Third quarter 2026
Filed Oct 21, 2026Q3 2026 sales increased 8.8% to $496.4 million, while GAAP diluted EPS was $0.50 and adjusted diluted EPS was $0.50; 2026 guidance was unchanged.
Sales, operating income, net income and both GAAP and adjusted diluted EPS increased year over year, led by Commercial Aerospace growth and higher operating leverage. Defense, Space & Other sales declined, and management cited seasonal sales, accelerated hiring and training costs, and temporary fighter and space-program softness.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net salesGAAP | $496.4M | – | 8.8% |
| Q3 2026 net sales change in constant currencyother | 9.2% | – | 9.2% |
| Q3 2026 cost of salesGAAP | $380.9M | – | – |
| Q3 2026 gross marginGAAP | $115.5M | – | – |
| Q3 2026 gross margin percentageGAAP | 23.3% | – | – |
| Q3 2026 selling, general and administrative expensesGAAP | $44.9M | – | – |
| Q3 2026 selling, general and administrative expenses as a percentage of salesGAAP | 9.0% | – | – |
| Q3 2026 research and development expensesGAAP | $16.2M | – | – |
| Q3 2026 research and development expenses as a percentage of salesGAAP | 3.3% | – | – |
| Q3 2026 other operating expenseGAAP | −$400K | – | – |
| Q3 2026 operating incomeGAAP | $54.8M | – | 52.2% |
| Q3 2026 adjusted operating incomenon-GAAP | $54.4M | – | 21.4% |
| Q3 2026 adjusted operating income as a percentage of salesnon-GAAP | 11.0% | – | – |
| Q3 2026 interest expense, netGAAP | $12.1M | – | – |
| Q3 2026 income before income taxesGAAP | $42.7M | – | – |
| Q3 2026 income tax expenseGAAP | $4.1M | – | – |
| Q3 2026 net incomeGAAP | $38.6M | – | 87.4% |
| Q3 2026 adjusted net incomenon-GAAP | $38.2M | – | 28.2% |
| Q3 2026 basic net income per common shareGAAP | $0.51 | – | – |
| Q3 2026 diluted net income per common shareGAAP | $0.50 | – | 92.3% |
| Q3 2026 adjusted diluted net income per sharenon-GAAP | $0.50 | – | 35.1% |
| Q3 2026 weighted-average common shares, dilutedGAAP | 76.7M | – | – |
| First nine months 2026 net salesGAAP | $1.53B | – | 8.9% |
| First nine months 2026 net sales change in constant currencyother | 8.7% | – | 8.7% |
| First nine months 2026 gross marginGAAP | $388.3M | – | – |
| First nine months 2026 gross margin percentageGAAP | 25.4% | – | – |
| First nine months 2026 operating incomeGAAP | $185M | – | 67.9% |
| First nine months 2026 adjusted operating incomenon-GAAP | $195.5M | – | 35.5% |
| First nine months 2026 adjusted operating income as a percentage of salesnon-GAAP | 12.8% | – | – |
| First nine months 2026 net incomeGAAP | $125.1M | – | 98.6% |
| First nine months 2026 adjusted net incomenon-GAAP | $133.9M | – | 33.4% |
| First nine months 2026 diluted net income per common shareGAAP | $1.63 | – | 109.0% |
| First nine months 2026 adjusted diluted net income per sharenon-GAAP | $1.75 | – | 41.1% |
| First nine months 2026 net cash provided by operating activitiesGAAP | $171.1M | – | – |
| First nine months 2026 capital expendituresGAAP | −$68.6M | – | – |
| First nine months 2026 free cash flownon-GAAP | $102.5M | – | – |
| Cash and cash equivalents as of September 30, 2026GAAP | $77.8M | – | – |
| Long-term debt as of September 30, 2026GAAP | $934.9M | – | – |
| Total debt, net of cash as of September 30, 2026other | $857.1M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Commercial AerospaceBoth widebodies, including the Airbus A350 and Boeing 787, and narrowbodies including the Airbus A320 and Boeing MAX grew year over year. Other Commercial Aerospace increased 1.3%. | $330.3M | – | 20.5% |
| Defense, Space & OtherThe decrease reflected the divestment of a non-core Austrian-based industrial business, closure of a non-core industrial business in Leicester, UK, and temporary softness in F-35, an international fighter program, launchers and rocket motors. | $166.1M | – | (8.7%) |
| Composite MaterialsQ3 2026 net sales to external customers; operating income was $61.1 million and operating margin was 14.7%. | $390.3M | – | – |
| Engineered ProductsQ3 2026 net sales to external customers; operating income was $12.7 million and operating margin was 11.8%. | $106.1M | – | – |
2026 outlook
- RevenueSales of $2.025 billion to $2.125 billion
- NoteAdjusted diluted earnings per share of $2.30 to $2.40
- NoteFree cash flow of greater than $195 million
- NoteCapital expenditures less than $100 million
Capital returns
- During the third quarter of 2026, the Company did not repurchase any shares.
- As of September 30, 2026, the aggregate remaining authorization under the share repurchase program was approximately $380.6 million.
- The Board of Directors authorized an increase to the share repurchase program, raising the total authorization to $750.0 million.
- The Board of Directors declared a quarterly dividend of $0.18 per share payable to stockholders of record as of November 2, 2026, with a payment date of November 9, 2026.
- Dividends paid in the first nine months of 2026 were $(40.9) million, compared to $(41.0) million in the first nine months of 2025.
What drove it
- Commercial Aerospace represented 66.5% of Q3 net sales, compared with 60.1% in Q3 2025.
- Higher volume drove year-over-year operating leverage, lifting Q3 gross margin to 23.3% from 21.9%.
- Commercial Aerospace growth was led by the A350, 787 and MAX platforms during the first nine months of 2026.
- Q3 adjusted operating income was affected by exchange rates unfavorably by approximately 30 basis points as a percentage of sales compared with Q3 2025.
- The first nine months of 2026 included restructuring charges related to the shutdown of industrial-oriented manufacturing at the Leicester, UK facility and non-recurring professional fees.
Concerns
- Defense, Space & Other sales declined 8.7% in Q3 2026 and 6.8% in the first nine months of 2026.
- Management cited typical summer sales seasonality, which impacted operating leverage in Q3.
- Management cited near-term cost headwinds from accelerated hiring and training to support demand expected for Q4 and 2027.
- Working capital consumed $78.1 million in the first nine months of 2026, compared with $63.8 million in the comparable 2025 period.
- Interest expense, net was $12.1 million in Q3 2026 compared with $9.2 million in Q3 2025.
What to watch
- Management expects full-year results to be within the previously provided sales and adjusted EPS ranges.
- Commercial Aerospace demand across widebody and narrowbody platforms, including the Airbus A350, Boeing 787, Airbus A320 and Boeing MAX.
- The timing of recovery from temporary softness in F-35, an international fighter program, launchers and rocket motors.
- Execution of accelerated hiring and training to support Q4 and 2027 demand.
- Management expects to return to its targeted leverage range by the end of 2026.
- Delivery of free cash flow of greater than $195 million while capital expenditures remain less than $100 million.
Balance sheet and cash flow
- Cash and cash equivalents were $77.8 million as of September 30, 2026, compared with $71.0 million as of December 31, 2025.
- Total long-term debt was $934.9 million as of September 30, 2026, compared with $993.0 million as of December 31, 2025.
- Total debt, net of cash was $857.1 million as of September 30, 2026, compared with $922.0 million as of December 31, 2025.
- Working capital was a cash use of $78.1 million for the first nine months of 2026, compared with a use of $63.8 million for the comparable period in 2025.
- Capital expenditures on an accrual basis were $61.2 million for the first nine months of 2026, compared with $49.9 million for the first nine months of 2025.
- During the first nine months of 2026, the Company redeemed $400.0 million of 3.95% senior notes due 2027 and issued $400.0 million of 4.9% senior notes due 2031.
Analysis
Hexcel reported Q3 2026 net sales of $496.4 million, up 8.8% from $456.2 million in Q3 2025, with constant-currency sales growth of 9.2%. Commercial Aerospace was the growth engine, with sales of $330.3 million, up 20.5%, supported by widebody and narrowbody platforms. Defense, Space & Other sales declined 8.7% to $166.1 million, reflecting divestments and closures of non-core industrial businesses as well as temporary softness in fighter, launcher and rocket-motor programs.
Profitability improved materially on a reported basis. Q3 gross margin increased to 23.3% from 21.9% as higher volume drove operating leverage. GAAP operating income increased 52.2% to $54.8 million and GAAP net income increased 87.4% to $38.6 million. Adjusted operating income rose 21.4% to $54.4 million, with adjusted operating margin improving to 11.0% from 9.8%. Management noted that exchange rates were unfavorable by approximately 30 basis points to operating income as a percentage of sales.
The first nine months show the same mix shift and margin progression. Net sales increased 8.9% to $1,527.2 million, while Commercial Aerospace sales rose 19.1% and represented 66% of year-to-date sales. First-nine-month gross margin improved to 25.4% from 22.4%, and adjusted operating income rose to $195.5 million, or 12.8% of sales, from $144.3 million, or 10.3% of sales. Defense, Space & Other sales fell 6.8% year to date, maintaining the contrast between commercial aerospace strength and defense and space-program softness.
Cash generation strengthened despite greater working-capital use and capital spending. Net cash provided by operating activities was $171.1 million for the first nine months, compared with $105.0 million, and free cash flow increased to $102.5 million from $49.9 million. Working capital used $78.1 million of cash and capital expenditures were $68.6 million. Long-term debt was $934.9 million at September 30, 2026, while total debt net of cash was $857.1 million. Management emphasized debt repayment and expects to return to its targeted leverage range by the end of 2026.
The company reaffirmed its 2026 outlook for sales of $2.025 billion to $2.125 billion, adjusted diluted EPS of $2.30 to $2.40, free cash flow of greater than $195 million and capital expenditures less than $100 million. Capital allocation included no Q3 repurchases, a $750.0 million total repurchase authorization, and a quarterly dividend of $0.18 per share. The principal items to monitor are the conversion of strong Commercial Aerospace demand into Q4 results, the pace of Defense, Space & Other recovery, hiring and training costs, working-capital usage and full-year free-cash-flow delivery.
Management, verbatim
Consistent with what we communicated last quarter, our third quarter financial results reflected our typical summer sales seasonality, which impacted operating leverage. We also experienced near-term cost headwinds from accelerated hiring and training to support the strong demand signals we are receiving across our business for Q4 and 2027.
Tom Gentile, Chairman, CEO and President
In terms of market demand, commercial aerospace sales increased 21% year-over-year as the industry recovery continues to take hold, partially offset by temporary softness in a few fighter and space programs that impacted Defense, Space & Other sales. We are reaffirming our 2026 guidance and expect full year results to be within the sales and adjusted EPS ranges previously provided.
Tom Gentile, Chairman, CEO and President
We expect to return to our targeted leverage range by the end of 2026 as we have prioritized debt repayment following the accelerated share repurchase program we initiated last year at this time. Reflecting confidence in the strong cash generation profile of the business, the Board of Directors increased the share repurchase authorization to $750 million from $381 million.
Tom Gentile, Chairman, CEO and President
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported Q3 and first-nine-month operating metrics were not provided.
- Q3 operating cash flow and Q3 free cash flow were not provided.
- 2026 guidance for gross margin, operating expenses and tax rate was not provided.
- A prior-release outlook section was not provided, so comparisons of actual results with prior guidance cannot be made.
- Year-over-year percentage changes were not printed for individual Q3 cost of sales, gross margin dollars, selling, general and administrative expenses, research and development expenses, interest expense, income before income taxes, income tax expense, basic EPS, weighted-average shares, cash flow, capital expenditures, cash or debt metrics.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.