Mr. Nick Stanage, Hexcel’s Chief Executive Officer, summarizing the Company’s outlook commented, “In 2014, we expect another record year with constant currency sales growth of approximately 10%, continued operating income margin expansion, ‘teens’ growth in earnings per share and to generate free cash flow while continuing to fund our capital expenditures ramp-up to meet future customer demands.
"Commercial Aerospace will again lead our sales growth. While the B787 was a key driver of our 2013 sales growth, we now expect the A350 XWB to be a significant driver of growth for 2014 and the next several years. Hexcel content per A350 XWB is now estimated at $5 million per shipset, a significant milestone that reflects both the breadth and depth of our products as well as nearly ten years of dedicated effort.”
Hexcel’s overall 2014 revenue guidance is in the range of $1.80 billion to $1.88 billion, at current exchange rates, as compared to the 2013 revenue guidance of $1.655 billion to $1.685 billion. The Company expects 2014 sales growth to again be led by double digit sales growth in the Commercial Aerospace market, which comprises about 63% of the Company’s last twelve months sales.
This growth will come from sales to Airbus, Boeing, and their subcontractors (which account for 85% of Commercial Aerospace sales), thanks to on-going increases in aircraft build rates and new composite rich aircraft programs that are ramping up. Regional and business aircraft account for the remaining 15% of Commercial Aerospace sales and are also expected to increase in 2014.
Hexcel expects continued mid-single digit growth in the Space & Defense market in 2014, which comprises 23% of the Company’s sales. Growth will be led by the A400M military transport and global rotorcraft demand for Hexcel materials. The V-22 will begin to see the expected decline in build rate, but will likely remain the Company’s largest S&D program in 2014. In the Industrial markets (comprising 14% of total sales) Hexcel foresees mid-single digit growth in 2014, both for wind turbine sales, as well as other industrial sub-markets.
The Company expects 2014 adjusted diluted earnings per share to be in the $2.00 to $2.12 range. Diluted earnings per share is based on the current share count of nearly 102 million shares as Hexcel expects to at least repurchase sufficient shares to offset expected dilution from equity programs. The Company projects about a $12 million increase in depreciation expense in 2014. Despite the headwind from higher depreciation levels, Hexcel still expects to meet its 23%+ incremental operating income leverage target.
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