Debt |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | Note 5 –– Debt
On March 31, 2026, the Company entered into a new credit agreement (the “Credit Agreement”) to refinance its senior unsecured credit facility (the “Facility”). Under the terms of the Credit Agreement the borrowing capacity remained at $750 million. The Facility matures on March 31, 2031. In connection with the refinancing, the Company incurred approximately $1.9 million in financing costs which were deferred and will be amortized over the term of the Facility. In addition, the Company incurred a charge of approximately $0.3 million for closing costs related to the refinancing which were recorded in Other expense on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2026.
Borrowings under the Facility bear interest, at Hexcel’s option, for SOFR rate borrowings at (i) an Adjusted Term SOFR rate (subject to a 0.00% floor), where such “Adjusted Term SOFR” rate is equal to the Term SOFR rate for the applicable interest period, plus the Applicable Margin or (ii) for base rate borrowings, the greatest of (a) the prime rate, (b) the federal funds rate plus 0.50% and (c) the Adjusted Term SOFR rate (subject to a 0.00% floor) for a one-month interest period plus 1.00%, in each case plus the Applicable Margin. The “Applicable Margin” initially was 1.125% for SOFR rate borrowings and 0.125% for base rate borrowings. After the date the Agent received a compliance certificate for the fiscal quarter ended March 31, 2026, the Applicable Margin can fluctuate, determined by reference to the more favorable to Hexcel of its (x) public debt rating and (y) consolidated leverage ratio, as specified in the Credit Agreement. Up to $50 million of the Facility may be used for letters of credit. The Credit Agreement enables Hexcel, from time to time, to add term loans or to increase the revolving credit commitment in an aggregate amount not to exceed $500 million.
As of September 30, 2026, total borrowings under the Facility were $240.0 million, which approximated fair value. Outstanding letters of credit reduce the amount available for borrowing under the Facility. As of September 30, 2026, there were no issued letters of credit under the Facility, resulting in undrawn availability under the Facility of $510.0 million. The weighted average interest rate for the Facility as of September 30, 2026, over the six months since inception, was 4.79%. The Company was in compliance with all debt covenants as of September 30, 2026.
During the second quarter of 2026, the Company issued $400 million in aggregate principal amount of 4.9% Senior Unsecured Notes due in 2031. The interest rate on these senior notes may be increased by 0.25% each time a credit rating applicable to the notes is downgraded. The maximum rate is 6.9%. Interest on the notes will be payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2026. The effective interest rate as of September 30, 2026, for the period since inception, was 5.1%. The issuance of these senior notes resulted in the Company incurring financing fees of $3.9 million that have been deferred and will be recognized over the term of the senior notes. Based on quoted prices, the fair value of the 4.9% Senior Unsecured Notes was $384.2 million at September 30, 2026. In conjunction with the issuance of the 4.9% Senior Unsecured Notes, the Company redeemed the $400 million in aggregate principal amount of 3.95% Senior Unsecured Notes that were due in February 2027. The redemption of these senior notes resulted in debt extinguishment costs of $0.7 million which were recorded in Other expense on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2026. During the first quarter of 2025, the Company issued $300 million in aggregate principal amount of 5.875% Senior Unsecured Notes due in 2035. The interest rate on these senior notes may be increased by 0.25% each time a credit rating applicable to the notes is downgraded. The maximum rate is 7.875%. Interest on the notes is payable semiannually in arrears on February 26 and August 26 of each year, beginning on August 26, 2025. The effective interest rate for the nine months ended September 30, 2026 was 6.0% inclusive of an approximately 0.10% benefit of treasury locks. The issuance of these senior notes resulted in the Company incurring financing fees of $3.9 million that have been deferred and will be recognized over the term of the senior notes. Based on quoted prices, the fair value of the 5.875% Senior Unsecured Notes was $289.8 million at September 30, 2026. In conjunction with the issuance of the 5.875% Senior Unsecured Notes, the Company redeemed the $300 million in aggregate principal amount of 4.7% Senior Unsecured Notes that were due in August 2025. The redemption of these senior notes resulted in debt extinguishment costs of $0.4 million which were recorded in Other expense on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2025. |
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