december 12, 2017 | new york city · everything from carbon fibers and reinforcement fabrics to...

1 ©2017 Hexcel. All rights reserved.

DECEMBER 12, 2017 | NEW YORK CITY


Certain statements contained in this presentation constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements that are not of historical fact constitute “forward-looking statements” and accordingly, involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the Forward Looking Statements and Risk Factors sections of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and its third quarter 2017 quarterly report on Form 10Q filed with the Securities and Exchange Commission. We do not undertake an obligation to update our forward-looking statements to reflect future events.

Risks, Uncertainties and Other Factors with Respect to Forward-Looking Statements Disclaimer


HEXCEL IS A GLOBAL LEADER IN ADVANCED COMPOSITES TECHNOLOGY

Technology leader with a broad range of materials/products/qualifications

Leading, sole source positions in key markets with high barriers to entry

Excellent customer relationships

LTM September 2017 Sales | $1.945 billionU.S. 44% | Europe 43% | Other 13% Growing share of long-term growth markets

Long history of creating shareholder value

Sustainable competitive advantage


REASONS TO INVEST IN HEXCELInvesting in Innovation | Achieving Operational Excellence | Growing Shareholder Return

Unrivaled product portfolio

Investments in markets with long-term growth

potential

Technology and innovation for

sustained growth

Leadership in Attractive Markets

Culture of Innovation

Operational Excellence

Increasing Shareholder Value

Driving productivity through optimized

performance

ROIC well above cost of capital

25% increase in quarterly dividends since 2015

75% of net income returned to shareholders since 2014

Proven execution, strong earnings growth, exceptional cash generation


INDUSTRY-LEADING MARKET POSITIONS Our technology enables sole source

positions with high barriers to entry We offer innovative, high-value

materials and products Composite content is growing in

technology-intensive markets Ramp-up in build rates for composite-

intensive programs creates growth COMMERCIAL AEROSPACEAirbus and BoeingEngines/Nacelles

Regional/Business

SPACE & DEFENSERotorcraft

Military AircraftLaunch Vehicles

Satellites

INDUSTRIALWind Energy

AutomotiveRecreation

Other

72%

17% 11%

Growth fueled by composite penetration and technology innovation

LTM Sales, Sept 30, 2017


WE HAVE AN UNRIVALED RANGE OF PRODUCTSEverything from carbon fibers and reinforcement fabrics to prepregs, honeycomb core, tooling materials and more . . . from raw materials to fly away parts . . . vertical integration is a strength and a differentiator.

CARBON FIBERA320neo sharklets

A350 primary structureLEAP fan blades/case

F-35 wings

REINFORCEMENTSAerospace primary and secondary structures

Aircraft radomes787 stringers

CARBON PREPREGSAerospace primary and secondary structures

A350 fuselage and wingsGE90 fan blade

BMW 7 Series B-pillar

HONEYCOMBRotorcraft bladesNacelle structures

Aircraft flooringAcousti-Cap®

GLASS PREPREGSWind turbine blades

Aerospace wing-to-body fairingsAerospace secondary structures

ENGINEERED PRODUCTS

Structural assembliesMachine/shaped core

Tooling systemCompression molded parts

Strong | stiff | lightweight | fatigue resistant | corrosion resistant


Leveraged sales to the bottom line and cash

RECENT FINANCIAL PERFORMANCE$ millions, except EPS

Results from 2012 to 2016

SALES ADJUSTED DILUTED EPS

• Sales: Up $426 million (+27%)• Adjusted Earnings Per Share: Up $1.02 per share (+65%)• Cash from Operations: Up $169 million (+73%)

2012 2013 2014 2015 2016 2017E

$1,5

78

$1,6

78

$1,8

56

$1,8

61

$2,0

04

$2.1

6

$2.3

2

2012 2013 2014 2015 2016 2017E

$273 $3

18

$301

$401

2012 2013 2014 2015 2016 2017E

$1.5

6

$1.8

5

$2.5

8

CASH FROM OPERATIONS

$232


TOTALSHAREHOLDER RETURNShare price % appreciation + Dividend yield

Hexcel continues to be an excellent investment

12/31/2011 2012 2013 2014 2015 2016 12/8/2017

$23.

56

$26.

15

$43.

59

$40.

29 $45.

47 $50.

98

$60.

64

Cash flow accelerating Margins growing Disciplined capital deployment Markets growing

157%Increase


COMMERCIAL AEROSPACECommercial Aviation | Engines/Nacelles | Business & Regional Jets

Growing composites secular penetration Strong global demand – nine-year backlog (Airbus &

Boeing) Growing build rates for narrow body programs;

increased shipset content for A320neo and B737 MAX over legacy programs

$944$1,085

$1,215$1,286

$1,429$ millions

Airbus and Boeing Other Commercial Aerospace

72%

2012 2013 2014 2015 2016 2017E


COMMERCIAL AEROSPACE COMPOSITES PENETRATIONComposite content percentage by weight Continued secular

penetration with next-generation:

• Primary structure• Secondary structure• Engines and nacelles


~41,000 new aircraft deliveries, worth ~ $6.1 trillion

COMMERCIAL AEROSPACE OUTLOOK 2017-2036Global passenger traffic up ~7.5% in 2017 and forecasted to be up another 6% in 2018

~35,000 new aircraft deliveries over the period, worth ~ $5.3 trillion

AIRBUS GLOBAL MARKET FORECAST BOEING GLOBAL MARKET FORECAST

Small widebody5,050

Freighters920

Other widebody3,160

Regional2,370

Single aisle 29,530

Single aisle 24,807

Twin aisle 8,686

Large aircraft1,406


Single Aisle Legacy Single Aisle New Widebody Legacy Widebody New Jumbo

0

2000

4000

6000

8000

10000

12000

14000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 BacklogSept 30

AIRBUS AND BOEING BACKLOGBacklog is worth more than $10 billion to Hexcel

A320 family/single aisle 5,488

A330, A350 1,057

A380 100

737 4,431

747 17

767 101

777 101

777x 326

787 683


SPACE & DEFENSERotorcraft | Fighters | Launch Vehicles | Transport

Well-positioned, diverse applications Hexcel carbon fiber is the industry standard Rotorcraft are ~50% of sales Hexcel content is significant on strong-performing

programs such as JSF, A400M, V22, CH-53K, Blackhawk

$357 $376 $376$337 $322

17%

$ millions

2012 2013 2014 2015 2016 2017E


CH-53K starts in 2019

Strong demand forLegacy programs

(Blackhawk and Apache)

Expect recovery for civil helicopters through 2020

DEFENSE ROTORCRAFT SPACE

Sikorsky CH-53K

F-35 (JSF) ramp-up continues

KC-46 Tanker & KC-390 Transport deliveries starting 2018 and

ramping

Projected market growth as U.S. and European defense spending

expected to increase

Lockheed Martin F-35A Lightning II

SPACE & DEFENSE OUTLOOK through 2020

OATK Next Gen Launch Vehicle

Market for legacy satellitelaunchers steady (Delta IV, Ares)

Emerging new entrants allowing for new positions for growth in launchers, missiles,

UAVs and satellites (SpaceX Falcon 9)

Opportunities for growth with new developments for U.S. Air Force, NASA


INDUSTRIALWind Energy | Automotive | Recreation | Infrastructure | Marine

Broad range of performance applications Wind energy comprises ~50% of the total

• Significant step-up expected in 2018• Multi-year contract with Vestas announced

Automotive accelerating composite adoption

$277

$218

$264$238

$253

$ millions

11%

2012 2013 2014 2015 2016 2017E


Less weight + electrification is driving composite adoption

Focus is on early adopters of composite technology

Advancing our capability via automation to develop composite

solutions

WIND ENERGY AUTOMOTIVE INDUSTRIAL SPECIALTIES

Expected to return to growth in 2018

Greater turbine efficiency requires larger, lighter blades – which drives

segment composite growth

Vestas backlog remains strong at more than $10 billion for turbines

INDUSTRIAL OUTLOOK 2017-2020

Sport & Leisure: Positioned for 1.5x growth rate over the period

Marine: Fuel efficiencies and performance drive composites growth

Infrastructure: Growth driven from building and water piping projects


CUSTOMER COMMMITMENT IS STRONGSustainable competitive advantages driving contract wins, sole source positions, content growth and market share gains

OCTOBER 30, 2017Hexcel and UTC Aerospace Systems Extend Contract for Prepregsthrough 2030

OCTOBER 16, 2017Hexcel and Vestas Expand Multi-Year Composite Materials Supply Agreement for Wind Blades

JUNE 22, 2017Airbus Helicopters Extends 40-year Partnership by Selecting Hexcel to Supply H160 Composite Materials

OCTOBER 16, 2016Airbus Amends and Extends $15 Billion in Contracts; Prepreg Contract for A350 Extended through 2030


WE DELIVER WHAT OURCUSTOMERS WANTAdvanced composite solutions that are stronger, lighter and tougher providing optimized long term value.

Carbon fiber is 5x stronger than aluminum

Carbon fiber is 30% lighter than aluminum

Our products are tougher, stifferand more durable


Les Avenières, FranceDuxford, U.K. Decatur, Alabama

RESEARCH & TECHNOLOGY CENTERS OF EXCELLENCEExpanding our leading technology positions through investments in research

Salt Lake City, UtahDublin, California

GROWING INVESTMENT IN RESEARCH & TECHNOLOGY

BROAD AND EXPANDING PATENT PORTFOLIO

UNIVERSITY COLLABORATIONS & TECHNICAL CONSORTIUMS

Engaged in active collaborations with leading universities, government research centers and corporations

PhD PROGRAMSSupporting doctorate studies at key academic institutions


WE INVEST IN TECHNOLOGY TO GROW OUR CAPABILITIESWe expand our horizons with strategic acquisitions and investments

JANUARY 2016Acquisition

Non-crimp fabric technology,lightweight carbon fiber multi-axials,

highly engineered carbon and glass fiber fabrics, dry reinforcements

DECEMBER 2017Agreement to Acquire

Additive manufacturing to produce 3D printed parts for Commercial Aerospace

and Space and Defense

MAY 2016Investment

Carbon fiber recycling to produce aerospace and industrial parts to create

a full lifecycle solution

OCTOBER 2017Acquisition

Strengthens development capability and technologies for next-generation

aerospace and industrial applications


Our leading manufacturing processes give us a sustainable, competitive advantage

THE HEXCEL COMPOSITE MANUFACTURING ADVANTAGE

Vertical integration provides optimization & flexibility – engineering the optimum fiber-chemistry interface

Supply chain efficiencies and strategic logistics reduce inventory, lower transportation costs and speed delivery

Custom equipment + big data analytics = leading manufacturing processes

Research and technology enable customer intimacy and collaboration


WE BUILD CAPABILITIES TODAY to ENSURE FUTURE SUCCESSCapital investments to meet customer demands

NEW R&T CENTERLes Avenières, France

Center of Excellence for advancements in weaving and reinforcements

ENGINEERED CORE PLANTCasablanca, Morocco

Strategically located near customersin the Morocco aerospace hub

PAN & CARBON FIBER PLANTRoussillon, France

First Hexcel PAN plant outside the U.S.


ORGANIC GROWTHInvesting in R&T and capacity to win positions on new programs

1

M&A OPPORTUNITIESConsolidations; technologies and adjacencies that focus on early stage and emerging opportunities

2

RETURN TO SHAREHOLDERSDividends and share buybacks3

DISCIPLINED CAPITAL DEPLOYMENTOur cash priorities


DISCIPLINED CAPITAL MANAGEMENTCreating shareholder value by the numbers

Baa3MOODY’S

<2.5LEVERAGE RATIO

Maintain Strong Balance Sheet

25%QUARTERLY DIVIDEND

INCREASE 2015-17

$0.1

0

$0.1

1

$0.1

25

$629 million

SHARE REPURCHASES2013-2017

BBBS&P

INVESTMENT GRADE MAINTAINED

2015 2016 2017

Debt

EBITDA

75%OF NET INCOME RETURNED TO

SHAREHOLDERS SINCE 2014


Value creation More than $2.3 billion

invested during past five years

– $1.4 billion capex– $118 million in

investments– $740 million returned to

shareholders as of September 30, 2017

Proven Value Creation: Funding growth and innovation; returning cash to shareholders

CAPITAL DEPLOYMENTSOURCES and USES OF CASH


5-year total = $1.7 billion 5-year total = $2.3 billion

CASH INVESTED

Capex Investments Share Repurchases & Dividends

$430

$285

$490$517

$318

$273

2013 2017E 2017E2014 2015 2016 2013 2014 2015 2016

$401

$301


Disciplined, steadily increasing leverage

Target debt/EBITDA ratio less than 2.5x

Plan 2018 increase in debt to maintain leverage objective – expect EPS positive

Committed to maintaining investment grade rating

0.8x 0.8x

1.0x

1.3x1.5x

1.8x

DEBT LEVERAGETOTAL DEBT / ADJUSTED EBITDA TOTAL DEBT

$257$295

$416

$577

$689

$834

2012 2013 2014 2015 2016

Sept 30,

2017 2012 2013 2014 2015 2016

Sept 30,

2017


Investment cycle cash generation cycle

Investment in Organic Growth Past peak capex spend, moving

toward execution on investment and cash generation phase

Targeting $280 million for 2017 Guidance now for $170-$190 million

in 2018

CAPEX 2016 - 2019

Capital Expenditures

$320 million

~$280 million

~$180 million

2016 2017E 2018E 2019E

~$180 million


Strong consistent returns throughout investment period

Low point in 2017/2018 as investment phase comes to an end

ROIC consistently above cost of capital ROIC returns to growth as capex spend

tapers in current growth cycle

RETURN ON INVESTED CAPITALROIC is our metric for capital investments, acquisitions and compensation

Well above cost of capital; poised to increase % as capex declines

Return on Invested Capital (after tax)

0%

9%

2013 2014 2015 2016 2017E 2020

Cost of Capital

15%


Stock buyback started in 2013and has grown steadily

Dividends commenced in 2015 – increased twice

Shareholder return and value creation is a priority for Hexcel

SHAREHOLDER RETURNDemonstrated commitment since 2013$ millions

Consistently returning >50% of net income

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

2013 2014 2015 2016 2017 Est


HEXCELSHAREHOLDER RETURN PRIORITIES

Growing free cash flow + appropriate debt = cash to drive shareholder return


High-single digit growth• Airbus and Boeing ~88% of total sales• A350 growth continues• New narrow-bodies ramp and build rates increase• Legacy wide-body headwinds • Other commercial aerospace growing double digits

Stable• Well-positioned to hold sales steady• Rotorcraft stable

Increased secular penetration, build rates and wind recovery driving growth

Double-digit growth• Wind recovers in 2018 and expected to

exceed 2016 levels

2018 REVENUE OUTLOOKCommercial Aerospace 70% | Space & Defense 16% | Industrial 14%

COMMERCIAL AEROSPACE SPACE & DEFENSE INDUSTRIAL


CUSTOMER SALES ADJUSTED DILUTED EPS

LOW

$2,100HIGH

$2,200LOW

$2.80HIGH

$2.94

2018 GUIDANCE$ millions, except EPS


TARGET$420

Strong sales growth plus growing free cash flow

CAPITAL EXPENDITURES

LOW$170

HIGH$190

FREE CASH FLOW

>$230- =


2018 ADDITIONAL DETAILS Incremental $14 million depreciation on capex to support

growth

29% tax rate – cash taxes up $25 million from 2017

Q1 cash usage expected as usual

− Working capital is “seasonal”

SG&A higher in Q1 2018 (versus Q2-Q4) by ~$8 million− Timing of stock incentive compensation expense

R&T spend up double digits - investing in innovation and qualifications

FX exposure to 2018 operating income is about 65% hedged

Strong dollar vs. Euro/GBP is an advantage

5% movement is a $4.8 million operating income impact in 2018, net of hedges

2018 hedge rate is lower than the 2017 level


THE JOURNEY FROM CASH INVESTMENT TO CASH GENERATIONInvest in leading-edge technology → built assets to deliver future revenue growth → generate strong ROIC and growing free cash flow

On track to deliver $1 billion of free cash flow from 2016-2020

CAPEX FREE CASH FLOW

2013 2014 2015 2016 2017E 2018E 2013 2014 2015 2016 2017E 2018E


2020 SALES OUTLOOK

Double-digitCAGR EPS

growth

Commercial Aerospace6-9% CAGR

Space & Defense3-5% CAGR

Industrial15%+ CAGR

S&D

2020TOTAL HEXCEL

7-10% CAGR(2017E – 2020)


Changes driven by wide bodies: Target 7 - 10% CAGR sales growth

S&D

SALES OUTLOOKUpdate from prior guidance

Key movements: Commercial Aerospace wide bodies: ($120 million) Space & Defense, primarily A400M: ($25 million) Industrial – Wind outlook realigned: ($35 million) Structil/OPM acquisitions add: $30+ million

<$2 billion

7-10% CAGRMidpoint $2.55 billion

Commercial Aerospace Space and Defense Industrial

2017E 2020


COMMITTED TOSHAREHOLDER RETURNStrong record of shareholder return

Investing in innovation to win new programs and expand composites penetration

M&A opportunities addressed with vigilance and discipline

Anticipate increasing return to shareholders to>50% of net earnings

Growing dividend trend to continue; dividend level increased twice since initiated in 2015

Free cash flow forecasted to grow significantly in coming years

Long-term growth with strong financial performance drives investor return


SUMMARY

Our strong performance and growth will continue for years to come

Expect 2018 to be a record year for sales, operating income, EPS and cash generation

Hexcel remains a proven leader and a great investment in an attractive industry with few competitors and high barriers to entry

We have a growing leadership position in attractive markets

Our innovation, technology and vertical integration are differentiators

Capital management is a strength evidenced by record-setting cash generation that will continue for years to come

Sales$2.10 - $2.20 billion

Adjusted diluted EPS

$2.80 - $2.94

CapEx$170 - $190 million

Free cash flow>$230 million

Shareholder return>50% of net income

2018 GUIDANCE

december 12, 2017 | new york city · everything from carbon fibers and reinforcement fabrics to...

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