Hexcel issues $300 million in senior notes due 2035

Hexcel Corporation (NYSE:HXL), a leader in advanced composites technology with a market capitalization of $5.07 billion, has successfully issued $300 million of 5.875% Senior Notes due on February 26, 2035. The announcement was made today, based on a press release statement. According to InvestingPro data, the company maintains strong financial health with liquid assets exceeding short-term obligations.

The offering was made under Hexcel’s shelf registration statement filed on March 22, 2024, with the Securities and Exchange Commission (SEC). The final terms of the Notes were detailed in a prospectus supplement filed on February 13, 2025. The company expects to receive net proceeds of approximately $296 million after considering the underwriting discount and offering expenses. This debt issuance aligns with Hexcel’s moderate debt profile, as InvestingPro analysis shows a healthy debt-to-equity ratio of 0.48 and last twelve months EBITDA of $360.1 million.

Interest on the new Notes will be paid semi-annually starting August 26, 2025. Hexcel has the option to redeem the Notes, either in whole or in part, prior to November 26, 2034, at a price set forth in the Indenture. After this date, the company may redeem the Notes at 100% of their principal amount plus accrued interest.

In the event of a ’Change of Control Repurchase Event,’ as defined in the supplemental indenture, Hexcel must offer to repurchase the Notes at 101% of the principal amount plus accrued interest unless the Notes are fully redeemed.

The Notes, unsecured and unsubordinated, rank equally with Hexcel’s other unsecured and unsubordinated debt. They were issued in denominations of $2,000 and multiples of $1,000 thereafter.

The Indenture governing the Notes includes customary restrictions for transactions of this type, such as limitations on incurring additional liens, making certain fundamental changes, and entering into sale and leaseback transactions. It also outlines events of default typical for such financings.

The underwriting agreement for the Notes was entered into with BofA Securities, Inc., Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC, acting as representatives of the underwriters.

This financial move demonstrates Hexcel’s continued efforts to manage its capital structure and finance its long-term strategic objectives. The company’s financial strength is evidenced by its robust Altman Z-Score of 5.08 and current ratio of 2.21, as reported by InvestingPro. The company, incorporated in Delaware and headquartered in Stamford, Connecticut, operates within the industrial applications and services sector, specializing in plastics, materials, synthetic resins, and nonvulcan elastomers. Discover comprehensive analysis and 8 additional key insights about Hexcel through InvestingPro’s detailed research reports, part of its coverage of over 1,400 US stocks.

In other recent news, Hexcel Corporation reported its fourth-quarter 2024 earnings, revealing an adjusted earnings per share (EPS) of $0.52, which exceeded analysts’ forecasts of $0.50. The company’s revenue was slightly below expectations, coming in at $473.8 million against the anticipated $481.2 million. Despite the revenue miss, Hexcel’s commercial aerospace segment showed strong growth, representing 59% of total sales. The company has issued guidance for 2025, projecting sales between $1.95 billion and $2.05 billion and adjusted EPS between $2.05 and $2.25. Analysts at Truist Securities raised Hexcel’s price target to $85, maintaining a Buy rating, citing the company’s strategic initiatives and positive outlook for commercial aerospace revenue growth. Meanwhile, Vertical Research Partners increased their price target to $70, holding a cautious stance with a Hold rating due to ongoing supply chain challenges. Hexcel’s strategic moves include plans to divest its Austrian facility and underperforming wind glass-fiber business, aiming to improve margins in the long term.

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