we're positioned to be able to execute going into 2027.

Ken Herbert
Ken Herbert
Analyst at RBC Capital Markets

Okay, thanks. As we think about the revenue guidance increase, is it fair to assume that you've basically added, call it three to five A350 units with maybe some incremental or higher max shipments in that as well? Is that really the right way to think about the guidance increase?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Ken, I would say yes. We think there's a little bit of upside on the A350 guidance we had of 80. Lars Wagner in Farnborough said they're producing at eight or nine a month right now. We've been pulling at kind of around eight in this last quarter, that continues to step up. We have firm purchase orders now that support the 80+ for the rest of the year. The other major program I'd say that's increased is the 737. We saw that pulling at just above 42 for the quarter, Boeing has said themselves that they're expecting that 500, that's kind of what we're expecting as well then.

Ken Herbert
Ken Herbert
Analyst at RBC Capital Markets

Great. Thanks, Tom. Thanks, Jamie.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yep.

Operator

Your next question comes from the line of Sheila Kahyaoglu with Jefferies. Please go ahead.

Sheila Kahyaoglu
Sheila Kahyaoglu
Analyst at Jefferies

Thanks, guys, and great quarter. Maybe if I could just ask about following up on the margin question. Appreciate the seasonality driving the second half margin ramp-down by 100 basis points. Tom or Jamie, can you maybe talk about where you are in your hiring process of the 400 heads and the incremental carbon fiber line? Can you just remind me, Tom, is that in Salt Lake? How much capacity does that take on? As a follow-up to this, how do we think about incremental margins going forward once you've kind of taken on these startup costs?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Right. Well, we had planned a 400 for the year, originally. We've already hired 300 of those, as of right now, we'll complete the 400 in the back half of the year. We'll add to that, because we do see the demand picking up, and we want to make sure we're ready for it. The carbon fiber line is one that we had in Salt Lake City. We have 14. We had idled four. We'd already brought back two, so we're bringing now a third back. We still have one that will be down, but we're bringing that third. That was supposed to come online next year. We're pulling it into this year because we see the demand picking up so much in the back half of this year and in through to the first part of 2027. That's where it is.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

It's in Salt Lake City. It's the 13th of 14 lines, the hiring is to support that. Now, in terms of incremental margins, you saw for the quarter it was 49%. For the year, at the midpoint, we're seeing 37%, which is up from kind of the low 30s in the original guidance. We expect margins to continue to improve as production rates go up and we get operating leverage. That's what really helps us in part get on the path to the 18% by the end of the decade. It really is about operating leverage, as production rates go up, we're going to continue to see margins improve, including incrementals. That is exactly what we've seen the first half of this year. We expect more in the second half and certainly into 2027 and 2028.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

As production rates increase and we get more operating leverage, our margins will continue to increase towards that 18%.

Sheila Kahyaoglu
Sheila Kahyaoglu
Analyst at Jefferies

This is the 30% to mid-30s is a good incremental margin going forward?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Yes.

Sheila Kahyaoglu
Sheila Kahyaoglu
Analyst at Jefferies

Perfect. Thank you.

Operator

Your next question comes from the line of David Strauss with Wells Fargo. Please go ahead.

Josh Korn
Josh Korn
Analyst at Wells Fargo

Hi. Good morning. This is Josh Korn on for David. Wanted to ask about FX and the impact you see in 2027 as compared to this year. Thanks.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

As we think about FX, so through the six-month period here, we've seen the dollar weakening. It's been a bit of a headwind to margins. We had about a 90 basis point impact here, in Q2 explicitly. We do have some hedge programs in place, which is moderating some of the volatility that can occur in that FX environment. We haven't put together and discussed yet our plans on 2027. We're going to be in the process of pulling our plans together for 2027, where we'll think about what that looks like going forward. Obviously, continued dollar weakening it doesn't benefit us as we move forward, strengthening the dollar would provide some benefit as we move into 2027.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Yeah. A stronger dollar is better for us.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yep.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

It just is what happens in the macroeconomic environment will determine that. We haven't put our plans together for 2027, but the stronger dollar helps us.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yep.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

We'll see where that goes.

Josh Korn
Josh Korn
Analyst at Wells Fargo

Okay, thanks. On A350, are you currently profitable?

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yeah. As we think about the A350 program, right, we are at the utilization levels and our production and operating leverage that we're receiving, that program is profitable as we move ahead. As we continue to see an increase in the ramp rate, the rate of ramp increase over time for that program, that will continue to improve profitability on a go-forward basis.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Yeah. At the current production rate

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yeah

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

It's profitable on the A350.

Josh Korn
Josh Korn
Analyst at Wells Fargo

Okay, great. Thank you.

Operator

Your next question comes from the line of Richard Safran with Seaport Research Partners. Please go ahead.

Richard Safran
Richard Safran
Analyst at Seaport Research Partners

Thanks. Good morning, everybody. I was particularly interested in your comments about defense. You have positions on many platforms. You're no doubt aware the government is looking to accelerate aircraft and missile production. I'm just going to ask one two-part question. How are you expecting defense to trend as a percent of sales longer term, considering growth in defense and commercial? Second, are you still selling to defense pretty much on commercial terms? As defense grows, should we expect margins for defense to be pretty much comparable to commercial?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Okay. Well, in terms of defense as a percent of sales, right now it's about 35%. Ultimately, I'd love it to be 50%. The challenge is, commercial for us is going to be growing so fast in the next three to four years as production rates fully recover. Defense will struggle to keep up. That said, I think defense will continue to grow, and ultimately, we're going to be at 40%-50% in terms of our defense spend relative to commercial, because defense will continue to grow. Now, yes, we do sell our defense product at commercial terms. As we go forward, that will not be dilutive to our margins.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Correct.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Because we sell at commercial terms.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yes.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

That won't be dilutive.

Richard Safran
Richard Safran
Analyst at Seaport Research Partners

Okay. Thank you.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Okay, thanks.

Operator

Your next question comes from the line of Myles Walton with Wolfe Research. Please go ahead.

Myles Walton
Myles Walton
Analyst at Wolfe Research

Thanks. Good morning.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Good morning.

Myles Walton
Myles Walton
Analyst at Wolfe Research

I was wondering if you could speak to the rolling of LTAs. First on the non-Airbus side, you had an announcement about extending agreements with Boeing. Maybe the broad thought here is, are we at the sweet spot of LTAs that were sort of just on the cusp of the price escalation that we saw in 2022, the high inflation period rolling over, and we're getting the benefit of that? That's one question. The second one is, if Airbus does decide to pull the trigger on the A350-2000 by the end of the year, which seems like something they're thinking about seriously, is that going to pull forward your negotiation for price for your overall contract, giving you an opportunity to put more CapEx in the ground maybe next year? Thanks.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Okay. On the first one, what I would say regarding Long-Term Agreements is our agreements tend to be for about five to seven years. Every year, 15%-20% of them come due. Now, obviously, the Airbus ones, which represent 40% of our business, expire at the end of 2030, so those don't come due. When the other contracts come due, we are negotiating, and we are seeing price increases in the renegotiation. It really reflects the value we bring and the investments that we have made. That's been something that we see, is that we are seeing strong price realization on renegotiated LTAs. That will continue. In fact, this quarter, we benefited from some of that price improvement on LTAs. That's a positive, and it will continue and continue to be reflected in our performance.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Now, on the A350-2000, it's going to be a stretch. The good news with that is a longer aircraft requires more material, and we provide the entire material system for the A350. That will be a big positive for us, and that's something that we will work closely with Airbus to support. Now, you asked about whether it would pull forward any of the pricing discussion. I don't think the two are related, so I don't anticipate any connection to that. What we will work on, though, is understanding what the impact will be on capacity and how we put capacity into place for the future. We will, at the right time, talk with Airbus about how we do that in the most constructive way.

Myles Walton
Myles Walton
Analyst at Wolfe Research

Okay. All right. Thank you.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Okay. Thanks, Myles.

Operator

Your next question comes from the line of Scott Mikus with Melius Research. Please go ahead.

Scott Mikus
Scott Mikus
Analyst at Melius Research

Morning, Tom, Jamie, and Kurt. Just to follow up on Myles' question on the A350-2000

Scott Mikus
Scott Mikus
Analyst at Melius Research

If that aircraft were to be powered by the GE9X engine, what could your ship set content be on that variant?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Well, that's a lot of speculation. What I would say is the A350-2000 will be a longer aircraft, so more material. That will benefit us. We obviously have a very significant position on the 777X and on the GE9X engine, both in terms of the fan blades and the fan case and parts of the nacelle. I won't speculate on whether those things will go together, but both of those things would be beneficial to Hexcel.

Scott Mikus
Scott Mikus
Analyst at Melius Research

Okay. Tom, you talked about driving productivity. You closed down a couple of facilities in Europe, but you've also expanded your footprint in both Morocco and Decatur, Alabama, where energy costs aren't as high. Are there other footprint optimization efforts underway to reduce costs or shift production to lower-cost locations?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

We're always looking for those, the big ones are done. As you know, we sold our Neumarkt facility. We closed our Belton facility. We've expanded in Morocco, as you said. We've also really closed down our industrial operations in Leicester, England, and we sold off a 3D printing plant we had in Hartford, Connecticut. Those are the big ones. We'll look to continue to optimize, as you say, by shifting more work to Morocco, it's a very competitive workforce, very highly technically trained, lower energy costs. In Alabama, we're introducing now our first carbon fiber line, which should save on some logistics and also benefit from lower energy costs as well. Those are all things. These actions that we've taken on, I would call it portfolio pruning, have really helped drive some of our margin improvements.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

You see that reflected in the Engineered Products margin this quarter. Overall, the portfolio pruning helped, we also drove productivity in some of those Engineered Products plants, as well as getting pricing on some of the LTAs. Combination of those three things, portfolio pruning, pricing, and productivity, is driving margin enhancement, particularly in our Engineered Products segment.

Scott Mikus
Scott Mikus
Analyst at Melius Research

All right. Thank you.

Operator

Your next question comes from the line of Kristine Liwag with Morgan Stanley. Please go ahead.

Kristine Liwag
Kristine Liwag
Analyst at Morgan Stanley

Hey, good morning, everyone.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Morning, Kristine.

Kristine Liwag
Kristine Liwag
Analyst at Morgan Stanley

Hey. Tom, can you just level set us in terms of what production rates you're able to support with the capacity increases included in your plan if you're able to restart all four idle carbon fiber lines? I guess, are there areas that you need to grow CapEx in some of your more value add non-carbon fiber manufacturing portion to meet what Boeing and Airbus want to build in 2030?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Right. Well, the answer is we have sufficient capacity in place already. We have to bring some of it back online, and we have to complete the two plants that we started in Decatur. We started one, what we call polyacrylonitrile plant, it's a precursor, and one carbon fiber line. Both of those have to come online. With all that capacity, we have enough capacity to meet all of the peak production rates that Boeing and Airbus and the defense primes have articulated for their various programs. That's why we've said that our CapEx over the next several years can remain under $100 million. If Airbus decides to go above 12, for example, on the A350, or there's a big new win on next-generation narrow body, that would require additional capacity, and we would work with our customers on that.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

To meet the current targets that they have for peak production across all the programs, we have sufficient capacity in place for coming online to support it.

Kristine Liwag
Kristine Liwag
Analyst at Morgan Stanley

Super helpful. If I could follow up, when you're restarting the idled carbon fiber lines, how operationally challenging is it? Is it as easy as turning on the lights and dusting off the cobwebs, or they're more heavy lift? Also, as we think about volumes going through the lines, how do we think about margin trajectory? How quickly does that line get filled up, and when does margins from that line become accretive to overall segment margins?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Right. Well, the startup is not routine. It takes a couple of months of planning and preparation. Once they've gone through that, you're doing a lot of maintenance and lubrication and cleaning. It only takes a couple of weeks. The team is able to bring the line up and get it to production. From there, maybe a couple of months before it's at full productivity. We've done this a lot over the years, either starting up a new line or restarting a line, particularly following the pandemic. The team is fairly experienced at it, and it takes a couple of months to get up to full productivity. Now, in terms of margin, again, we've been suffering from the lack of fixed cost absorption because we've had idle lines.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

As those lines come on and we're producing and we're getting absorption now, fixed cost absorption and operating leverage, we will see the margins go up.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Okay.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Bringing the lines on early will be a net benefit for us in terms of our margin enhancement.

Kristine Liwag
Kristine Liwag
Analyst at Morgan Stanley

Thank you for the color.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Okay, thanks.

Operator

Your next question comes from the line of Mariana Pérez Mora with Bank of America. Please go ahead.

Mariana Pérez Mora
Mariana Pérez Mora
Analyst at Bank of America

Thank you so much. Good morning, everyone, and welcome, Jamie.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yeah, thank you.

Mariana Pérez Mora
Mariana Pérez Mora
Analyst at Bank of America

As a starting question, as a welcome question. You talk about capital deployment in the prepared remarks, and you talk about being disciplined, but also considering inorganic opportunities if they were to match these criteria. Considering that you have this operating leverage, there is capacity, and you're getting to a net leverage in line with the overall ranges, how are you thinking about inorganic opportunities that could meet the criteria? Is it exposure to right-end markets? It is material capabilities? How are you thinking overall?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Well, when we think of inorganic and we're continuing to look, it's not on our current agenda because we're paying down debt. What we've said is we're focused on advanced material science, heavy Aerospace and Defense focus, with a return on invested capital and ROIC of 15%+. Those are the basic criteria. We're going to have a high bar because we've got a lot of opportunity to execute on the current production ramp, and that's going to create a lot of operating leverage, improve margins, and drive cash flow. We're not going to get distracted from that. We're laser-focused on execution. If the absolute best opportunity comes inorganically that meets those strategic thresholds I mentioned and the return criteria, we will consider it. Absent that, we'll focus on our dividend and share repurchase.

Mariana Pérez Mora
Mariana Pérez Mora
Analyst at Bank of America

Right. Thank you. Then when we think about the margins, but mostly incremental cash margins as we think about going into 2030, how should we think about that?

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yeah. Over the long-run, sort of in that mid-30% range is incremental margin opportunity for us as we move ahead. We're going to see better leverage overall, as we benefit from productivity initiatives, pricing, and bringing our business back up to line to be able to absorb the fixed cost base that we have here. As Tom noted, we've got between the commercial aerospace peak rate recovery, there's $500 million worth of incremental sales there. We're going to continue to grow the space business, adding around $200 million. All of that gets us to the sort of 18% operating margin performance, by the end of the decade. As we move beyond that, we'll have repricing opportunities on our A350 contract going into that next decade, into that period. That's going to provide incremental uplift opportunities.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

In the interim, we're going to continue to look at the cost base, right? We're going to try to control costs as we move forward. We're going to look at ways to expand margins, in the near term, where it's to the best of our ability, while continuing to support the rate ramp. We feel really good about the growth opportunity ahead, and we feel very strongly that there's margin expansion opportunities and really strong cash generation for us over the next couple of years.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Yeah. What I would add to that is that once we get up to the peak production rates, 2028 and into 2029, we're likely to stay there for a very long time

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yeah

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

because the backlogs are enormous. It's close to 10 years of production, particularly on the wide-bodies, which favors us. While there's discussion of a next narrow-body sometime in the future, which we're working on, there's no discussion of a replacement for the current wide-bodies like the A350 or the 787 or the 777, all of which are big programs for Hexcel. We see a continued, sustained opportunity to be at those high levels of production for a long period of time, getting great operating leverage. While our target is 18% by the end of the decade, we're certainly not going to stop there.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Correct.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

We're going to be driving productivity and pricing initiatives

Jamie Coogan
Jamie Coogan
CFO at Hexcel

Yeah

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

to continue to benefit from the investments that we've made and the value that we bring to our customers.

Mariana Pérez Mora
Mariana Pérez Mora
Analyst at Bank of America

Great. Thank you. One last one, if I may. You talk about these pricing opportunities, especially getting into next decade, but then by the time you'll be having those pricing discussions, the new narrow body, the new wide body replacements will be also part of the conversation with the OEMs. How are you thinking about positioning to this negotiation, on a stronger way than the prior wave?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Well, look, it's always a negotiation on all these things. We want to maintain great customer relationships. As I always say, that we want to make sure we get a fair return on the investments we've made and that the value we bring our customers. That will guide us in terms of our negotiation, and we want to make sure that the platforms we're on today continue to be successful. Of course, we want to be on the next-generation platforms. The one that's currently in focus is the narrow body at some point in the future. The wide body, there haven't been any discussions about those.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

We're going to continue to be, as we go through pricing relative to the current cost environment, and as we move ahead and think about where that cost environment is, we need a return on the investments that we've made in the business to support the customers. I think it's really important that as we go into those negotiations, that we recognize that we do provide meaningful value as part of those conversations. We'll be willing to have the right conversations with those customers in support of their long-term initiatives, but ultimately, making sure that Hexcel receives the benefit as well for the value that we provide, given the current cost that we're seeing for these programs.

Mariana Pérez Mora
Mariana Pérez Mora
Analyst at Bank of America

Great. Thank you so much for the color.

Operator

Our final question comes from the line of Gautam Khanna with TD Cowen. Please go ahead.

Analyst at TD Cowen

Hey, this is Anton on for Gautam. Just curious on the MV-75, there's been some funding challenges. Is there any potential impact from this baked into the 2026 guide? What's your exposure there? Thanks.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

The MV-75, which is the follow-on replacement for Black Hawk, is a great program. We've been in discussions with Bell, continuing to determine what our final positions will be on it. It's still in early phases of development, it has no impact on 2026 guidance. It's a great program and we look forward to continuing the discussions with Bell about how we can support it. It's a really outstanding program. It is moving forward, overall, I think from original projections, no impact for us on 2026 guidance.

Analyst at TD Cowen

Got it. Thanks. Just quickly, if I can, the Boeing contract you guys announced at Farnborough, how is that any different? What's the difference between that and the old contract?

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

It's just a renewal. We have extensive operations with Boeing on their commercial and defense platforms and space. In the normal course of business, when those contracts come due, we renegotiate them, and that's what this was. It was just a normal renewal for the Long-Term Agreements that we have with Boeing, which are quite extensive.

Jamie Coogan
Jamie Coogan
CFO at Hexcel

There's a number of LTAs, not a specific one-to-one match there, right? There's a number of LTAs that were aggregated together as part of that, just to reinforce that relationship and the strength of that relationship.

Analyst at TD Cowen

Thanks.

Tom Gentile
Tom Gentile
Chairman, CEO, and President at Hexcel

Thank you.

Operator

That ends the Q&A portion of today's call. Ladies and gentlemen, this concludes the Hexcel second quarter 2026 earnings Call. Thank you all for joining. You may now disconnect.

Executives
    • Kurt Goddard
      Kurt Goddard
      VP of Investor Relations
    • Tom Gentile
      Tom Gentile
      Chairman, CEO, and President
    • Jamie Coogan
      Jamie Coogan
      CFO
Analysts
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