Segment Information

12 Months Ended

Dec. 31, 2018

Note 18 — Segment Information

The financial results for our segments are prepared using a management approach, which is consistent with the basis and manner in which we internally segregate financial information for the purpose of assisting in making internal operating decisions. We evaluate the performance of our segments based on operating income, and generally account for intersegment sales based on arm’s length prices. We report two segments, Composite Materials and Engineered Products. Corporate and certain other expenses are not allocated to the segments, except to the extent that the expense can be directly attributable to the segment. Corporate & Other is shown to reconcile to Hexcel’s consolidated results.

In addition to the product line-based segmentation of our business, we also monitor sales into our principal end markets as a means to understanding demand for our products. Therefore, for each segment, we have also reported disaggregated sales by end market.

The following table presents financial information on our segments as of December 31, 2018, 2017 and 2016, and for the years then ended.

(In millions)	Composite Materials		Engineered Products		Corporate & Other			Total
Third-Party Sales
2018	$	1,770.5	$	418.6	$	—		$	2,189.1
2017		1,597.1	376.2		—				1,973.3
2016		1,610.0	394.3		—				2,004.3
Intersegment sales
2018	$	74.6	$	0.1	$	(74.7	)	—
2017	63.6		0.4			(64.0	)	—
2016	67.6		0.1			(67.7	)	—
Operating income (loss)
2018	$	373.8	$	50.6	$	(53.2	)	$	371.2
2017	359.4			48.7		(57.5	)	350.6
2016	368.3			50.0		(58.2	)	360.1
Depreciation and Amortization
2018	$	113.9	$	9.1	$	0.1		$	123.1
2017		96.8	7.5		0.2				104.5
2016		86.0	7.2		0.1				93.3
Equity in earnings from affiliated companies
2018	$	—	$	5.6	$	—		$	5.6
2016	—		3.3		—				3.3
2016	—		2.5		—			2.5
Other expense (income), net
2018	$	—	$	7.7	$	—		$	7.7
Segment assets
2018	$	2,501.9	$	272.9	$	49.3		$	2,824.1
2017		2,415.5	279.1			86.3			2,780.9
2016		2,127.2	220.7		52.7				2,400.6
Investments in affiliated companies
2018	$	2.4	$	32.1	$	14.2		$	48.7
2017	—		26.5			21.2			47.7
2016	—		23.1			30.0		53.1
Accrual basis additions to property, plant and equipment
2018	$	173.5	$	5.6	$	—		$	179.1
2017	270.3		14.1		—				284.4
2016		305.2		14.9	0.1				320.2

Geographic Data

Net sales and long-lived assets, by geographic area, consisted of the following for the three years ended December 31, 2018, 2017 and 2016:

(In millions)	2018		2017		2016
Net sales by Geography (a):
United States	$	1,055.9	$	937.3	$	957.8
International
France	369.8		335.7		335.2
Spain	189.5			187.0	219.7
Germany		216.0		206.0	169.5
United Kingdom	167.3		160.4		154.2
Austria	111.4		86.1		92.8
Other	79.2		60.8			75.1
Total international		1,133.2		1,036.0		1,046.5
Total consolidated net sales	$	2,189.1	$	1,973.3	$	2,004.3

Net Sales to External Customers (b):
United States	$	909.8	$	806.6	$	833.1
International
Germany	233.1		217.7		210.5
Spain	194.1		199.4		204.4
France	201.7		161.5		153.8
United Kingdom		79.0	80.1		95.5
Other		571.4		508.0		507.0
Total international		1,279.3		1,166.7		1,171.2
Total	$	2,189.1	$	1,973.3	$	2,004.3

Long-lived assets (c):
United States	$	1,332.1	$	1,304.4	$	1,213.8
International
France	397.7		402.7		217.2
United Kingdom	146.1		151.6		130.8
Spain	56.6		61.7		56.2
Other	86.3		94.6		79.8
Total international	686.7			710.6		484.0
Total consolidated long-lived assets	$	2,018.8	$	2,015.0	$	1,697.8

(a)	Net sales by geography based on the location in which the product sold was manufactured.

(b)	Net sales to external customers based on the location to which the product sold was delivered.

(c)	Long-lived assets primarily consist of property, plant and equipment, net and goodwill.

Significant Customers and Suppliers

Approximately 41%, 44% and 41% of our 2018, 2017 and 2016 net sales, respectively, were to Airbus and its subcontractors. Of the 41% of overall sales to Airbus and its subcontractors in 2018, 38% related to Commercial Aerospace market applications and 3% related to Space & Defense market applications. Approximately 25% for each of 2018 and 2017 and 28% of our 2016 net sales, respectively, were to Boeing and related subcontractors. Of the 25% of overall sales to Boeing and its subcontractors in 2018, 23% related to Commercial Aerospace market applications and 2% related to Space & Defense market applications. In the Composite Materials segment approximately 16% of sales for both 2018 and 2017 and 17% for 2016, respectively, were to Boeing and its subcontractors. Approximately 46%, 50% and 48% of sales for 2018, 2017 and 2016, respectively were to Airbus and its subcontractors. In the Engineered Products segment approximately 63%, 64% and 69% of sales for 2018, 2017 and 2016, respectively were to Boeing and its subcontractors.

A significant decline in business with Airbus or Boeing could materially impact our business, operating results, prospects and financial condition.

Certain key raw materials we consume are available from relatively few sources, and in many cases the cost of product qualification makes it impractical to develop multiple sources of supply. The lack of availability of these materials could under certain circumstances materially impact our consolidated results of operations.