Hexcel Corporation (HXL) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for Hexcel Corporation. Our host for today's call is Nick Stanage, Chairman, CEO and President. [Operator Instructions] I will now turn the call over to your host, Mr. Stanage. You may begin, sir.

Thanks, Paul. Good morning, and welcome to Hexcel's Annual Meeting of Stockholders. I'm Nick Stanage, Chairman, Chief Executive Officer and President of Hexcel Corporation, and I will chair this meeting. It is 10:30 a.m. on June 1, 2020, and this meeting is called to order. We thank everyone for being with us today through our virtual meeting platform. While we are disappointed that we are not able to gather together in person, like we normally do for our Annual Meeting of Stockholders, as part of our precautions regarding the COVID-19 pandemic, this technology enables us to reach a larger audience of stockholders who would not typically be able to participate in our annual meeting. On the call with us today are the other current members of Hexcel's Board of Directors: Joel Beckman; Lynn Brubaker; Jeffrey Campbell; Cynthia Egnotovich; Thomas Gendron; Jeffrey Graves; Guy Hachey; and Catherine Suever. Also joining this call this morning are the following executive officers of Hexcel: Patrick Winterlich, Executive Vice President and Chief Financial Officer; Gail Lehman, Executive Vice President, General Counsel and Secretary of Hexcel, who will officiate as secretary for this meeting; and Robert Hennemuth, Executive Vice President, Human Resources and Communications. From Ernst & Young LLP, our independent auditors, we have David Glinka, Engagement Partner. [ Kevin Chao ], a representative of Broadridge Financial Solutions, having taken the oath of office will serve as the inspector of elections and will certify the voting results. The inspector's oath will be filed with the meeting records. After the formal portion of the meeting is concluded, we will address any questions that have been submitted in the space provided on the virtual meeting platform. Validated stockholders may submit questions at any time during this meeting. When submitting questions, stockholders should follow the guidelines set forth in the rules of procedure available now in the meeting materials section of the virtual meeting platform. A representative from Hexcel is reviewing questions that have been submitted and Ms. Lehman will read your questions aloud at the appropriate time. To facilitate full and fair stockholder participation, we ask that you limit yourself to one question. We also have a certified list of stockholders as of April 15, 2020, the record date for this meeting available in the virtual meeting platform for the duration of the meeting and an affidavit from Broadridge that the mailing of our proxy materials commenced on April 21, 2020, to stockholders of record on April 15, 2020. Both will be filed with the meeting records. Ms. Lehman will now report on the presence of a quorum and will present the proposals for the meeting.

Thank you, Mr. Chairman. The preliminary report of the inspector of election indicates that at least 89.12% of the outstanding common stock as of the April 15 record date is present or represented by proxy at this meeting. Based on the report, a quorum is present and the polls are open for voting. The first proposal on the ballot is the election of the following individuals to serve as directors of Hexcel. Nick L. Stanage; Joel S. Beckman; Jeffrey C. Campbell; Cynthia M. Egnotovich; Thomas A. Gendron; Jeffrey A. Graves; Guy C. Hachey; and Catherine A. Suever. The second proposal on the ballot is a proposal to conduct an advisory vote to approve the company's 2019 executive compensation. The third proposal on the ballot is to ratify the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for 2020. No other business has been raised to be transacted at this meeting. Proposals 1 through 3 are fully described in the proxy statement that accompanied or was referred to in the notice of meeting. Mr. Stanage, you may proceed with voting.

Thank you, Ms. Lehman. The voting at this meeting will be done on the virtual meeting platform. Although voting is done primarily by proxy, if you wish to vote or change your vote during this meeting, please click on the link provided within the virtual meeting platform. Any stockholder who has already voted and does not want to change their vote need not take any further action. If you intend to vote during the meeting through the virtual meeting platform, and haven't yet done so, please do so now. [Voting]

Thank you. The polls are now closed. Because we permit voting by telephone, by proxy cards, over the Internet and on the virtual meeting platform, it will take additional time to finalize the tabulation. The final tabulation will be filed with the SEC on a Form 8-K within 4 days of this meeting. However, we can announce preliminary voting results. Madam Secretary, do you have the preliminary report on the voting?

Mr. Chairman, we have received the preliminary report of the inspector of election. Each nominee for director has been duly elected to the Board of Directors and proposals 2 and 3 have been approved by the requisite vote of the stockholders.

Thank you. Since no other business has been brought before the 2020 Annual Meeting of Stockholders, the polls are now closed and I declare the formal portion of this meeting adjourned. We will now answer general questions that have been submitted through the virtual meeting platform in accordance with the rules of procedure. Please note, we will attempt to answer as many questions as time allows, but only questions that are germane to the meeting or our business will be addressed. Any relevant questions that we do not get to will be addressed on our company's website after the meeting. Ms. Lehman, can you please begin with our first question.

Yes, certainly. We have a question from the Carpenter Union pension funds, and I will read it. Mr. Chairman, the Carpenter Union pension funds have a collective ownership position of 182,500 shares of company common stock. As long-term shareholders, we appreciate the company efforts to prioritize employee health and safety as production operations continue to serve customers and other important stakeholders during the COVID-19 pandemic. We are glad to see that Dr. Graves will be remaining on the Board, and congratulations to him on his new job. Liquidity is critically important in these times and the Board feels the company's liquidity position is strong. What factors would the Board or senior management consider before any decision to resume share repurchases?

Well, Carpenter Union, thank you for your ownership and for your questions and support. As you could expect, our Board and management through regular Board meetings, review our capitalization as one of our key topics of discussion in every Board meeting. In addition to that, given the pandemic and the ongoing activity, we have implemented additional Board meetings to review the status of our customer demands, the safety of our employees, and the overall liquidity position the company have on a real-time basis. As we look at our capitalization, we always evaluate our debt structure, our covenants. We evaluate our opportunities with respect to new customer programs, research and technology, investment, development as well as CapEx expenditure. So there's not one in particular item that drive our decision. It's a balance of all the items that make up our capital decisions and basically, we'll continue to look at those factors as we evaluate the right timing on how to return capital to shareholders, and when that might be reinstated down the road. Next question?

Mr. Chairman, there are no additional questions in the queue.

Hearing no further questions, this concludes our question-and-answer session. We thank you for joining our 2020 Annual Meeting of Stockholders. Thank you.

This now concludes the meeting. Thank you for joining, and have a pleasant day.