What Hexcel Corporation told the SEC could break it.

Hexcel is one of ~120 potentially responsible parties for the Lower Passaic River cleanup; the EPA's selected remedy for the lower eight miles is estimated at $0.97–2.07 billion, with an additional $308.7–661.5 million for the upper nine miles, allocated among PRPs.

“In March 2016, the EPA issued a Record of Decision (“ROD”) setting forth the EPA's selected remedy for the lower eight miles of the Lower Passaic River at an expected cost ranging from $ 0.97 billion to $ 2.07 billion. In August 2017, the EPA appointed an independent third-party allocation expert to make recommendations on the relative liability of approximately 120 identified non-government PRPs for the lower eight miles of the Lower Passaic River.”

Tariffs (along with sales mix and inventory actions) contributed to a gross-margin decline to 23.0% in 2025 from 24.7% in 2024, and Hexcel has been unable to recover or offset some material and transportation cost increases.

“Lower margins for 2025 as compared to the prior year were due to sales mix, tariffs, and inventory reduction actions which drove unfavorable cost leverage.”

Key raw materials (epoxy/phenolic resins, acrylonitrile, carbon fiber, fiberglass yarn, aramid paper, aluminum foil) may be supplied through a sole source or limited number of sources, with a number of products having only one or two qualified sources, so a supply interruption could disrupt deliveries to customers.

“Our profitability depends largely on the price and continuity of the supply of raw materials, which may be supplied through a sole source or a limited number of sources. We purchase large volumes of raw materials, such as epoxy and phenolic resins, acrylonitrile, carbon fiber, fiberglass yarn, aramid paper and, to a lesser extent, aluminum foil.”

European subsidiaries had $0.9 billion of third-party sales in 2025 (68% USD, 31% Euros, 1% GBP); mismatches between sales and functional-currency costs make their margins vary with foreign exchange rates.

“In 2025, our European subsidiaries had third-party sales of $0.9 billion of which approximately 68% were denominated in U.S. dollars, 31% were denominated in Euros and 1% were denominated in British pounds sterling.”

In 2025, 47% of production and 57% of customer sales occurred outside the United States, exposing Hexcel to international economic, political, legal and supply-cost risks.

“In 2025, 47% of our production and 57% of our customer sales occurred outside of the United States.”