Segment Information

12 Months Ended

Dec. 31, 2019

Note 18 — Segment Information

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

In addition to the product line-based segmentation of our business, we also monitor sales into our principal end markets as a means to understanding demand for our products.

The following table presents financial information on our segments as of December 31, 2019, 2018 and 2017, and for the years then ended.

(In millions)	Composite Materials			Engineered Products		Corporate & Other			Total
Third-party sales
2019	$	1,863.1		$	492.6	$	—		$	2,355.7
2018		1,770.5		418.6		—				2,189.1
2017		1,597.1		376.2		—				1,973.3
Intersegment sales
2019	$	83.4		$	0.8	$	(84.2	)	$	—
2018	74.6			0.1			(74.7	)	—
2017	63.6			0.4			(64.0	)	—
Operating income (loss)
2019	$	411.3		$	72.0	$	(58.1	)	$	425.2
2018	373.8				50.6		(53.2	)	371.2
2017	359.4				48.7		(57.5	)	350.6
Depreciation and amortization
2019	$	126.5		$	15.1	$	0.1		$	141.7
2018		113.9		9.1		0.1				123.1
2017		96.8		7.5		0.2				104.5
Equity in earnings from affiliated companies
2019	$	(0.3	)	$	4.3	$	(0.3	)	$	3.7
2018	—			5.6		—				5.6
2017	—			3.3		—			3.3
Other expense (income), net
2018	$	—		$	7.7	$	—		$	7.7
Segment assets
2019	$	2,669.6		$	465.2	$	(6.2	)	$	3,128.6
2018		2,501.9		272.9			49.3			2,824.1
2017		2,415.5		279.1		86.3				2,780.9
Investments in affiliated companies
2019	$	2.2		$	36.1	$	8.2		$	46.5
2018	2.4			32.1			14.2			48.7
2017	—			26.5			21.2		47.7
Accrual basis additions to property, plant and equipment
2019	$	185.8		$	5.2	$	—		$	191.0
2018	173.5			5.6		—				179.1
2017		270.3			14.1	—				284.4

Geographic Data

Net sales and long-lived assets, by geographic area, consisted of the following for the three years ended December 31, 2019, 2018 and 2017:

(In millions)	2019		2018		2017
Net Sales by Geography (a):
United States	$	1,246.9	$	1,055.9	$	937.3
International
France	364.3		369.8		335.7
Spain	166.6		189.5			187.0
Germany		221.3		216.0		206.0
United Kingdom	168.9		167.3		160.4
Austria	110.1		111.4		86.1
Other	77.6		79.2		60.8
Total international		1,108.8		1,133.2		1,036.0
Total consolidated net sales	$	2,355.7	$	2,189.1	$	1,973.3
Net Sales to External Customers (b):
United States	$	1,083.3	$	909.8	$	806.6
International
Germany	212.8		233.1		217.7
France		191.9	201.7		161.5
Spain		188.0	194.1		199.4
United Kingdom		77.4		79.0	80.1
Other		602.3		571.4		508.0
Total international		1,272.4		1,279.3		1,166.7
Total	$	2,355.7	$	2,189.1	$	1,973.3
Long-lived Assets (c):
United States	$	1,609.2	$	1,332.1	$	1,304.4
International
France	387.1		397.7		402.7
United Kingdom	151.9		146.1		151.6
Spain	57.2		56.6		61.7
Other	84.3		86.3		94.6
Total international	680.5			686.7		710.6
Total consolidated long-lived assets	$	2,289.7	$	2,018.8	$	2,015.0

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

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

(c)	Long-lived assets primarily consist of property, plant and equipment, net and goodwill at December 31, 2019, 2018 and 2017. Also included at December 31, 2019 are right of use assets related to operating leases.

Significant Customers and Suppliers

Approximately 39%, 41% and 44% of our 2019, 2018 and 2017 net sales, respectively, were to Airbus and its subcontractors. Of the 39% of overall sales to Airbus and its subcontractors in 2019, 36% related to Commercial Aerospace market applications and 3% related to Space & Defense market applications. Approximately 25% of our net sales for 2019, 2018 and 2017 were to Boeing and related subcontractors. Of the 25% of overall sales to Boeing and its subcontractors in 2019, 23% related to Commercial Aerospace market applications and 2% related to Space & Defense market applications. In the Composite Materials segment approximately 17% of sales for 2019 and 16% for 2018 and 2017, were to Boeing and its subcontractors. Approximately 44%, 46% and 50% of sales for 2019, 2018 and 2017, respectively were to Airbus and its subcontractors. In the Engineered Products segment approximately 55%, 63% and 64% of sales for 2019, 2018 and 2017, respectively were to Boeing and its subcontractors.

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

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