Diluted EPS of $0.88 and adjusted diluted
EPS of $1.15 from continuing operations
Highlights
- Second quarter sales of $1.5
billion, up 10%, reflecting 3.4% organic growth
- Record ECS security sales of $393
million, up 74%, reflecting 8% organic growth
- Announced the acquisition of the
Power Solutions business of HD Supply for $825 million
- Completed the sale of OEM Supply -
Fasteners segment for $380 million.
Anixter International Inc. (NYSE: AXE) today reported quarterly
sales of $1.48 billion for the quarter ended July 3, 2015, a 10.2
percent increase compared to the year-ago quarter. The current
quarter and year-ago quarter each had 63 billing days. Adjusting
for the favorable impact from the third quarter 2014 acquisition of
Tri-Ed and the unfavorable impacts of the stronger US dollar and
weaker average copper prices, organic sales increased 3.4 percent
year-over-year. All commentary in this release reflects continuing
operations unless otherwise noted. Please refer to the tables at
the end of this release for the reconciliations to GAAP from the
adjusted numbers as reported.
"Our Enterprise Cabling & Security Solutions ("ECS") segment
achieved quarterly sales of $1 billion for the first time in our
history, reflecting strength in both our security solutions and
network infrastructure businesses," commented Bob Eck, President
and CEO. "Sequentially, sales improved in our Electrical and
Electronic Wire & Cable ("W&C") segment, while on a
year-over-year basis, the business was negatively affected by
copper and slower industrial growth, especially related to the oil
and gas sector in Canada. From a geographic perspective, we
delivered strong organic growth in the US while overall North
America growth was adversely impacted by the weaker Canadian macro
environment."
Operating income of $64.5 million compares to $77.2 million in
the prior year quarter. Excluding $14.1 million of expense, which
includes restructuring costs, an asset write-off and related
business realignment expenses, adjusted operating profit of $78.6
million compares to $77.2 million in the prior year quarter.
Adjusted operating income was negatively impacted by higher
amortization expense resulting from the Tri-Ed acquisition. ECS
adjusted operating profit of $50.9 million compares to $45.5
million in the prior year quarter and W&C adjusted operating
profit of $30.0 million compares to $34.7 million in the prior year
quarter.
Adjusted EBITDA of $92.7 million, or 6.3 percent of sales,
compares to $86.6 million, or 6.5 percent of sales, in the prior
year quarter. The decline in margin reflects the impact of mix from
the strong growth in our security business, foreign exchange, lower
average copper prices and competitive pricing pressure in the
market.
Adjusted net income of $38.4 million compares to $43.0 million
in the prior year quarter. Versus prior year, currency and copper
had a $2.5 million negative impact, higher depreciation and
amortization resulting from the Tri-Ed acquisition had a $2.4
million negative impact, and stranded costs associated with the
sale of the Fasteners business had a $1.7 million negative impact,
respectively.
Adjusted earnings per diluted share of $1.15 compare to $1.29 in
the prior year quarter. Current year earnings were negatively
impacted by $0.20 from the above-mentioned items.
Income Statement Detail
Gross margin of 22.2 percent in the current quarter compares to
22.3 percent in the prior quarter and 22.6 percent in the prior
year quarter. The acquisition of Tri-Ed accounts for 20 basis
points of the year-over-year margin decrease, with the remaining
year-over-year margin decrease caused by a lower margin in ECS
reflecting the faster growth of legacy security sales, in addition
to currency headwinds and competitive pressures. Versus the prior
quarter, the decrease in margin reflects project and product mix in
the W&C segment.
Operating expense of $264.4 million compares to $226.1 million
in the prior year quarter. Included in the current quarter is $14.1
million in expense of which $5.3 million is a restructuring charge
which will result in annualized savings of approximately $13
million when fully realized, reflecting actions we are taking to
improve efficiencies and eliminate stranded costs in the business.
Further excluding the $24.0 million pro forma impact of Tri-Ed and
favorable foreign currency of $9.7 million, adjusted operating
expense would have increased by 4.0 percent. In addition to a
volume-related operating expense increase, current quarter
operating expense includes the year-over-year incremental impact of
approximately $3.3 million from the previously disclosed higher
pension and other employee benefit costs. Further adjusting for
this, adjusted operating expense would have increased 2.7
percent.
Interest expense of $12.7 million increased by $3.7 million
compared to the prior year quarter. The increase in interest
expense results from the Senior notes due 2021 issued in September
2014 to fund the Tri-Ed acquisition and incremental interest
expense from the term loan received in August 2014, partially
offset by notes that matured in the first quarter of 2015 and lower
balances in our revolving credit facilities.
Foreign exchange and other expense of $3.5 million compares to
$1.9 million in the year ago period, primarily due to $1.4 million
additional foreign exchange losses.
Our second quarter effective tax rate of 38.8 percent includes
$0.7 million ($0.02 per diluted share) of additional expense due to
the change in the full year forecasted effective tax rate. Other
differences in the comparable tax rate relate to our worldwide
country mix of income. Excluding the additional expense, the
effective tax rate would have been 37.3 percent, as compared to the
prior full year adjusted tax rate of 37.5 percent.
Segment Update
Enterprise Cabling & Security Solutions (“ECS”) sales
of $1,001.6 million compares to $834.0 million in the prior year
period, a 20.1 percent increase, driven by an increase in security
sales, both from Tri-Ed and our legacy business. Adjusting for the
$32.3 million unfavorable impact from foreign exchange on current
year sales and the $149.0 million favorable impact from the Tri-Ed
acquisition, ECS organic sales increased by 5.2 percent.
Record quarter ECS security sales of $393.2 million, which
represents approximately 40 percent of total segment sales,
increased from $226.3 million in the prior year quarter. Adjusted
for the acquisition impact of Tri-Ed and the $11.5 million negative
currency impact, organic security sales growth was 8 percent. The
strength we have experienced for the last 3 quarters continued,
reflecting the success of actions we took in 2014 to significantly
strengthen our legacy security business and drive synergies with
the Tri-Ed acquisition.
ECS adjusted EBITDA of $60.6 million compares to $50.5 million
in the prior year quarter. The corresponding margin of 6.0 percent
compares to 6.1 percent in the prior year quarter. Currency
headwinds, product mix and competitive pricing pressures caused the
decline in margin from the prior year.
Electrical and Electronic Wire & Cable (“W&C”)
sales of $478.8 million compares to $508.9 million in the prior
year period, a 5.9 percent decrease. Excluding the $21.5 million
unfavorable impact from foreign exchange and the $8.9 million
unfavorable impact from lower average copper prices, W&C
organic sales increased by 0.1 percent.
W&C adjusted EBITDA of $34.2 million compares to $39.1
million in the prior year quarter. The corresponding adjusted
EBITDA margin of 7.2 percent compares to 7.7 percent in the prior
year quarter. The decline in margin versus the prior quarter was
caused by the unfavorable impacts of lower copper prices and
currency headwinds combined with the overall weaker macro
environment, all creating significant negative operating expense
leverage.
Discontinued Operations
As a result of the sale of Anixter's Fasteners business, this
business has been presented as Discontinued Operations beginning in
the first quarter of 2015, and 2014 results have been restated to
reflect this classification. The business delivered net income of
$9.6 million in the quarter and a gain from the sale of the
Fasteners business of $32.3 million, net of tax, resulting in
diluted income per share from discontinued operations of $1.26.
Cash Flow and Leverage
Net cash provided by operations was $39.3 million for the six
months ended July 3, 2015, which compares to $86.7 million in the
prior year period. The lower cash provided by operations reflects
payments related to discontinued operations. Year-to-date capital
expenditures of $22.1 million compares to $17.1 million in the
prior year period. For the full year we expect to invest
approximately $50 million in capital investments while generating
over $140 million in cash flow from operations.
“While we experienced strong growth in certain of our markets,
we were impacted on a year-over-year basis by currency, copper and
pricing effects consistent with the first quarter of 2015. In light
of the ongoing macro economic headwinds, we are relentlessly
focused on opportunities to drive cost reduction to improve our
long term cost structure and profitability, as evidenced by the $13
million of future cost savings we announced today," commented Ted
Dosch, Executive Vice President - Finance and CFO. "We are pleased
with the progress of the ongoing integration of the Tri-Ed
business, which delivered expected synergies to the combined
security business in the first half of 2015. Finally, with the
pending acquisition of Power Solutions, the repositioning of our
portfolio will be complete at this time. Our attention will be
focused on the successful integration of our recent acquisition and
maximizing the synergy opportunities of our new platform. Our plans
are to take a concerted effort to reduce our debt from the
generation of significant free cash flow."
Key capital structure and credit-related statistics for the
quarter:
- Debt-to-total capital ratio of 44.0%
compares to 51.6% at the end of 2014
- Weighted average cost of borrowed
capital of 4.7% compares to 4.6% in the year-ago quarter
- $458.7 million available under
revolving lines of credit and accounts receivable securitization
facility
Strategy Update and Business
Outlook
"In addition to solid execution in the business, the current
quarter was marked by significant progress on our strategic goals.
Power Solutions represents the largest acquisition in Anixter's
history and will transform our business into a leading North
American electrical distribution platform, enhance our competitive
position in the electrical wire and cable business and further
strengthen our overall customer and supplier value proposition,"
commented Bob Eck. "The strategic steps we have taken over the past
12 months, including the acquisition of Tri-Ed, the sale of
Fasteners and the announced acquisition of Power Solutions,
position Anixter as a leading global competitor in each of our
businesses, provide a platform for substantial and sustainable long
term growth, and will enable us to maximize shareholder value in
both the near term and the long term."
Eck concluded, “Looking ahead, we are optimistic that the
positive trends in our security and network infrastructure
businesses will continue through the second half of the year. While
our Wire & Cable business has been impacted by macro-economic
headwinds, including lower copper and oil prices, we believe that
the acquisition of Power Solutions is a critical strategic step to
increase the competitiveness and profitable growth of this business
going forward. With first half 2015 organic sales growth from
continuing operations of 2.8 percent, and solid sequential gains in
the second quarter, we narrowed and improved our outlook for full
year organic sales growth to the 2 - 4 percent range."
Financial Results from continuing
operations
(In millions, except per share amounts)
Three Months Ended Six
Months Ended Jul 3, 2015 Jul
4, 2014
PercentChange
Jul 3, 2015 Jul 4, 2014
PercentChange
Net Sales $ 1,480.4 $ 1,342.9 10 % $ 2,865.5 $ 2,617.2 10 %
Operating Income $ 64.5 $ 77.2 (17 )% $ 123.8 $ 147.2 (16 )% EBITDA
$ 71.6 $ 81.7 (12 )% $ 137.1 $ 148.4 (8 )% Net Income $ 29.5 $ 44.5
(34 )% $ 56.0 $ 82.2 (32 )% Diluted Earnings Per Share $ 0.88 $
1.33 (34 )% $ 1.68 $ 2.47 (32 )% Diluted Weighted Shares 33.4 33.3
— %
33.4 33.3 — %
Second Quarter Earnings Call
Details
We will host a conference call to discuss these results
beginning at 9:30 a.m. Central Time today. The call will be
available as a live audio webcast and can be accessed at the
Investor Relations portion of our website at anixter.com/investor. Dial-in numbers for the call
are as follows:
U.S./Canada toll-free dial-in: (888) 455-2260
International dial-in: (719) 325-2454 Passcode: 659 8533
A replay of the call will be available at anixter.com/investor
for 15 days following the call. Prior to the beginning of the call
a supplemental presentation titled “Second Quarter 2015 Highlights
and Operating Review” will be available on the company’s Investor
Relations section of the website.
About Anixter
Anixter International is a leading global distributor of
enterprise cabling and security solutions, electrical and
electronic wire and cable. The company adds value to the
distribution process by providing its customers access to 1)
innovative inventory management programs 2) approximately 400,000
products and $800 million in inventory 3) approximately 220
warehouses/branch locations with 5.5 million square feet of space
and 4) locations in over 250 cities in more than 50 countries.
Founded in 1957 and headquartered near Chicago, Anixter trades on
the New York Stock Exchange under the symbol AXE.
Safe Harbor Statement
The statements in this release other than historical facts are
forward-looking statements made in reliance upon the safe harbor of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to a number of factors that
could cause our actual results to differ materially from what is
indicated here. These factors include but are not limited to
general economic conditions, the level of customer demand
particularly for capital projects in the markets we serve, changes
in supplier sales strategies or financial viability, risks
associated with the sale of nonconforming products and services,
political, economic or currency risks related to foreign
operations, inventory obsolescence, copper price fluctuations,
customer viability, risks associated with accounts receivable, the
impact of regulation and regulatory, investigative and legal
proceedings and legal compliance risks and risks associated with
integration of acquired companies. These uncertainties may cause
our actual results to be materially different than those expressed
in any forward looking statements. We do not undertake to update
any forward looking statements. Please see our Securities and
Exchange Commission (“SEC”) filings for more information.
Non-GAAP Financial Measures
In addition to the results provided in accordance with U.S.
Generally Accepted Accounting Principles (“GAAP”) above, this
release includes certain financial measures computed using non-GAAP
components as defined by the SEC. Specifically, net sales
comparisons to the prior corresponding period, both worldwide and
in relevant segments, are discussed in this release both on a GAAP
basis and non-GAAP basis. We believe that by reporting non-GAAP
organic growth, which adjusts for the impact of acquisitions (when
applicable), foreign exchange fluctuations and copper prices, both
management and investors are provided with meaningful supplemental
sales information to understand and analyze our underlying trends
and other aspects of our financial performance. Beginning in 2015,
we calculate the year-over-year organic sales growth impact
relating to the Tri-Ed acquisition by including the 2014 results
with our results (on a "pro forma" basis) as we believe this
represents the most accurate representation of organic growth,
considering the nature of the company we acquired and the
synergistic revenues that have been achieved. From time to time, we
may also exclude other items from reported financial results (e.g.,
impairment charges, inventory adjustments, restructuring charges,
tax items, currency devaluations, etc.) so that both management and
financial statement users can use these non-GAAP financial measures
to better understand and evaluate our performance period over
period and to analyze the underlying trends of our business.
EBITDA is defined as net income from continuing operations
before interest, income taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA before foreign exchange and
other non-operating expense and non-cash stock-based compensation,
excluding the other special items from reported financial results,
as defined above. EBITDA and Adjusted EBITDA are presented because
we believe they are useful indicators of our performance and our
ability to meet debt service requirements. They are not, however,
intended as an alternative measure of operating results or cash
flow from operations as determined in accordance with generally
accepted accounting principles.
Non-GAAP financial measures provide insight into selected
financial information and should be evaluated in the context in
which they are presented. These non-GAAP financial measures have
limitations as analytical tools, and should not be considered in
isolation from, or as a substitute for, financial information
presented in compliance with GAAP, and non-GAAP financial measures
as reported by us may not be comparable to similarly titled amounts
reported by other companies. The non-GAAP financial measures should
be considered in conjunction with the Condensed Consolidated
Financial Statements and Management’s Discussion and Analysis of
Financial Condition and Results of Operations. Management does not
use these non-GAAP financial measures for any purpose other than
the reasons stated above.
Additional information about Anixter is
available at anixter.com.
ANIXTER INTERNATIONAL INC. Condensed Consolidated
Statements of Operations (Unaudited)
Three Months Ended Six Months
Ended
July 3,2015
July 4,2014
July 3, 2015 July 4, 2014 (In
millions, except per share amounts) As Adjusted As
Adjusted Net sales $ 1,480.4 $
1,342.9 $ 2,865.5 $ 2,617.2 Cost
of goods sold 1,151.5 1,039.6 2,227.3 2,022.1
Gross profit 328.9 303.3 638.2
595.1 Operating expenses 264.4 226.1 514.4
447.9
Operating income 64.5 77.2
123.8 147.2 Other expense: Interest expense (12.7 )
(9.0 ) (26.9 ) (19.1 ) Other, net (3.5 ) (1.9 ) (7.5 ) (11.6 )
Income from continuing operations before income taxes 48.3 66.3
89.4 116.5 Income tax expense from continuing operations 18.8
21.8 33.4 34.3
Net income from
continuing operations 29.5 44.5 56.0
82.2 Income from discontinued operations before income taxes
(including gain on disposal of $42.3 million) 46.5 13.4 57.7 27.4
Income tax expense from discontinued operations 4.6 4.1
23.2 8.4
Net income from discontinued
operations 41.9 9.3 34.5
19.0 Net income $ 71.4
$ 53.8 $ 90.5
$ 101.2 Income per share: Basic:
Continuing operations $ 0.89 $ 1.35 $ 1.69 $ 2.49 Discontinued
operations 1.26 0.28 1.04 0.58
Net
Income $ 2.15 $ 1.63 $ 2.73 $ 3.07
Diluted:
Continuing operations $ 0.88 $ 1.33 $ 1.68 $ 2.47 Discontinued
operations 1.26 0.28 1.03 0.57
Net
Income $ 2.14 $ 1.61 $ 2.71 $ 3.04
Weighted-average
common shares outstanding: Basic 33.2 33.0 33.2 33.0 Diluted
33.4 33.3 33.4 33.3
Reportable Segments Net
sales: Enterprise Cabling & Security Solutions $ 1,001.6 $
834.0 $ 1,917.4 $ 1,610.8 Electrical and Electronic Wire &
Cable 478.8 508.9 948.1 1,006.4 $
1,480.4 $ 1,342.9 $ 2,865.5 $ 2,617.2
Operating income: Enterprise Cabling & Security
Solutions $ 42.2 $ 45.5 $ 78.5 $ 83.1 Electrical and Electronic
Wire & Cable 25.0 34.7 51.2 70.0 Corporate (2.7 ) (3.0 ) (5.9 )
(5.9 ) $ 64.5 $ 77.2 $ 123.8 $ 147.2
ANIXTER INTERNATIONAL INC. Condensed Consolidated
Balance Sheets (Unaudited)
July 3, 2015
January 2, 2015
(In millions, except share and per share amounts) As
Adjusted ASSETS Current assets: Cash and cash
equivalents $ 206.2 $ 92.0 Accounts receivable, net 1,177.6 1,171.0
Inventories 865.1 859.0 Deferred income taxes 33.4 33.7 Other
current assets 50.9 54.9 Current assets of discontinued operations
47.6 379.2 Total current assets 2,380.8 2,589.8 Property and
equipment, net 112.0 104.2 Goodwill 577.3 582.3 Other assets 265.3
282.5 Long-term assets of discontinued operations — 27.7
Total assets $ 3,335.4 $
3,586.5 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 773.3 $ 738.5
Accrued expenses 193.3 183.2 Current liabilities of discontinued
operations 29.8 108.8 Total current liabilities 996.4
1,030.5 5.125% Senior notes 394.5 394.2 5.625% Senior notes 346.3
345.9 Term loan 196.3 198.8 Revolving lines of credit and other 3.6
3.8 5.95% senior notes — 200.0 Accounts receivable securitization
facility — 65.0 Other liabilities 198.0 215.1 Long-term liabilities
of discontinued operations 4.5 0.2
Total liabilities
2,139.6 2,453.5 Total stockholders' equity
1,195.8 1,133.0 Total liabilities and
stockholders' equity $ 3,335.4 $
3,586.5 ANIXTER INTERNATIONAL INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
July 3, 2015
July 4, 2014
(In millions) Operating activities: Net income
$ 90.5 $ 101.2 Adjustments to reconcile net income to net cash
provided by operating activities: Gain on sale of business, net of
tax of $10.0 (49.3 ) — Depreciation 11.9 11.4 Amortization of
intangible assets 10.7 3.9 Stock-based compensation 7.4 6.6
Accretion of debt discount 0.8 0.5 Amortization of deferred
financing costs 0.7 0.7 Deferred income taxes — (3.8 ) Excess
income tax benefit from employee stock plans (0.5 ) (3.6 ) Pension
plan contributions (12.1 ) (8.3 ) Pension plan expenses 5.9 2.3
Changes in current assets and liabilities, net (30.5 ) (22.4 )
Other, net 3.8 (1.8 )
Net cash provided by operating
activities 39.3 86.7 Investing
activities: Proceeds from sale of business 358.0 — Capital
expenditures, net (22.1 ) (17.1 ) Other 2.2 —
Net
cash provided by (used in) investing activities 338.1
(17.1 ) Financing activities: Proceeds
from borrowings 508.8 625.4 Repayment of borrowings (573.8 ) (606.1
) Retirement of Notes due 2015 (200.0 ) — Repayment of term loan
(2.5 ) — Excess income tax benefit from employee stock plans 0.5
3.6 Retirement of Notes due 2014 — (32.3 ) Proceeds from stock
options exercised — 4.2 Deferred financing costs — (0.5 ) Other
(1.0 ) (1.7 )
Net cash used in financing activities
(268.0 ) (7.4 ) Increase in cash and
cash equivalents 109.4 62.2 Effect of exchange
rate changes on cash balances 4.8 1.9 Cash and
cash equivalents at beginning of period 92.0 57.3
Cash and cash equivalents at end of period $
206.2 $ 121.4 ANIXTER
INTERNATIONAL INC. Financial Measures That Supplement GAAP
(Unaudited) Second Quarter 2015 Sales Growth
Trends Q2 2015 Q2
2014 Foreign
Organic As Exchange Copper
As As Acquisition Growth/ ($
millions) Reported Impact Impact
Adjusted Reported Impact Pro Forma
(Decline) (as adjusted)
Enterprise Cabling and Security
Solutions North America $ 795.4 $ 12.6 $ — $ 808.0 $ 613.4 $
148.4 $ 761.8 6.1 % Europe 83.1 11.8 — 94.9 82.7 — 82.7 14.8 %
Emerging Markets 123.1 7.9 — 131.0
137.9 0.6 138.5 (5.5 )%
ECS $
1,001.6 $ 32.3 $ —
$ 1,033.9 $ 834.0
$ 149.0 $ 983.0
5.2 % Electrical and Electronic Wire and
Cable North America $ 344.0 $ 11.8 $ 8.0 $ 363.8 $ 352.8 $ — $
352.8 3.1 % Europe 64.3 7.2 0.2 71.7 88.1 — 88.1 (18.6 )% Emerging
Markets 70.5 2.5 0.7 73.7 68.0 —
68.0 8.5 %
W&C $ 478.8
$ 21.5 $ 8.9
$ 509.2 $ 508.9 $
— $ 508.9 0.1 %
Total $ 1,480.4 $
53.8 $ 8.9 $
1,543.1 $ 1,342.9 $
149.0 $ 1,491.9 3.4
% Geographic Sales North America $ 1,139.4 $
24.4 $ 8.0 $ 1,171.8 $ 966.2 $ 148.4 $ 1,114.6 5.1 % Europe 147.4
19.0 0.2 166.6 170.8 — 170.8 (2.4 )% Emerging Markets 193.6
10.4 0.7 204.7 205.9 0.6 206.5
(0.9 )%
Total $ 1,480.4 $
53.8 $ 8.9 $
1,543.1 $ 1,342.9 $
149.0 $ 1,491.9 3.4
% June Year-to-Date 2015 Sales Growth Trends
YTD 2015 YTD 2014
Foreign
Organic As Exchange Copper As
As Acquisition Growth/ ($ millions)
Reported Impact Impact Adjusted
Reported Impact Pro Forma (Decline) (as
adjusted)
Enterprise Cabling and Security Solutions North
America $ 1,515.6 $ 23.5 $ — $ 1,539.1 $ 1,182.0 $ 289.3 $ 1,471.3
4.6 % Europe 166.5 22.5 — 189.0 166.3 — 166.3 13.7 % Emerging
Markets 235.3 14.2 — 249.5 262.5
1.5 264.0 (5.5 )%
ECS $ 1,917.4
$ 60.2 $ —
$ 1,977.6 $ 1,610.8
$ 290.8 $ 1,901.6
4.0 % Electrical and Electronic Wire and
Cable North America $ 683.8 $ 21.7 $ 21.7 $ 727.2 $ 703.6 $ — $
703.6 3.3 % Europe 135.9 14.3 1.0 151.2 170.7 — 170.7 (11.4 )%
Emerging Markets 128.4 4.1 2.0 134.5
132.1 — 132.1 1.8 %
W&C $
948.1 $ 40.1 $
24.7 $ 1,012.9 $
1,006.4 $ — $
1,006.4 0.6 % Total
$ 2,865.5 $ 100.3
$ 24.7 $ 2,990.5 $
2,617.2 $ 290.8 $
2,908.0 2.8 % Geographic
Sales North America $ 2,199.4 $ 45.2 $ 21.7 $ 2,266.3 $ 1,885.6
$ 289.3 $ 2,174.9 4.2 % Europe 302.4 36.8 1.0 340.2 337.0 — 337.0
1.0 % Emerging Markets 363.7 18.3 2.0 384.0
394.6 1.5 396.1 (3.1 )%
Total
$ 2,865.5 $ 100.3
$ 24.7 $ 2,990.5 $
2,617.2 $ 290.8 $
2,908.0 2.8 % ANIXTER
INTERNATIONAL INC. Financial Measures That Supplement GAAP
(Unaudited) - continued
(In millions, except per share amounts) Positive
(Negative) impact Three Months Ended Six Months
Ended
July 3,2015
July 4, 2014
July 3, 2015
July 4, 2014
Continuing operations As Adjusted As Adjusted
Items impacting comparability of results: Items impacting
operating income: Restructuring charge $ (5.3 ) $ — $ (5.3 ) $ —
Write-off of capitalized software (3.1 ) — (3.1 ) — Venezuelan
customer bad debt expense (2.6 ) — (2.6 ) — Dilapidation provision
(1.7 ) — (1.7 ) — Acquisition and integration costs (1.0 ) — (1.0 )
— Pension divestiture costs (0.4 ) — (0.4 ) —
Total of items impacting operating income $
(14.1 ) $ — $
(14.1 ) $ — Items impacting
other expenses: Foreign exchange loss from the devaluation of
foreign currencies $ — $ — $ (0.7 ) $ (8.0 )
Total
of items impacting other expenses $ —
$ — $ (0.7 ) $
(8.0 ) Total of items impacting pre-tax income
$ (14.1 ) $ — $
(14.8 ) $ (8.0 ) Items impacting
income taxes: Tax impact of items impacting pre-tax income above $
5.2 $ — $ 5.5 $ 2.7 Primarily reversal of deferred income tax
valuation allowances — 2.0 — 6.9 Impact of change in forecast on
effective tax rate
— (0.5 ) — —
Total of items impacting income taxes $ 5.2
$ 1.5 $ 5.5
$ 9.6 Net income impact of these items
$ (8.9 ) $ 1.5 $
(9.3 ) $ 1.6 Diluted EPS
impact of these items $ (0.27 ) $
0.04 $ (0.27 ) $
0.05 GAAP to Non-GAAP Net Income and
EPS Reconciliation for continuing operations: Net income from
continuing operations – Non-GAAP $ 38.4 $ 43.0 $ 65.3 $ 80.6 Items
impacting net income from continuing operations (8.9 ) 1.5
(9.3 ) 1.6 Net income from continuing operations – GAAP $
29.5 $ 44.5 $ 56.0 $ 82.2
Diluted EPS – Non-GAAP $ 1.15 $ 1.29 $ 1.95 $ 2.42 Diluted EPS
impact of these items (0.27 ) 0.04 (0.27 ) 0.05
Diluted EPS – GAAP $ 0.88 $ 1.33 $ 1.68 $ 2.47
Items impacting
comparability of Operating Income by Segment Three Months
Ended July 3, 2015 ECS W&C Corporate
Total Adjusted operating income - Non-GAAP $ 50.9 $
30.0 $ (2.3 ) $ 78.6 Adjusted operating margin - Non-GAAP 5.1 % 6.3
% nm 5.3 %
Total of items impacting
operating income for the three months ended July 3, 2015
$ (8.7 ) $ (5.0 )
$ (0.4 ) $ (14.1 )
Operating income - GAAP $ 42.2 $ 25.0 $ (2.7 ) $ 64.5 Operating
margin - GAAP 4.2 % 5.2 % nm 4.4 %
Items impacting comparability of Operating Income by Segment
Six Months Ended July 3, 2015 ECS W&C
Corporate Total Adjusted operating income -
Non-GAAP $ 87.2 $ 56.2 $ (5.5 ) $ 137.9 Adjusted operating margin -
Non-GAAP 4.6 % 5.9 % nm 4.8 %
Total
of items impacting operating income for the six months ended July
3, 2015 $ (8.7 ) $ (5.0
) $ (0.4 ) $ (14.1
) Operating income - GAAP $ 78.5 $ 51.2 $ (5.9 ) $
123.8 Operating margin - GAAP 4.1 % 5.4 % nm 4.3 %
nm - not
meaningful
ANIXTER INTERNATIONAL
INC.
2015 and 2014 Effective Tax Rate – GAAP and Non-GAAP
Three Months Ended Six Months Ended July 3,
July 4, July 3, July 4, 2015
2014 2015 2014 As Adjusted As
Adjusted Income from continuing operations before taxes – GAAP
$ 48.3 $ 66.3 $ 89.4 $ 116.5 Income tax expense – GAAP $ 18.8 $
21.8 $ 33.4 $ 34.3 Effective income tax rate 38.8 % 32.9 % 37.4 %
29.4 %
Total of items impacting pre-tax income above
$ (14.1 ) $ — $
(14.8 ) $ (8.0 ) Total of
items impacting income taxes above $ 5.2
$ 1.5 $ 5.5 $
9.6 Income from continuing operations before
income taxes – Non-GAAP $ 62.4 $ 66.3 $ 104.2 $ 124.5 Income tax
expense – Non-GAAP $ 24.0 $ 23.3 $ 38.9 $ 43.9 Adjusted effective
income tax rate 38.4 % 35.2 %
37.3 % 35.3 %
2015 EBITDA by Segment
Three Months Ended July 3, 2015
ECS W&C Corporate
Total Net income from continuing operations $ 42.2 $ 25.0 $
(37.7 ) $ 29.5 Interest expense — — 12.7 12.7 Income taxes — — 18.8
18.8 Depreciation 3.7 1.5 0.1 5.3 Amortization of intangible assets
3.7 1.5 — 5.2
EBITDA $
49.6 $ 28.0 $ (6.1
) $ 71.5 EBITDA leverage
0.5 % 32.8 % nm (7.5
)% EBITDA as a % of sales 5.0 %
5.8 % nm 4.8 % Foreign
exchange and other non-operating expense $ — $ — $ 3.5 $ 3.5
Stock-based compensation 2.3 1.2 0.1 3.6 Restructuring charge 3.0
2.2 0.1 5.3 Write-off of capitalized software 1.9 0.9 0.3 3.1
Venezuelan customer bad debt expense 2.6 — — 2.6 Dilapidation
provision 0.9 0.8 — 1.7 Acquisition and integration costs — 1.0 —
1.0 Pension divestiture costs 0.3 0.1 — 0.4
Adjusted EBITDA $ 60.6 $
34.2 $ (2.1 ) $
92.7 Adjusted EBITDA leverage 6.0
% 16.0 % nm 4.3 %
Adjusted EBITDA as a % of sales 6.0 %
7.2 % nm 6.3 % Six
Months Ended July 3, 2015 ECS W&C
Corporate Total Net income from continuing operations
$ 78.5 $ 51.2 $ (73.7 ) $ 56.0 Interest expense — — 26.9 26.9
Income taxes — — 33.4 33.4 Depreciation 7.1 3.2 0.1 10.4
Amortization of intangible assets 7.4 2.9 —
10.3
EBITDA $ 93.0 $
57.3 $ (13.3 ) $
137.0 EBITDA leverage 1.2 %
32.8 % nm (4.6 )% EBITDA as a
% of sales 4.9 % 6.1 % nm
4.8 % Foreign exchange and other non-operating
expense $ — $ — $ 7.5 $ 7.5 Stock-based compensation 4.4 2.4 0.1
6.9 Restructuring charge 3.0 2.2 0.1 5.3 Write-off of capitalized
software 1.9 0.9 0.3 3.1 Venezuelan customer bad debt expense 2.6 —
— 2.6 Dilapidation provision 0.9 0.8 — 1.7 Acquisition and
integration costs — 1.0 — 1.0 Pension divestiture costs 0.3
0.1 — 0.4
Adjusted EBITDA $
106.1 $ 64.7 $
(5.3 ) $ 165.5 Adjusted
EBITDA leverage 4.3 % 24.2 %
nm (0.2 )% Adjusted EBITDA as a % of
sales 5.5 % 6.8 % nm
5.8 % nm - not meaningful
2014 EBITDA by Segment Three
Months Ended July 4, 2014 As Adjusted ECS
W&C Corporate Total Net
income from continuing operations $ 45.5 $ 34.7 $ (35.7 ) $ 44.5
Interest expense — — 9.0 9.0 Income taxes — — 21.8 21.8
Depreciation 2.9 1.9 — 4.8 Amortization of intangible assets 0.2
1.4 — 1.6
EBITDA $
48.6 $ 38.0 $ (4.9
) $ 81.7 EBITDA leverage
nm nm nm nm EBITDA as a % of
sales 5.8 % 7.4 % nm
6.1 % Foreign exchange and other non-operating
expense $ — $ — $ 1.9 $ 1.9 Stock-based compensation 1.9 1.1
— 3.0
Adjusted EBITDA $
50.5 $ 39.1 $ (3.0
) $ 86.6 Adjusted EBITDA
leverage nm nm nm nm Adjusted
EBITDA as a % of sales 6.1 % 7.7 %
nm 6.5 % Six Months Ended July 4,
2014 As Adjusted ECS W&C
Corporate Total Net income from continuing operations
$ 83.1 $ 70.0 $ (70.9 ) $ 82.2 Interest expense — — 19.1 19.1
Income taxes — — 34.3 34.3 Depreciation 5.8 3.7 — 9.5 Amortization
of intangible assets 0.4 2.9 — 3.3
EBITDA $ 89.3 $ 76.6
$ (17.5 ) $ 148.4
EBITDA leverage nm nm nm nm
EBITDA as a % of sales 5.5 % 7.6
% nm 5.7 % Foreign exchange and
other non-operating expense $ — $ — $ 11.6 $ 11.6 Stock-based
compensation 3.7 2.3 — 6.0
Adjusted
EBITDA $ 93.0 $ 78.9
$ (5.9 ) $ 166.0
Adjusted EBITDA leverage nm nm nm
nm Adjusted EBITDA as a % of sales 5.8
% 7.8 % nm 6.3 %
nm - not meaningful
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150728005428/en/
Anixter International Inc.Investor ContactsTed
DoschEVP - Finance & Chief Financial Officer(224)
521-4281orLisa Micou Meers, CFAVP - Investor
Relations(224) 521-8895
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