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What changed in HEXCEL CORP /DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HEXCEL CORP /DE/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+126 added−118 removedSource: 10-K (2025-02-05) vs 10-K (2024-02-07)

Top changes in HEXCEL CORP /DE/'s 2024 10-K

126 paragraphs added · 118 removed · 104 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

55 edited+5 added−10 removed92 unchanged
Biggest changeThis carbon fiber line is expected to be qualified to produce carbon fiber for aerospace markets in late 2025 or early 2026. Additionally, we completed the expansion of our Engineered Products facility in Casablanca, Morocco as we doubled the size of the facility to meet growing demand.
Biggest changeAdditionally in 2023, we completed the expansion of our Engineered Products facility in Casablanca, Morocco as we doubled the size of the facility to meet growing aerospace demand. 9 We formulate a variety of resin systems that are tailored to specific applications and support the process for manufacturing composite parts.
Our diversity recruitment efforts include targeted university recruitment and attendance at conferences promoting racial and gender diversity in engineering, which have historically been a major source of candidates for our summer internship program and Early Career Program for new hires.
Our recruitment efforts include targeted university recruitment and attendance at conferences promoting racial and gender diversity in engineering, which have historically been a major source of candidates for our summer internship program and Early Career Program for new hires.
Inclusion of information in this Annual Report on Form 10-K is not an indication that the subject or information is material to our business or operating results Such forward-looking statements include, but are not limited to: (a) the estimates and expectations based on aircraft production rates provided by Airbus, Boeing and others and the revenues we may generate from an aircraft model or program; (b) expectations with regard to the impact of regulatory activity related to the Boeing 737 MAX or Boeing 787 on our revenues; (c) expectations with regard to raw material cost and availability; (d) expectations of composite content on new commercial aircraft programs and our share of those requirements; (e) expectations regarding revenues from space and defense applications, including whether certain programs might be curtailed or discontinued; (f) expectations regarding sales for industrial applications; (g) expectations regarding cash generation, working capital trends, and inventory levels; (h) expectations as to the level of capital expenditures, capacity, including the timing of completion of capacity expansions, and qualification of new products; (i) expectations regarding our ability to improve or maintain margins; (j) expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy; (k) projections regarding our tax rate; (l) expectations with regard to the continued impact of macroeconomic factors or geopolitical issues or conflicts; (m) expectations regarding our strategic initiatives, including our sustainability goals; (n) expectations with regard to the effectiveness of cybersecurity measures; (o) expectations regarding the outcome of legal matters or the impact of changes in laws or regulations; and (p) our expectations of financial results for 2024 and beyond.
Inclusion of information in this Annual Report on Form 10-K is not an indication that the subject or information is material to our business or operating results Such forward-looking statements include, but are not limited to: (a) the estimates and expectations based on aircraft production rates provided by Airbus, Boeing and others and the revenues we may generate from an aircraft model or program; (b) expectations with regard to the impact of regulatory activity related to the Boeing 737 MAX on our revenues; (c) expectations with regard to raw material cost and availability; (d) expectations of composite content on new commercial aircraft programs and our share of those requirements; (e) expectations regarding revenues from space and defense applications, including whether certain programs might be curtailed or discontinued; (f) expectations regarding sales for industrial applications; (g) expectations regarding cash generation, working capital trends, and inventory levels; (h) expectations as to the level of capital expenditures, capacity, including the timing of completion of capacity expansions, and qualification of new products; (i) expectations regarding our ability to improve or maintain margins; (j) expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy; (k) projections regarding our tax rate; (l) expectations with regard to the continued impact of macroeconomic factors or geopolitical issues or conflicts; (m) expectations regarding our strategic initiatives, including our sustainability goals; (n) expectations with regard to the effectiveness of cybersecurity measures; (o) expectations regarding the outcome of legal matters or the impact of changes in laws or regulations; and (p) our expectations of financial results for 2025 and beyond.
Any reference to our website in this Annual Report on Form 10-K is intended to be an inactive textual reference only. We make available, free of charge through our website, our Form 10-Ks, 10-Qs and 8-Ks, and any amendments to these forms, as soon as reasonably practicable after filing with, or furnishing to, the SEC.
Any reference to our website in this Annual Report on 12 Form 10-K is intended to be an inactive textual reference only. We make available, free of charge through our website, our Form 10-Ks, 10-Qs and 8-Ks, and any amendments to these forms, as soon as reasonably practicable after filing with, or furnishing to, the SEC.
Our strategic and operational decision making is influenced by our commitment to reduce the environmental impact of our operations, including our carbon footprint, air and water emissions and waste reduction. We continue to pursue initiatives to improve our emissions profile through operational efficiency improvements that 10 reduce our reliance on fossil fuels and increase our use of renewable power.
Our strategic and operational decision making is influenced by our commitment to reduce the environmental impact of our operations, including our carbon footprint, air and water emissions and waste reduction. We continue to pursue initiatives to improve our emissions profile through operational efficiency improvements that reduce our reliance on fossil fuels and increase our use of renewable power.
Space applications for advanced composites include solid rocket booster cases, fairings and payload doors for both government funded and commercial launch vehicles, and satellite buss and solar arrays for military and commercial satellites. 8 Another growth generating trend for Hexcel is the further penetration of composites in rotorcraft blades, including both new and replacement blades.
Space applications for advanced composites include solid rocket booster cases, fairings and payload doors for both government funded and commercial launch vehicles, and satellite buss and solar arrays for military and commercial satellites. Another growth generating trend for Hexcel is the further penetration of composites in rotorcraft blades, including both new and replacement blades.
Our Industrial customers have always desired to order their requirements on as short a lead-time as possible. As a result, twelve-month order backlog is not a meaningful trend indicator for us. Raw Materials and Production Activities Our manufacturing operations are in many cases vertically integrated.
Our Industrial customers, in particular, have always desired to order their requirements on as short a lead-time as possible. As a result, twelve-month order backlog is not a meaningful trend indicator for us. Raw Materials and Production Activities Our manufacturing operations are in many cases vertically integrated.
Information contained on or accessible through, including any reports available on, our website is not a part of, and is not incorporated by reference into, this Annual Report on Form 10-K or any other report or document we file with the Securities and Exchange Commission (“SEC”).
Information contained on or accessible through our website, including any reports available therein, is not a part of, and is not incorporated by reference into, this Annual Report on Form 10-K or any other report or document we file with the Securities and Exchange Commission (“SEC”).
For additional information regarding certain 13 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 this report.
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 this report.
At this time, we are not subject to carbon emission trading programs at any of our facilities, though we are actively monitoring country and region-specific regulations and trends to ensure pricing and capital expenditures are incorporated into our future product portfolio planning.
At this time, we are not subject to carbon emission trading programs at any of our facilities, though we are actively monitoring country and region-specific regulations and trends to ensure future potential pricing and capital expenditures are incorporated into our product portfolio planning.
Such factors include, but are not limited to, the following: the extent of the impact of macroeconomic factors or geopolitical issues or conflicts; reductions in sales to any significant customers, particularly Airbus or Boeing, including related to regulatory activity or public scrutiny impacting the Boeing 737 MAX or the Boeing 787; our ability to effectively adjust production and inventory levels to align with customer demand; our ability to effectively motivate, retain and hire the necessary workforce; the availability and cost of raw materials, including the impact of supply shortages and disruptions and inflation; our ability to successfully implement or realize our strategic initiatives, including our sustainability goals and any restructuring or alignment activities in which we may engage; changes in sales mix; changes in current pricing due to cost levels; changes in aerospace delivery rates; changes in government defense procurement budgets; timely new product development or introduction; our ability to install, staff and qualify necessary capacity or complete capacity expansions to meet customer demand; cybersecurity-related risks, including the potential impact of breaches or intrusions; currency exchange rate fluctuations; changes in political, social and economic conditions, including the effect of change in global trade policies, such as sanctions; work stoppages or other labor disruptions; our ability to successfully complete any strategic acquisitions, investments or dispositions; compliance with environmental, health, safety and other related laws and regulations, including those related to climate change; the effects of natural disasters or other severe weather events, which may be worsened by the impact of climate change, and other severe catastrophic events, including any public health crisis; and the unexpected outcome of legal matters or impact of changes in laws or regulations .
Such factors include, but are not limited to, the following: the extent of the impact of macroeconomic factors or geopolitical issues or conflicts; reductions in sales to any significant customers, particularly Airbus or Boeing, including related to regulatory activity or public scrutiny impacting the Boeing 737 MAX; our ability to effectively adjust production and inventory levels to align with customer demand; our ability to effectively motivate, retain and hire the necessary workforce; the availability and cost of raw materials, including the impact of supply disruptions and inflation; our ability to successfully implement or realize our strategic initiatives, including our sustainability goals and any restructuring or alignment activities in which we may engage; changes in sales mix; changes in current pricing due to cost levels; changes in aerospace delivery rates; changes in government defense procurement budgets; timely new product development or introduction; our ability to install, staff and qualify necessary capacity or complete capacity expansions to meet customer demand; cybersecurity-related risks, including the potential impact of breaches or intrusions; currency exchange rate fluctuations; changes in political, social and economic conditions, including the effect of change in global trade policies, tariff rates, economic sanctions and embargoes; work stoppages or other labor disruptions; our ability to successfully complete any strategic acquisitions, investments or dispositions; compliance with environmental, health, safety and other related laws and regulations, including those related to climate change; the effects of natural disasters or other severe weather events, which may be worsened by the impact of climate change, and other severe catastrophic events, including any public health crisis; and the unexpected outcome of legal matters or impact of changes in laws or regulations .
The Industrial market also includes sales to major end user sub-markets, in order of size based on our 2023 sales: general industrial applications (including those sold through distributors), transportation (e.g., automobiles, mass transit and high-speed rail, and marine applications) and consumer electronics, wind energy, and recreational equipment (e.g., skis and snowboards, bicycles and hockey sticks).
The Industrial market also includes sales to major end user sub-markets, in order of size based on our 2024 sales: general industrial applications (including those sold through distributors), transportation (e.g., automobiles, mass transit and high-speed rail, and marine applications) and consumer electronics, wind energy, and recreational equipment (e.g., skis and snowboards, bicycles and hockey sticks).
Structural Adhesives: We manufacture and market a comprehensive range of HexBond® film and paste adhesives. These structural adhesives, which bond metal to metal and composites and honeycomb structures, are used in the aerospace industry and for many industrial applications. Honeycomb: HexWeb® honeycomb is a lightweight, cellular structure generally composed of a sheet of nested hexagonal cells.
Structural Adhesives: We manufacture and market a comprehensive range of HexBond® film and paste adhesives. These structural adhesives, which bond metal to metal and composites and honeycomb structures, are used in the aerospace industry and for select industrial applications. Honeycomb: HexWeb® honeycomb is a lightweight, cellular structure generally composed of a sheet of nested hexagonal cells.
The increasing global emphasis on emissions reduction supports the adoption of our advanced composite light weighting solutions for transportation applications.
Conversely, the increasing global emphasis on emissions reduction supports the adoption of our advanced composite light weighting solutions for transportation applications.
The following table identifies the key customers and the major manufacturing facilities of the Engineered Products segment: 6 ENGINEERED PRODUCTS KEY CUSTOMERS MANUFACTURING FACILITIES The Boeing Company Amesbury, Massachusetts Bell (1) Burlington, Washington CTRM Aero Composites Casablanca, Morocco General Dynamics Kent, Washington General Electric Pottsville, Pennsylvania GKN South Windsor, Connecticut Lockheed Martin Welkenraedt, Belgium Sikorsky (2) Spirit Aerosystems RTX (1) A Textron Company (2) A Lockheed Martin Company Significant Customers Approximately 39%, 38% and 33% of our 2023, 2022 and 2021 net sales, respectively, were to Airbus and its subcontractors.
The following table identifies the key customers and the major manufacturing facilities of the Engineered Products segment: 6 ENGINEERED PRODUCTS KEY CUSTOMERS MANUFACTURING FACILITIES The Boeing Company Amesbury, Massachusetts Bell (1) Burlington, Washington CTRM Aero Composites Casablanca, Morocco General Dynamics Kent, Washington General Electric Pottsville, Pennsylvania GKN South Windsor, Connecticut Lockheed Martin Welkenraedt, Belgium Sikorsky (2) Spirit Aerosystems RTX (1) A Textron Company (2) A Lockheed Martin Company Significant Customers Approximately 40%, 39% and 38% of our 2024, 2023 and 2022 net sales, respectively, were to Airbus and its subcontractors.
The Engineered Products segment has historically included a 50% ownership interest in a Malaysian joint venture, Aerospace Composites Malaysia Sdn. Bhd. (“ACM”) with Boeing Worldwide Operations Limited. Hexcel historically purchased certain semi-finished composite components from the joint venture and performed inspection and additional assembly work prior to direct delivery to Boeing production lines.
The Engineered Products segment, prior to 2024, had included a 50% ownership interest in a Malaysian joint venture, Aerospace Composites Malaysia Sdn. Bhd. (“ACM”) with Boeing Worldwide Operations Limited. Hexcel historically purchased certain semi-finished composite components from the joint venture and performed inspection and additional assembly work prior to direct delivery to Boeing production lines.
We are qualified to supply materials to a broad range of military aircraft, commercial helicopter and space programs, including the Lockheed Martin F-35 (Lightning), Sikorsky CH-53K (King Stallion), Bell-Boeing V-22 (Osprey) tilt rotor aircraft, Sikorsky UH-60 Black Hawk, Dassault Rafale and Airbus A400M military transport.
We are qualified to supply materials to a broad range of military aircraft, commercial helicopter and space programs, including the Lockheed Martin F-35 (Lightning), Sikorsky CH-53K (King Stallion), Bell-Boeing V-22 (Osprey) tilt rotor aircraft, Sikorsky UH-60 Black Hawk, Dassault Rafale, Airbus A400M and Embraer KC-390 military transport aircraft.
The following table identifies the principal products and examples of the primary end-uses from the Engineered Products segment: SEGMENT PRODUCTS PRIMARY END-USES ENGINEERED PRODUCTS Composite Structures Aircraft structures and finished aircraft components, including wing to body fairings, wing panels, flight deck panels, door liners, rotorcraft blades, spars and tip caps Engineered Honeycomb Aircraft structural sub-components and semi-finished components used in rotorcraft blades, engine nacelles, and aircraft surfaces (flaps, wings, elevators and fairings) RF Interference Control Military and aerospace applications Net sales for the Engineered Products segment to third-party customers were $314.8 million in 2023, $298.0 million in 2022, and $305.3 million in 2021, which represented approximately 20% of our net sales each year.
The following table identifies the principal products and examples of the primary end-uses from the Engineered Products segment: SEGMENT PRODUCTS PRIMARY END-USES ENGINEERED PRODUCTS Composite Structures Aircraft structures and finished aircraft components, including wing to body fairings, wing panels, flight deck panels, door liners, rotorcraft blades, spars and tip caps Engineered Honeycomb Aircraft structural sub-components and semi-finished components used in rotorcraft blades, engine nacelles, and aircraft surfaces (flaps, wings, elevators and fairings) RF Interference Control Military and aerospace applications Net sales for the Engineered Products segment to third-party customers were $372.0 million in 2024, $314.8 million in 2023, and $298.0 million in 2022, which represented approximately 20% of our net sales each year.
We are committed to efforts to increase diversity and foster an inclusive work environment that supports our global workforce through recruiting efforts, equitable compensation policies, and educational workshops to promote a positive and collaborative culture.
We are committed to efforts to foster an inclusive work environment that supports our global workforce through recruiting efforts, equitable compensation policies, and educational workshops to promote a positive and collaborative culture.
The following tables identify the key customers and the major manufacturing facilities of the Composite Materials segment: COMPOSITE MATERIALS KEY CUSTOMERS Aernnova Daher Nordam Airbus Dassault Northrop Grumman Bell (1) Embraer Pratt & Whitney (2) Blizzard FACC Safran BMW General Electric Sikorsky (4) The Boeing Company GKN Syensqo Bombardier Gulfstream (3) Spirit Aerosystems CFAN Leonardo Toray Collins Aerospace (2) Lockheed Martin RTX CTRM Aero Composites Mubea Vestas (1) A Textron Company (2) A RTX Company (3) A General Dynamics Company (4) A Lockheed Martin Company 5 MANUFACTURING FACILITIES Casa Grande, Arizona Neumarkt, Austria Dagneux, France Parla, Spain Decatur, Alabama Roussillon, France Duxford, England Salt Lake City, Utah Illescas, Spain Seguin, Texas Leicester, England Stade, Germany Les Avenières, France Vert-le-Petit, France Net sales for the Composite Materials segment to third-party customers were $1,474.2 million in 2023, $1,279.7 million in 2022, and $1,019.4 million in 2021, which represented about 80% of our net sales each year.
The following tables identify the key customers and the major manufacturing facilities of the Composite Materials segment: COMPOSITE MATERIALS KEY CUSTOMERS Aernnova Dassault Northrop Grumman Airbus Embraer Pratt & Whitney (2) Bell (1) FACC Safran The Boeing Company General Electric Sikorsky (4) Bombardier GKN Syensqo CFAN Gulfstream (3) Spirit Aerosystems Collins Aerospace (2) Leonardo Toray CTRM Aero Composites Lockheed Martin RTX Daher Nordam (1) A Textron Company (2) A RTX Company (3) A General Dynamics Company (4) A Lockheed Martin Company 5 MANUFACTURING FACILITIES Casa Grande, Arizona Neumarkt, Austria Dagneux, France Parla, Spain Decatur, Alabama Roussillon, France Duxford, England Salt Lake City, Utah Illescas, Spain Seguin, Texas Leicester, England Stade, Germany Les Avenières, France Vert-le-Petit, France Net sales for the Composite Materials segment to third-party customers were $1.531.0 million in 2024, $1,474.2 million in 2023, and $1,279.7 million in 2022, which represented about 80% of our net sales each year.
The blades include Composite Materials products such as carbon fiber, prepregs, and honeycomb core to improve blade performance. In addition, our Engineered Products segment provides specialty value added services such as machining, sub-assembly, and even full blade manufacturing for rotorcraft. Industrial The Industrial market represented 10% of our 2023 net sales.
The blades include Composite Materials products such as carbon fiber, prepregs, and honeycomb core to improve blade performance. In addition, our Engineered Products segment provides specialty value added services such as machining, sub-assembly, and even full blade manufacturing for rotorcraft. Industrial The Industrial market represented 7% of our 2024 net sales.
We employ a minimal number of contract workers. Approximately 30% of employees in the United States and the majority of those in Europe are represented by unions or works’ councils. We believe that our relations with employees, unions and works’ councils are 12 good.
We employ a minimal number of contract workers. Approximately 26% of employees in the United States and the majority of those in Europe are represented by unions or works’ councils. We believe that our relations with employees, unions and works’ councils are good.
We continually focus on innovation that will help our customers reduce their cycle time and increase their production through-put, including lower curing temperatures, faster curing times, and enhancing the flow characteristics of the resin formulations, particularly for infusion manufacturing processes.
We continually focus on innovation that will help our customers reduce their cycle time and increase their production through-put, including lower curing temperatures, faster curing times, and enhancing the flow characteristics of the resin formulations, particularly for out-of-autoclave infusion and resin transfer molding manufacturing processes.
The following summaries describe the ongoing activities related to the Composite Materials and Engineered Products segments as of December 31, 2023.
The following summaries describe the ongoing activities related to the Composite Materials and Engineered Products segments as of December 31, 2024.
The revenue from this market includes automotive, a wide variety of recreational products, consumer electronics, marine, wind turbine blades and other industrial applications. A number of these applications represent emerging opportunities for our products. In developing new applications, we seek those opportunities where advanced composites technology offers significant benefits to the end user, often applications that demand high engineering performance.
The revenue from this market includes automotive, a wide variety of recreational products, consumer electronics, marine, wind turbine blades and other industrial applications. Some of these applications represent emerging opportunities for our products. In developing new applications, we seek those opportunities where advanced composites technology offers significant benefits to the end user, often applications that demand highly engineered performance.
All of the PAN we produce is for internal carbon fiber production. We utilized between 60% and 65% by value of the carbon fiber we produced in 2023 and between 65% and 70% in 2022 with the remainder of our output sold to third-party customers.
All of the PAN we produce is for internal carbon fiber production. We utilized between 60% and 65% by value of the carbon fiber we produced in both 2024 and 2023 with the remainder of our output sold to third-party customers.
Approximately 21% of these revenues were for business jets and regional and other commercial aircraft.
Approximately 20% of these revenues were for business jets and regional and other commercial aircraft.
We sell to three different markets: Commercial Aerospace, Space & Defense and Industrial. Commercial Aerospace The Commercial Aerospace industry is our largest user of advanced composites. Commercial Aerospace represented 60% of our 2023 net sales. Approximately 79% of these revenues can be identified as sales to Airbus, Boeing, and their subcontractors for the production of commercial aircraft.
We sell to three different markets: Commercial Aerospace, Space & Defense and Industrial. Commercial Aerospace The Commercial Aerospace industry is our largest user of advanced composites. Commercial Aerospace represented 63% of our 2024 net sales. Approximately 80% of these revenues can be identified as sales to Airbus, Boeing, and their subcontractors for the production of commercial aircraft.
Of the 15% of overall sales to Boeing and its subcontractors in 2023, 12% related to Commercial Aerospace market applications and 3% related to Space & Defense market applications. Markets Our products are sold for a broad range of end-uses where durability, strength and weight are important factors to our customers.
Of the 15% of overall sales to Boeing and its subcontractors in 2024, 13% related to Commercial Aerospace market applications and 2% related to Space & Defense market applications. Markets Our products are sold for a broad range of end-uses where durability, strength and weight are important factors to our customers.
The total number of full-time employees and contract workers as of December 31, 2022 and 2021 was 5,328 and 4,863, respectively. Other Information Our internet website is www.hexcel.com.
The total number of full-time employees and contract workers as of December 31, 2023 and 2022 was 5,590 and 5,328, respectively. Other Information Our internet website is www.hexcel.com.
Employee levels are managed to align with business demand and, while we have experienced and continue to expect tight labor markets, management believes it currently has sufficient human capital to operate our business successfully. As of December 31, 2023, we employed 5,590 full-time employees and contract workers: 2,936 in the United States and 2,654 in other countries.
Employee levels are managed to align with business demand and, while we have experienced and continue to expect tight labor markets, management believes it currently has sufficient human capital to operate our business successfully. As of December 31, 2024, we employed 5,894 full-time employees and contract workers: 3,120 in the United States and 2,774 in other countries.
For aircraft that are in the development or ramp-up stage we will have sales as much as several years in advance of the aircraft entry-into-service. Airbus and Boeing combined backlog at December 31, 2023 was 14,814 aircraft, or a 16.9% increase compared to December 31, 2022.
For aircraft that are in the development or ramp-up stage we will have sales as much as several years in advance of the aircraft entry-into-service. Airbus and Boeing combined backlog at December 31, 2024 was 14,903 aircraft, or a 1.0% increase compared to December 31, 2023.
Competition In the production and sale of advanced composites, we compete with a number of U.S. and international companies on a worldwide basis. The broad markets for composites are highly competitive, and we have focused on both specific sub-markets and specialty products within markets.
In addition, we operate various sales representation offices globally. 11 Competition In the production and sale of advanced composites, we compete with a number of U.S. and international companies on a worldwide basis. The broad markets for composites are highly competitive, and we have focused on both specific sub-markets and specialty products within markets.
We believe that our policies, practices, and procedures are properly designed to prevent unreasonable risk of environmental damage and associated financial liability. To date, environmental control regulations have not had a significant adverse effect on our overall operations and nearly 90% of our sites as of December 31, 2023 are ISO14001:2015 certified.
We believe that our policies, practices, and procedures are properly designed to prevent unreasonable risk of environmental damage and associated financial liability. To date, environmental control regulations have not had a significant adverse effect on our overall operations and approximately 91% of our sites as of December 31, 2024 are ISO14001:2015 certified under a Corporate umbrella certification.
These laws, rules and regulations may impose significant costs of compliance on the Company and may impact our competitiveness through restricting our ability to do business in certain places or with certain entities and individuals.
These laws, rules and regulations may impose significant costs of compliance on the Company and may impact our competitiveness through restricting our ability to do business in certain places or with certain entities and individuals. Any failure to comply with trade regulations could limit our ability to conduct business internationally.
Of the 39% of overall sales to Airbus and its subcontractors in 2023, 35% related to Commercial Aerospace market applications and 4% related to Space & Defense market applications. Approximately 15%, 14% and 16% of our 2023, 2022 and 2021 net sales, respectively, were to Boeing and its subcontractors.
Of the 40% of overall sales to Airbus and its subcontractors in 2024, 37% related to Commercial Aerospace market applications and 3% related to Space & Defense market applications. Approximately 15%, 15% and 14% of our 2024, 2023 and 2022 net sales, respectively, were to Boeing and its subcontractors.
The aggregate demand by Space & Defense customers is primarily a function of procurement of military aircraft that utilize advanced composites, primarily by the United States and certain Western European governments, including both commercial and military rotorcraft.
The aggregate demand by Space & Defense customers is primarily a function of procurement of military aircraft, rotorcraft and space craft that utilize advanced composites, including the United States, a number of Western European countries, as well as a select number of other countries globally.
We believe that the patents and know-how rights currently owned or licensed by Hexcel are adequate for the conduct of our business. We do not believe that our business would be materially affected by the expiration of any single patent or series of related patents, or by the termination of any single license agreement or series of related license agreements.
We do not believe that our business would be materially affected by the expiration of any single patent or series of related patents, or by the termination of any single license agreement or series of related license agreements.
In early 2023, we completed the construction of our newest and largest R&T Center of Excellence in Salt Lake City, Utah which supports next-generation composite technology development across our business including applications for the Commercial Aerospace, Space & Defense and Industrial markets.
Our newest R&T Center of Excellence in Salt Lake City, Utah, which was completed in early 2023, supports next-generation composite technology development across our business including applications for the Commercial Aerospace, Space & Defense and Industrial markets. The 100,000 square foot facility is adjacent to our existing carbon fiber and prepreg manufacturing operations in Salt Lake City.
Additionally, the International Civil Aviation Organization (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) emission reduction mandates for international aviation become mandatory later this decade, which may influence fleet renewal in the coming years.
Additionally, the International Civil Aviation Organization (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) emission reduction mandates for international aviation becomes mandatory on January 1, 2027, which may influence fleet renewal.
With the increasing demand for carbon fiber, particularly in aerospace applications, in recent years we increased our PAN and carbon fiber capacity to serve the growing needs of our customers and our own downstream products. After a new production line starts operating, it can take up to a year to be certified for aerospace applications.
With the increasing demand for carbon fiber, particularly in aerospace applications, in recent years we increased our PAN and carbon fiber capacity to serve the growing needs of our customers and our own downstream products. In early 2023, we announced that we resumed construction of a new carbon fiber line in Decatur, AL.
Space & Defense The Space & Defense market represented 30% of our 2023 net sales. The Space & Defense market has historically been an innovator in the use of, and source of significant demand for, advanced composites.
These applications also exhibit increasing utilization of composite materials with each new generation of aircraft. Space & Defense The Space & Defense market represented 30% of our 2024 net sales. The Space & Defense market has historically been an innovator in the use of, and source of significant demand for, advanced composites.
ITEM 1. Bu siness. General Hexcel Corporation and its subsidiaries (herein referred to as “Hexcel”, “the Company”, “we”, “us”, or “our”), is a global leader in advanced lightweight composites technology.
ITEM 1. Bu siness. General Hexcel Corporation and its subsidiaries (herein referred to as “Hexcel”, “the Company”, “we”, “us”, or “our”), is a global leader in advanced lightweight composites technology. We propel the future of flight and transportation through excellence in advanced material lightweighting solutions that create a better world for us all.
We formulate a variety of resin systems that are tailored to specific applications and support the process for manufacturing composite parts. The type of epoxy and curative used in the resin systems vary depending on the application being considered, including the required service temperature, mechanical performance, and rate of cure.
The type of epoxy and curative used in the resin systems vary depending on the application being considered, including the required service temperature, mechanical performance, and rate of cure.
The Engineered Products segment is comprised of lightweight high strength composite structures, radio frequency/electromagnetic interference (“RF/EMI”) and microwave absorbing materials, engineered core and specialty machined honeycomb products with added functionality and thermoplastic additive manufacturing. We continue to monitor developments in ongoing geopolitical issues and conflicts globally.
The Engineered Products segment is comprised of lightweight high strength composite structures, radio frequency/electromagnetic interference (“RF/EMI”) and microwave absorbing materials, engineered core and specialty machined honeycomb products with added functionality and thermoplastic additive manufacturing. We serve international markets through manufacturing facilities, sales offices and representatives located in the Americas, Europe, Asia Pacific, India, and Africa.
Any failure to comply with trade regulations could limit our ability to conduct business internationally. 11 Sales and Marketing A staff of salaried marketing managers, product managers and sales personnel sell and market our products directly to customers worldwide. We also use independent authorized distributors for certain products, markets, and regions. In addition, we operate various sales representation offices globally.
Sales and Marketing A staff of salaried marketing managers, product managers and sales personnel sell and market our products directly to customers worldwide. We also use independent authorized distributors for certain products, markets, and regions.
The UH-60 wide chord blade program and blades for the V-22 were the two largest blade programs in 2023 and 2022. CH-53K is a future growth program, including the composite helicopter blades and new helicopter programs in development which use Hexcel composites in prototypes.
The Sikorsky Black Hawk wide chord blade program was the largest blade program in 2024 and 2023. Hexcel composites are being used in prototypes of new military and civilian helicopters globally. CH-53K is a future growth program, 8 including the composite helicopter blades and new helicopter programs in development which use Hexcel composites in prototypes.
We have implemented sustainable energy sourcing within certain sites, as we work with our energy suppliers to increase sources of renewable power and install on-site solar panels at our manufacturing sites in Neumarkt, Austria, Casa Grande, Arizona, and Casablanca, Morocco.
We procure renewable power through our energy suppliers and at several sites, through power purchase agreements (PPA). We also work with our energy suppliers to provide on-site 10 renewable power including the installation of on-site solar panels at our manufacturing sites in Neumarkt, Austria, Casa Grande, Arizona, and Casablanca, Morocco.
We have applied this same approach to our product life cycle, implementing circular economic principles to reduce waste – both in our manufacturing and product packaging.
The generation of solar power reduces our demand for fossil-fuel powered electricity, which supports our carbon and greenhouse gas emission reduction goals. We have applied this same approach to our product life cycle, implementing circular economic principles to reduce waste – both in our manufacturing and product packaging.
As part of Boeing's supply chain optimization, this assembly work was transferred overseas in stages in 2020 and 2021 to other parts of the Boeing supply chain, including ACM. Effective January 1, 2022, all of this work was transferred, and Hexcel no longer purchases semi-finished components from ACM.
As part of Boeing's supply chain optimization, this assembly work was transferred overseas in stages in 2020 and 2021 to other parts of the Boeing supply chain, including ACM. Under the ACM joint venture structure, 50% of ACM net income accrued to Hexcel. In December 2023, Hexcel sold its 50% interest in ACM to Boeing.
For example, aircraft operators subject to the European Union Emissions Trading Scheme (EU-ETS) are facing significantly higher costs to purchase carbon credits for compliance compared to the cost a few years ago, which may influence fleet replacement plans to purchase lightweight new aircraft.
In addition, pressure is increasing on airlines to replace their aging fleet with more fuel efficient and quieter aircraft to be more environmentally responsible. For example, aircraft operators subject to the European Union Emissions Trading Scheme (EU-ETS) are facing high costs to purchase carbon credits for compliance, which may influence fleet replacement plans to purchase lightweight new aircraft.
Our broad product range includes carbon fiber, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, resins, engineered core and composite structures for use in commercial aerospace, space and defense, and industrial applications. We serve international markets through manufacturing facilities, sales offices and representatives located in the Americas, Europe, Asia Pacific, India, and Africa.
Our broad product range includes carbon fiber, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, resins, engineered core and composite structures for use in commercial aerospace, space and defense, and industrial applications. We are a manufacturer of products within a single industry: Advanced Composites. We have two reportable segments: Composite Materials and Engineered Products.
In addition to competing directly with companies offering similar products, we compete with producers of substitutes for composites such as metal, structural foam, and wood. Depending upon the material and markets, relevant competitive factors include technology, product performance, historical database of usage, delivery, service, price, customer preference for sole sourcing and customer preferred processes.
In addition to competing directly with companies offering similar products, we compete with producers of substitutes for composites such as metal, structural foam, and wood.
Consistent with market demand, we have been placing more emphasis on higher performing products and cost-effective production processes while seeking continually to improve the consistency of our products and our capital efficiency. Towards this end, we have entered into formal and informal alliances, as well as licensing and teaming arrangements, with several customers, suppliers, external agencies, universities and laboratories.
Our products rely primarily on our expertise in materials science, textiles, process engineering and polymer chemistry. Consistent with market demand, we have been placing more emphasis on higher performing products and cost-effective production processes while seeking continually to improve the consistency of our products and our capital efficiency.
We believe that we possess unique capabilities to design, develop, manufacture, and qualify composite materials and structures, including trade secrets and extensive internal knowledge gained from decades of experience. It is our policy to actively enforce our proprietary rights.
Towards this end, we have entered into formal and informal alliances, as well as licensing and teaming arrangements, with several customers, suppliers, external agencies, universities and laboratories. We believe that we possess unique capabilities to design, develop, manufacture, and qualify composite materials and structures, including trade secrets and extensive internal knowledge gained from decades of experience.
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We propel the future of flight, energy generation, transportation, and recreation through excellence in providing innovative high-performance material solutions that are lighter, stronger and tougher, helping to create a better world for us all.
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We continue to monitor developments in ongoing geopolitical issues and conflicts globally.
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We also had a presence in Malaysia where we were a partner in a joint venture which manufactures composite structures for Commercial Aerospace applications. In December 2023, we sold our interest in the joint venture. We are a manufacturer of products within a single industry: Advanced Composites. We have two reportable segments: Composite Materials and Engineered Products.
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The backlogs are at near record levels reflecting strong demand as well as continued production challenges and constraints within the commercial aerospace supply chain that has been limiting the production of new aircraft. The balance of our Other Commercial Aerospace sales is related to business jets and regional aircraft manufacture, and other commercial aircraft applications.
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Under the ACM joint venture structure, 50% of ACM net income accrued to Hexcel. In December 2023, Hexcel sold its 50% interest in ACM to Boeing and received net proceeds of $44.7 million.
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We had previously paused construction on this line in early 2020. This carbon fiber line is expected to be qualified to produce carbon fiber for aerospace markets in 2028. After a new production line starts operating, it can take up to a year to be certified for aerospace applications.
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In addition, pressure is increasing on airlines to replace their aging fleet with more fuel efficient and quieter aircraft to be more environmentally responsible.
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It is our policy to actively enforce our proprietary rights. We believe that the patents and know-how rights currently owned or licensed by Hexcel are adequate for the conduct of our business.
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Airbus and Boeing began increasing production rates in 2022 for select aircraft platforms as air travel recovers and demand for latest-generation fuel efficient aircraft increases. As supply chains recover, disruptions with obtaining and training labor and constraints on receiving raw materials across the aerospace supply chain have tempered the near-term growth in aircraft production rates, leading to higher backlogs.
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Depending upon the material and markets, relevant competitive factors include technology, product performance, historical database of usage, on-time delivery, service, price, customer preference for sole sourcing and the ease-of-use of our material to support customer-preferred processes. We believe that new competitors face significant barriers to entry into many of our markets.
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The balance of our Other Commercial Aerospace sales is related to business jets and regional aircraft manufacture, and other commercial aircraft applications. These applications also exhibit increasing utilization of composite materials with each new generation of aircraft, such as the composite wing on the large-cabin Falcon 10X business jet that Dassault announced in 2022.
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However, these lines can start supplying carbon fiber for many industrial applications within a shorter time period. 9 In early 2023, we announced that we resumed construction of a new carbon fiber line in Decatur, AL. We had previously paused construction on this line in early 2020.
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The 100,000 square foot facility is adjacent to our existing carbon fiber and prepreg manufacturing operations in Salt Lake City. Our products rely primarily on our expertise in materials science, textiles, process engineering and polymer chemistry.
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The generation of solar power reduces our demand for fossil-fuel powered electricity, which supports our carbon and greenhouse gas emission reduction goals. We also procure renewable power through our energy suppliers and at several sites, through power purchase agreements (PPA).
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We believe that new competitors face significant barriers to entry into many of our markets.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeCertain provisions of our certificate of incorporation, bylaws, and the DGCL have anti-takeover effects and could delay, discourage, defer or prevent a tender offer or takeover attempt that a stockholder might consider to be in the stockholders’ best interests .
Biggest changeCertain provisions of our certificate of incorporation, bylaws, and the DGCL have anti-takeover effects and could delay, discourage, defer or prevent a tender offer or takeover attempt that a stockholder might consider to be in the stockholders’ best interests . 21 Certain provisions of our certificate of incorporation and bylaws and the DGCL may have the effect of delaying or preventing changes in control if our board of directors determines that such changes in control are not in the best interests of the Company and its stockholders.
Such provisions include, among other things, those that: • prohibit stockholders from taking action by written consent and do not permit stockholders to call a special meeting; • authorize the board of directors, without further action by the stockholders, to issue shares of preferred stock in one or more series, and with respect to each series, to fix the number of shares constituting that series, and establish the rights and terms of that series; • establish advance notice procedures for stockholders to submit proposals and nominations of candidates for election to the board of directors to be brought before a stockholders meeting; • allow our directors to establish the size of the board of directors (so long as the board of directors consists of at least three and no more than fifteen directors) and fill vacancies on the board of directors created by an increase in the number of directors (subject to the rights of the holders of any series of preferred stock to elect additional directors under specified circumstances); • do not provide stockholders cumulative voting rights with respect to director elections; • provide that the bylaws may be amended by the board of directors without stockholder approval, to the extent permitted by law; and • do not opt out of Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in a “business combination” with any interested stockholder (generally speaking, a stockholder who holds 15% or more 21 of our voting stock) for three years from the date such stockholder becomes an interested stockholder, unless certain conditions are met.
Such provisions include, among other things, those that: • prohibit stockholders from taking action by written consent and do not permit stockholders to call a special meeting; • authorize the board of directors, without further action by the stockholders, to issue shares of preferred stock in one or more series, and with respect to each series, to fix the number of shares constituting that series, and establish the rights and terms of that series; • establish advance notice procedures for stockholders to submit proposals and nominations of candidates for election to the board of directors to be brought before a stockholders meeting; • allow our directors to establish the size of the board of directors (so long as the board of directors consists of at least three and no more than fifteen directors) and fill vacancies on the board of directors created by an increase in the number of directors (subject to the rights of the holders of any series of preferred stock to elect additional directors under specified circumstances); • do not provide stockholders cumulative voting rights with respect to director elections; • provide that the bylaws may be amended by the board of directors without stockholder approval, to the extent permitted by law; and • do not opt out of Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in a “business combination” with any interested stockholder (generally speaking, a stockholder who holds 15% or more of our voting stock) for three years from the date such stockholder becomes an interested stockholder, unless certain conditions are met.
We currently pay quarterly dividends; however, our board of directors regularly evaluates our capital allocation strategy and dividend policy, and any future determination to pay, maintain or increase cash dividends will be at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements and 20 contractual or legal restrictions, including the requirements of our revolving credit facility and other financing agreements to which we may be a party.
We currently pay quarterly dividends; however, our board of directors regularly evaluates our capital allocation strategy and dividend policy, and any future determination to pay, maintain or increase cash dividends will be at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements and contractual or legal restrictions, including the requirements of our revolving credit facility and other financing agreements to which we may be a party.
While we believe we have identified and discussed below the material risks affecting our business, there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be material that may adversely affect our business, financial condition, results of operations or cash flows in the future, and may require significant management time and attention.
While we believe we have identified and 13 discussed below the material risks affecting our business, there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be material that may adversely affect our business, financial condition, results of operations or cash flows in the future, and may require significant management time and attention.
Due to necessary cost reduction measures or changes in the industry and markets in which we 16 compete, we may decide to implement additional restructuring or alignment activities in the future, such as closing plants, idling certain equipment or operations, or making additions, reductions or other changes to our management or workforce.
Due to necessary cost reduction measures or changes in the industry and markets in which we compete, we may decide to implement additional restructuring or alignment activities in the future, such as closing plants, idling certain equipment or operations, or making additions, reductions or other changes to our management or workforce.
Reductions in space and defense spending could result in a decline in our sales. Space and defense production that has occurred in recent years may not be sustained, individual programs important to Hexcel may be cancelled, production may not continue to grow or may decrease and the increased demand for composite-intensive programs may not continue.
Reductions in space and defense spending could result in a decline in our sales. Space and defense production that has occurred in recent years may not be sustained, individual programs important to Hexcel may be cancelled, production may not continue to grow or may decrease and the increased demand for composite-intensive programs 14 may not continue.
As a result, the local currency margins of goods manufactured with costs denominated in local currency, yet sold in U.S. dollars, will vary with fluctuations in currency exchange rates, reducing when the U.S. dollar weakens against the Euro and British pound sterling.
As a result, the local currency margins of goods manufactured with costs denominated in local currency, yet sold in U.S. dollars, will vary with fluctuations in currency exchange rates, reducing when the U.S. dollar weakens against the Euro and British 17 pound sterling.
Compliance with greenhouse gas and climate change initiatives has resulted, and may in the future result in, additional costs to us, including increased energy, transportation and raw material costs, additional taxes, 18 reduced emission allowances or additional restrictions on production or operations.
Compliance with greenhouse gas and climate change initiatives has resulted, and may in the future result in, additional costs to us, including increased energy, transportation and raw material costs, additional taxes, additional compliance costs, reduced emission allowances or additional restrictions on production or operations.
Restructuring and/or alignment activities can also create unanticipated consequences, such as instability or distraction among our workforce, and we cannot provide any assurance that any restructuring or alignment efforts that we undertake will result in the intended benefits.
Restructuring and/or alignment activities can also create unanticipated consequences, such as instability or distraction among our workforce, and we cannot provide any assurance that any restructuring or alignment efforts that we undertake 16 will result in the intended benefits.
Our manufacturing plants use energy, including electricity and natural gas, and some of our plants emit amounts of greenhouse gases that may in the future be affected by these legislative and regulatory efforts.
Our manufacturing plants use energy, including electricity and natural gas, and some of our plants emit amounts of greenhouse gases that are, and may in the future be affected by these legislative and regulatory efforts.
The loss of, or significant reduction in, purchases by Airbus or Boeing or any of our other significant customers could materially impair our business, operating results, 14 prospects and financial condition.
The loss of, or significant reduction in, purchases by Airbus or Boeing or any of our other significant customers could materially impair our business, operating results, prospects and financial condition.
Future delays, or production cuts arising from the impact of macroeconomic events, geopolitical conditions, global conflict or supply chain and labor disruptions, in these or other major new customer programs could similarly impact our results. In addition, our customers continue to emphasize the need for cost reduction or other improvements in contract terms throughout the supply chain.
Future delays, or production cuts arising from the impact of macroeconomic events, geopolitical conditions, global conflict or supply chain and labor disruptions, in these or other major new customer programs could similarly impact our results. In addition, our customers emphasize the need for cost reduction or other improvements in contract terms throughout the supply chain.
We have substantial international operations subject to uncertainties that could affect our operating results. We believe that revenue from sales outside the U.S. will continue to account for a material portion of our total revenue for the foreseeable future. In 2023, 50% of our production and 59% of our customer sales occurred outside of the United States.
We have substantial international operations subject to uncertainties that could affect our operating results. We believe that revenue from sales outside the U.S. will continue to account for a material portion of our total revenue for the foreseeable future. In 2024, 50% of our production and 59% of our customer sales occurred outside of the United States.
If we are unable to attract and retain a qualified and diverse workforce, we may be unable to maintain our competitive position and our future success could be materially adversely affected. We have engaged in restructuring and alignment activities from time to time and there can be no assurance that our efforts will have the intended effects.
If we are unable to attract and retain a qualified and inclusive workforce, we may be unable to maintain our competitive position and our future success could be materially adversely affected. We have engaged in restructuring and alignment activities from time to time and there can be no assurance that our efforts will have the intended effects.
Our business could be negatively impacted by sustainability/environmental, social and governance (“ESG”) matters and/or our reporting of such matters . There is an increasing focus from certain investors, customers, employees, and other stakeholders concerning sustainability/ESG matters, and an increasing number of investors are requiring companies to disclose sustainability/ESG policies, practices and metrics.
Our business could be negatively impacted by sustainability/environmental, social and governance (“ESG”) matters and/or our reporting of such matters . There is an increasing focus from certain investors, customers, employees, and other stakeholders concerning sustainability matters, and an increasing number of stakeholders are requiring companies to disclose sustainability and related policies, practices and metrics.
These requirements govern, among other things, emissions to air, discharge to waters, the generation, handling, storage, transport, treatment and disposal of regulated materials and waste, and remediation of contaminated sites. We have made, and will continue to make, capital and other expenditures in order to comply with these laws and regulations.
These requirements govern, among other things, emissions to air, discharge to waters, the generation, handling, storage, transport, treatment and disposal of regulated materials and waste, and remediation of contaminated sites. We have made, and will continue to make, capital and other expenditures to comply with these laws and regulations.
During recent years, as a result of the challenges created by global supply and transportation constraints, ongoing global conflict, the COVID-19 pandemic and market volatility, we experienced supply disruptions and cost increases and anticipate that the risk of supply disruptions and material shortages, as well as cost increases, may continue.
During recent years, as a result of the challenges created by global supply and transportation constraints, ongoing global conflict and market volatility, we experienced supply disruptions and cost increases and anticipate that the risk of supply disruptions and material shortages, as well as cost increases, may continue.
A number of governmental bodies have introduced or are contemplating legislative or regulatory changes in response to climate change, including regulating greenhouse gas emissions. The continued lack of consistent climate legislation creates economic and regulatory uncertainty.
A number of governmental bodies have introduced or are contemplating legislative or regulatory changes in response to climate change, including regulating greenhouse gas emissions and increasing mandatory disclosures. The continued lack of consistent climate legislation creates economic and regulatory uncertainty.
Additionally, we may face reputational challenges in the event that our sustainability/ESG policies, practices and metrics do not meet the standards set by certain constituencies, which are often inconsistent in approach. In addition, from time to time, we communicate certain initiatives, targets or goals regarding sustainability/ESG matters.
Additionally, we may face reputational challenges in the event that our sustainability and other environmental, social and governance policies, practices and metrics do not meet the standards set by certain constituencies, which are often inconsistent in approach. In addition, from time to time, we communicate certain initiatives, targets or goals regarding sustainability/ESG matters.
Reductions in demand for commercial aircraft or a delay in deliveries could result from many factors, including delays in the startup or ramp-up of new programs, suspension or discontinuation of current commercial aircraft programs, changes in the propensity for the general public to travel by air (including as a result of terrorist events and any subsequent military response, a public health crisis or a global conflict), a significant change in the cost of aviation fuel, a change in technology resulting in the use of alternative materials, environmental concerns (including climate change), consolidation and liquidation of airlines, availability of funding for new aircraft purchases or leases, inventory corrections or disruptions throughout the supply chain and slower macroeconomic growth.
Ongoing pressures on build rates, or reductions in demand, for commercial aircraft or a delay in deliveries could result from many factors, including delays in the startup or ramp-up of new programs, suspension or discontinuation of current commercial aircraft programs, changes in the propensity for the general public to travel by air (including as a result of terrorist events and any subsequent military response, a public health crisis or a global conflict), a significant change in the cost of aviation fuel, a change in technology resulting in the use of alternative materials, environmental concerns (including climate change), consolidation and liquidation of airlines, availability of funding for new aircraft purchases or leases, inventory corrections or disruptions throughout the supply chain, labor disruptions and work stoppages and slower macroeconomic growth.
In 2022 and 2023, in addition to labor shortages, we also experienced increases in labor costs in the countries in which we operate due to rising inflation rates and localized labor market disruptions. Further increases in labor costs could significantly reduce our profit margins if we are unable to flow such costs through to our customers.
In recent years, in addition to labor shortages, we also experienced increases in labor costs in the countries in which we operate due to rising inflation rates and localized labor market disruptions. Further increases in labor costs could significantly reduce our profit margins if we are unable to flow such costs through to our customers.
Our business has historically been dependent on a highly trained workforce because of the complex nature of our products. As of December 31, 2023, approximately 30% of employees in the United States were unionized and the majority in Europe were represented by a works council.
Our business has historically been dependent on a highly trained workforce because of the complex nature of our products. As of December 31, 2024, approximately 26% of employees in the United States were unionized and the majority in Europe were represented by a works council.
In addition, some investors use ESG criteria to guide their investment strategies, and may not invest in us, or divest their holdings of us, if they believe our policies relating to ESG matters are inadequate or, on the other hand, have a negative response to such policies as a result of anti-ESG sentiment.
In addition, some investors use sustainability criteria to guide their investment strategies, and may not invest in us, or divest their holdings of us, if they believe our policies relating to environmental, social and governance matters are inadequate or, on the other hand, have a negative response to such policies as a result of anti-environmental, social and governance sentiment.
Given the nature of our business and our contracts (many of which are fixed price and of long duration), we may be unable to recover some of these increased costs or to offset such costs with greater than expected efficiencies.
Given the nature of our business and our contracts (many of which are fixed price and of long duration), we have been, and in the future may be unable to recover some of these increased costs or to offset such costs with greater than expected efficiencies.
In addition, the production of military aircraft depends upon defense budgets and the related demand for defense and related equipment. Approximately 30% of our sales in 2023 were to the Space & Defense market, of which approximately 80% were related to military programs in the United States and other countries.
In addition, the production of military aircraft depends upon defense budgets and the related demand for defense and related equipment. Approximately 30% of our 2024 sales were to the Space & Defense market, of which approximately 79% were related to military programs in the United States and other countries.
We expect we will be required to make additional investments in our facilities and equipment, change our manufacturing processes, obtain substitute materials, which may cost more or be less available or harder to source, fund offset projects, or undertake other costly activities.
We expect we will be required to make additional investments in our facilities and equipment, change our manufacturing processes, obtain substitute materials, which may cost more or be less available or harder to source, fund offset projects, or undertake other costly activities as a result of these laws and regulations.
Our business, financial position, results of operations and cash flows have been and may continue to be adversely impacted by the global macroeconomic environment, which has experienced, and continues to experience, extraordinary challenges, including high rates of inflation; increasing interest rates; widespread disruptions in supply chains; workforce challenges, including labor shortages; and market volatility.
Risks Related to Our Operations The global macroeconomic environment could negatively impact our business and our financial position, results of operations and/or cash flows could be materially adversely affected . 15 Our business, financial position, results of operations and cash flows have been and may continue to be adversely impacted by the global macroeconomic environment, which has experienced, and continues to experience, extraordinary challenges, including high rates of inflation; increasing interest rates; widespread disruptions in supply chains; workforce challenges, including labor shortages; and market volatility.
For the years ended December 31, 2023 and December 31, 2022, approximately 39% and 38% of our total consolidated sales, respectively, were to Airbus, and its related subcontractors and approximately 15% and 14% of our total consolidated sales, respectively, were to Boeing and its related subcontractors.
For the years ended December 31, 2024 and December 31, 2023, approximately 40% and 39% of our total consolidated sales, respectively, were to Airbus, and its related subcontractors and approximately 15% and 15% of our total consolidated sales, respectively, were to Boeing and its related subcontractors.
In addition, although we are not experiencing direct material adverse effects on our business resulting from ongoing global conflicts, the global implications, including increased inflation, escalating energy costs, and constrained raw material availability, and thus increasing costs, as well as embargos on flights from certain countries, are impacting the global economy and the aerospace industry in particular. 17 Fluctuations in currency exchange rates may influence the profitability and cash flows of our business.
In addition, although we are not experiencing direct material adverse effects on our business resulting from ongoing global conflicts, the global implications, including increased inflation, escalating energy costs, and constrained raw material availability, and thus increasing costs, as well as embargos on flights from certain countries, are impacting the global economy and the aerospace industry in particular.
To the extent there are significant deferrals, cancellations, or reductions in demand that result in decreased aircraft build rates, it would have a negative impact on sales for our Commercial Aerospace products and as a result reduce our operating income. Approximately 60% of our sales for 2023 were derived from sales to the Commercial Aerospace industry.
Ongoing or additional deferrals, cancellations, or reductions in demand that result in decreased aircraft build rates would, if significant, have a negative impact on sales for our Commercial Aerospace products and as a result reduce our operating income. Approximately 63% of our sales for 2024 were derived from sales to the Commercial Aerospace industry.
In the Commercial Aerospace market, approximately 79%, and in the Space & Defense market, approximately 20%, of our 2023 sales were made to Airbus and Boeing and their related subcontractors.
In the Commercial Aerospace market, approximately 80%, and in the Space & Defense market, approximately 19%, of our 2024 sales were made to Airbus and Boeing and their related subcontractors.
In addition, we could be criticized for the scope of such initiatives, targets or goals or perceived as not acting responsibly in connection with these matters. Any such matters could have a material adverse effect on our business.
In addition, we could be criticized for the scope of such initiatives, targets or goals or perceived as not acting responsibly in connection with these matters. Any such matters could have a material adverse effect on our business. We may not be able to service our debt obligations or satisfy covenants included in our outstanding debt.
From time to time, we have responded to changes in our industry and the markets we serve, or other changes in our business, by restructuring or aligning our operations, including the closure of our Windsor, Colorado and Tianjin, China wind energy prepreg production facilities in 2020 and 2022, respectively, and the movement of our Research and Technology Center from Dublin, California to Salt Lake City, Utah.
From time to time, we have responded to changes in our industry and the markets we serve, or other changes in our business, by restructuring or aligning our operations, including the closure of our Tianjin, China wind energy prepreg production facility in 2022, the movement of our Research and Technology Center from Dublin, California to Salt Lake City, Utah, and the sale of our 50% interest in a Malaysian joint venture.
Our customers may require us to implement sustainability/ESG responsibility procedures or standards before they continue to do business with us.
Our customers may require us to implement sustainability or other environmental, social and governance responsibility procedures or standards before they continue to do business with us.
Our amended and restated bylaws (the “bylaws”) provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between us and our stockholders, which could discourage lawsuits against the Company and our directors and officers .
The 2018 share repurchase plan was fully utilized as of June 30, 2024. Our amended and restated bylaws (the “bylaws”) provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between us and our stockholders, which could discourage lawsuits against the Company and our directors and officers .
Our customers, partners, suppliers and subcontractors and others to whom we entrust confidential data, and on whom we rely to provide products and services, face similar threats and growing requirements, including ones for which others may seek to hold us responsible. We depend on such parties to implement adequate controls and safeguards to protect against and report cyber incidents.
Our customers, partners, vendors, suppliers, subcontractors and others to whom we entrust confidential data, and on whom we rely to provide products and services, face similar threats and growing requirements, including ones for which others may seek to hold us responsible.
Risks Related to Our Common Stock We cannot make any guarantees with respect to payment of dividends on, or repurchases of, our common stock.
A ratings downgrade could also limit our access to certain sources of debt financing. Risks Related to Our Common Stock We cannot make any guarantees with respect to payment of dividends on, or repurchases of, our common stock.
Even if successfully integrated, the acquired business may not achieve the results we expect or produce expected benefits in the time frame planned.
Even if successfully integrated, the acquired business may not achieve the results we expect or produce expected benefits in the time frame planned. In addition, we may not be able to successfully complete any strategic divestures in a timely manner, or at all.
We periodically need to renegotiate our collective bargaining and works council agreements, and any failure to negotiate new agreements or extensions in a timely manner could result in work stoppages or slowdowns. Our ability to hire, train, assimilate and retain a qualified workforce has also been impacted by the ongoing labor market disruptions.
We periodically need to renegotiate our collective bargaining and works council agreements, and any failure to negotiate new agreements or extensions in a timely manner could result in work stoppages or slowdowns.
At different times, both Airbus and Boeing have experienced various delays in the start and ramp up of several aircraft programs. In the past, these have delayed our expected growth, or our effective utilization of capacity installed for such growth.
At different times, both Airbus and Boeing have experienced various delays in the start and ramp up of several aircraft programs.
In addition, failure to comply with applicable regulations could result in fines or government investigations or actions, which could affect our business, financial condition, results of operations and cash flows. We could also face increased costs related to defending and resolving legal claims and other litigation related to climate change and the alleged impact of our operations on climate change.
In addition, failure to comply with applicable regulations could result in fines or government investigations or actions, which could affect our business, financial 18 condition, results of operations and cash flows.
Any deterioration in any of the cyclical markets we serve could adversely affect our financial performance and operating results.
Any deterioration in any of the cyclical markets we serve could adversely affect our financial performance and operating results. Since 2022, air traffic has continued to grow and led to record demand for aircraft.
There can be no assurance that we will repurchase stock at favorable prices. We resumed repurchases under our share repurchase program in the third quarter of 2023, following suspension of repurchases in April 2020; however, the repurchase program may be suspended or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value.
On February 19, 2024, our Board of Directors approved a $300 million share repurchase plan, which was in addition to the amount that remained available for repurchase under the existing 2018 share repurchase plan, however, the repurchase program may be suspended or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value.
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During both 2020 and 2021, due to the impact of the COVID-19 pandemic on Commercial Aerospace, we experienced a material decrease in demand, resulting in order cancellations and deferrals from our Commercial Aerospace customers, which resulted in decreased sales for our Commercial Aerospace products and reduced operating income for the years ended December 31, 2021 and 2020.
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However, supply chain challenges in the Commercial Aerospace industry, as well as labor disruptions and regulatory issues experienced by certain participants in the industry, continue to delay planned production and negatively impact aircraft build rates.
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In addition, we may not be able to successfully complete any strategic divestures in a timely manner, or at all. 15 Risks Related to Our Operations The global macroeconomic environment could negatively impact our business and our financial position, results of operations and/or cash flows could be materially adversely affected .
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For instance, both Boeing and Airbus have, in recent years, experienced difficulties meeting production goals due to supply chain delays, and, in fall 2024, Boeing experienced delays in 737 MAX and other aircraft production due to a strike by factory workers. In the past, these have delayed our expected growth, or our effective utilization of capacity installed for such growth.
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There is also the risk that we are unable to achieve our diversity, equity and inclusion objectives or, more broadly, to meet diversity or other sustainability goals increasingly required by our stockholders, customers, employees and other stakeholders.
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In addition, to successfully compete, we may need to implement artificial intelligence strategies for our products, which may be costly or ineffective, introduce errors, cause loss of intellectual property, and raise complex regulatory compliance, intellectual property and other issues.
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Certain provisions of our certificate of incorporation and bylaws and the DGCL may have the effect of delaying or preventing changes in control if our board of directors determines that such changes in control are not in the best interests of the Company and its stockholders.
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Recent labor activity in the aerospace industry, including union strikes and extended labor negotiations, may have an adverse impact on such efforts and may result in work stoppages or slowdowns, or increased labor costs. Our ability to hire, train, assimilate and retain a qualified workforce has also been impacted by the ongoing labor market disruptions.
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Fluctuations in currency exchange rates may influence the profitability and cash flows of our business.
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We could also face increased costs related to defending and resolving legal claims and other litigation related to climate change and the alleged impact of our operations on climate change.
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While we review cybersecurity capabilities with our top-tier suppliers and have implemented cybersecurity requirements in our standard supplier contract terms,” we do not control such third parties and our ability to monitor their cybersecurity is limited, we cannot ensure the cybersecurity measures they take will be sufficient to protect any information we share with them or prevent any disruption arising from a technology failure, cyberattack or other information or security breach.
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We depend on such parties to implement adequate controls and safeguards to protect against and report cyber incidents.
Added
At the same time, there also exists anti-environmental, social and governance sentiment among certain stakeholders and government institutions, and we may face scrutiny, reputational risk, lawsuits or market access restrictions from these parties regarding any such initiatives we have adopted.
Added
Our ability to meet our interest expense and debt service obligations will depend on our future performance, including the cash we generate from operating activities, which could be affected by financial, business, economic and other factors, including potential 20 changes in laws or regulations, industry conditions, industry supply and demand, customer preferences and pressure from competitors.
Added
If we are unable to meet our debt service obligations, including to repay or refinance debt as it becomes due, or we fail to comply with our financial and other negative covenants contained in the agreements governing our indebtedness, we may be required to refinance all or part of our debt, sell strategic assets at unfavorable prices, incur additional indebtedness or issue common stock or other equity securities, which we may not be able to do on acceptable terms or in amounts sufficient to meet our needs.
Added
If we are able to raise additional funds through the issuance of equity securities, such issuance would also result in dilution to our stockholders. Our inability to service our obligations or refinance our debt could have a material and adverse effect on our business, financial condition or operating results.
Added
In addition, we have been, and may continue to be, negatively impacted by high interest rates. In addition, the credit ratings of our debt could be subject to a downgrade. If a ratings downgrade were to occur, we could experience higher borrowing costs in the future and more restrictive debt covenants, which would reduce profitability and diminish operational flexibility.
Added
There can be no assurance that we will repurchase stock at favorable prices.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease portions of the facilities located in Casa Grande, Arizona; Pottsville, Pennsylvania; Parla, Spain; and Leicester, England. In addition to the facility in Amesbury, Massachusetts we purchased in 2023, we also lease land and a building at another location in Amesbury. We own all other remaining manufacturing facilities.
Biggest changeIn addition to the facility in Amesbury, Massachusetts we purchased in 2023, we also lease land and a building at another location in Amesbury. We own all other remaining manufacturing facilities.
Manufacturing Facilities Facility Location Segment Principal Products Total Square Footage United States: Amesbury, Massachusetts Engineered Products Microwave and RF Absorbing Composite Materials 202,100 Burlington, Washington Engineered Products Engineered Honeycomb Parts 252,124 Casa Grande, Arizona Composite Materials Honeycomb and Honeycomb Parts 443,123 Decatur, Alabama Composite Materials PAN Precursor (used to produce Carbon Fibers) 819,863 Kent, Washington Engineered Products Composite structures 486,400 Pottsville, Pennsylvania Engineered Products Engineered Honeycomb Parts 180,305 Salt Lake City, Utah Composite Materials Carbon Fibers; Prepregs 1,194,070 Seguin, Texas Composite Materials Fabrics; Specialty Reinforcements 228,815 South Windsor, Connecticut Engineered Products 3D printed parts 32,600 International: Casablanca, Morocco Engineered Products Engineered Honeycomb Parts 260,875 Dagneux, France Composite Materials Prepregs 213,698 Duxford, England Composite Materials Prepregs; Adhesives; Honeycomb and Honeycomb Parts 417,109 Illescas, Spain Composite Materials Carbon Fibers 58,986 Leicester, England Composite Materials Lightweight Multiaxials Fabrics 134,657 Les Avenières, France Composite Materials Fabrics; Specialty Reinforcements 490,000 Neumarkt, Austria Composite Materials Prepregs 159,791 Parla, Spain Composite Materials Prepregs 147,186 Roussillon, France Composite Materials PAN Precursor and Carbon Fibers 222,170 Stade, Germany Composite Materials Prepregs 154,268 Vert-le-Petit, France Composite Materials Pultruded profiles; Prepregs and Adhesives 70,944 Welkenraedt, Belgium Engineered Products Engineered Honeycomb Parts 235,326 We lease the land and buildings in South Windsor, Connecticut, and the land on which the Burlington, Washington and Roussillon, France facilities are located.
Manufacturing Facilities Facility Location Segment Principal Products Total Square Footage United States: Amesbury, Massachusetts Engineered Products Microwave and RF Absorbing Composite Materials 202,100 Burlington, Washington Engineered Products Engineered Honeycomb Parts 252,124 Casa Grande, Arizona Composite Materials Honeycomb and Honeycomb Parts 443,123 Decatur, Alabama Composite Materials PAN Precursor (used to produce Carbon Fibers) 819,863 Kent, Washington Engineered Products Composite structures 486,400 Pottsville, Pennsylvania Engineered Products Engineered Honeycomb Parts 180,305 Salt Lake City, Utah Composite Materials Carbon Fibers; Prepregs 1,365,000 Seguin, Texas Composite Materials Fabrics; Specialty Reinforcements 228,815 South Windsor, Connecticut Engineered Products 3D printed parts 32,600 International: Casablanca, Morocco Engineered Products Engineered Honeycomb Parts 333.832 Dagneux, France Composite Materials Prepregs 213,698 Duxford, England Composite Materials Prepregs; Adhesives; Honeycomb and Honeycomb Parts 417,109 Illescas, Spain Composite Materials Carbon Fibers 58,986 Leicester, England Composite Materials Lightweight Multiaxials Fabrics 134,657 Les Avenières, France Composite Materials Fabrics; Specialty Reinforcements 490,000 Neumarkt, Austria Composite Materials Prepregs 159,791 Parla, Spain Composite Materials Prepregs 147,186 Roussillon, France Composite Materials PAN Precursor and Carbon Fibers 222,170 Stade, Germany Composite Materials Prepregs 154,268 Vert-le-Petit, France Composite Materials Pultruded profiles; Prepregs and Adhesives 70,944 Welkenraedt, Belgium Engineered Products Engineered Honeycomb Parts 235,326 We lease the land and buildings in South Windsor, Connecticut, and the land on which the Burlington, Washington and Roussillon, France facilities are located.
Added
During the fourth quarter of 2024, the Company announced that it was exploring strategic options for its operations in Austria and is undergoing a process to find a suitable successor for the Neumarkt plant. We lease portions of the facilities located in Casa Grande, Arizona; Pottsville, Pennsylvania; Parla, Spain; and Leicester, England.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. Legal Pro ceedings The information required by Item 3 is contained within Note 16 on page 71 of this Annual Report on Form 10-K and is incorporated herein by reference. ITEM 4. Mine Saf ety Disclosure Not applicable. 24 PA RT II
Biggest changeITEM 3. Legal Pro ceedings The information required by Item 3 is contained within Note 16 on page 72 of this Annual Report on Form 10-K and is incorporated herein by reference. ITEM 4. Mine Saf ety Disclosure Not applicable. 24 PA RT II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring 2023 the Company repurchased 423,292 shares of common stock on the open market under our share repurchase plan approved by our Board in 2018 (the “2018 Share Repurchase Plan”), at an average price of $71.17 per share for a total cost of $30.1 million, leaving approximately $187 million available for additional repurchases under the 2018 Repurchase Plan. .
Biggest changeDuring 2024, the Company repurchased 3,649,310 shares of common stock on the open market under the aforementioned Share Repurchase Plans at an average price of $68.49 per share for a total cost of $252.2 million, leaving approximately $234.9 million available for additional repurchases under the 2024 Share Repurchase Plan.
On January 31, 2024, there were 390 holders of record of our common stock. ITEM 6. [ Reserved]
On January 31, 2025, there were 365 holders of record of our common stock. ITEM 6. [ Reserved]
Added
Under the share repurchase plan adopted by the Board of Directors of the Company (the "Board") in May 2018 (the “2018 Repurchase Plan"), the Board authorized $500 million for the repurchase of the Company's common stock which was fully utilized as of June 30, 2024.
Added
The repurchase of the Company’s common stock under the 2018 Repurchase Plan was all made in open market transactions. On February 19, 2024, the Board approved a $300 million share repurchase plan (the “2024 Share Repurchase Plan”) which was in addition to the amount that remained available for repurchases under the 2018 Repurchase Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeITEM 7. Management’s Discu ssion and Analysis of Financial Condition and Results of Operations The information required by Item 7 is contained on pages 32 to 38 of this Annual Report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and is incorporated herein by reference.
Biggest changeITEM 7. Management’s Discu ssion and Analysis of Financial Condition and Results of Operations The information required by Item 7 is contained on pages 32 to 39 of this Annual Report on Form 10-K under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and is incorporated herein by reference.

Other HXL 10-K year-over-year comparisons