10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2019

or

☐ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from                      to                    

Commission File Number 1-8472

Hexcel Corporation

(Exact name of registrant as specified in its charter)

Delaware	94-1109521
(State of Incorporation)	(I.R.S. Employer Identification No.)

Two Stamford Plaza

281 Tresser Boulevard

Stamford, Connecticut 06901-3238

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (203) 969-0666

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ☐    No   ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 15, 2019
COMMON STOCK	84,888,081

HEXCEL CORPORATION AND SUBSIDIARIES

INDEX

			Page
PART I.	FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)
	●	Condensed Consolidated Balance Sheets — March 31, 2019 and December 31, 2018	3
	●	Condensed Consolidated Statements of Operations — The three months ended March 31, 2019 and 2018	4
	●	Condensed Consolidated Statements of Comprehensive Income — The three months ended March 31, 2019 and 2018	4
	●	Condensed Consolidated Statements of Cash Flows — The three months ended March 31, 2019 and 2018	5
	●	Condensed Consolidated Statements of Stockholders’ Equity — The three months ended March 31, 2019 and March 31, 2018	6
	●	Notes to Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		24
ITEM 4.	Controls and Procedures		24
PART II.	OTHER INFORMATION		24
ITEM 1.	Legal Proceedings		24
ITEM 1A.	Risk Factors		24
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		25
ITEM 6.	Exhibits		26
SIGNATURE			28

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PART I. FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements

Hexcel Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
	(Unaudited)
	March 31,			December 31,
(In millions)	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	43.7		$	32.7
Accounts receivable, net		324.3			260.9
Inventories, net		334.5			297.8
Contract assets		53.7			50.5
Prepaid expenses and other current assets		26.1			33.9
Total current assets		782.3			675.8
Property, plant and equipment		2,894.5			2,839.9
Less accumulated depreciation		(991.8	)		(963.4	)
Net property, plant and equipment		1,902.7			1,876.5
Goodwill and other intangible assets		286.2			142.3
Investments in affiliated companies		50.9			48.7
Other assets		143.9			80.8
Total assets	$	3,166.0		$	2,824.1
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings	$	9.7		$	9.4
Accounts payable		165.2			161.9
Accrued compensation and benefits	62.1				75.8
Accrued liabilities		112.9			79.6
Total current liabilities		349.9			326.7
Commitments and contingencies (see Note 14)
Long-term debt		1,160.0			947.4
Retirement obligations		42.1			42.0
Other non-current liabilities		241.6			186.0
Total liabilities		1,793.6			1,502.1
Stockholders' equity:
Common stock, $0.01 par value, 200.0 shares authorized, 108.8 shares  and 108.5 shares  issued at March 31, 2019 and December 31, 2018, respectively		1.1			1.1
Additional paid-in capital		811.8			798.3
Retained earnings		1,786.0			1,726.5
Accumulated other comprehensive loss		(113.9	)		(108.0	)
		2,485.0			2,417.9
Less – Treasury stock, at cost, 24.0 shares at March 31, 2019, and 23.7 shares at December 31, 2018, respectively.		(1,112.6	)		(1,095.9	)
Total stockholders' equity		1,372.4			1,322.0
Total liabilities and stockholders' equity	$	3,166.0		$	2,824.1

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Hexcel Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

	(Unaudited)
	Quarter Ended March 31,
(In millions, except per share data)	2019		2018
Net sales	$	609.9	$	540.1
Cost of sales		442.7		397.5
Gross margin		167.2		142.6
Selling, general and administrative expenses		49.5		46.4
Research and technology expenses		14.9		13.8
Operating income		102.8		82.4
Interest expense, net		12.0		8.0
Income before income taxes, and equity in earnings from affiliated companies		90.8		74.4
Provision for income taxes		20.6		14.1
Income before equity in earnings from affiliated companies		70.2		60.3
Equity in earnings from affiliated companies		2.0		1.3
Net income	$	72.2	$	61.6
Basic net income per common share	$	0.85	$	0.68
Diluted net income per common share	$	0.84	$	0.68
Dividends per share	$	0.15	$	0.125
Weighted-average common shares:
Basic		85.0		90.0
Diluted		86.0		91.2

Hexcel Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

	(Unaudited)
	Quarter Ended March 31,
(In millions)	2019			2018
Net Income	$	72.2		$	61.6
Currency translation adjustments		(2.8	)		31.6
Net unrealized pension and other benefit actuarial gains   and prior service credits		(0.4	)		(0.8	)
Net unrealized (losses) gains on financial instruments (net of tax)		(2.7	)		4.8
Total other comprehensive (loss) income		(5.9	)		35.6
Comprehensive income	$	66.3		$	97.2

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Hexcel Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

	(Unaudited)
	Three Months Ended March 31,
(In millions)	2019			2018
Cash flows from operating activities
Net income	$	72.2		$	61.6
Reconciliation to net cash provided by operating activities:
Depreciation and amortization		38.7			29.8
Amortization related to financing		0.3			0.3
Deferred income taxes		4.2			10.1
Equity in earnings from affiliated companies		(2.0	)		(1.3	)
Stock-based compensation		11.1			9.9
Changes in assets and liabilities:
Increase in accounts receivable		(59.4	)		(41.2	)
Increase in inventories		(32.3	)		(14.6	)
(Increase) decrease in prepaid expenses and other current assets		(5.8	)		2.6
Increase in accounts payable/accrued liabilities		19.1			7.0
Other – net		(0.2)			(1.6	)
Net cash provided by operating activities		45.9			62.6
Cash flows from investing activities
Capital expenditures		(61.1	)		(59.5	)
Acquisition of business		(158.4	)	―
Net cash used for investing activities		(219.5	)		(59.5	)
Cash flows from financing activities
Borrowing from senior unsecured credit facility		289.0			133.0
Repayment of senior unsecured credit facility		(77.0	)		(105.0	)
Repayment of finance lease obligation and other debt, net		(0.2	)	―
Dividends paid		(12.7	)		(11.2	)
Repurchase of stock		(11.2	)		(30.1	)
Activity under stock plans		(3.0	)		(2.2	)
Net cash provided by (used in) financing activities		184.9			(15.5	)
Effect of exchange rate changes on cash and cash equivalents		(0.3	)		2.1
Net increase (decrease) in cash and cash equivalents		11.0			(10.3	)
Cash and cash equivalents at beginning of period		32.7		60.1
Cash and cash equivalents at end of period	$	43.7		$	49.8
Supplemental data:
Accrual basis additions to property, plant and equipment	$	57.5		$	45.3

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Hexcel Corporation and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2019 and March 31, 2018

			Additional		Accumulated			Other						Total
			Paid-In		Retained			Comprehensive			Treasury			Stockholders’
(In millions)	Par		Capital		Earnings			Income (Loss)			Stock			Equity
Balance, December 31, 2017	$	1.1	$	774.3	$	1,496.1		$	(45.0	)	$	(731.4	)	$	1,495.1
Net income	—		—			61.6		—			—				61.6
Dividends paid on common stock	—		—			(11.2	)	—			—				(11.2	)
Impact of new accounting pronouncements	—		—			2.2			1.6		—				3.8
Change in other comprehensive income – net of tax	—		—		—				35.6		—				35.6
Stock based compensation	—			13.4	—			—				(5.7	)		7.7
Acquisition of treasury stock	—		—		—			—				(30.1	)		(30.1	)
Balance, March 31, 2018	$	1.1	$	787.7	$	1,548.7		$	(7.8	)	$	(767.2	)	$	1,562.5
			Additional		Accumulated			Other						Total
			Paid-In		Retained			Comprehensive			Treasury			Stockholders’
(In millions)	Par		Capital		Earnings			Income (Loss)			Stock			Equity
Balance, December 31, 2018	$	1.1	$	798.3	$	1,726.5		$	(108.0	)	$	(1,095.9	)	$	1,322.0
Net income	—		—			72.2		—			—				72.2
Dividends paid on common stock	—		—			(12.7	)	—			—				(12.7	)
Change in other comprehensive income – net of tax	—		—		—				(5.9	)	—				(5.9	)
Stock based compensation	—			13.5	—			—				(5.5	)		8.0
Acquisition of treasury stock	—		—		—			—				(11.2	)		(11.2	)
Balance, March 31, 2019	$	1.1	$	811.8	$	1,786.0		$	(113.9	)	$	(1,112.6	)	$	1,372.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HEXCEL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Significant Accounting Policies

In these notes, the terms “Hexcel,” “the Company,” “we,” “us,” or “our” mean Hexcel Corporation and subsidiary companies. The accompanying Condensed Consolidated Financial Statements are those of Hexcel Corporation.  Refer to Note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of our significant accounting policies. Significant changes to our accounting policies subsequent to the filing of our Form 10-K, relate solely to the adoption of Topic 842, Leases, are discussed below in Recent Accounting Pronouncements as well as in Note 4.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared from the unaudited accounting records of Hexcel pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.  Certain information and footnote disclosures normally included in financial statements have been omitted pursuant to rules and regulations of the SEC. In the opinion of management, the Condensed Consolidated Financial Statements include all normal recurring adjustments as well as any non-recurring adjustments necessary to present fairly the statement of financial position, results of operations and cash flows for the interim periods presented.  The Condensed Consolidated Balance Sheet as of December 31, 2018 was derived from the audited 2018 consolidated balance sheet.  Interim results are not necessarily indicative of results expected for any other interim period or for the full year.  These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K.

Investments in Affiliated Companies

We have a 50% equity investment in Aerospace Composites Malaysia Sdn. Bhd. (“ACM”) and a 25% equity investment in Hexcut Services.  These investments are accounted for using the equity method of accounting.      

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). This standard requires lessees to recognize a right of use asset and lease liability on the balance sheet for all leases, with the exception of leases with a duration of one year or less. We adopted the provisions of this standard on January 1, 2019, using the modified transition method which allows companies to recognize existing leases at the adoption date without requiring comparable presentation. As a result of the adoption of this standard we recognized approximately $50 million of right of use assets and related liabilities for operating leases that existed prior to January 1, 2019. These right of use assets were recorded in noncurrent assets, and the related liabilities were recorded in other accrued liabilities and other noncurrent liabilities. See Note 4 - Leases, for more details.

In August 2018 the FASB issued Accounting Standards Update No. 2018-14 (ASU 2018-14), Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20), which amends the current disclosure requirements regarding defined benefit pensions and other post retirement plans, and allows for the removal of certain disclosures, while adding certain new disclosure requirements. This standard is effective for fiscal years beginning after December 15, 2020 and allows for early adoption. We do not expect this new standard to have a significant impact to our disclosures.

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Note 2 — Net Income per Common Share

	Quarter Ended March 31,
(In millions, except per share data)	2019		2018
Basic net income per common share:
Net income	$	72.2	$	61.6
Weighted average common shares outstanding		85.0		90.0
Basic net income per common share	$	0.85	$	0.68
Diluted net income per common share:
Net income		72.2		61.6
Weighted average common shares outstanding — Basic		85.0		90.0
Plus incremental shares from assumed conversions:
Restricted stock units		0.4		0.5
Stock options		0.6		0.7
Weighted average common shares outstanding — Dilutive		86.0		91.2
Diluted net income per common share	$	0.84	$	0.68

   Total shares underlying stock options of 0.3 million and 0.2 million, respectively, were excluded from the computation of diluted net income per share for the three months ended March 31, 2019 and March 31, 2018, as they were anti-dilutive.  

Note 3 — Inventories

(In millions)	March 31, 2019		December 31, 2018
Raw materials	$	170.3	$	131.4
Work in progress		40.8		43.6
Finished goods		123.4		122.8
Total Inventory	$	334.5	$	297.8

Note 4 — Leases

The Company regularly enters into operating leases for certain buildings, equipment, parcels of land, and vehicles. As of January 1, 2019, we adopted the provisions of ASC 842, accounting for leases.  Accordingly, we capitalized all agreements with terms for more than one year, where a right of use asset was identified. In connection with the adoption of ASC 842 on January 1, 2019 we elected certain practical expedients available under ASC 842-10-65-1 that provide certain concessions to ease the burden of transition, such as the treatment of indirect lease costs, and service contracts which may contain embedded leases. In addition, we elected certain expedients not related to the transition, such as the election to capitalize lease and non-lease components of an agreement as a single component for purposes of simplicity, with the exception of those related to equipment and machinery.

Generally, amounts capitalized represent the present value of minimum lease payments over the term, and the duration is equivalent to the base agreement, however, in certain instances management used certain assumptions when determining the value and duration of certain leases.  These assumptions include, but are not limited to, the probability of renewing a lease term, certain future events impacting lease payments, as well as fair values not explicit in an agreement. Such assumptions impacted the duration of many of our building leases, as well as certain of our equipment leases.

In determining the lease renewal, management considered the need and ability to substitute a given asset, as well as certain conditions such as related contractual obligations to our customers (i.e. a contractual obligation of a customer requiring certain manufacturing proximities). In determining fair value management considered the stand alone value of an asset in an ordinary market as well as incurring certain costs to terminate an agreement.  Most of our leases do not include variable payments but contain

8

scheduled escalations. Any lease payments tied to certain future indexes are adjusted on a go forward basis as those indexes become known.

At March 31, 2019, we had approximately $61.4 million of right of use assets recorded in other non-current assets, and $61.8 million of related liabilities, $50.3 of which was included in other non-current liabilities with the remainder in other current liabilities. The weighted average of the remaining lease terms was approximately 8 years.

We discount the future lease payments of our leases using the prevailing rates extended to us by our lenders relevant to the period of inception. These rates are comprised of LIBOR plus a stated spread less a component related to collateralization.  The rates are relative to the duration of the lease at inception and the country to which the lease agreement pertains to.  The weighted average interest rate used in calculating the fair values listed above was 2.5%.

The following table lists the schedule of cash payments related to right of use assets by year:

(In millions)
Remainder of 2019	$	8.9
2020		11.3
2021		9.9
2022		7.2
2023		7.2
Thereafter		25.7
Total	$	70.2

Operating lease expense recognized during the quarter ending March 31, 2019, relating to right of use assets, was $2.9 million, and was recorded in cost of goods sold as well as in operating expenses, in our condensed consolidated statements of operations. Expense related to operating leases which have a duration of a year or less were not material for the same period. Finance leases at March 31, 2019, were immaterial.

Note 5 — Retirement and Other Postretirement Benefit Plans

We maintain qualified and nonqualified defined benefit retirement plans covering certain current and former U.S. and European employees, retirement savings plans covering eligible U.S. and U.K. employees and certain postretirement health care and life insurance benefit plans covering eligible U.S. retirees. We also participate in a union sponsored multi-employer pension plan covering certain U.S. employees with union affiliations.

Defined Benefit Retirement Plans

Net Periodic Benefit Costs

Net periodic benefit costs of our defined benefit retirement plans for the three months ended March 31, 2019 and 2018 were as follows:

	Quarter Ended March 31,
(In millions)	2019		2018
U.S. Nonqualified Defined Benefit Retirement Plans
Service cost	$	0.3	$	0.3
Interest cost		0.2	0.1
Net periodic benefit cost	$	0.5	$	0.4

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Accrued liabilities	$	1.0	$	0.9
Other non-current liabilities		18.3		17.2
	$	19.3	$	18.1

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	Quarter Ended March 31,
(In millions)	2019			2018
European Defined Benefit Retirement Plans
Service cost	$	0.3		$	0.3
Interest cost		1.1		1.1
Expected return on plan assets		(2.2	)		(2.4	)
Net amortization and deferral		0.1			0.1
Net periodic benefit credit	$	(0.7	)	$	(0.9	)

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Noncurrent asset	$	46.6	$	42.6
Accrued liabilities		1.2		0.4
Other non-current liabilities		20.0		18.8
Total accrued benefit	$	21.2	$	19.2

All costs related to our pensions are included as a component of operating income in our consolidated statements of operations. For the three months ended March 31, 2019 and 2018, amounts unrelated to service costs were a benefit of $0.8 million and $1.1 million, respectively.  

Contributions

We generally fund our U.S. non-qualified defined benefit retirement plans when benefit payments are incurred.  We have contributed approximately $0.2 million in the first three months of 2019 to cover unfunded benefits.  We expect to contribute a total of $0.9 million in 2019 to cover unfunded benefits.  We contributed $0.1 million to our U.S. non-qualified defined benefit retirement plans during the quarter ended March 31, 2018.

We contributed $1.2 million and $1.6 million to our European defined benefit retirement plans in the three months ended March 31, 2019 and 2018, respectively.  We plan to contribute approximately $5.0 million during 2019 to our European plans.

Postretirement Health Care and Life Insurance Benefit Plans

We recorded $0.3 million of net amortization gain deferral for the quarters ended March 31, 2019 and March 31, 2018. Net periodic benefit costs of our postretirement health care and life insurance benefit plans for the three months ended March 31, 2019 and 2018 were immaterial.

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.5	$	0.5
Other non-current liabilities	3.9		2.8
Total accrued benefit	$	4.4	$	3.3

Amounts contributed in connection with our postretirement plans, were immaterial for both the three months ended March 31, 2019 and March 31, 2018. We periodically fund our postretirement plans to pay covered expenses as they are incurred. We expect to contribute less than $0.5 million in 2019 to cover unfunded benefits.

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Note 6––Debt

(In millions)	March 31, 2019			December 31, 2018
Current portion of finance lease	$	0.7		$	0.3
Current portion of Euro term loan		9.0			9.1
Current portion of debt		9.7			9.4
Non-current portion of Euro term loan		50.5			51.4
Senior unsecured credit facility due 2021		414.0			202.0
4.7% senior notes — due 2025		300.0			300.0
3.95% senior notes — due 2027		400.0			400.0
Senior notes — original issue discount		(1.9	)		(2.0	)
Senior notes — deferred financing costs		(4.7	)		(4.8	)
Non-current portion of finance lease and other debt		2.1			0.8
Long-term debt		1,160.0			947.4
Total debt	$	1,169.7		$	956.8

In 2017, the Company issued $400 million in aggregate principal amount of 3.95% Senior Unsecured Notes due in 2027. The interest rate on these senior notes may be increased 0.25% each time a credit rating applicable to the notes is downgraded. Conversely, such increases would be reversed should the credit rating be subsequently upgraded. The maximum rate is 5.95%. The effective interest rate for three months ended March 31, 2019 was 3.88% inclusive of approximately a 0.25% benefit of treasury locks. Based on quoted prices the fair value of the senior notes due in 2027 was $400.3 million at March 31, 2019.

In 2015, the Company issued $300 million in aggregate principal amount of 4.7% Senior Unsecured Notes due in 2025. The interest rate on these senior notes may be increased by 0.25% each time a credit rating applicable to the notes is downgraded. Conversely, such increases would be reversed should the credit rating be subsequently upgraded. The maximum rate is 6.7%.  The effective interest rate for the three months ended March 31, 2019 was 4.83%. Based on quoted prices, the fair value of the notes due in 2025 was $314.1 million at March 31, 2019.

The Company has a revolving credit facility (the “Facility”) that allows up to $700 million of borrowings. The Facility matures in June 2021. The interest rate for the Facility at March 31, 2019 was LIBOR + 1.25%. The interest rate ranges from LIBOR + 0.875% to a maximum of LIBOR + 1.875%, depending on the Company’s leverage ratio.     

The Facility contains financial and other covenants, including, but not limited to, restrictions on the incurrence of debt and the granting of liens, as well as the maintenance of an interest coverage ratio and a leverage ratio. In accordance with the terms of the Facility, we are required to maintain a minimum interest coverage ratio of 3.50 (based on the ratio of EBITDA, as defined in the Facility Agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.50 (based on the ratio of total debt to EBITDA) throughout the term of the Facility. In addition, the Facility contains other terms and conditions such as customary representations and warranties, additional covenants and customary events of default.

As of March 31, 2019, total borrowings under the Facility were $414.0 million, which approximates fair value due to its revolving nature. The Facility permits us to issue letters of credit up to an aggregate amount of $40 million. Outstanding letters of credit reduce the amount available for borrowing under our Facility. As of March 31, 2019, there were no outstanding letters of credit under the Facility, resulting in undrawn availability under the Facility as of March 31, 2019 of $286.0 million. The weighted average interest rate for the Facility was 4.17% for the three months ended March 31, 2019.

In 2016, we entered into a€60 million term loan.  The loan has two tranches of which the first tranche for €25 million has a rate of Euribor +1.2% and a final maturity date of June 30, 2023, and a second tranche for €35 million has a rate of Euribor +1.25% with a final maturity date of June 30, 2024. The loans are payable in annual installments that began on June 30, 2017, for the first tranche, and beginning on June 30, 2019, for the second. There is a zero percent floor on the Euribor. Amounts outstanding under this loan at March 31, 2019 were $59.4 million which approximates fair value under the market approach.    

Note 7 — Derivative Financial Instruments

Interest Rate Swap and Interest Lock Agreements

        As of March 31, 2019, the Company had interest rate swaps, having a combined notional value of $50.0 million, that swap floating rate obligations for fixed rate obligations at an average rate of 1.09% against LIBOR in U.S. dollars. Both swaps mature in September 2019. The swaps are accounted for as cash flow hedges of our floating rate bank loan. To ensure the swaps were highly

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effective, all of the critical terms of the swaps matched the terms of the bank loan. The fair value of the interest rate swaps was an asset of $0.3 millionat March 31, 2019 and $0.6 million at December 31, 2018. 

At March 31, 2019 we had interest rate swaps related to European debt obligations which had a combined notional value of approximately €52.9 million. These derivatives swapped floating rate obligations for fixed rate obligations at a weighted average rate of 0.51% against Euribor in Euros.  The swaps amortize through the final maturities of the obligations, on June 30, 2023 and June 30, 2024, in annual installments. The derivatives are accounted for as cash flow hedges of the floating rate term loans.  To ensure the swaps were highly effective, all of the critical terms of the swap matched the terms of the bank loans.  The fair value of the interest rate swaps was a liability of $0.7 millionat March 31, 2019, and$0.5 million at December 31, 2018.

The Company had treasury lock agreements to protect against unfavorable movements in the benchmark treasury rate related to the issuance of our 3.95% Senior Unsecured Notes. These hedges were designated as cash flow hedges therefore any change in fair value was recorded as a component of other comprehensive income. As part of the issuance of our senior notes, we net settled these derivatives and therefore the previously deferred gains recorded in other comprehensive income will be released to interest expense over the life of the senior notes. The effect of these treasury locks reduced the effective interest rate on the 2017 senior notes by approximately 0.25%.  

Foreign Currency Forward Exchange Contracts

A number of our European subsidiaries are exposed to the impact of exchange rate volatility between the U.S. dollar and the subsidiaries’ functional currencies, being either the Euro or the British Pound sterling. We entered into contracts to exchange U.S. dollars for Euros and British Pound sterling through September 2021, which we account for as cash flow hedges. The aggregate notional amount of these contracts was $418.5 million and $416.5 million at March 31, 2019 and December 31, 2018, respectively.  The purpose of these contracts is to hedge a portion of the forecasted transactions of our European subsidiaries under long-term sales contracts with certain customers. These contracts are expected to provide us with a more balanced matching of future cash receipts and expenditures by currency, thereby reducing our exposure to fluctuations in currency exchange rates.  The effective portion of the hedges, losses of $3.6 million were recorded in other comprehensive income (“OCI”) for the three months ended March 31, 2019 and gains of $8.4 million for the three months ended March 31, 2018.  We classified the carrying amount of these contracts of $1.1 million in other assets and $17.1 million in other liabilities, of which $10.0 million is recorded in noncurrent liabilities, on the Condensed Consolidated Balance Sheets at March 31, 2019 and $1.3 million in other assets and $15.3 million in other liabilities at December 31, 2018.  We recognized net losses of $1.8 million in gross margin during the three months ended March 31, 2019 and net gains of $2.3 million for the three months ended March 31, 2018.  

In addition, we enter into foreign exchange forward contracts which are not designated as hedges. These are used to provide an offset to transactional gains or losses arising from the re-measurement of non-functional monetary assets and liabilities such as accounts receivable. The change in the fair value of the derivatives is recorded in the statement of operations. There are no credit contingency features in these derivatives. During the quarters ended March 31, 2019 and 2018, we recognized net foreign exchange gains of $0.3 million and $2.0 million, respectively, in the Condensed Consolidated Statements of Operations. The net foreign exchange impact recognized from these hedges offset the translation exposure of these transactions. The carrying amount of the contracts for derivatives not designated as hedging instruments was $0.1 million classified in other assets and $0.2 million in other liabilities at March 31, 2019, and $0.3 million in other assets at December 31, 2018, in the Condensed Consolidated Balance Sheets.

 The change in fair value of our foreign currency forward exchange contracts under hedge designations recorded net of tax within accumulated other comprehensive income for the quarters ended March 31, 2019 and March 31, 2018 was as follows:

	Quarter Ended March 31,
(In millions)	2019			2018
Unrealized (losses) gains at beginning of period, net of tax	$	(10.6	)	$	8.6
Losses (gains) reclassified to net sales		1.3			(1.6	)
(Decrease) increase in fair value		(2.1	)		6.4
Unrealized (losses) gains at end of period, net of tax	$	(11.4	)	$	13.4

Unrealized losses of $6.5 million recorded in accumulated other comprehensive loss, net of tax of $2.5 million, as of March 31, 2019, are expected to be reclassified into earnings over the next twelve months as the hedged sales are recorded.

Commodity Swap Agreements

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On occasion we enter into commodity swap agreements to hedge against price fluctuations of raw materials, including propylene (the principal component of acrylonitrile).  As of March 31, 2019, we had commodity swap agreements with a notional value of $20.1 million. The swaps mature monthly through March 2021. The swaps are accounted for as a cash flow hedge of our forward raw material purchases. To ensure the swaps are highly effective, all of the critical terms of the swap matched the terms of the hedged items. The fair value of the commodity swap agreements was a liability of $4.6 million at March 31, 2019.

Note 8 — Income Taxes

The income tax provision for the current quarter was $20.6 million compared to $14.1 million for the quarter ended March 31, 2018. Both periods benefited from deductions associated with share based compensation payments. Our underlying estimated annual effective income tax rate is expected to remain at 24%.            

Note 9 — Fair Value Measurements

The authoritative guidance for fair value measurements establishes a hierarchy for observable and unobservable inputs used to measure fair value, into three broad levels, which are described below:

• Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

• Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

• Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value.

We have no assets or liabilities that utilize Level 1 inputs. However, we have derivative instruments classified as liabilities and assets which utilize Level 2 inputs, and one liability that utilizes Level 3 inputs.

For derivative assets and liabilities that utilize Level 2 inputs, we prepare estimates of future cash flows of our derivatives, which are discounted to a net present value. The estimated cash flows and the discount factors used in the valuation model are based on observable inputs, and incorporate non-performance risk (the credit standing of the counterparty when the derivative is in a net asset position, and the credit standing of Hexcel when the derivative is in a net liability position). The fair value of these assets and liabilities was approximately $1.5 million and $22.6 million, respectively, at March 31, 2019.  In addition, the fair value of these derivative contracts, which are subject to a master netting arrangement under certain circumstances, is presented on a gross basis in the Consolidated Balance Sheet.

Below is a summary of valuation techniques for all Level 2 financial assets and liabilities:

• Interest rate swaps — valued using LIBOR yield curves at the reporting date. Fair value was an asset of $0.3 million and a liability of $0.7 million at March 31, 2019.

• Foreign exchange derivative assets and liabilities — valued using quoted forward prices at the reporting date. Fair value of assets and liabilities at March 31, 2019 was $1.2 million and $17.3 million, respectively.

• Commodity raw materials — valued using quoted forward prices at the reporting date. Fair value of liabilities at March 31, 2019 was $4.6 million.

Counterparties to the above contracts are highly rated financial institutions, none of which experienced any significant downgrades in the quarter ended March 31, 2019 that would reduce the receivable amount owed, if any, to the Company.

Liabilities classified as Level 3 — we have a liability for $3.0 million, which represents contingent consideration that was recognized in connection with the Company’s Oxford Performance Materials acquisition. This amount was estimated based on certain contractual stipulations which require payments to be made to the seller in the future based upon the achievement of certain results. We used forecasted results which were discounted using an internally derived discount rate. Future amounts payable may differ from this estimate by the difference between the actual and forecasted results. The amount of interest related to this liability accreted during the three months ended March 31, 2019 was not material.  

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Note 10 — Revenue

Our revenue is primarily derived from the sale of inventory under long-term agreements with our customers. We have determined that individual purchase orders (“PO”), whose terms and conditions taken with a master agreement, create the ASC 606 contracts which are generally short-term in nature.  For those sales, which are not tied to a long-term agreement, we generate a PO that is subject to our standard terms and conditions. In instances where our customers acquire our goods related to government contracts, the contracts are typically subject to terms similar, or equal to, the Federal Acquisition Regulation Part 52.249-2, which contains a termination for convenience clause (“T for C”), which requires that the customer pay for the cost of both the finished and unfinished goods at the time of cancellation plus a reasonable profit.

We recognize revenue over time for those agreements that have T for C, and where the products being produced have no alternative use.  As our production cycle is typically six months or less, it is expected that goods related to the revenue recognized over time will be shipped and billed within the current year. Less than half of our agreements contain provisions which would require revenue to be recognized over time.

We disaggregate our revenue based on market for analytical purposes. The following table details our revenue by market for the three months ended March 31, 2019 and 2018:

	Quarter Ended March 31,
(In millions)	2019		2018
Consolidated Net Sales	$	609.9	$	540.1
Commercial Aerospace	415.5		382.7
Space & Defense		107.8	90.1
Industrial	86.6			67.3

Revenue recognized over time gives rise to contract assets, which represent revenue recognized but unbilled.  Contract assets are included in our Consolidated Balance Sheets as a component of current assets. The activity related to contract assets for the three months ended March 31, 2019 is as follows:

`
(In millions)	Composite Material			Engineered Products		Total
Balance at December 31, 2018	$	12.9		$	37.6	$	50.5
Net revenue billed		(1.4	)		4.6		3.2
Balance at March 31, 2019	$	11.5		$	42.2	$	53.7

Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional.  

Note 11 — Segment Information

The financial results for our operating 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 operating segments based on operating income, and generally account for intersegment sales based on arm’s length prices.  Corporate and certain other expenses are not allocated to the operating segments, except to the extent that the expense can be directly attributable to the business segment.

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Financial information for our operating segments for the three months ended March 31, 2019 and 2018 were as follows:

	(Unaudited)
	Composite		Engineered		Corporate &
(In millions	Materials		Products		Other (a)			Total
First Quarter 2019
Net sales to external customers	$	487.7	$	122.2	$	—		$	609.9
Intersegment sales		19.2		0.1		(19.3	)		—
Total sales	$	506.9	$	122.3	$	(19.3	)	$	609.9
Operating income		112.5		14.8		(24.5	)		102.8
Depreciation and amortization		34.9		3.8		—			38.7
Stock-based compensation		4.1		0.8		6.2			11.1
Accrual basis additions to capital expenditures		56.8		0.7		—			57.5
First Quarter 2018
Net sales to external customers	$	444.6	$	95.5	$	—		$	540.1
Intersegment sales		19.2		—		(19.2	)		—
Total sales	$	463.8	$	95.5	$	(19.2	)	$	540.1
Operating income		91.0		9.9		(18.5	)		82.4
Depreciation and amortization		27.5		2.3		—			29.8
Stock-based compensation		3.6		0.7		5.6			9.9
Accrual basis additions to capital expenditures		45.3		—		—			45.3

(a) We do not allocate corporate expenses to the operating segments.

Goodwill and Intangible Assets

	Composite			Engineered
(In millions)	Materials			Products			Total
Balance at December 31, 2018	$	98.2		$	44.1		$	142.3
Amortization Expense		0.5		1.2				1.7
Additions		—			145.8			145.8
Currency translation adjustments		(2.1	)		(1.5	)		(3.6	)
Balance at March 31, 2019	$	96.6		$	189.6		$	286.2

The addition to goodwill and intangible assets is due to the acquisition of ARC Technologies LLC, discussed in Note 13. At March 31, 2019, the balance of goodwill and intangible assets was $189.4 million and $96.8 million, respectively. No impairments have been recorded against these amounts.

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Note 12 — Accumulated Other Comprehensive Loss

Comprehensive income represents net income and other gains and losses affecting stockholders’ equity that are not reflected in the Consolidated Statements of Operations. The components of accumulated other comprehensive loss as of March 31, 2019 and December 31, 2018 were as follows:

(In millions)	Unrecognized Net Defined Benefit and Postretirement Plan Costs			Change in Fair Value of Derivatives Products (1)			Foreign Currency Translation			Total
Balance at December 31, 2018	$	(15.4	)	$	(5.8	)	$	(86.8	)	$	(108.0	)
Other comprehensive loss before reclassifications		(0.2	)		(4.3	)		(2.8	)		(7.3	)
Amounts reclassified from accumulated other comprehensive loss	(0.2		)		1.6		―				1.4
Other comprehensive loss		(0.4	)		(2.7	)		(2.8	)		(5.9	)
Balance at March 31, 2019	$	(15.8	)	$	(8.5	)	$	(89.6	)	$	(113.9	)

(1) Includes forward foreign exchange contracts, interest rate derivatives and commodity swaps.

The amounts reclassified to earnings from the unrecognized net defined benefit and postretirement plan costs component of accumulated other comprehensive loss for the three months ended March 31, 2019, were $0.2 million with no material tax impact. The amounts reclassified to earnings from the change in fair value of the derivatives component of accumulated other comprehensive loss for the quarter ended March 31, 2019 were net losses of $1.8 million less taxes of $0.4 million related to foreign currency forward exchange contracts and $0.7 million less taxes of $0.2 million related to commodity swaps. We also recorded net gains of $0.4 million less taxes of $0.1 million related to interest rate swaps. 

Note 13 — Acquisitions

       During the quarter ended March 31, 2019, we acquired all of the outstanding equity interests in ARC Technologies LLC, a leading supplier of customer RF/EMI and microwave absorbing composite materials for military, aerospace and industrial applications, for approximately $158.4 million in cash, plus a future payment of $5.4 million, that will be paid in 2019. This acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations.

In connection with the acquisition, the Company recognized approximately $82.8 million of goodwill, and approximately $63.0 million of intangible assets which are included in our Engineered Products segment.

Note 14 — Commitments and Contingencies

We are involved in litigation, investigations and claims arising out of the normal conduct of our business, including those relating to commercial transactions, environmental, employment and health and safety matters. While it is impossible to predict the ultimate resolution of litigation, investigations and claims asserted against us, we believe, based upon our examination of currently available information, our experience to date, and advice from legal counsel, that, after taking into account our existing insurance coverage and amounts already provided for, the currently pending legal proceedings against us will not have a material adverse impact on our consolidated results of operations, financial position or cash flows.

Environmental Matters

We have been named as a potentially responsible party (“PRP”) with respect to the below hazardous waste disposal sites that we do not own or possess, which are included on, or proposed to be included on, the Superfund National Priority List of the U.S. Environmental Protection Agency (“EPA”) or on equivalent lists of various state governments. Because the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) allows for joint and several liability in certain circumstances, we could be responsible for all remediation costs at such sites, even if we are one of many PRPs. We believe, based on the amount and nature of our waste, and the number of other financially viable PRPs, that our liability in connection with such environmental matters will not be material.

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Lower Passaic River Study Area

Hexcel together with approximately 48 other PRPs that comprise the Lower Passaic Cooperating Parties Group (the “CPG”), are subject to a May 2007 Administrative Order on Consent (“AOC”) with the EPA requiring the CPG to perform a Remedial Investigation/Feasibility Study of environmental conditions of a 17-mile stretch of the Passaic River in New Jersey (the “Lower Passaic River”). We were included in the CPG based on our operations at our former manufacturing site in Lodi, New Jersey.        

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. This estimate does not include any costs related to a future remedy for the upper nine miles of the Lower Passaic River. 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 PRP’s, which is not expected to be completed until 2020.

In October 2016, pursuant to a settlement agreement with the EPA, Occidental Chemical Corporation (“OCC”), one of the PRPs commenced performance of the remedial design required by the ROD, reserving its right of cost contribution from all other PRPs. In June 2018, OCC filed suit against approximately 120 parties, including Hexcel, in the U.S. District Court of the District of New Jersey seeking cost recovery and contribution under CERCLA related to the Lower Passaic River. We do not know whether this litigation will impact the EPA’s allocation process or the ultimate outcome of the matter.

The accrual was $2.1 million as of March 31, 2019 and at December 31, 2018. Given the uncertainty associated with the many elements of the Superfund process for the Lower Passaic River, the amounts accrued may not be indicative of the amounts for which we will ultimately be responsible.

Omega Chemical Corporation Superfund Site, Whittier, California

We are a PRP at a former chemical waste site in Whittier, California. The PRPs at Omega have established The Omega Chemical Site PRP Organized Group, (the “OPOG”), and are currently investigating and remediating soil and groundwater at the site pursuant to a Consent Decree with the EPA. OPOG has attributed either 1.21% or 2.07% of the waste tonnage (dependent on the specific location within the Omega Chemical Site) sent to the site to Hexcel.  In addition to the Omega site specifically, the EPA is investigating the scope of regional groundwater contamination in the vicinity of the Omega site and issued an ROD; the OPOG members have been served notice by the EPA as PRPs who will be required to be involved in the remediation of the regional groundwater contamination in that vicinity as well.  As a member of OPOG, Hexcel will incur costs associated with the investigation and remediation of the Omega site and the regional groundwater remedy, although our ultimate liability, if any, in connection with this matter cannot be determined at this time. The total accrued liability relating to potential liability for both the Omega site and regional groundwater remedies was $0.3 million at March 31, 2019 and at December 31, 2018.

Summary of Environmental Reserves

Our estimate of liability as a PRP and our remaining costs associated with our responsibility to remediate the Lower Passaic River and other sites are accrued in the consolidated balance sheets. As of March 31, 2019 and December 31, 2018, our aggregate environmental related accruals were $2.6 million and $2.7 million, respectively, of which $0.7 million and $0.8 million, respectively, was included in accrued liabilities with the remainder included in non-current liabilities.  As related to certain environmental matters the accrual was estimated at the low end of a range of possible outcomes since no amount within the range is a better estimate than any other amount.  If we had accrued, for those sites where we are able to estimate our liability, at the high end of the range of possible outcomes, our accrual would have been $16 million higher at March 31, 2019.

These accruals can change significantly from period to period due to such factors as additional information on the nature or extent of contamination, the methods of remediation required, changes in the apportionment of costs among responsible parties and other actions by governmental agencies or private parties, or the impact, if any, of being named in a new matter.

Product Warranty

We provide standard assurance-type warranties for our products, which cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Warranty expense for the quarter ended March 31, 2019, and accrued warranty cost, included in “accrued liabilities” in the Condensed Consolidated Balance Sheets at March 31, 2019 and December 31, 2018, were as follows:

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	Product
(In millions)	Warranties
Balance as of December 31, 2018	$	4.8
Warranty expense		2.4
Deductions and other		(0.3	)
Balance as of March 31, 2019	$	6.9

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

We develop, manufacture, and market lightweight, high-performance structural materials, including carbon fibers, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, adhesives, RF/EMI and microwave absorbing materials, engineered honeycomb and composite structures, for use in Commercial Aerospace, Space & Defense and Industrial markets. Our products are used in a wide variety of end applications, such as commercial and military aircraft, space launch vehicles and satellites, wind turbine blades, automotive, recreational products and other industrial applications.

We serve international markets through manufacturing facilities, sales offices and representatives located in the Americas, Asia Pacific, Europe, Russia, India and Africa. We are also a partner in a joint venture in Malaysia, which manufactures composite structures for Commercial Aerospace applications.

On January 3, 2019, we acquired ARC Technologies, LLC (“ARC”), a leading supplier of custom RF/EMI and microwave absorbing composite materials for military, aerospace and industrial applications.  The acquisition strengthens our existing advanced materials portfolio in structural composites and thermoplastics.

We have two segments, Composite Materials and Engineered Products. The Composite Materials segment is comprised of our carbon fiber, specialty reinforcements, resins, prepregs and other fiber-reinforced matrix materials, honeycomb core product lines and pultruded profiles.  The Engineered Products segment is comprised of lightweight high strength composite structures, RF/EMI and microwave absorbing materials, engineered core and specialty machined honeycomb products with added functionality.

Net sales for the quarter were $609.9 million, 12.9% greater (14.9% in constant currency) than the $540.1 million reported for the first quarter of 2018.  The increase in sales the quarter was driven by strong growth across all markets and included sales from the ARC acquisition.

Commercial Aerospace sales of $415.5 million increased 8.6% (9.6% in constant currency) for the quarter as compared to the first quarter of 2018.  The first quarter benefited from increased growth for most programs with particularly strong performance for the A320neo and 737 MAX, as well as continued growth for the 787 and A350.

Sales to other commercial aerospace, which includes regional and business aircraft customers, were up 7% for the first quarter of 2019, as compared to 2018, reflecting strengthening of business jet sales.

Space & Defense sales of $107.8 million increased 19.6% (21.8% in constant currency) for the quarter as compared to the first quarter of 2018 including sales from the ARC acquisition. Growth in the F-35 Joint Strike Fighter (“JSF”) was the primary driver along with continued strength in military rotorcraft. Rotorcraft accounted for just over 40% of Space & Defense sales in the quarter.

Total Industrial sales of $86.6 million for the first quarter of 2019 increased 28.7% (36.8% in constant currency) as compared to the first quarter of 2018. Wind energy sales improved 66.6% (78.0% in constant currency) compared to the prior year period as the transition to the new generation of composite blades started in mid-2018.

Gross margin for the first quarter of 2019 was 27.4% as compared to 26.4% for the first quarter of 2018, as 2018 was negatively impacted by several headwinds including acrylonitrile (AN) and wind energy resin pricing. Our new plant in Roussillon, France is now fully operational and producing qualified precursor and aerospace grade carbon fiber.

Selling, general and administrative expenses for the first quarter 2019 were lower as a percentage of sales and in constant currency than the prior year period as we maintained tight cost control.  Research and technology expenses for the first quarter of 2019 were about 8% higher in constant currency than the comparable 2018 period, as we continued to invest in advance composite technology and innovation.

Operating cash flow for the first three months of 2019 was $45.9 million compared to $62.6 million in 2018, as working capital increased resulting in a cash use of $78.4 million in 2019 as compared to a use of $46.2 million in 2018 reflecting growth in the underlying business. For the first three months of 2019, capital expenditures were $61.1 million as compared to $59.5 million in the first three months of 2018.  Free cash flow (defined as cash provided by operating activities less capital expenditures) for the first three months of 2019 was a cash use $15.2 million versus a source of $3.1 million in 2018.

Accrual basis additions to capital expenditures were $57.5 million for the first three months of 2019 and $45.3 million in 2018. We expect accrual basis capital expenditures to be in the $170 million to $190 million range for 2019.

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Financial Overview

Results of Operations

	Quarter Ended March 31,
(In millions, except per share data)	2019			2018			% Change
Net sales	$	609.9		$	540.1			12.9	%
Net sales change in constant currency								14.9	%
Operating income	$	102.8		$	82.4			24.8	%
As a percentage of net sales		16.9	%		15.3	%
Net income	72.2			61.6				17.2	%
Diluted net income per common share	$	0.84		$	0.68			23.5	%

The Company’s performance measurement includes free cash flow, which is a non-GAAP measure. Management believes this non-GAAP measurement is meaningful to investors because it provides a view of Hexcel with respect to ongoing operating results. This non-GAAP measurement is not recognized in accordance with generally accepted accounting principles and should not be viewed as an alternative to a GAAP measure of performance.  The following is a reconciliation from GAAP to non-GAAP amounts.

	Three Months Ended March 31,
(In millions)	2019			2018
Net cash provided by operating activities	$	45.9		$	62.6
Less: Capital expenditures		(61.1	)		(59.5	)
Free cash flow (Non-GAAP)	$	(15.2	)	$	3.1

Net Sales

The following table summarizes net sales to third-party customers by segment and end market for the three months ended March 31, 2019 and 2018:

	Quarter Ended March 31,
(In millions)	2019		2018		%Change
Consolidated Net Sales	$	609.9	$	540.1		12.9	%
Commercial Aerospace		415.5		382.7		8.6	%
Space & Defense		107.8		90.1		19.6	%
Industrial		86.6	67.3			28.7	%
Composite Materials	$	487.7	$	444.6		9.7	%
Commercial Aerospace		323.4		303.2		6.7	%
Space & Defense		77.7		74.1		4.9	%
Industrial		86.6	67.3			28.7	%
Engineered Products	$	122.2	$	95.5		28.0	%
Commercial Aerospace	92.1		79.5			15.8	%
Space & Defense		30.1		16.0		88.1	%

Sales by Segment

Composite Materials: Net sales of $487.7 million in the first quarter of 2019 increased $43.1 million from the $444.6 million in sales for the prior year quarter, driven by strong growth in Commercial Aerospace and in wind energy sales in Industrial. The increase in Commercial Aerospace for the first three months of 2019 benefitted from increased production rates and higher composite content on the new narrow body planes. Space & Defense sales primarily benefitted from growth in the JSF program. Wind energy sales were up in 2019 as the transition to new generation blades that are longer with a higher composite content started in mid-2018.  

Engineered Products: Net sales of $122.2 million in the first quarter of 2019 increased $26.7 million from the $95.5 million for 2018. This was attributable to an increase in Commercial Aerospace sales benefitting from the ARC acquisition as well as reflecting strong growth in the A320neo and 737 MAX.

20

Sales by Market

Commercial Aerospace sales of $415.5 million increased 8.6% (9.6% in constant currency) for the quarter as compared to the first quarter of 2018.  The first quarter benefited from increased growth for most programs with particularly strong performance for the A320neo and 737 MAX, as well as continued growth for the 787 and A350.

Sales to other commercial aerospace, which includes regional and business aircraft customers, were up 7% for the first quarter of 2019, as compared to 2018, reflecting strengthening of business jet sales.

Space & Defense sales of $107.8 million increased 19.6% (21.8% in constant currency) for the quarter as compared to the first quarter of 2018 including sales from the ARC acquisition. Growth in the F-35 Joint Strike Fighter (“JSF”) was the primary driver along with continued strength in military rotorcraft. Rotorcraft accounted for just over 40% of Space & Defense sales in the quarter.

Total Industrial sales of $86.6 million for the first quarter of 2019 increased 28.7% (36.8% in constant currency) as compared to the first quarter of 2018. Wind energy sales improved 66.6% (78.0% in constant currency) compared to the prior year period as the transition to the new generation of composite blades started in mid-2018.

Gross Margin

	Quarter Ended March 31,
(In millions)	2019			2018			%Change
Gross margin	$	167.2		$	142.6			17.3	%
Percentage of sales		27.4	%		26.4	%

Gross margin for the first quarter was 27.4% compared to 26.4% in the first quarter of 2018, as 2018 was negatively impacted by several headwinds including AN and wind energy resin pricing. Our new plant in Roussillon, France is now fully operational and producing qualified precursor and aerospace grade carbon fiber.

Operating Expenses

	Quarter Ended March 31,
(In millions)	2019			2018			% Change
SG&A expense	$	49.5		$	46.4			6.7	%
Percentage of sales		8.1	%		8.6	%
R&T expense	$	14.9		$	13.8			8.0	%
Percentage of sales		2.4	%		2.6	%

Selling, general and administrative expenses for the first quarter of 2019 were lower as a percentage of sales than the comparable periods in 2018 as we maintained tight cost control. Research and technology expense increased for the first quarter of 2019 by $1.1 million, or 8% as we continue to invest in innovative composite products and solutions to support our customers and next-generation products.  

Operating Income

	Quarter Ended March 31,
(In millions)	2019				2018			% Change
Consolidated operating income		$	102.8		$	82.4			24.8	%
Operating margin			16.9	%		15.3	%
Composite Materials			112.5			91.0			23.6	%
Operating margin			22.2	%		19.6	%
Engineered Products			14.8		9.9				49.5	%
Operating margin			12.1	%		10.4	%
Corporate & Other			(24.5	)		(18.5	)		32.4	%

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Operating income for the first quarters of 2019 and 2018 was $102.8 million and $82.4 million, respectively. Exchange rates favorably impacted the first quarter of 2019 by 50 basis points compared to 2018. Depreciation and amortization expense for the first three months of 2019 was $8.9 million higher than the comparable period for 2018.

Interest Expense, Net

	Quarter Ended March 31,
(In millions)	2019		2018		% Change
Interest expense, net	$	12.0	$	8.0		50.0	%

Interest expense for the first quarter ended March 31, 2019 increased $4.0 million as compared to the same period last year. The increase was primarily due to higher debt levels as a result of the ARC acquisition.

Provision for Income Taxes      

	Quarter Ended March 31,
(In millions)	2019			2018
Income tax expense	$	20.6		$	14.1
Effective tax rate		22.7	%		18.9	%

The income tax provision for the current quarter was $20.6 million compared to $14.1 million for the quarter ended March 31, 2018. Both periods benefited from deductions associated with share based compensation payments. Our underlying estimated annual effective income tax rate is expected to remain at 24%.  

Financial Condition

Liquidity: As of March 31, 2019, our total debt, net of cash, was $1,126.0 million, as compared to $924.1 million at December 31, 2018.  The increase in debt in the first three months of 2019 primarily reflects the ARC acquisition. At March 31, 2019, total borrowings under our $700 million Senior Unsecured Revolving Credit Facility (“the Facility”) were $414 million. The Facility permits us to issue letters of credit up to an aggregate amount of $40.0 million.  Any outstanding letters of credit reduce the amount available for borrowing under our Facility.  As of March 31, 2019, we had not issued any letters of credit under the Facility, resulting in undrawn availability under the Facility of $286 million.  

The Facility contains financial and other covenants, including, but not limited to, restrictions on the incurrence of debt and the granting of liens, as well as the maintenance of an interest coverage ratio and a leverage ratio.  In accordance with the terms of the Facility, we are required to maintain a minimum interest coverage ratio of 3.50 (based on the ratio of EBITDA, as defined in the credit agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.50 (based on the ratio of total debt to EBITDA) throughout the term of the Facility.  In addition, the Facility contains other terms and conditions such as customary representations and warranties, additional covenants and customary events of default. The conditions and covenants related to the senior notes are less restrictive than those of our Facility. As of March 31, 2019, we were in compliance with all debt covenants and expect to remain in compliance.

We expect to meet our short-term liquidity requirements (including capital expenditures) through net cash from operating activities, cash on hand and the Facility.  As of March 31, 2019, long-term liquidity requirements consist primarily of obligations under our long-term debt obligations.  We do not have any significant required debt repayments until September 2021 when the Facility expires.

Operating Activities: Net cash provided by operating activities was $45.9 million in the first three months of 2019, as compared to $62.6 million in the first three months of 2018. The change in working capital was a use of $78.4 million in 2019 as compared to $46.2 million in 2018, driven by growth in the underlying business.

Investing Activities: Net cash used for investing activities was $219.5 million and $59.5 million in the first three months of 2019 and 2018, respectively. The first quarter of 2019 includes $158.4 million for the ARC acquisition. Capital expenditures were $61.1 million and $59.5 million in 2019 and 2018, respectively.

Financing Activities: Financing activities provided $184.9 million of cash in the first three months of 2019, and were a use of $15.5 million in the same period in 2018.  This increase in cash provided was primarily due to amounts borrowed from our Facility to fund the ARC acquisition. We returned $23.9 million to stockholders from stock repurchases and dividends in 2019 compared to $41.3 million in 2018.

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Financial Obligations and Commitments: As of March 31, 2019, the current portion of debt included $9.0 million related to the Euro term loan. The next significant scheduled debt maturity will not occur until 2021, when the Facility matures.  Certain sales and administrative offices, data processing equipment and manufacturing facilities are leased under operating leases.

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect reported amounts of assets, liabilities, revenues, expenses and related disclosures.  We base our assumptions, estimates and judgments on historical experience, current trends and other factors management believes to be relevant at the time our condensed consolidated financial statements are prepared.  On a regular basis, management reviews accounting policies, assumptions, estimates and judgments to ensure our financial statements are presented fairly and in accordance with U.S. GAAP.  However, because future events and their effects cannot be determined with certainty, actual results may differ from our assumptions and estimates, and such differences could be material.

We describe our significant accounting policies and critical accounting estimates in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Significant changes to our accounting policies subsequent to the filing of our Form 10-K, relate  to the adoption of Topic 842, Leases, as discussed in Notes 1 and 4 to our financial statements.

Commitments and Contingencies

We are involved in litigation, investigations and claims arising out of the normal conduct of our business, including those relating to commercial transactions, environmental, employment and health and safety matters. We estimate and accrue our liabilities resulting from such matters based upon a variety of factors, including the stage of the proceeding; potential settlement value; assessments by internal and external counsel; and assessments by environmental engineers and consultants of potential environmental liabilities and remediation costs.  We believe we have adequately accrued for these potential liabilities; however, facts and circumstances may change, such as new developments, or a change in approach, including a change in settlement strategy or in an environmental remediation plan, that could cause the actual liability to exceed the estimates, or may require adjustments to the recorded liability balances in the future.

Our estimate of liability as a potentially responsible party and our remaining costs associated with our responsibility to remediate the Lower Passaic River in New Jersey and other sites are accrued in the consolidated balance sheets. As of March 31, 2019, our aggregate environmental related accruals were $2.6 million, of which $0.7 million was included in accrued liabilities, with the remainder included in non-current liabilities. As related to certain environmental matters, the accrual was estimated at the low end of a range of possible outcomes since no amount within the range is a better estimate than any other amount.  If we had accrued at the high end of the range of possible outcomes, for those sites where we are able to estimate our liability, our accrual would have been approximately $16 million higher.  These accruals can change significantly from period to period due to such factors as additional information on the nature or extent of contamination, the methods of remediation required, changes in the apportionment of costs among responsible parties, the amount of insurance coverage and other actions by governmental agencies or private parties, or the impact, if any, of being named in a new matter. 

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to future prospects, developments and business strategies.  These forward-looking statements are identified by their use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “should”, “would”, “will” and similar terms and phrases, including references to assumptions.  Such statements are based on current expectations, are inherently uncertain, and are subject to changing assumptions.

Such forward-looking statements include, but are not limited to: (a) the estimates and expectations based on aircraft production rates made publicly available by Airbus, Boeing and others; (b) the revenues we may generate from an aircraft model or program; (c) the impact of the possible push-out in deliveries of the Airbus and Boeing backlog and the impact of delays in the startup or ramp-up of new aircraft programs or the final Hexcel composite material content once the design and material selection have been completed; (d) expectations of composite content on new commercial aircraft programs and our share of those requirements; (e) expectations of growth in revenues from space and defense applications, including whether certain programs might be curtailed or discontinued; (f) expectations regarding growth in sales for wind energy, recreation, automotive and other industrial applications;

(g) expectations regarding working capital trends and expenditures; (h) expectations as to the level of capital expenditures and when we will complete the construction of capacity expansions and qualification of new products; (i) expectations regarding our ability to

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maintain and improve margins as we add new facilities and in view of the current economic environment; (j) expectations regarding the outcome of legal matters or the impact of changes in laws or regulations; (k) our projections regarding our income tax rate and the realizability of net operating loss and tax credit carryforwards; and (l) the anticipated impact of the above factors and various market risks on our expectations of financial results for 2019 and beyond. 

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different.  Such factors include, but are not limited to, the following: reductions in sales to any significant customers, particularly Airbus, Boeing or Vestas, including any reduction in sales to Boeing related to a decrease in production volume of the 737 MAX; changes in sales mix; changes in current pricing and cost levels; changes in aerospace delivery rates; changes in government defense procurement budgets; changes in military aerospace program technology; timely new product development or introduction; industry capacity; increased competition; availability and cost of raw materials; supply chain disruptions; inability to install, staff and qualify necessary capacity or achievement of planned manufacturing improvements; cybersecurity breaches or intrusions; currency exchange rate fluctuations; changes in political, social and economic conditions; including but not limited to, the effect of change in U.S. trade policies and the exit of the U.K. from the European Union; work stoppages or other labor disruptions; and the unexpected outcome of legal matters or impact of changes in laws or regulations.

Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. As a result, the foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this and other reports we file with the Securities and Exchange Commission. For additional information regarding certain factors that may cause our actual results to differ from those expected or anticipated see the information under the caption “Risk Factors” which is located in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.  We do not undertake an obligation to update our forward-looking statements or risk factors to reflect future events or circumstances, except as otherwise required by law.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

There are no material changes in market risk from the information provided in the Company’s 2018 Annual Report on Form 10-K.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of March 31, 2019, and with the participation of the company's management have concluded that these disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.  These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit, is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our Chief Executive Officer and Chief Financial Officer have concluded that there have not been any changes in our internal control over financial reporting during the three months ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

The information required by Item 1 is contained within Note 13 on pages 15 through 16 of this Form 10-Q and is incorporated herein by reference.

ITEM 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018, which could materially affect our business, financial condition or future results. With the exception of the below risk factor, there were no material changes in the Company’s risk factors from the aforementioned 10-K. In addition, future uncertainties may increase the magnitude of these adverse effects or give rise to additional material risks not now contemplated.

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If we fail to comply with government procurement laws and regulations, we could lose business and be liable for various penalties or sanctions.

        We must comply with laws and regulations relating to the formation, administration, and performance of U.S. government contracts, including the government security requirements and government export control laws and regulations. In complying with these laws and regulations, we may incur significant costs, and non-compliance may result in the imposition of fines and penalties, including contractual damages. If we fail to comply with these laws and regulations or if a government audit, review, or investigation uncovers improper or illegal activities, we may be subject to civil penalties, criminal penalties, or administrative sanctions, including suspension or debarment from contracting with the U.S. government.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Period	(a) Total Number of  Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly  Announced Plans or Programs			(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units)  that May  Yet Be Purchased Under the Plans or Programs
January 1 – January 31, 2019	193,603	$	57.75	193,603		$	373,594,906
February 1 – February 28, 2019	—		—	—			373,594,906
March 1 – March 31, 2019	—		—	—			373,594,906
Total	193,603	$	57.75	193,603	(1)	$	373,594,906

(1) On May 7, 2018, we announced that our Board authorized us to repurchase an additional $500 million of our outstanding common stock of which $373.6 million was still available at March 31, 2019.

ITEM 5. Other Information

Not applicable

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ITEM 6. Exhibits

Exhibit No.	Description
10.1*	Form of Executive Severance Agreement entered into between Hexcel Corporation and Colleen Pritchett on March 20, 2019.
31.1	Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Hexcel Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Equity, and (vi) related notes.

* Indicates management contract or compensatory plan or arrangement.

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EXHIBIT INDEX

Exhibit No.	Description
10.1*	Form of Executive Severance Agreement entered into between Hexcel Corporation and Colleen Pritchett on March 20, 2019.
31.1	Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Hexcel Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Equity, and (vi) related notes.

* Indicates management contract or compensatory plan or arrangement.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Hexcel Corporation
April 23, 2019	/s/ Kimberly Hendricks
(Date)	Kimberly Hendricks
	Senior Vice President, Corporate Controller and
	Chief Accounting Officer

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EX-10.1

Exhibit 10.1

FORM OF OFFICER SEVERANCE AGREEMENT

This SEVERANCE AGREEMENT between HEXCEL CORPORATION, a Delaware corporation with offices at Stamford, Connecticut (the "Company"), and [              ] (the "Officer"), dated [               ], is effective as of [               ] (the “Effective Date”).

WHEREAS, the Company is engaged in the business of developing, manufacturing and marketing carbon fibers, structural reinforcements, honeycomb structures, resins, and a variety of high-performance composite materials and parts therefrom for the commercial aerospace, space and defense, recreation and industrial markets throughout the world, and hereafter may engage in other areas of business (collectively,  the “Business”);

WHEREAS, the Officer, as a result of training, expertise and personal application over the years, has acquired and will continue to acquire considerable and unique expertise and knowledge which are of substantial value to the Company in the conduct, management and operation of the  Business;

WHEREAS, the Company is willing to provide the Officer with certain benefits in the event of the termination of the Officer’s employment with the Company, including in the event of a Change in Control (as hereinafter defined); and

WHEREAS, the Officer, in consideration of receiving such benefits from the Company, is willing to afford certain protection to the Company in regard to the confidentiality of its information, ownership of inventions and competitive activities.

NOW, THEREFORE, in consideration of the mutual covenants of the Officer and the Company and of the Officer's continued employment with the Company, the parties agree as follows:

1.Position and Duties. The Officer currently serves as President, Aerospace, Americas of the Company and shall have such duties, responsibilities and authority consistent with such position as may, from time to time, be assigned to the Officer by the Chief Executive Officer (the “CEO”). The Officer shall devote substantially all her working time and effort to the business and affairs of the Company.

2.Termination. The Officer’s employment may be terminated under the following circumstances:

(a)At Will. The Officer is employed “at will,” meaning that the Company may terminate the Officer’s employment at any time for any reason or for no reason on written notice of termination to the Officer, and the Officer may terminate her employment with the Company at any time for any reason or for no reason on written notice of termination to the Company.

(b)Good Reason. The Officer may terminate her employment for “Good Reason,” which shall mean a termination by the Officer after a reduction of more than 10% in the Officer’s annual Total Direct Compensation (“TDC”) as in effect on the date hereof or as her TDC may be increased from time to time hereafter (except for across-the-

1

board reductions in TDC affecting all similarly situated officers of the Company which reductions shall not count toward the 10%). TDC means the sum of the Officer’s annual base salary, annual target award under MICP, and thegrant date value of an annual equity awardunder the Company’s Incentive Stock Plan, as may be amended hereafter(the determination of grant date valueshall be conclusively determined by the Compensation Committee for grants to the Officer and all similarly situated officers of the Company). The Officer shall be deemed to have waived any assertion of Good Reason unless the Officer shall have delivered a notice of terminationto the Company, as provided in Section 2(d) hereof, and specifying the reasons therefor,within 20 days after the effective date of such reduction. The Company shall have 10 days from the receipt of such notice to rescind or reverse the effect of such reduction and, upon doing so, both the grounds for Good Reason and the Officer’s notice of termination automatically shall be deemed void with retroactive effect.

(c)Cause. The Company may terminate the Officer's employment hereunder for Cause. The following shall constitute Cause:

(i)the willful and continued failure by the Officer to substantially perform her duties or discharge her responsibilities to the Company, or to follow the reasonable requests of her supervisor to undertake actions falling within the scope of such duties and responsibilities; or

(ii)any fraudulent or intentional misconduct by the Officer that causes or might reasonably be expected to cause material reputational, financial or other harm to the Company, or any improper or grossly negligent failure by the Officer, including in a supervisory capacity, to identify, escalate, monitor or manage, in a timely manner and as reasonably expected, risks that cause or might reasonably be expected to cause material reputational, financial or other harm to the Company; or

(iii) any conduct that violates the covenants set forth in Sections 5, 6 and 7 hereof, or violates requirements of the Company embodied in its employee policies adopted from time to time including, but not limited to, policies directed to ethical business conduct, insider trading, anti-corruption, harassment, and other policies proscribing or prohibiting conduct as an employee of the Company; or

(iv)the Officer becomes subject to a suspension or debarment proceeding, or related investigations, conducted in connection with any actual or suspected violations of any United States Government procurement laws or regulations, or is for any other reason ineligible to participate in the discussion, negotiation and entering into of contracts with respect to United States government procurement, or fails to obtain or maintain any professional license reasonably required for the Officer lawfully to perform her duties and responsibilities.

No act, or failure to act, on the Officer's part shall be considered "willful" unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company. The Officer shall not be deemed to have been terminated for Cause without delivery to the Officer of a written notice of termination from the CEO specifying the grounds for Cause.

(d) Date of Termination. The Date of Termination shall mean if the Officer's employment is terminated pursuant to Section 2, the date specified in the applicable notice of termination (provided that such date shall not be more than thirty days from the date such notice is given under Section 2(a) and shall not be less than fifteen nor

2

more than thirtydays from the date notice of termination is given under Section 2(b) and 2(c).

3.Compensation Upon Termination. If the Officer's employment is terminated by the Company other than for Cause (and other than for disability as defined under the Company’s then-existing disability compensation programs), or is terminated by the Officer for Good Reason, then

(a) in addition to the amounts and benefits as may be provided pursuant to the remainder of this Section 3, the Company shall pay to or provide on behalf of the Officer (i) any business expense reimbursements properly submitted and unpaid and (ii) any benefits to which the Officer is entitled under the terms of the Company's benefit plans, programs and arrangements;

(b)in addition to the amounts and benefits as may be provided pursuant to the remainder of this Section 3, the Company shall at the time such payments are due pay the Officer her base salary through the Date of Termination; and

(c)Subject to Section 4, and conditioned on the Officer executing a release, in form and substance satisfactory to the Company, releasing it from any and all claims arising out of or in connection with the termination of employment, and in lieu of any claim to further compensation for periods subsequent to the Date of Termination, whether under any severance policy applicable to employees or pursuant to any prior understanding between the Company and the Officer,

(i) if the Date of Termination is within two years after the occurrence of a Change in Control, the Company shall pay the Officer a cash lump sum equal to the product of (A) the sum of (1) the Officer’s annual base salary in effect at the time the notice of termination is given and (2) the Officer’s Average Annual Bonus (as defined below) and (B) the number 1.5; and

(ii) if the Date of Termination is not governed by clause (c)(i) immediately above, the Company shall pay the Officer a cash lump sum equal to the Officer’s annual base salary in effect at the time the notice of termination is given.

The term “Average Annual Bonus” shall mean the average of the last three annual bonus amounts awarded to the Officer under the Company’s Management Incentive Compensation Plan(as may be amended hereafter, the “MICP”) for the last three plan years completed prior to the Date of Termination or, if the Officer has not participated in the MICP for three completed annual award periods, the average of the annual amounts awarded for the completed annual award period(s), provided that any award made in respect of an annual award period in which the Officer did not participate for the full period shall be annualized for purposes of computing the Average Annual Bonus by multiplying such award by a fraction, of which the numerator is 365 and the denominator is the number of days during which the Officer participated in such annual award period; and provided further that any award for the plan year during which the Date of Termination occurs shall not be used in computing Average Annual Bonus.

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(d)Subject to Section 4, if the Officer’s employment with the Company is terminated by the Company other than for Cause (or disability as defined above), or is terminated by the Officer for Good reason, during the period of a “Potential Change in Control” or at the request of a Person (as defined in Section (f)(1) below) who, directly or indirectly, takes any action designed to cause a Change in Control, then the Company shall make payments and provide benefits to the Officer under this Agreement as though a Change in Control had occurred immediately prior to such termination.  A Potential Change in Control shall exist during the period commencing at the time the Company enters into any agreement or arrangement which, if consummated, would result in a Change in Control and ending at the time such agreement or arrangement either (i) results in a Change in Control or (ii) terminates, expires or otherwise becomes of no further force or effect.

(e) The Company shall continue the participation of the Officer for a period of one year (except if the Date of Termination is within two years after the occurrence of a Change in Control, such period shall be one and one-half years) in all medical, dental, hospitalization, life insurance and other welfare and plans and programs, in each case in which the Officer participated immediately prior to the Date of Termination, provided that the Officer's continued participation is possible under the general terms and provisions of such plans and programs. In the event that the Officer's participation in any such plan or program is barred, the Company shall by other means provide the Officer with benefits equivalent to those which the Officer would otherwise have been entitled to receive under such plans and programs from which the Officer’s continued participation is barred. Any benefits or payments under this Section 3(e) shall be reduced to the extent benefits of the same type are received by, or made available to, the Officer by a subsequent employer during the applicable benefit continuation period following the Date of Termination (and the Officer shall be obligated to notify the Company in writing within ten days after such time as the Officer receives any such benefits, or such time as any such benefits are made available to the Officer).

(f)For purposes of this Agreement, a "Change in Control" shall mean the first to occur of the following events:

(1)any person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as modified and used in Sections 13(d) and 14(d) of the Exchange Act) (a "Person") is or becomes the Beneficial Owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of more than 50% of either (A) the combined fair market value of the then outstanding stock of the Company (the “Total Fair Market Value”) or (B) the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the Company (the “Total Voting Power”); excluding, however, the following: (I) any acquisition by the Company or any of its affiliates, (II) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its affiliates, (III) any Person who becomes such a Beneficial Owner in connection with a transaction described in the exclusion within paragraph (4) below and (IV) any acquisition of additional stock or securities by a Person who owns more than 50% of the Total Fair Market Value or Total Voting Power of the Company immediately prior to such acquisition; or

(2)any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company that, together with any securities acquired directly or indirectly by such Person within the immediately preceding twelve-consecutive month period, represent 40% or more of the Total Voting Power of the Company; excluding,

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however, any acquisition described in sub-clauses (I) through (IV) of subsection (1) above; or

(3)a change in the composition of the Board such that the individuals who, as of the original effective date of this Agreement, constitute the Board (such individuals shall be hereinafter referred to as the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this definition, that any individual who becomes a director subsequent to such effective date, whose election, or nomination for election by the Company’s stockholders, was made or approved by a vote of at least a majority of the Incumbent Directors (or directors whose election or nomination for election was previously so approved) shall be considered an Incumbent Director; but, provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a person or legal entity other than the Board shall not be considered an Incumbent Director; provided finally, however, that, as of any time, any member of the Board who has been a director for at least twelve consecutive months immediately prior to such time shall be considered an Incumbent Director for purposes of this definition, other than for the purpose of the first proviso of this definition; or

(4)there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company or a sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction (A) pursuant to which all or substantially all of the individuals and entities who are the Beneficial Owners, respectively, of the outstanding Common Stock of the Company and Total Voting Power immediately prior to such Corporate Transaction will Beneficially Own, directly or indirectly, more than 50%, respectively, of the outstanding common stock and the combined voting power of the  then outstanding securities entitled to vote generally in the election of directors of the company resulting from such Corporate Transaction (including, without limitation, a company which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Corporate Transaction of the Outstanding Common Stock and Total Voting Power, as the case may be, and (B) immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the company resulting from such Corporate Transaction (including, without limitation, a company which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries); provided, however, that notwithstanding anything to the contrary in subsections (1) through (4) above, an event which does not constitute a change in the ownership of the Company, a change in the effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, each as defined in Section 1.409A-3(i)(5) of the Treasury Regulations (or any successor provision), shall not be considered a Change in Control for purposes of this Agreement.

4.No Mitigation or Offset.

(a)(i) The Officer shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and, other than as provided in Section 3(e) for continuation of benefits, the amount of any

5

payment orbenefit provided for in this Agreement shall not be reduced by any compensation earned by the Officer as the result of employment by another employer.

(ii) The amount of any payment or benefit provided for in this Agreement shall not be reduced by retirement benefits or offset against any amount the Company claims to be owed by the Officer.

5.Non-Competition; Non-Solicitation; Non-Disparagement.

(a)The Officer acknowledges that, as a senior  management employee, the Officer will be involved, on a high level, in the development, implementation and management of the Company's global business plans, including those which involve the Company's finances, research, marketing, planning, operations, and acquisition strategies. By virtue of the Officer's position and knowledge of the Company, the Officer acknowledges that his employment by a competitor of the Company represents a serious competitive danger to the Company, and that the use of the Officer's experience and knowledge about the Company's business, strategies and plans by a competitor can and would constitute a valuable competitive advantage over the Company.  In view of the foregoing, and in consideration of the payments made to the Officer under this Agreement, the Officer covenants and agrees that, if the Officer's employment is terminated and the Company has fulfilled its obligations under this Agreement, for a period of one year (or one and one-half years if the Officer receives payments under Section 3(c)(i) or 3(d) hereof) after the Date of Termination the Officer will not (A) engage, in any capacity, directly or indirectly, including but not limited as employee, agent, consultant, manager, Officer, owner or stockholder (except as a passive investor holding less than a 5% equity interest in any enterprise) in any business entity engaged in competition with the Business conducted by the Company on the Date of Termination anywhere in the world, or (B) solicit a customer of the Business in violation of clause (A), provided, that the Officer may be employed by a competitor of the Company so long as the Officer's duties and responsibilities do not relate directly or indirectly to the business segment of the new employer which is actually or potentially competitive with the Business, or (C) directly or indirectly solicit, induce or otherwise encourage any person to discontinue or refrain from entering into any employment relationship (contractual or otherwise) with the Company.

(b) The Company (for itself and its officers and directors) and the Officer mutually agree and covenant not to disparage the reputation or character of the other.

6.Assignment of Inventions. The Officer agrees that all processes, technologies, designs and inventions, including new contributions, improvements, ideas and discoveries, whether patentable or not (collectively "Inventions"), conceived, developed, invented or made by the Officer prior to the Date of Termination shall belong to the Company, provided that such Inventions grew out of the Officer's work with the Company or any of its subsidiaries or affiliates, are related in any manner to the business (commercial or experimental) of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company's time or with the use of the Company's facilities or materials. At the request of the Company, the Officer shall (i) promptly disclose such Inventions to the Company, (ii) assign to the Company, without additional compensation, all patent and other rights to such Inventions for the United States and foreign countries, (iii) sign all papers necessary to carry out the foregoing, and (iv) give testimony or otherwise take action in support of the Officer's status as the inventor of such Inventions, in each case at the Company's expense.

6

7.Confidentiality.

(a) In addition to any obligation regarding Inventions, the Officer acknowledges that the trade secrets and confidential and proprietary information of the Company, its subsidiaries and affiliates, including without limitation:

(i) unpublished information concerning: (A) research activities and plans,

(B) marketing or sales plans, C) pricing or pricing strategies, (D) operational techniques, and (E) strategic plans;

(ii) unpublished financial information, including information concerning revenues, profits and profit margins;

(iii) internal confidential manuals; and

(iv) any "material inside information" as such phrase is used for purposes of the Securities Exchange Act of 1934, as amended; all constitute valuable, special and unique information of the Company, its subsidiaries and affiliates.  In recognition of this fact, the Officer agrees that the Officer will not disclose any such trade secrets or confidential or proprietary information (except (A) information which becomes publicly available without violation of this Agreement, (B) information of which the Officer, prior to disclosure by the Officer, did not know and should not have known was disclosed to the Officer by a third party in violation of any other person's confidentiality or fiduciary obligation, (C) disclosure required in connection with any legal process (provided the Officer promptly gives the Company written notice of any legal process seeking to compel such disclosure and reasonably cooperates in the Company’s attempt to eliminate or limit the scope of such disclosure) and (D) disclosure while employed by the Company which the Officer reasonably and in good faith believes to be in or not opposed to the interests of the Company) to any person, firm, corporation, association or other entity, for any reason or purpose whatsoever, nor shall the Officer make use of any such information for the benefit of any person, firm, corporation or other entity except on behalf of the Company, its subsidiaries and affiliates.

(b)(i) Nothing in this Agreement shall prohibit or restrict the Officer from initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or filing a claim or assisting with an investigation directly with a government agency or entity or a self-regulatory authority, or from making other disclosures that are protected under the whistleblower provisions of any applicable law or regulation.  The Officer need not notify the Company that the Officer is engaging in the activities described in the preceding sentence.  However, if the Officer is required by law to disclose confidential information, other than to a government agency or entity or a self-regulatory authority, the Officer shall give prompt written notice to the General Counsel of the Company and shall otherwise comply with the requirements of subsection (a)(iv)(C) above. Notwithstanding the foregoing, under no circumstance will the Officer be authorized to disclose any information covered by attorney-client privilege or attorney work product of the Company or any of its subsidiaries without prior written consent of the Company’s General Counsel or other officer designated by the Board of Directors of the Company.

(ii) The Officer has been advised that the U.S. Defend Trade Secrets Act of 2016 provides criminal and civil immunity to U.S. federal and state claims for trade secret misappropriation to individuals who disclose a trade secret to their attorney, a court, or a government official in certain confidential circumstances that are set forth in 18 U.S.C. §§

7

1833(b)(1) and 1833(b)(2) related to the reporting or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law.

8Binding Agreement. This Agreement and all rights of the Officer hereunder shall inure to the benefit of and be enforceable by the Officer's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Officer should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided in this Agreement, shall be paid to the Officer's devisee, legatee, or other designee or, if there be no such designee, to the Officer's estate.

9.Notice. Notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered, if delivered personally, or mailed by United States certified or registered mail, return receipt requested, postage prepaid, and when received if delivered otherwise, addressed as follows:

If to the Officer:

[                      ]

[                      ]

[                      ]

If to the Company:

Hexcel Corporation

281 Tresser Blvd.

Stamford, CT  06901-3238

Attn:General Counsel

or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

10.General Provisions. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Officer (or, if applicable, his legal representative)  and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Connecticut without regard to its conflicts of law principles.

11.Validity and Enforceability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. It is the desire and intent of the parties that the provisions of Sections 5, 6 and 7 hereof shall be enforceable to the fullest extent permitted by applicable law or public policy.  If any such provision or the

8

application thereof to any person or circumstance shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such provision shall be construed in a manner so as to permit its enforceability to the fullest extent permitted by applicable law or public policy. In any case, the provisions or the application thereof to any person or circumstance other than those to which they have been held invalid or unenforceable shall remain in full force and effect.In the event any provision is unenforceable in the jurisdiction in which the Officer is employed on the date hereof, such provision nevertheless shall be enforceable to the fullest extent permitted by the laws of any other jurisdiction in which the Company shall have the ability to seek remedies against the Officer.

12.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

13.Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in the State of Connecticut, constituting an Employment Dispute Tribunal in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Sections 5, 6 or 7 hereof.

14Entire Agreement. This Agreement is the entire agreement or understanding between the Company and the Officer regarding the subject matter hereof, and all prior or contemporaneous agreements or understandings including, without limitation, offers of employment, post-hiring agreements, or other oral or written understandings between the Company and the Officer, are expressly superseded by this Agreement, and are of no further force or effect, except that any executory relocation benefit previously extended to the Officer will not be affected by this Agreement.

15.Remedies. The Officer agrees that in addition to any other remedy provided at law or in equity or in this Agreement, the Company shall be entitled to a temporary restraining order and both preliminary and permanent injunctions restraining Officer from violating any provision of Sections 5, 6 and 7 hereof.  The Company shall pay to the Officer all legal fees and expenses incurred in contesting, arbitrating or disputing any action or failure to act by the Company or in seeking to obtain or enforce any right under this Agreement, provided that the Officer has obtained a final determination supporting at least part of his claim and there has been no determination that the balance of his claim was made in bad faith.

16.Consent to Jurisdiction and Forum. The Officer hereby expressly and irrevocably agrees that any action, whether at law or in equity, permitted to be brought by the Company under this Agreement may be brought in the State of Connecticut or in any federal court therein. The Officer hereby irrevocably consents to personal jurisdiction in such court and to accept service of process in accordance with the provisions of the laws of the State of Connecticut. In the event the Company commences any such action in the State of Connecticut or in any Federal court therein, the Company shall reimburse the Officer for the reasonable expenses incurred by the Officer in her appearance in such forum which are in addition to the expenses the Officer would have incurred by appearing in the forum of the Officer's residence at that time, including but not limited to additional legal fees.

9

17.Code Section 409A.The parties intend that any payment under any part of this Agreement shall, to the extent subject to Section 409A of the Code, be paid in compliance with Section 409A and the Treasury Regulations thereunder such that there shall be no adverse tax consequences, interest, or penalties as a result of the payments, and the parties shall interpret the Agreement in accordance with Section 409A and the Treasury Regulations thereunder. The parties agree to modify this Agreement or the timing (but not the amount) of any payment to the extent necessary to comply with Section 409A of the Code and avoid application of any taxes, penalties, or interest thereunder. However, in the event that the amounts payable under this Agreement are subject to any taxes, penalties or interest under Section 409A, the Officer shall be solely liable for the payment of any such taxes, penalties or interest.

18.Term of Agreement. The term of this Agreement (the “Term”) commenced on the Effective Date and shall end on the first anniversary thereof; provided, however, that commencing on the first anniversary of the Effective Date and on each subsequent anniversary of the Effective Date (each such anniversary a “Renewal date”), the Term shall automatically be extended for one additional year unless, not later than the date which is one year prior to such Renewal Date, the Company shall have given notice to the Officer that the Term will not be renewed for one additional year.

10

IN WITNESS WHEREOF, the parties have executed this Severance Agreement as of the date and year first above written.

HEXCEL CORPORATION

By:

Name: Gail E. Lehman

Title: EVP, General Counsel and Corporate Secretary

[                  ] ("Officer")

11

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Nick L. Stanage, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hexcel Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 23, 2019	/s/ Nick L. Stanage
(Date)	Nick L. Stanage
	Chairman of the Board of Directors,
	Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Patrick Winterlich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hexcel Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 23, 2019	/s/ Patrick Winterlich
(Date)	Patrick Winterlich
	Executive Vice President and
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS OF

CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Hexcel Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nick L. Stanage, Chairman of the Board of Directors, Chief Executive Officer and President of the Company, and Patrick Winterlich, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 23, 2019	/s/ Nick L. Stanage
(Date)	Nick L. Stanage
	Chairman of the Board of Directors,
	Chief Executive Officer and President
April 23, 2019	/s/ Patrick Winterlich
(Date)	Patrick Winterlich
	Executive Vice President and
	Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Hexcel Corporation and will be retained by Hexcel Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 15, 2019
Document And Entity Information [Abstract]
Entity Registrant Name	HEXCEL CORP /DE/
Entity Central Index Key	0000717605
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		84,888,081
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	HXL

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 43.7	$ 32.7
Accounts receivable, net	324.3	260.9
Inventories, net	334.5	297.8
Contract assets	53.7	50.5
Prepaid expenses and other current assets	26.1	33.9
Total current assets	782.3	675.8
Property, plant and equipment	2,894.5	2,839.9
Less accumulated depreciation	(991.8)	(963.4)
Net property, plant and equipment	1,902.7	1,876.5
Goodwill and other intangible assets	286.2	142.3
Investments in affiliated companies	50.9	48.7
Other assets	143.9	80.8
Total assets	3,166.0	2,824.1
Current liabilities:
Short-term borrowings	9.7	9.4
Accounts payable	165.2	161.9
Accrued compensation and benefits	62.1	75.8
Accrued liabilities	112.9	79.6
Total current liabilities	349.9	326.7
Commitments and contingencies (see Note 14)
Long-term debt	1,160.0	947.4
Retirement obligations	42.1	42.0
Other non-current liabilities	241.6	186.0
Total liabilities	1,793.6	1,502.1
Stockholders' equity:
Common stock, $0.01 par value, 200.0 shares authorized, 108.8 shares and 108.5 shares issued at March 31, 2019 and December 31, 2018, respectively	1.1	1.1
Additional paid-in capital	811.8	798.3
Retained earnings	1,786.0	1,726.5
Accumulated other comprehensive loss	(113.9)	(108.0)
Total stockholders' equity including treasury stock value	2,485.0	2,417.9
Less – Treasury stock, at cost, 24.0 shares at March 31, 2019, and 23.7 shares at December 31, 2018, respectively.	(1,112.6)	(1,095.9)
Total stockholders' equity	1,372.4	1,322.0
Total liabilities and stockholders' equity	$ 3,166.0	$ 2,824.1

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	108,800,000	108,500,000
Treasury stock, shares	24,000,000	23,700,000

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Net sales	$ 609.9	$ 540.1
Cost of sales	442.7	397.5
Gross margin	167.2	142.6
Selling, general and administrative expenses	49.5	46.4
Research and technology expenses	14.9	13.8
Operating income	102.8	82.4
Interest expense, net	12.0	8.0
Income before income taxes, and equity in earnings from affiliated companies	90.8	74.4
Provision for income taxes	20.6	14.1
Income before equity in earnings from affiliated companies	70.2	60.3
Equity in earnings from affiliated companies	2.0	1.3
Net income	$ 72.2	$ 61.6
Basic net income per common share	$ 0.85	$ 0.68
Diluted net income per common share	0.84	0.68
Dividends per share	$ 0.15	$ 0.125
Weighted-average common shares:
Basic	85.0	90.0
Diluted	86.0	91.2

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net Income	$ 72.2	$ 61.6
Currency translation adjustments	(2.8)	31.6
Net unrealized pension and other benefit actuarial gains and prior service credits	(0.4)	(0.8)
Net unrealized (losses) gains on financial instruments (net of tax)	(2.7)	4.8
Total other comprehensive (loss) income	(5.9)	35.6
Comprehensive income	$ 66.3	$ 97.2

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities
Net income	$ 72.2	$ 61.6
Reconciliation to net cash provided by operating activities:
Depreciation and amortization	38.7	29.8
Amortization related to financing	0.3	0.3
Deferred income taxes	4.2	10.1
Equity in earnings from affiliated companies	(2.0)	(1.3)
Stock-based compensation	11.1	9.9
Changes in assets and liabilities:
Increase in accounts receivable	(59.4)	(41.2)
Increase in inventories	(32.3)	(14.6)
(Increase) decrease in prepaid expenses and other current assets	(5.8)	2.6
Increase in accounts payable/accrued liabilities	19.1	7.0
Other – net	(0.2)	(1.6)
Net cash provided by operating activities	45.9	62.6
Cash flows from investing activities
Capital expenditures	(61.1)	(59.5)
Acquisition of business	(158.4)
Net cash used for investing activities	(219.5)	(59.5)
Cash flows from financing activities
Borrowing from senior unsecured credit facility	289.0	133.0
Repayment of senior unsecured credit facility	(77.0)	(105.0)
Repayment of finance lease obligation and other debt, net	(0.2)
Dividends paid	(12.7)	(11.2)
Repurchase of stock	(11.2)	(30.1)
Activity under stock plans	(3.0)	(2.2)
Net cash provided by (used in) financing activities	184.9	(15.5)
Effect of exchange rate changes on cash and cash equivalents	(0.3)	2.1
Net increase (decrease) in cash and cash equivalents	11.0	(10.3)
Cash and cash equivalents at beginning of period	32.7	60.1
Cash and cash equivalents at end of period	43.7	49.8
Supplemental data:
Accrual basis additions to property, plant and equipment	$ 57.5	$ 45.3

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions	Total	Par	Additional Paid-In Capital	Accumulated Retained Earnings	Other Comprehensive Income (Loss)	Treasury Stock
Balance at Dec. 31, 2017	$ 1,495.1	$ 1.1	$ 774.3	$ 1,496.1	$ (45.0)	$ (731.4)
Increase (Decrease) in Stockholders' Equity
Net income	61.6			61.6
Dividends paid on common stock	(11.2)			(11.2)
Impact of new accounting pronouncements	3.8			2.2	1.6
Change in other comprehensive income – net of tax	35.6				35.6
Stock based compensation	7.7		13.4			(5.7)
Acquisition of treasury stock	(30.1)					(30.1)
Balance at Mar. 31, 2018	1,562.5	1.1	787.7	1,548.7	(7.8)	(767.2)
Balance at Dec. 31, 2018	1,322.0	1.1	798.3	1,726.5	(108.0)	(1,095.9)
Increase (Decrease) in Stockholders' Equity
Net income	72.2			72.2
Dividends paid on common stock	(12.7)			(12.7)
Change in other comprehensive income – net of tax	(5.9)				(5.9)
Stock based compensation	8.0		13.5			(5.5)
Acquisition of treasury stock	(11.2)					(11.2)
Balance at Mar. 31, 2019	$ 1,372.4	$ 1.1	$ 811.8	$ 1,786.0	$ (113.9)	$ (1,112.6)

XML

Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

Note 1 — Significant Accounting Policies

In these notes, the terms “Hexcel,” “the Company,” “we,” “us,” or “our” mean Hexcel Corporation and subsidiary companies. The accompanying Condensed Consolidated Financial Statements are those of Hexcel Corporation.  Refer to Note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of our significant accounting policies. Significant changes to our accounting policies subsequent to the filing of our Form 10-K, relate solely to the adoption of Topic 842, Leases, are discussed below in Recent Accounting Pronouncements as well as in Note 4.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared from the unaudited accounting records of Hexcel pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.  Certain information and footnote disclosures normally included in financial statements have been omitted pursuant to rules and regulations of the SEC. In the opinion of management, the Condensed Consolidated Financial Statements include all normal recurring adjustments as well as any non-recurring adjustments necessary to present fairly the statement of financial position, results of operations and cash flows for the interim periods presented.  The Condensed Consolidated Balance Sheet as of December 31, 2018 was derived from the audited 2018 consolidated balance sheet.  Interim results are not necessarily indicative of results expected for any other interim period or for the full year.  These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K.

Investments in Affiliated Companies

We have a 50% equity investment in Aerospace Composites Malaysia Sdn. Bhd. (“ACM”) and a 25% equity investment in Hexcut Services.  These investments are accounted for using the equity method of accounting.      

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). This standard requires lessees to recognize a right of use asset and lease liability on the balance sheet for all leases, with the exception of leases with a duration of one year or less. We adopted the provisions of this standard on January 1, 2019, using the modified transition method which allows companies to recognize existing leases at the adoption date without requiring comparable presentation. As a result of the adoption of this standard we recognized approximately $50 million of right of use assets and related liabilities for operating leases that existed prior to January 1, 2019. These right of use assets were recorded in noncurrent assets, and the related liabilities were recorded in other accrued liabilities and other noncurrent liabilities. See Note 4 - Leases, for more details.

In August 2018 the FASB issued Accounting Standards Update No. 2018-14 (ASU 2018-14), Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20), which amends the current disclosure requirements regarding defined benefit pensions and other post retirement plans, and allows for the removal of certain disclosures, while adding certain new disclosure requirements. This standard is effective for fiscal years beginning after December 15, 2020 and allows for early adoption. We do not expect this new standard to have a significant impact to our disclosures.

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Net Income per Common Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Net Income per Common Share

Note 2 — Net Income per Common Share

	Quarter Ended March 31,
(In millions, except per share data)	2019		2018
Basic net income per common share:
Net income	$	72.2	$	61.6
Weighted average common shares outstanding		85.0		90.0
Basic net income per common share	$	0.85	$	0.68
Diluted net income per common share:
Net income		72.2		61.6
Weighted average common shares outstanding — Basic		85.0		90.0
Plus incremental shares from assumed conversions:
Restricted stock units		0.4		0.5
Stock options		0.6		0.7
Weighted average common shares outstanding — Dilutive		86.0		91.2
Diluted net income per common share	$	0.84	$	0.68

   Total shares underlying stock options of 0.3 million and 0.2 million, respectively, were excluded from the computation of diluted net income per share for the three months ended March 31, 2019 and March 31, 2018, as they were anti-dilutive.  

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Inventories

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Inventories

Note 3 — Inventories

(In millions)	March 31, 2019		December 31, 2018
Raw materials	$	170.3	$	131.4
Work in progress		40.8		43.6
Finished goods		123.4		122.8
Total Inventory	$	334.5	$	297.8

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

Note 4 — Leases

The Company regularly enters into operating leases for certain buildings, equipment, parcels of land, and vehicles. As of January 1, 2019, we adopted the provisions of ASC 842, accounting for leases.  Accordingly, we capitalized all agreements with terms for more than one year, where a right of use asset was identified. In connection with the adoption of ASC 842 on January 1, 2019 we elected certain practical expedients available under ASC 842-10-65-1 that provide certain concessions to ease the burden of transition, such as the treatment of indirect lease costs, and service contracts which may contain embedded leases. In addition, we elected certain expedients not related to the transition, such as the election to capitalize lease and non-lease components of an agreement as a single component for purposes of simplicity, with the exception of those related to equipment and machinery.

Generally, amounts capitalized represent the present value of minimum lease payments over the term, and the duration is equivalent to the base agreement, however, in certain instances management used certain assumptions when determining the value and duration of certain leases.  These assumptions include, but are not limited to, the probability of renewing a lease term, certain future events impacting lease payments, as well as fair values not explicit in an agreement. Such assumptions impacted the duration of many of our building leases, as well as certain of our equipment leases.

In determining the lease renewal, management considered the need and ability to substitute a given asset, as well as certain conditions such as related contractual obligations to our customers (i.e. a contractual obligation of a customer requiring certain manufacturing proximities). In determining fair value management considered the stand alone value of an asset in an ordinary market as well as incurring certain costs to terminate an agreement.  Most of our leases do not include variable payments but contain scheduled escalations. Any lease payments tied to certain future indexes are adjusted on a go forward basis as those indexes become known.

At March 31, 2019, we had approximately $61.4 million of right of use assets recorded in other non-current assets, and $61.8 million of related liabilities, $50.3 of which was included in other non-current liabilities with the remainder in other current liabilities. The weighted average of the remaining lease terms was approximately 8 years.

We discount the future lease payments of our leases using the prevailing rates extended to us by our lenders relevant to the period of inception. These rates are comprised of LIBOR plus a stated spread less a component related to collateralization.  The rates are relative to the duration of the lease at inception and the country to which the lease agreement pertains to.  The weighted average interest rate used in calculating the fair values listed above was 2.5%.

The following table lists the schedule of cash payments related to right of use assets by year:

(In millions)
Remainder of 2019	$	8.9
2020		11.3
2021		9.9
2022		7.2
2023		7.2
Thereafter		25.7
Total	$	70.2

Operating lease expense recognized during the quarter ending March 31, 2019, relating to right of use assets, was $2.9 million, and was recorded in cost of goods sold as well as in operating expenses, in our condensed consolidated statements of operations. Expense related to operating leases which have a duration of a year or less were not material for the same period. Finance leases at March 31, 2019, were immaterial.

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Retirement and Other Postretirement Benefit Plans

3 Months Ended

Mar. 31, 2019

Defined Benefit Pension Plans And Defined Benefit Postretirement Plans Disclosure [Abstract]

Retirement and Other Postretirement Benefit Plans

Note 5 — Retirement and Other Postretirement Benefit Plans

We maintain qualified and nonqualified defined benefit retirement plans covering certain current and former U.S. and European employees, retirement savings plans covering eligible U.S. and U.K. employees and certain postretirement health care and life insurance benefit plans covering eligible U.S. retirees. We also participate in a union sponsored multi-employer pension plan covering certain U.S. employees with union affiliations.

Defined Benefit Retirement Plans

Net Periodic Benefit Costs

Net periodic benefit costs of our defined benefit retirement plans for the three months ended March 31, 2019 and 2018 were as follows:

	Quarter Ended March 31,
(In millions)	2019		2018
U.S. Nonqualified Defined Benefit Retirement Plans
Service cost	$	0.3	$	0.3
Interest cost		0.2	0.1
Net periodic benefit cost	$	0.5	$	0.4

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Accrued liabilities	$	1.0	$	0.9
Other non-current liabilities		18.3		17.2
	$	19.3	$	18.1

	Quarter Ended March 31,
(In millions)	2019			2018
European Defined Benefit Retirement Plans
Service cost	$	0.3		$	0.3
Interest cost		1.1		1.1
Expected return on plan assets		(2.2	)		(2.4	)
Net amortization and deferral		0.1			0.1
Net periodic benefit credit	$	(0.7	)	$	(0.9	)

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Noncurrent asset	$	46.6	$	42.6
Accrued liabilities		1.2		0.4
Other non-current liabilities		20.0		18.8
Total accrued benefit	$	21.2	$	19.2

All costs related to our pensions are included as a component of operating income in our consolidated statements of operations. For the three months ended March 31, 2019 and 2018, amounts unrelated to service costs were a benefit of $0.8 million and $1.1 million, respectively.  

Contributions

We generally fund our U.S. non-qualified defined benefit retirement plans when benefit payments are incurred.  We have contributed approximately $0.2 million in the first three months of 2019 to cover unfunded benefits.  We expect to contribute a total of $0.9 million in 2019 to cover unfunded benefits.  We contributed $0.1 million to our U.S. non-qualified defined benefit retirement plans during the quarter ended March 31, 2018.

We contributed $1.2 million and $1.6 million to our European defined benefit retirement plans in the three months ended March 31, 2019 and 2018, respectively.  We plan to contribute approximately $5.0 million during 2019 to our European plans.

Postretirement Health Care and Life Insurance Benefit Plans

We recorded $0.3 million of net amortization gain deferral for the quarters ended March 31, 2019 and March 31, 2018. Net periodic benefit costs of our postretirement health care and life insurance benefit plans for the three months ended March 31, 2019 and 2018 were immaterial.

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.5	$	0.5
Other non-current liabilities	3.9		2.8
Total accrued benefit	$	4.4	$	3.3

Amounts contributed in connection with our postretirement plans, were immaterial for both the three months ended March 31, 2019 and March 31, 2018. We periodically fund our postretirement plans to pay covered expenses as they are incurred. We expect to contribute less than $0.5 million in 2019 to cover unfunded benefits.

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Debt

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt

Note 6 –– Debt

(In millions)	March 31, 2019			December 31, 2018
Current portion of finance lease	$	0.7		$	0.3
Current portion of Euro term loan		9.0			9.1
Current portion of debt		9.7			9.4
Non-current portion of Euro term loan		50.5			51.4
Senior unsecured credit facility due 2021		414.0			202.0
4.7% senior notes — due 2025		300.0			300.0
3.95% senior notes — due 2027		400.0			400.0
Senior notes — original issue discount		(1.9	)		(2.0	)
Senior notes — deferred financing costs		(4.7	)		(4.8	)
Non-current portion of finance lease and other debt		2.1			0.8
Long-term debt		1,160.0			947.4
Total debt	$	1,169.7		$	956.8

In 2017, the Company issued $400 million in aggregate principal amount of 3.95% Senior Unsecured Notes due in 2027. The interest rate on these senior notes may be increased 0.25% each time a credit rating applicable to the notes is downgraded. Conversely, such increases would be reversed should the credit rating be subsequently upgraded. The maximum rate is 5.95%. The effective interest rate for three months ended March 31, 2019 was 3.88% inclusive of approximately a 0.25% benefit of treasury locks. Based on quoted prices the fair value of the senior notes due in 2027 was $400.3 million at March 31, 2019.

In 2015, the Company issued $300 million in aggregate principal amount of 4.7% Senior Unsecured Notes due in 2025. The interest rate on these senior notes may be increased by 0.25% each time a credit rating applicable to the notes is downgraded. Conversely, such increases would be reversed should the credit rating be subsequently upgraded. The maximum rate is 6.7%.  The effective interest rate for the three months ended March 31, 2019 was 4.83%. Based on quoted prices, the fair value of the notes due in 2025 was $314.1 million at March 31, 2019.

The Company has a revolving credit facility (the “Facility”) that allows up to $700 million of borrowings. The Facility matures in June 2021. The interest rate for the Facility at March 31, 2019 was LIBOR + 1.25%. The interest rate ranges from LIBOR + 0.875% to a maximum of LIBOR + 1.875%, depending on the Company’s leverage ratio.     

The Facility contains financial and other covenants, including, but not limited to, restrictions on the incurrence of debt and the granting of liens, as well as the maintenance of an interest coverage ratio and a leverage ratio. In accordance with the terms of the Facility, we are required to maintain a minimum interest coverage ratio of 3.50 (based on the ratio of EBITDA, as defined in the Facility Agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.50 (based on the ratio of total debt to EBITDA) throughout the term of the Facility. In addition, the Facility contains other terms and conditions such as customary representations and warranties, additional covenants and customary events of default.

As of March 31, 2019, total borrowings under the Facility were $414.0 million, which approximates fair value due to its revolving nature. The Facility permits us to issue letters of credit up to an aggregate amount of $40 million. Outstanding letters of credit reduce the amount available for borrowing under our Facility. As of March 31, 2019, there were no outstanding letters of credit under the Facility, resulting in undrawn availability under the Facility as of March 31, 2019 of $286.0 million. The weighted average interest rate for the Facility was 4.17% for the three months ended March 31, 2019.

In 2016, we entered into a€60 million term loan.  The loan has two tranches of which the first tranche for €25 million has a rate of Euribor +1.2% and a final maturity date of June 30, 2023, and a second tranche for €35 million has a rate of Euribor +1.25% with a final maturity date of June 30, 2024. The loans are payable in annual installments that began on June 30, 2017, for the first tranche, and beginning on June 30, 2019, for the second. There is a zero percent floor on the Euribor. Amounts outstanding under this loan at March 31, 2019 were $59.4 million which approximates fair value under the market approach.    

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Note 7 — Derivative Financial Instruments

Interest Rate Swap and Interest Lock Agreements

        As of March 31, 2019, the Company had interest rate swaps, having a combined notional value of $50.0 million, that swap floating rate obligations for fixed rate obligations at an average rate of 1.09% against LIBOR in U.S. dollars. Both swaps mature in September 2019. The swaps are accounted for as cash flow hedges of our floating rate bank loan. To ensure the swaps were highly effective, all of the critical terms of the swaps matched the terms of the bank loan. The fair value of the interest rate swaps was an asset of $0.3 million at March 31, 2019 and $0.6 million at December 31, 2018. 

At March 31, 2019 we had interest rate swaps related to European debt obligations which had a combined notional value of approximately €52.9 million. These derivatives swapped floating rate obligations for fixed rate obligations at a weighted average rate of 0.51% against Euribor in Euros.  The swaps amortize through the final maturities of the obligations, on June 30, 2023 and June 30, 2024, in annual installments. The derivatives are accounted for as cash flow hedges of the floating rate term loans.  To ensure the swaps were highly effective, all of the critical terms of the swap matched the terms of the bank loans.  The fair value of the interest rate swaps was a liability of $0.7 millionat March 31, 2019, and$0.5 million at December 31, 2018.

The Company had treasury lock agreements to protect against unfavorable movements in the benchmark treasury rate related to the issuance of our 3.95% Senior Unsecured Notes. These hedges were designated as cash flow hedges therefore any change in fair value was recorded as a component of other comprehensive income. As part of the issuance of our senior notes, we net settled these derivatives and therefore the previously deferred gains recorded in other comprehensive income will be released to interest expense over the life of the senior notes. The effect of these treasury locks reduced the effective interest rate on the 2017 senior notes by approximately 0.25%.  

Foreign Currency Forward Exchange Contracts

A number of our European subsidiaries are exposed to the impact of exchange rate volatility between the U.S. dollar and the subsidiaries’ functional currencies, being either the Euro or the British Pound sterling. We entered into contracts to exchange U.S. dollars for Euros and British Pound sterling through September 2021, which we account for as cash flow hedges. The aggregate notional amount of these contracts was $418.5 million and $416.5 million at March 31, 2019 and December 31, 2018, respectively.  The purpose of these contracts is to hedge a portion of the forecasted transactions of our European subsidiaries under long-term sales contracts with certain customers. These contracts are expected to provide us with a more balanced matching of future cash receipts and expenditures by currency, thereby reducing our exposure to fluctuations in currency exchange rates.  The effective portion of the hedges, losses of $3.6 million were recorded in other comprehensive income (“OCI”) for the three months ended March 31, 2019 and gains of $8.4 million for the three months ended March 31, 2018.  We classified the carrying amount of these contracts of $1.1 million in other assets and $17.1 million in other liabilities, of which $10.0 million is recorded in noncurrent liabilities, on the Condensed Consolidated Balance Sheets at March 31, 2019 and $1.3 million in other assets and $15.3 million in other liabilities at December 31, 2018.  We recognized net losses of $1.8 million in gross margin during the three months ended March 31, 2019 and net gains of $2.3 million for the three months ended March 31, 2018.  

In addition, we enter into foreign exchange forward contracts which are not designated as hedges. These are used to provide an offset to transactional gains or losses arising from the re-measurement of non-functional monetary assets and liabilities such as accounts receivable. The change in the fair value of the derivatives is recorded in the statement of operations. There are no credit contingency features in these derivatives. During the quarters ended March 31, 2019 and 2018, we recognized net foreign exchange gains of $0.3 million and $2.0 million, respectively, in the Condensed Consolidated Statements of Operations. The net foreign exchange impact recognized from these hedges offset the translation exposure of these transactions. The carrying amount of the contracts for derivatives not designated as hedging instruments was $0.1 million classified in other assets and $0.2 million in other liabilities at March 31, 2019, and $0.3 million in other assets at December 31, 2018, in the Condensed Consolidated Balance Sheets.

 The change in fair value of our foreign currency forward exchange contracts under hedge designations recorded net of tax within accumulated other comprehensive income for the quarters ended March 31, 2019 and March 31, 2018 was as follows:

	Quarter Ended March 31,
(In millions)	2019			2018
Unrealized (losses) gains at beginning of period, net of tax	$	(10.6	)	$	8.6
Losses (gains) reclassified to net sales		1.3			(1.6	)
(Decrease) increase in fair value		(2.1	)		6.4
Unrealized (losses) gains at end of period, net of tax	$	(11.4	)	$	13.4

Unrealized losses of $6.5 million recorded in accumulated other comprehensive loss, net of tax of $2.5 million, as of March 31, 2019, are expected to be reclassified into earnings over the next twelve months as the hedged sales are recorded.

Commodity Swap Agreements

On occasion we enter into commodity swap agreements to hedge against price fluctuations of raw materials, including propylene (the principal component of acrylonitrile).  As of March 31, 2019, we had commodity swap agreements with a notional value of $20.1 million. The swaps mature monthly through March 2021. The swaps are accounted for as a cash flow hedge of our forward raw material purchases. To ensure the swaps are highly effective, all of the critical terms of the swap matched the terms of the hedged items. The fair value of the commodity swap agreements was a liability of $4.6 million at March 31, 2019.

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 8 — Income Taxes

The income tax provision for the current quarter was $20.6 million compared to $14.1 million for the quarter ended March 31, 2018. Both periods benefited from deductions associated with share based compensation payments. Our underlying estimated annual effective income tax rate is expected to remain at 24%.            

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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 9 — Fair Value Measurements

The authoritative guidance for fair value measurements establishes a hierarchy for observable and unobservable inputs used to measure fair value, into three broad levels, which are described below:

• Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

• Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

• Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value.

We have no assets or liabilities that utilize Level 1 inputs. However, we have derivative instruments classified as liabilities and assets which utilize Level 2 inputs, and one liability that utilizes Level 3 inputs.

For derivative assets and liabilities that utilize Level 2 inputs, we prepare estimates of future cash flows of our derivatives, which are discounted to a net present value. The estimated cash flows and the discount factors used in the valuation model are based on observable inputs, and incorporate non-performance risk (the credit standing of the counterparty when the derivative is in a net asset position, and the credit standing of Hexcel when the derivative is in a net liability position). The fair value of these assets and liabilities was approximately $1.5 million and $22.6 million, respectively, at March 31, 2019.  In addition, the fair value of these derivative contracts, which are subject to a master netting arrangement under certain circumstances, is presented on a gross basis in the Consolidated Balance Sheet.

Below is a summary of valuation techniques for all Level 2 financial assets and liabilities:

• Interest rate swaps — valued using LIBOR yield curves at the reporting date. Fair value was an asset of $0.3 million and a liability of $0.7 million at March 31, 2019.

• Foreign exchange derivative assets and liabilities — valued using quoted forward prices at the reporting date. Fair value of assets and liabilities at March 31, 2019 was $1.2 million and $17.3 million, respectively.

• Commodity raw materials — valued using quoted forward prices at the reporting date. Fair value of liabilities at March 31, 2019 was $4.6 million.

Counterparties to the above contracts are highly rated financial institutions, none of which experienced any significant downgrades in the quarter ended March 31, 2019 that would reduce the receivable amount owed, if any, to the Company.

Liabilities classified as Level 3 — we have a liability for $3.0 million, which represents contingent consideration that was recognized in connection with the Company’s Oxford Performance Materials acquisition. This amount was estimated based on certain contractual stipulations which require payments to be made to the seller in the future based upon the achievement of certain results. We used forecasted results which were discounted using an internally derived discount rate. Future amounts payable may differ from this estimate by the difference between the actual and forecasted results. The amount of interest related to this liability accreted during the three months ended March 31, 2019 was not material.  

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Revenue

3 Months Ended

Mar. 31, 2019

Revenue From Contract With Customer [Abstract]

Revenue

Note 10 — Revenue

Our revenue is primarily derived from the sale of inventory under long-term agreements with our customers. We have determined that individual purchase orders (“PO”), whose terms and conditions taken with a master agreement, create the ASC 606 contracts which are generally short-term in nature.  For those sales, which are not tied to a long-term agreement, we generate a PO that is subject to our standard terms and conditions. In instances where our customers acquire our goods related to government contracts, the contracts are typically subject to terms similar, or equal to, the Federal Acquisition Regulation Part 52.249-2, which contains a termination for convenience clause (“T for C”), which requires that the customer pay for the cost of both the finished and unfinished goods at the time of cancellation plus a reasonable profit.

We recognize revenue over time for those agreements that have T for C, and where the products being produced have no alternative use.  As our production cycle is typically six months or less, it is expected that goods related to the revenue recognized over time will be shipped and billed within the current year. Less than half of our agreements contain provisions which would require revenue to be recognized over time.

We disaggregate our revenue based on market for analytical purposes. The following table details our revenue by market for the three months ended March 31, 2019 and 2018:

	Quarter Ended March 31,
(In millions)	2019		2018
Consolidated Net Sales	$	609.9	$	540.1
Commercial Aerospace	415.5		382.7
Space & Defense		107.8	90.1
Industrial	86.6			67.3

Revenue recognized over time gives rise to contract assets, which represent revenue recognized but unbilled.  Contract assets are included in our Consolidated Balance Sheets as a component of current assets. The activity related to contract assets for the three months ended March 31, 2019 is as follows:

`
(In millions)	Composite Material			Engineered Products		Total
Balance at December 31, 2018	$	12.9		$	37.6	$	50.5
Net revenue billed		(1.4	)		4.6		3.2
Balance at March 31, 2019	$	11.5		$	42.2	$	53.7

Accounts receivable, net includes amounts billed to customers where the right to payment is unconditional.  

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Segment Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Information

Note 11 — Segment Information

The financial results for our operating 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 operating segments based on operating income, and generally account for intersegment sales based on arm’s length prices.  Corporate and certain other expenses are not allocated to the operating segments, except to the extent that the expense can be directly attributable to the business segment.

Financial information for our operating segments for the three months ended March 31, 2019 and 2018 were as follows:

	(Unaudited)
	Composite		Engineered		Corporate &
(In millions	Materials		Products		Other (a)			Total
First Quarter 2019
Net sales to external customers	$	487.7	$	122.2	$	—		$	609.9
Intersegment sales		19.2		0.1		(19.3	)		—
Total sales	$	506.9	$	122.3	$	(19.3	)	$	609.9
Operating income		112.5		14.8		(24.5	)		102.8
Depreciation and amortization		34.9		3.8		—			38.7
Stock-based compensation		4.1		0.8		6.2			11.1
Accrual basis additions to capital expenditures		56.8		0.7		—			57.5
First Quarter 2018
Net sales to external customers	$	444.6	$	95.5	$	—		$	540.1
Intersegment sales		19.2		—		(19.2	)		—
Total sales	$	463.8	$	95.5	$	(19.2	)	$	540.1
Operating income		91.0		9.9		(18.5	)		82.4
Depreciation and amortization		27.5		2.3		—			29.8
Stock-based compensation		3.6		0.7		5.6			9.9
Accrual basis additions to capital expenditures		45.3		—		—			45.3

(a) We do not allocate corporate expenses to the operating segments.

Goodwill and Intangible Assets

	Composite			Engineered
(In millions)	Materials			Products			Total
Balance at December 31, 2018	$	98.2		$	44.1		$	142.3
Amortization Expense		0.5		1.2				1.7
Additions		—			145.8			145.8
Currency translation adjustments		(2.1	)		(1.5	)		(3.6	)
Balance at March 31, 2019	$	96.6		$	189.6		$	286.2

The addition to goodwill and intangible assets is due to the acquisition of ARC Technologies LLC, discussed in Note 13. At March 31, 2019, the balance of goodwill and intangible assets was $189.4 million and $96.8 million, respectively. No impairments have been recorded against these amounts.

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Accumulated Other Comprehensive Loss

Note 12 — Accumulated Other Comprehensive Loss

Comprehensive income represents net income and other gains and losses affecting stockholders’ equity that are not reflected in the Consolidated Statements of Operations. The components of accumulated other comprehensive loss as of March 31, 2019 and December 31, 2018 were as follows:

(In millions)	Unrecognized Net Defined Benefit and Postretirement Plan Costs			Change in Fair Value of Derivatives Products (1)			Foreign Currency Translation			Total
Balance at December 31, 2018	$	(15.4	)	$	(5.8	)	$	(86.8	)	$	(108.0	)
Other comprehensive loss before reclassifications		(0.2	)		(4.3	)		(2.8	)		(7.3	)
Amounts reclassified from accumulated other comprehensive loss	(0.2		)		1.6		―				1.4
Other comprehensive loss		(0.4	)		(2.7	)		(2.8	)		(5.9	)
Balance at March 31, 2019	$	(15.8	)	$	(8.5	)	$	(89.6	)	$	(113.9	)

(1) Includes forward foreign exchange contracts, interest rate derivatives and commodity swaps.

The amounts reclassified to earnings from the unrecognized net defined benefit and postretirement plan costs component of accumulated other comprehensive loss for the three months ended March 31, 2019, were $0.2 million with no material tax impact. The amounts reclassified to earnings from the change in fair value of the derivatives component of accumulated other comprehensive loss for the quarter ended March 31, 2019 were net losses of $1.8 million less taxes of $0.4 million related to foreign currency forward exchange contracts and $0.7 million less taxes of $0.2 million related to commodity swaps. We also recorded net gains of $0.4 million less taxes of $0.1 million related to interest rate swaps. 

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Acquisitions

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisitions

Note 13 — Acquisitions

       During the quarter ended March 31, 2019, we acquired all of the outstanding equity interests in ARC Technologies LLC, a leading supplier of customer RF/EMI and microwave absorbing composite materials for military, aerospace and industrial applications, for approximately $158.4 million in cash, plus a future payment of $5.4 million, that will be paid in 2019. This acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations.

In connection with the acquisition, the Company recognized approximately $82.8 million of goodwill, and approximately $63.0 million of intangible assets which are included in our Engineered Products segment.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 14 — Commitments and Contingencies

We are involved in litigation, investigations and claims arising out of the normal conduct of our business, including those relating to commercial transactions, environmental, employment and health and safety matters. While it is impossible to predict the ultimate resolution of litigation, investigations and claims asserted against us, we believe, based upon our examination of currently available information, our experience to date, and advice from legal counsel, that, after taking into account our existing insurance coverage and amounts already provided for, the currently pending legal proceedings against us will not have a material adverse impact on our consolidated results of operations, financial position or cash flows.

Environmental Matters

We have been named as a potentially responsible party (“PRP”) with respect to the below hazardous waste disposal sites that we do not own or possess, which are included on, or proposed to be included on, the Superfund National Priority List of the U.S. Environmental Protection Agency (“EPA”) or on equivalent lists of various state governments. Because the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) allows for joint and several liability in certain circumstances, we could be responsible for all remediation costs at such sites, even if we are one of many PRPs. We believe, based on the amount and nature of our waste, and the number of other financially viable PRPs, that our liability in connection with such environmental matters will not be material.

Lower Passaic River Study Area

Hexcel together with approximately 48 other PRPs that comprise the Lower Passaic Cooperating Parties Group (the “CPG”), are subject to a May 2007 Administrative Order on Consent (“AOC”) with the EPA requiring the CPG to perform a Remedial Investigation/Feasibility Study of environmental conditions of a 17-mile stretch of the Passaic River in New Jersey (the “Lower Passaic River”). We were included in the CPG based on our operations at our former manufacturing site in Lodi, New Jersey.        

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. This estimate does not include any costs related to a future remedy for the upper nine miles of the Lower Passaic River. 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 PRP’s, which is not expected to be completed until 2020.

In October 2016, pursuant to a settlement agreement with the EPA, Occidental Chemical Corporation (“OCC”), one of the PRPs commenced performance of the remedial design required by the ROD, reserving its right of cost contribution from all other PRPs. In June 2018, OCC filed suit against approximately 120 parties, including Hexcel, in the U.S. District Court of the District of New Jersey seeking cost recovery and contribution under CERCLA related to the Lower Passaic River. We do not know whether this litigation will impact the EPA’s allocation process or the ultimate outcome of the matter.

The accrual was $2.1 million as of March 31, 2019 and at December 31, 2018. Given the uncertainty associated with the many elements of the Superfund process for the Lower Passaic River, the amounts accrued may not be indicative of the amounts for which we will ultimately be responsible.

Omega Chemical Corporation Superfund Site, Whittier, California

We are a PRP at a former chemical waste site in Whittier, California. The PRPs at Omega have established The Omega Chemical Site PRP Organized Group, (the “OPOG”), and are currently investigating and remediating soil and groundwater at the site pursuant to a Consent Decree with the EPA. OPOG has attributed either 1.21% or 2.07% of the waste tonnage (dependent on the specific location within the Omega Chemical Site) sent to the site to Hexcel.  In addition to the Omega site specifically, the EPA is investigating the scope of regional groundwater contamination in the vicinity of the Omega site and issued an ROD; the OPOG members have been served notice by the EPA as PRPs who will be required to be involved in the remediation of the regional groundwater contamination in that vicinity as well.  As a member of OPOG, Hexcel will incur costs associated with the investigation and remediation of the Omega site and the regional groundwater remedy, although our ultimate liability, if any, in connection with this matter cannot be determined at this time. The total accrued liability relating to potential liability for both the Omega site and regional groundwater remedies was $0.3 million at March 31, 2019 and at December 31, 2018.

Summary of Environmental Reserves

Our estimate of liability as a PRP and our remaining costs associated with our responsibility to remediate the Lower Passaic River and other sites are accrued in the consolidated balance sheets. As of March 31, 2019 and December 31, 2018, our aggregate environmental related accruals were $2.6 million and $2.7 million, respectively, of which $0.7 million and $0.8 million, respectively, was included in accrued liabilities with the remainder included in non-current liabilities.  As related to certain environmental matters the accrual was estimated at the low end of a range of possible outcomes since no amount within the range is a better estimate than any other amount.  If we had accrued, for those sites where we are able to estimate our liability, at the high end of the range of possible outcomes, our accrual would have been $16 million higher at March 31, 2019.

These accruals can change significantly from period to period due to such factors as additional information on the nature or extent of contamination, the methods of remediation required, changes in the apportionment of costs among responsible parties and other actions by governmental agencies or private parties, or the impact, if any, of being named in a new matter.

Product Warranty

We provide standard assurance-type warranties for our products, which cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Warranty expense for the quarter ended March 31, 2019, and accrued warranty cost, included in “accrued liabilities” in the Condensed Consolidated Balance Sheets at March 31, 2019 and December 31, 2018, were as follows:

	Product
(In millions)	Warranties
Balance as of December 31, 2018	$	4.8
Warranty expense		2.4
Deductions and other		(0.3	)
Balance as of March 31, 2019	$	6.9

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements have been prepared from the unaudited accounting records of Hexcel pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.  Certain information and footnote disclosures normally included in financial statements have been omitted pursuant to rules and regulations of the SEC. In the opinion of management, the Condensed Consolidated Financial Statements include all normal recurring adjustments as well as any non-recurring adjustments necessary to present fairly the statement of financial position, results of operations and cash flows for the interim periods presented.  The Condensed Consolidated Balance Sheet as of December 31, 2018 was derived from the audited 2018 consolidated balance sheet.  Interim results are not necessarily indicative of results expected for any other interim period or for the full year.  These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K.

Investments in Affiliated Companies

Investments in Affiliated Companies

We have a 50% equity investment in Aerospace Composites Malaysia Sdn. Bhd. (“ACM”) and a 25% equity investment in Hexcut Services.  These investments are accounted for using the equity method of accounting.      

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). This standard requires lessees to recognize a right of use asset and lease liability on the balance sheet for all leases, with the exception of leases with a duration of one year or less. We adopted the provisions of this standard on January 1, 2019, using the modified transition method which allows companies to recognize existing leases at the adoption date without requiring comparable presentation. As a result of the adoption of this standard we recognized approximately $50 million of right of use assets and related liabilities for operating leases that existed prior to January 1, 2019. These right of use assets were recorded in noncurrent assets, and the related liabilities were recorded in other accrued liabilities and other noncurrent liabilities. See Note 4 - Leases, for more details.

In August 2018 the FASB issued Accounting Standards Update No. 2018-14 (ASU 2018-14), Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20), which amends the current disclosure requirements regarding defined benefit pensions and other post retirement plans, and allows for the removal of certain disclosures, while adding certain new disclosure requirements. This standard is effective for fiscal years beginning after December 15, 2020 and allows for early adoption. We do not expect this new standard to have a significant impact to our disclosures.

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Net Income per Common Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Summary of Earnings Per Share Basic and Diluted

	Quarter Ended March 31,
(In millions, except per share data)	2019		2018
Basic net income per common share:
Net income	$	72.2	$	61.6
Weighted average common shares outstanding		85.0		90.0
Basic net income per common share	$	0.85	$	0.68
Diluted net income per common share:
Net income		72.2		61.6
Weighted average common shares outstanding — Basic		85.0		90.0
Plus incremental shares from assumed conversions:
Restricted stock units		0.4		0.5
Stock options		0.6		0.7
Weighted average common shares outstanding — Dilutive		86.0		91.2
Diluted net income per common share	$	0.84	$	0.68

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Inventories (Tables)

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

(In millions)	March 31, 2019		December 31, 2018
Raw materials	$	170.3	$	131.4
Work in progress		40.8		43.6
Finished goods		123.4		122.8
Total Inventory	$	334.5	$	297.8

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Schedule of Cash Payments Related to Right of Use Assets

The following table lists the schedule of cash payments related to right of use assets by year:

(In millions)
Remainder of 2019	$	8.9
2020		11.3
2021		9.9
2022		7.2
2023		7.2
Thereafter		25.7
Total	$	70.2

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Retirement and Other Postretirement Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2019

Defined Benefit Retirement Plans

Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Net Periodic Benefit Costs of Defined Benefit Retirement Plans

	Quarter Ended March 31,
(In millions)	2019			2018
European Defined Benefit Retirement Plans
Service cost	$	0.3		$	0.3
Interest cost		1.1		1.1
Expected return on plan assets		(2.2	)		(2.4	)
Net amortization and deferral		0.1			0.1
Net periodic benefit credit	$	(0.7	)	$	(0.9	)

Schedule of Amounts Recognized on Balance Sheet

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Noncurrent asset	$	46.6	$	42.6
Accrued liabilities		1.2		0.4
Other non-current liabilities		20.0		18.8
Total accrued benefit	$	21.2	$	19.2

Defined Benefit Retirement Plans | Non-qualified

Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Net Periodic Benefit Costs of Defined Benefit Retirement Plans

Net periodic benefit costs of our defined benefit retirement plans for the three months ended March 31, 2019 and 2018 were as follows:

	Quarter Ended March 31,
(In millions)	2019		2018
U.S. Nonqualified Defined Benefit Retirement Plans
Service cost	$	0.3	$	0.3
Interest cost		0.2	0.1
Net periodic benefit cost	$	0.5	$	0.4

Schedule of Amounts Recognized on Balance Sheet

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Accrued liabilities	$	1.0	$	0.9
Other non-current liabilities		18.3		17.2
	$	19.3	$	18.1

Postretirement Health Care and Life Insurance Benefit Plans

Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of Amounts Recognized on Balance Sheet

Net periodic benefit costs of our postretirement health care and life insurance benefit plans for the three months ended March 31, 2019 and 2018 were immaterial.

(In millions)	March 31, 2019		December 31, 2018
Amounts recognized on the balance sheet:
Accrued liabilities	$	0.5	$	0.5
Other non-current liabilities	3.9		2.8
Total accrued benefit	$	4.4	$	3.3

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Debt (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Debt and Capital Lease Obligations

(In millions)	March 31, 2019			December 31, 2018
Current portion of finance lease	$	0.7		$	0.3
Current portion of Euro term loan		9.0			9.1
Current portion of debt		9.7			9.4
Non-current portion of Euro term loan		50.5			51.4
Senior unsecured credit facility due 2021		414.0			202.0
4.7% senior notes — due 2025		300.0			300.0
3.95% senior notes — due 2027		400.0			400.0
Senior notes — original issue discount		(1.9	)		(2.0	)
Senior notes — deferred financing costs		(4.7	)		(4.8	)
Non-current portion of finance lease and other debt		2.1			0.8
Long-term debt		1,160.0			947.4
Total debt	$	1,169.7		$	956.8

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Change in Fair Value of Foreign Currency Forward Exchange Contracts Under Hedge Designations

 The change in fair value of our foreign currency forward exchange contracts under hedge designations recorded net of tax within accumulated other comprehensive income for the quarters ended March 31, 2019 and March 31, 2018 was as follows:

	Quarter Ended March 31,
(In millions)	2019			2018
Unrealized (losses) gains at beginning of period, net of tax	$	(10.6	)	$	8.6
Losses (gains) reclassified to net sales		1.3			(1.6	)
(Decrease) increase in fair value		(2.1	)		6.4
Unrealized (losses) gains at end of period, net of tax	$	(11.4	)	$	13.4

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Revenue (Tables)

3 Months Ended

Mar. 31, 2019

Revenue From Contract With Customer [Abstract]

Schedule of Revenue By Market

The following table details our revenue by market for the three months ended March 31, 2019 and 2018:

	Quarter Ended March 31,
(In millions)	2019		2018
Consolidated Net Sales	$	609.9	$	540.1
Commercial Aerospace	415.5		382.7
Space & Defense		107.8	90.1
Industrial	86.6			67.3

Schedule of Activity Related to Contract Assets

The activity related to contract assets for the three months ended March 31, 2019 is as follows:

`
(In millions)	Composite Material			Engineered Products		Total
Balance at December 31, 2018	$	12.9		$	37.6	$	50.5
Net revenue billed		(1.4	)		4.6		3.2
Balance at March 31, 2019	$	11.5		$	42.2	$	53.7

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Schedule of Operating Segment Reporting Information

Financial information for our operating segments for the three months ended March 31, 2019 and 2018 were as follows:

	(Unaudited)
	Composite		Engineered		Corporate &
(In millions	Materials		Products		Other (a)			Total
First Quarter 2019
Net sales to external customers	$	487.7	$	122.2	$	—		$	609.9
Intersegment sales		19.2		0.1		(19.3	)		—
Total sales	$	506.9	$	122.3	$	(19.3	)	$	609.9
Operating income		112.5		14.8		(24.5	)		102.8
Depreciation and amortization		34.9		3.8		—			38.7
Stock-based compensation		4.1		0.8		6.2			11.1
Accrual basis additions to capital expenditures		56.8		0.7		—			57.5
First Quarter 2018
Net sales to external customers	$	444.6	$	95.5	$	—		$	540.1
Intersegment sales		19.2		—		(19.2	)		—
Total sales	$	463.8	$	95.5	$	(19.2	)	$	540.1
Operating income		91.0		9.9		(18.5	)		82.4
Depreciation and amortization		27.5		2.3		—			29.8
Stock-based compensation		3.6		0.7		5.6			9.9
Accrual basis additions to capital expenditures		45.3		—		—			45.3

(a) We do not allocate corporate expenses to the operating segments.

Schedule of Goodwill and Intangible Assets by Segment

Goodwill and Intangible Assets

	Composite			Engineered
(In millions)	Materials			Products			Total
Balance at December 31, 2018	$	98.2		$	44.1		$	142.3
Amortization Expense		0.5		1.2				1.7
Additions		—			145.8			145.8
Currency translation adjustments		(2.1	)		(1.5	)		(3.6	)
Balance at March 31, 2019	$	96.6		$	189.6		$	286.2

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Schedule of Components of Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss as of March 31, 2019 and December 31, 2018 were as follows:

(In millions)	Unrecognized Net Defined Benefit and Postretirement Plan Costs			Change in Fair Value of Derivatives Products (1)			Foreign Currency Translation			Total
Balance at December 31, 2018	$	(15.4	)	$	(5.8	)	$	(86.8	)	$	(108.0	)
Other comprehensive loss before reclassifications		(0.2	)		(4.3	)		(2.8	)		(7.3	)
Amounts reclassified from accumulated other comprehensive loss	(0.2		)		1.6		―				1.4
Other comprehensive loss		(0.4	)		(2.7	)		(2.8	)		(5.9	)
Balance at March 31, 2019	$	(15.8	)	$	(8.5	)	$	(89.6	)	$	(113.9	)

(1) Includes forward foreign exchange contracts, interest rate derivatives and commodity swaps.

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Schedule of Product Warranty

We provide standard assurance-type warranties for our products, which cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Warranty expense for the quarter ended March 31, 2019, and accrued warranty cost, included in “accrued liabilities” in the Condensed Consolidated Balance Sheets at March 31, 2019 and December 31, 2018, were as follows:

	Product
(In millions)	Warranties
Balance as of December 31, 2018	$	4.8
Warranty expense		2.4
Deductions and other		(0.3	)
Balance as of March 31, 2019	$	6.9

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Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2019	Jan. 01, 2019
Significant Accounting Policies [Line Items]
Operating lease, right of use assets	$ 61.4
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:OtherAssetsNoncurrent
Operating lease, liabilities	$ 50.3
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OtherLiabilitiesNoncurrent
Accounting Standards Update 2016-02
Significant Accounting Policies [Line Items]
Operating lease, right of use assets		$ 50.0
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]		us-gaap:OtherAssetsNoncurrent
Operating lease, liabilities		$ 50.0
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]		us-gaap:OtherLiabilitiesNoncurrent
Aerospace Composites Malaysia Sdn. Bhd.
Significant Accounting Policies [Line Items]
Interest in affiliated company, accounted for using equity method of accounting (as a percent)	50.00%
Hexcut Services
Significant Accounting Policies [Line Items]
Interest in affiliated company, accounted for using equity method of accounting (as a percent)	25.00%

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Net Income per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Basic net income per common share:
Net income	$ 72.2	$ 61.6
Weighted average common shares outstanding - Basic (in shares)	85.0	90.0
Basic net income per common share	$ 0.85	$ 0.68
Diluted net income per common share:
Net income	$ 72.2	$ 61.6
Weighted average common shares outstanding - Basic (in shares)	85.0	90.0
Plus incremental shares from assumed conversions:
Restricted stock units (in shares)	0.4	0.5
Stock options (in shares)	0.6	0.7
Weighted average common shares outstanding -Dilutive (in shares)	86.0	91.2
Diluted net income per common share	$ 0.84	$ 0.68

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Net Income per Common Share - Additional Information (Details) - shares shares in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of earnings per share amount (in shares)	0.3	0.2

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Inventories - Schedule of Inventories (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 170.3	$ 131.4
Work in progress	40.8	43.6
Finished goods	123.4	122.8
Total Inventory	$ 334.5	$ 297.8

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Leases - Additional Information - (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Lessee Lease Description [Line Items]
Operating lease, right of use assets	$ 61.4
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:OtherAssetsNoncurrent
Operating lease, liabilities	$ 61.8
Operating lease, liabilities	$ 50.3
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OtherLiabilitiesNoncurrent
Operating lease, weighted average remaining lease terms	8 years
Operating lease, weighted average interest rate	2.50%
Cost of Goods Sold and Operating Expenses
Lessee Lease Description [Line Items]
Operating lease expense	$ 2.9

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Leases - Schedule of Cash Payments Related to Right of Use Assets (Details) $ in Millions	Mar. 31, 2019 USD ($)
Operating Lease Liabilities Payments Due [Abstract]
Remainder of 2019	$ 8.9
2020	11.3
2021	9.9
2022	7.2
2023	7.2
Thereafter	25.7
Total	$ 70.2

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Retirement and Other Postretirement Benefit Plans - Schedule of Net Periodic Benefit Costs of Defined Benefit Retirement Plans (Details) - Defined Benefit Retirement Plans - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
U.S.
Net periodic benefit costs of defined benefit retirement plans
Service cost	$ 0.3	$ 0.3
Interest cost	0.2	0.1
Net periodic benefit (credit) cost	$ 0.5	$ 0.4
Defined Benefit Plan, Tax Status [Extensible List]	us-gaap:NonqualifiedPlanMember	us-gaap:NonqualifiedPlanMember	us-gaap:NonqualifiedPlanMember
European
Net periodic benefit costs of defined benefit retirement plans
Service cost	$ 0.3	$ 0.3
Interest cost	1.1	1.1
Expected return on plan assets	(2.2)	(2.4)
Net amortization and deferral	0.1	0.1
Net periodic benefit (credit) cost	$ (0.7)	$ (0.9)

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Retirement and Other Postretirement Benefit Plans - Schedule of Amounts Recognized on Balance Sheet (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Defined Benefit Retirement Plans | U.S.
Amounts recognized on the balance sheet:
Accrued liabilities	$ 1.0	$ 0.9
Other non-current liabilities	18.3	17.2
Total accrued benefit	$ 19.3	$ 18.1
Defined Benefit Plan, Tax Status [Extensible List]	us-gaap:NonqualifiedPlanMember	us-gaap:NonqualifiedPlanMember	us-gaap:NonqualifiedPlanMember
Defined Benefit Retirement Plans | European
Amounts recognized on the balance sheet:
Noncurrent asset	$ 46.6	$ 42.6
Accrued liabilities	1.2	0.4
Other non-current liabilities	20.0	18.8
Total accrued benefit	21.2	19.2
Postretirement Health Care and Life Insurance Benefit Plans
Amounts recognized on the balance sheet:
Accrued liabilities	0.5	0.5
Other non-current liabilities	3.9	2.8
Total accrued benefit	$ 4.4	$ 3.3

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Retirement and Other Postretirement Benefit Plans - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Defined Benefit Retirement Plans
Amounts recognized on the balance sheet:
Amounts unrelated to service costs, benefit	$ 800,000	$ 1,100,000
Defined Benefit Retirement Plans | U.S.
Amounts recognized on the balance sheet:
Employer contribution to defined benefit retirement plans	200,000	$ 100,000
Expected employer contribution in full current year	$ 900,000
Defined Benefit Plan, Tax Status [Extensible List]	us-gaap:NonqualifiedPlanMember	us-gaap:NonqualifiedPlanMember	us-gaap:NonqualifiedPlanMember
Defined Benefit Retirement Plans | European
Amounts recognized on the balance sheet:
Employer contribution to defined benefit retirement plans	$ 1,200,000	$ 1,600,000
Expected employer contribution in full current year	5,000,000
Net amortization gain deferral	(100,000)	(100,000)
Postretirement Health Care and Life Insurance Benefit Plans
Amounts recognized on the balance sheet:
Net amortization gain deferral	300,000	$ 300,000
Postretirement Health Care and Life Insurance Benefit Plans | Maximum
Amounts recognized on the balance sheet:
Expected employer contribution in full current year	$ 500,000

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Debt - Schedule of Debt and Capital Lease Obligations (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Current portion of finance lease	$ 0.7	$ 0.3
Current portion of Euro term loan	9.0	9.1
Current portion of debt	9.7	9.4
Non-current portion of Euro term loan	50.5	51.4
Long-term debt	1,160.0	947.4
Non-current portion of finance lease and other debt	2.1	0.8
Total debt	1,169.7	956.8
Senior unsecured credit facility - due 2021
Debt Instrument [Line Items]
Long-term debt	414.0	202.0
4.7% senior notes due 2025
Debt Instrument [Line Items]
Senior notes	300.0	300.0
4.7% senior notes due 2025 and 3.95% senior notes due 2027
Debt Instrument [Line Items]
Senior notes — original issue discount	(1.9)	(2.0)
Senior notes — deferred financing costs	(4.7)	(4.8)
3.95% senior notes due 2027
Debt Instrument [Line Items]
Senior notes	$ 400.0	$ 400.0

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Debt - Schedule of Debt and Capital Lease Obligations (Parenthetical) (Details)	3 Months Ended
	Mar. 31, 2019
Senior unsecured credit facility - due 2021
Debt Instrument [Line Items]
Debt instrument, maturity year	2021
4.7% senior notes due 2025
Debt Instrument [Line Items]
Debt instrument, interest rate	4.70%
Debt instrument, maturity year	2025
3.95% senior notes due 2027
Debt Instrument [Line Items]
Debt instrument, interest rate	3.95%
Debt instrument, maturity year	2027

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Debt - Additional Information (Details) € in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 EUR (€) tranche	Dec. 31, 2015 USD ($)	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Debt instrument, covenant terms	In accordance with the terms of the Facility, we are required to maintain a minimum interest coverage ratio of 3.50 (based on the ratio of EBITDA, as defined in the Facility Agreement, to interest expense) and may not exceed a maximum leverage ratio of 3.50 (based on the ratio of total debt to EBITDA) throughout the term of the Facility.
Borrowings	$ 1,160,000,000				$ 947,400,000
Term loan
Debt Instrument [Line Items]
Face value | €			€ 60
Debt instrument, interest rate terms	The loan has two tranches of which the first tranche for €25 million has a rate of Euribor +1.2% and a final maturity date of June 30, 2023, and a second tranche for €35 million has a rate of Euribor +1.25% with a final maturity date of June 30, 2024. The loans are payable in annual installments that began on June 30, 2017, for the first tranche, and beginning on June 30, 2019, for the second. There is a zero percent floor on the Euribor.
Number of tranches | tranche			2
Debt instrument, payment terms	annual
Term loan | Euribor
Debt Instrument [Line Items]
Debt instrument, floor rate			0.00%
Level 2 | Term loan
Debt Instrument [Line Items]
Outstanding amount under loan	$ 59,400,000
Maximum
Debt Instrument [Line Items]
Interest coverage ratio required to be maintained	350.00%
3.95% senior unsecured notes due 2027
Debt Instrument [Line Items]
Face value		$ 400,000,000
Debt instrument, interest rate	3.95%	3.95%
Debt instrument, maturity year		2027
Increase in senior notes interest rate		0.25%
Effective interest rate	3.88%
3.95% senior unsecured notes due 2027 | Level 2
Debt Instrument [Line Items]
Fair value of senior notes	$ 400,300,000
3.95% senior unsecured notes due 2027 | Maximum
Debt Instrument [Line Items]
Debt instrument, interest rate		5.95%
3.95% senior unsecured notes due 2027 | Treasury Lock | Interest Lock Agreement
Debt Instrument [Line Items]
Percentage of effective interest rate benefit	0.25%
4.7% senior unsecured notes due 2025
Debt Instrument [Line Items]
Face value				$ 300,000,000
Debt instrument, interest rate				4.70%
Debt instrument, maturity year				2025
Increase in senior notes interest rate				0.25%
Effective interest rate	4.83%
4.7% senior unsecured notes due 2025 | Level 2
Debt Instrument [Line Items]
Fair value of senior notes	$ 314,100,000
4.7% senior unsecured notes due 2025 | Maximum
Debt Instrument [Line Items]
Debt instrument, interest rate				6.70%
Senior unsecured credit facility- revolving loan due 2021
Debt Instrument [Line Items]
Debt instrument expiration period	2021-06
Variable interest rate basis	LIBOR + 1.25%.
Spread on variable interest rate basis	1.25%
Debt instrument, interest rate terms	The interest rate for the Facility at March 31, 2019 was LIBOR + 1.25%. The interest rate ranges from LIBOR + 0.875% to a maximum of LIBOR + 1.875%, depending on the Company’s leverage ratio.
Maximum amount available under credit facility to issue letters of credit	$ 40,000,000
Letters of credit outstanding under credit facility	0
Undrawn availability under credit facility	$ 286,000,000
Weighted average interest rate	4.17%
Senior unsecured credit facility- revolving loan due 2021 | Level 2
Debt Instrument [Line Items]
Borrowings	$ 414,000,000
Senior unsecured credit facility- revolving loan due 2021 | Maximum
Debt Instrument [Line Items]
Face value	$ 700,000,000
Variable interest rate basis	LIBOR + 1.875%
Spread on variable interest rate basis	1.875%
Senior unsecured credit facility- revolving loan due 2021 | Minimum
Debt Instrument [Line Items]
Variable interest rate basis	LIBOR + 0.875
Spread on variable interest rate basis	0.875%
Tranche one | Term loan
Debt Instrument [Line Items]
Face value | €			€ 25
Variable interest rate basis	Euribor +1.2%
Spread on variable interest rate basis			1.20%
Debt instrument, maturity date	Jun. 30, 2023
Beginning date of first required loan payment	Jun. 30, 2017
Tranche two | Term loan
Debt Instrument [Line Items]
Face value | €			€ 35
Variable interest rate basis	Euribor +1.25%
Spread on variable interest rate basis			1.25%
Debt instrument, maturity date	Jun. 30, 2024
Beginning date of first required loan payment	Jun. 30, 2019

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Derivative Financial Instruments - Additional Information (Details) € in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) item	Mar. 31, 2018 USD ($)	Mar. 31, 2019 EUR (€)	Dec. 31, 2018 USD ($)	Dec. 31, 2017
Derivative [Line Items]
Foreign currency unrealized losses expected to be reclassified into earnings over next twelve months	$ (6,500,000)
Foreign currency unrealized gains expected to be reclassified into earnings over next twelve months, tax	$ 2,500,000
3.95% senior unsecured notes due 2027
Derivative [Line Items]
Debt instrument, interest rate	3.95%		3.95%		3.95%
Interest Rate Swap Agreements
Derivative [Line Items]
Derivative fixed interest rate (as a percent)	0.51%		0.51%
Carrying value / fair value of derivative liabilities included in other liabilities	$ 700,000			$ 500,000
Interest Rate Swap Agreements | U.S. dollars
Derivative [Line Items]
Variable Rate Basis	LIBOR
Interest Rate Swap Agreements | EUR
Derivative [Line Items]
Variable Rate Basis	Euribor
Swaps maturing September 2019
Derivative [Line Items]
Average fixed interest rate (as a percent)	1.09%		1.09%
Interest Rate Swap Final Maturity Period One
Derivative [Line Items]
Final maturity date of swap amortization	Jun. 30, 2023
Interest Rate Swap Final Maturity Period Two
Derivative [Line Items]
Final maturity date of swap amortization	Jun. 30, 2024
Treasury Lock | Interest Lock Agreement | 3.95% senior unsecured notes due 2027
Derivative [Line Items]
Percentage of reduction in effective interest rate on senior notes	0.25%
Foreign Currency Forward Exchange Contracts
Derivative [Line Items]
Number of credit contingency features | item	0
Foreign Currency Forward Exchange Contracts | Cash Flow Hedging
Derivative [Line Items]
Gains (losses) in other comprehensive income, effective portion	$ (3,600,000)	$ 8,400,000
Commodity Swap Agreements
Derivative [Line Items]
Carrying value / fair value of derivative liabilities included in other liabilities	4,600,000
Notional amount	20,100,000
Designated as Hedging Instrument | Interest Rate Swap Agreements
Derivative [Line Items]
Floating rate obligation	50,000,000		€ 52.9
Carrying value / fair value of derivative assets included in other assets	300,000			600,000
Designated as Hedging Instrument | Foreign Currency Forward Exchange Contracts
Derivative [Line Items]
Carrying value / fair value of derivative assets included in other assets	1,100,000			1,300,000
Carrying value / fair value of derivative liabilities included in other liabilities	17,100,000			15,300,000
Notional amount	418,500,000			416,500,000
Designated as Hedging Instrument | Foreign Currency Forward Exchange Contracts | Other Noncurrent Liabilities
Derivative [Line Items]
Carrying value / fair value of derivative liabilities included in other liabilities	10,000,000
Designated as Hedging Instrument | Foreign Currency Forward Exchange Contracts | Cash Flow Hedging
Derivative [Line Items]
Net gain (loss) recognized in gross margin	(1,800,000)	2,300,000
Not Designated as Hedging Instrument | Foreign Currency Forward Exchange Contracts
Derivative [Line Items]
Carrying value / fair value of derivative assets included in other assets	100,000			$ 300,000
Carrying value / fair value of derivative liabilities included in other liabilities	200,000
Foreign exchange net gains (losses) on derivative contracts not designated as hedges	$ 300,000	$ 2,000,000

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Derivative Financial Instruments - Schedule of Change in Fair Value of Foreign Currency Forward Exchange Contracts Under Hedge Designations (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Derivative [Line Items]
Balance		$ 1,322.0	$ 1,495.1
Losses (gains) reclassified to net sales		1.4
Balance		1,372.4	1,562.5
Designated as Hedging Instrument
Derivative [Line Items]
Balance	[1]	(5.8)
Losses (gains) reclassified to net sales	[1]	1.6
Balance	[1]	(8.5)
Designated as Hedging Instrument | Foreign Currency Forward Exchange Contracts
Derivative [Line Items]
Balance		(10.6)	8.6
Losses (gains) reclassified to net sales		1.3	(1.6)
(Decrease) increase in fair value		(2.1)	6.4
Balance		$ (11.4)	$ 13.4

[1] Includes forward foreign exchange contracts, interest rate derivatives and commodity swaps.

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Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	24.00%
Provision for income taxes	$ 20.6	$ 14.1

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Fair Value Measurements - Additional Information (Details)	3 Months Ended
	Mar. 31, 2019 USD ($) item Liability
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Number of counterparties, which experienced significant downgrades | item	0
Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets	$ 0
Liabilities	$ 0
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value measurement with unobservable inputs reconciliation, number of liabilities | Liability	1
Level 3 | OPM Acquisition
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Acquisition of fair value liabilities, contingent consideration	$ 3,000,000
Level 2 | Fair Value Measured on Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	1,500,000
Derivative liabilities	22,600,000
Level 2 | Fair Value Measured on Recurring Basis | Interest Rate Swap Agreements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	$ 300,000
Derivative Asset, Measurement Input [Extensible List]	hxl:MeasurementInputLIBORYieldCurvesMember
Derivative liabilities	$ 700,000
Derivative Liability, Measurement Input [Extensible List]	hxl:MeasurementInputLIBORYieldCurvesMember
Level 2 | Fair Value Measured on Recurring Basis | Foreign Currency Forward Exchange Contracts
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative assets	$ 1,200,000
Derivative Asset, Measurement Input [Extensible List]	hxl:MeasurementInputLIBORYieldCurvesMember
Derivative liabilities	$ 17,300,000
Derivative Liability, Measurement Input [Extensible List]	us-gaap:MeasurementInputQuotedPriceMember
Level 2 | Fair Value Measured on Recurring Basis | Commodity Swap Agreements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative liabilities	$ 4,600,000
Derivative Liability, Measurement Input [Extensible List]	us-gaap:MeasurementInputQuotedPriceMember

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Revenue - Additional Information (Details)	3 Months Ended
	Mar. 31, 2019
Revenue From Contract With Customer [Abstract]
Revenue recognition, description of timing	As our production cycle is typically six months or less, it is expected that goods related to the revenue recognized over time will be shipped and billed within the current year.

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Revenue - Schedule of Revenue by Market (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation Of Revenue [Line Items]
Consolidated Net Sales	$ 609.9	$ 540.1
Commercial Aerospace
Disaggregation Of Revenue [Line Items]
Consolidated Net Sales	415.5	382.7
Space & Defense
Disaggregation Of Revenue [Line Items]
Consolidated Net Sales	107.8	90.1
Industrial
Disaggregation Of Revenue [Line Items]
Consolidated Net Sales	$ 86.6	$ 67.3

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Revenue - Schedule of Activity Related to Contract Assets (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Change in Contract with Customer Asset [Line Items]
Balance at December 31, 2018	$ 50.5
Net revenue billed	3.2
Balance at March 31, 2019	53.7
Composite Materials
Change in Contract with Customer Asset [Line Items]
Balance at December 31, 2018	12.9
Net revenue billed	(1.4)
Balance at March 31, 2019	11.5
Engineered Products
Change in Contract with Customer Asset [Line Items]
Balance at December 31, 2018	37.6
Net revenue billed	4.6
Balance at March 31, 2019	$ 42.2

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Segment Information - Schedule of Operating Segment Reporting Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Total sales	$ 609.9	$ 540.1
Operating income	102.8	82.4
Depreciation and amortization	38.7	29.8
Stock-based compensation	11.1	9.9
Accrual basis additions to capital expenditures	57.5	45.3
Corporate & Other and Intersegment Elimination
Segment Reporting Information [Line Items]
Total sales	(19.3)	(19.2)
Operating income	(24.5)	(18.5)
Stock-based compensation	6.2	5.6
Composite Materials
Segment Reporting Information [Line Items]
Total sales	487.7	444.6
Composite Materials | Intersegment Elimination
Segment Reporting Information [Line Items]
Total sales	19.2	19.2
Composite Materials | Operating Segments
Segment Reporting Information [Line Items]
Total sales	506.9	463.8
Operating income	112.5	91.0
Depreciation and amortization	34.9	27.5
Stock-based compensation	4.1	3.6
Accrual basis additions to capital expenditures	56.8	45.3
Engineered Products
Segment Reporting Information [Line Items]
Total sales	122.2	95.5
Engineered Products | Intersegment Elimination
Segment Reporting Information [Line Items]
Total sales	0.1
Engineered Products | Operating Segments
Segment Reporting Information [Line Items]
Total sales	122.3	95.5
Operating income	14.8	9.9
Depreciation and amortization	3.8	2.3
Stock-based compensation	0.8	$ 0.7
Accrual basis additions to capital expenditures	$ 0.7

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Segment Information - Schedule of Goodwill and Intangible Assets by Segment (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Changes in the carrying amount of gross goodwill and other purchased intangibles
Balance at the beginning of the period	$ 142.3
Amortization Expense	1.7
Additions	145.8
Currency translation adjustments	(3.6)
Balance at the end of the period	286.2
Composite Materials
Changes in the carrying amount of gross goodwill and other purchased intangibles
Balance at the beginning of the period	98.2
Amortization Expense	0.5
Currency translation adjustments	(2.1)
Balance at the end of the period	96.6
Engineered Products
Changes in the carrying amount of gross goodwill and other purchased intangibles
Balance at the beginning of the period	44.1
Amortization Expense	1.2
Additions	145.8
Currency translation adjustments	(1.5)
Balance at the end of the period	$ 189.6

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Segment Information - Additional Information (Details)	3 Months Ended
	Mar. 31, 2019 USD ($)
Segment Reporting [Abstract]
Goodwill	$ 189,400,000
Intangible assets	96,800,000
Goodwill and intangible asset impairment	$ 0

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Accumulated Other Comprehensive Loss - Schedule of Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Accumulated Other Comprehensive Income Loss [Line Items]
Balance		$ 1,322.0	$ 1,495.1
Other comprehensive loss before reclassifications		(7.3)
Amounts reclassified from accumulated other comprehensive loss		1.4
Total other comprehensive (loss) income		(5.9)	35.6
Balance		1,372.4	1,562.5
Accounting Standards Update 2018-02
Accumulated Other Comprehensive Income Loss [Line Items]
Total other comprehensive (loss) income		(5.9)
Unrecognized Defined Benefit and Postretirement Plan Costs
Accumulated Other Comprehensive Income Loss [Line Items]
Balance		(15.4)
Other comprehensive loss before reclassifications		(0.2)
Amounts reclassified from accumulated other comprehensive loss		(0.2)
Total other comprehensive (loss) income		(0.4)
Balance		(15.8)
Change in Fair Value of Derivatives Products
Accumulated Other Comprehensive Income Loss [Line Items]
Balance	[1]	(5.8)
Other comprehensive loss before reclassifications	[1]	(4.3)
Amounts reclassified from accumulated other comprehensive loss	[1]	1.6
Total other comprehensive (loss) income	[1]	(2.7)
Balance	[1]	(8.5)
Foreign Currency Translation
Accumulated Other Comprehensive Income Loss [Line Items]
Balance		(86.8)
Other comprehensive loss before reclassifications		(2.8)
Total other comprehensive (loss) income		(2.8)
Balance		(89.6)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income Loss [Line Items]
Balance		(108.0)	(45.0)
Total other comprehensive (loss) income		(5.9)	35.6
Balance		$ (113.9)	$ (7.8)

[1] Includes forward foreign exchange contracts, interest rate derivatives and commodity swaps.

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Accumulated Other Comprehensive Loss - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Unrecognized Net Defined Plan Costs
Accumulated Other Comprehensive Income Loss [Line Items]
Reclassification adjustment from AOCI on unrecognized net defined benefit and postretirement plan costs	$ 0.2
Change in Fair Value of Derivatives Products | Foreign Currency Forward Exchange Contracts
Accumulated Other Comprehensive Income Loss [Line Items]
Reclassification adjustment from AOCI on derivatives, net gains	(1.8)
Reclassification adjustment from AOCI on derivatives, tax benefit	0.4
Change in Fair Value of Derivatives Products | Commodity Swap Agreements
Accumulated Other Comprehensive Income Loss [Line Items]
Reclassification adjustment from AOCI on derivatives, net gains	0.7
Reclassification adjustment from AOCI on derivatives, tax benefit	0.2
Change in Fair Value of Derivatives Products | Interest Rate Swap Agreements
Accumulated Other Comprehensive Income Loss [Line Items]
Reclassification adjustment from AOCI on derivatives, net gains	0.4
Reclassification adjustment from AOCI on derivatives, tax benefit	$ 0.1

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Acquisitions - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Business Acquisition [Line Items]
Business acquisition, cash paid	$ 158.4
Goodwill	189.4
ARC Technologies LLC
Business Acquisition [Line Items]
Business acquisition, cash paid	158.4
Business acquisition, future payment	5.4
ARC Technologies LLC | Engineered Products
Business Acquisition [Line Items]
Goodwill	82.8
Recognized intangiable assets and liabilities	$ 63.0

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Commitments and Contingencies - Additional Information (Details)	1 Months Ended		3 Months Ended
	Aug. 31, 2017 PRP	Mar. 31, 2016 USD ($) mi	Mar. 31, 2019 USD ($) entity mi	Dec. 31, 2018 USD ($)
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies			$ 2,600,000	$ 2,700,000
Aggregate environmental related accruals included in current accrued liabilities			700,000	800,000
Amount which is better estimate within range			0	0
Remediation accrual balance if accrued at high end of the range of possible outcomes			16,000,000
Omega Chemical Corporation Superfund Site, Whittier | California
Loss Contingencies [Line Items]
Accrual for environmental loss contingencies			$ 300,000	300,000
Minimum | Omega Chemical Corporation Superfund Site, Whittier | California
Loss Contingencies [Line Items]
Contribution to waste tonnage (as a percent)			1.21%
Maximum | Omega Chemical Corporation Superfund Site, Whittier | California
Loss Contingencies [Line Items]
Contribution to waste tonnage (as a percent)			2.07%
Lower Passaic River
Loss Contingencies [Line Items]
Number of entities, in addition to Hexcel, who received a directive from the New Jersey Department of Environmental Protection | entity			48
Length of river to perform a Remedial Investigation/Feasibility Study (“RI/FS”) of environmental conditions | mi			17
Number of identified non governmental potentially responsible parties | PRP	120
Accrual for environmental loss contingencies			$ 2,100,000	$ 2,100,000
Lower Passaic River | Minimum
Loss Contingencies [Line Items]
Portion of the river for which Record of Decision setting forth the EPA's selected remedy (in miles) | mi		8
Expected cost of capping and dredging of the lower eight miles of the river by EPA		$ 970,000,000
Lower Passaic River | Maximum
Loss Contingencies [Line Items]
Portion of the river for which Record of Decision setting forth the EPA's selected remedy (in miles) | mi		9
Expected cost of capping and dredging of the lower eight miles of the river by EPA		$ 2,070,000,000

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Commitments and Contingencies - Schedule of Product Warranty (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Changes in accrued product warranty cost
Balance at the beginning of the period	$ 4.8
Warranty expense	2.4
Deductions and other	(0.3)
Balance at the end of the period	$ 6.9