ANIXTER INTERNATIONAL INC. ANIXTER
2014 FINANCIAL RESULTS RESTATED TO REFLECT IMPACT OF RECENT TRANSACTIONS
Products. Technology. Services.
Delivered Globally.
SAFE HARBOR STATEMENT
The statements in this presentation 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.
This presentation includes certain financial measures computed using non-Generally Accepted Accounting Principles ("non-GAAP") components as defined by the SEC. Certain sales, profitability, earnings per share and other non-GAAP financial measures in this presentation exclude special items which have been identified in our earnings releases as we believe that by reporting such information, both management and investors are provided with meaningful supplemental information to understand and analyze our underlying trends and other aspects of our financial performance.
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 consolidated financial statements, including the related notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC. We do not use these non-GAAP financial measures for any purpose other than the reasons stated above.
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ANIXTER TO SELL OEM SUPPLY-FASTENERS SEGMENT
TO AMERICAN INDUSTRIAL PARTNERS
Overview
Announced: February 12, 2015
Expected closing: 2Q 2015
Estimated sales price: $380 million
Preliminary after-tax proceeds: approximately $300 - 310 million
Financial impact on Anixter 2014 sales, operating income and EPS (Unaudited) Sales: $938.5 million
Operating income: $50.8 million excluding stranded costs reclassified to our
Corporate Segment
GAAP Diluted EPS: $0.94
Q1 2015 estimated discontinued operations (Unaudited) Sales: $245 - 250 million
Operating income: $11 - 12 million
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2014 RESULTS RESTATED TO REFLECT IMPACTS OF
RECENT TRANSACTIONS (Unaudited)
OEM Supply - Fastener Segment restated as Asset Held for Sale
Re-classification of W&C Segment security customers to ECS Segment
• Acquired Tri-Ed in September 2014
• Realigned US and Canada sales organizations as part of integration
• $70 million of FY14 W&C sales reclassified to ECS
• No impact on consolidated continuing operations for the year
Stranded Costs
• $11.7 million of corporate costs previously charged to OEM Supply remain stranded in continuing operations, reclassified to our Corporate Segment
• Relates to expenses for IT, finance, legal, HR, and public company costs
• Aggressive cost reduction initiative underway to minimize stranded costs
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2014 RESTATED FINANCIAL RESULTS:
GEOGRAPHIC AND SEGMENT SALES MIX (Unaudited)
2014 sales from continuing operations: $5.5 billion
W&C 37% ECS 63% EMEA 2% EM 14% North America 74%ECS: Enterprise Cabling & Security Solutions
W&C: Electrical and Electronic Wire & Cable
EM: Emerging Markets
EMEA: Europe, the Middle East and Africa
In the past 12 months Anixter has undertaken 2 transactions, improving our portfolio, growth, return on capital and capital efficiency metrics
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2014 INCOME STATEMENT OVERVIEW BY SEGMENT
FROM CONTINUING OPERATIONS
QUARTERLY DETAIL (Unaudited) | ||||||||||||
Continuing Operations $ millions | ECS | W&C | Corporate | |||||||||
Continuing Operations $ millions | 1Q 14 | 2Q 14 | 3Q 14 | 4Q 14 | 1Q 14 | 2Q 14 | 3Q 14 | 4Q 14 | 1Q 14 | 2Q 14 | 3Q 14 | 4Q 14 |
Net sales | $776.8 | $834.0 | $903.9 | $966.5 | $497.5 | $508.9 | $534.1 | $485.3 | $0 | $0 | $0 | $0 |
Operating income | $37.6 | $45.5 | $46.7 | $53.0 | $35.3 | $34.7 | $38.7 | $30.3 | -$2.9 | -$3.0 | -$2.9 | -$2.9 |
Operating margin | 4.8% | 5.5% | 5.2% | 5.5% | 7.1% | 6.8% | 7.2% | 6.3% | nm | nm | nm | nm |
FULL YEAR SUMMARY (Unaudited) | ||||
Continuing Operations $ millions | ECS | W&C | Corporate | Total |
Continuing Operations $ millions | 2014 | 2014 | 2014 | 2014 |
Net sales | $3,481.2 | $2,025.8 | $0.0 | $5,507.0 |
Operating income | $182.8 | $139.0 | -$11.7 | $310.1 |
Operating margin | 5.3% | 6.9% | nm | 5.6% |
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2014 AND 1Q15 INCOME STATEMENT OVERVIEW:
DISCONTINUED OPERATIONS
(Unaudited) | Discontinued Operations - GAAP | |||||
$ millions, except EPS | 1Q 14 | 2Q 14 | 3Q 14 | 4Q 14 | 2014 | 1Q 15 Estimate |
Net sales | $249.5 | $243.1 | $228.6 | $217.3 | $938.5 | $245 - 250 |
Operating income | $15.7 | $15.1 | $11.6 | $8.4 | $50.8 | $11 - 12 * |
Diluted EPS | $0.30 | $0.28 | $0.21 | $0.16 | $0.94 |
* Includes $2.2 million of transaction related expenses.
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2014 INCOME STATEMENT DETAILS:
CONTINUING OPERATIONS - GAAP
Continuing Operations (Unaudited) | GAAP | ||||
$ millions, except EPS | 1Q 14 | 2Q 14 | 3Q 14 | 4Q 14 | 2014 |
Net sales | $1,274.3 | $1,342.9 | $1,438.0 | $1,451.8 | $5,507.0 |
Gross profit | 291.8 | 303.3 | 322.7 | 321.5 | 1,239.3 |
Operating expense | 221.8 | 226.1 | 240.2 | 241.1 | 929.2 |
Operating income | 70.0 | 77.2 | 82.5 | 80.4 | 310.1 |
Interest expense | (10.1) | (9.0) | (10.3) | (15.1) | (44.5) |
Other, net | (9.7) | (1.9) | (2.0) | (2.4) | (16.0) |
Income before income taxes | 50.2 | 66.3 | 70.2 | 62.9 | 249.6 |
Income tax expense | 12.5 | 21.8 | 24.8 | 27.1 | 86.2 |
Effective tax rate | 24.9% | 32.9% | 35.4% | 43.0% | 34.5% |
Net income | $37.7 | $44.5 | $45.4 | $35.8 | $163.4 |
Diluted shares outstanding | 33.3 | 33.3 | 33.4 | 33.4 | 33.3 |
Diluted EPS | $1.13 | $1.33 | $1.36 | $1.07 | $4.90 |
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2014 INCOME STATEMENT DETAILS: CONTINUING
OPERATIONS - ITEMS IMPACTING COMPARABILITY
Continuing Operations (Unaudited) | Items Impacting Comparability * | ||||
$ millions, except EPS | 1Q 14 | 2Q 14 | 3Q 14 | 4Q 14 | 2014 |
Operating expense | - | - | (5.7) | (1.5) | (7.2) |
Operating income | - | - | 5.7 | 1.5 | 7.2 |
Other, net | (8.0) | - | (0.3) | - | (8.3) |
Income tax | 7.6 | 1.5 | 2.1 | (3.2) | 13.1 |
Net income | 0.4 | (1.5) | 3.9 | 4.7 | 2.4 |
Diluted shares outstanding | 33.3 | 33.3 | 33.4 | 33.4 | 33.3 |
Diluted EPS | $0.01 | -$0.04 | $0.12 | $0.14 | $0.07 |
* For further details on items impacting comparability, please refer to "ITEM 6. SELECTED FINANCIAL DATA" in our 10-K.
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2014 INCOME STATEMENT DETAILS:
CONTINUING OPERATIONS - NON-GAAP
Continuing Operations (Unaudited) | Non-GAAP | ||||
$ millions, except EPS | 1Q 14 | 2Q 14 | 3Q 14 | 4Q 14 | 2014 |
Net sales | $1,274.3 | $1,342.9 | $1,438.0 | $1,451.8 | $5,507.0 |
Gross profit | 291.8 | 303.3 | 322.7 | 321.5 | 1,239.3 |
Operating expense | 221.8 | 226.1 | 234.5 | 239.6 | 922.0 |
Operating income | 70.0 | 77.2 | 88.2 | 81.9 | 317.3 |
Interest expense | (10.1) | (9.0) | (10.3) | (15.1) | (44.5) |
Other, net | (1.7) | (1.9) | (1.7) | (2.4) | (7.7) |
Income before income taxes | 58.2 | 66.3 | 76.2 | 64.4 | 265.1 |
Income taxes | 20.1 | 23.3 | 26.9 | 23.9 | 99.3 |
Effective tax rate | 34.6% | 35.1% | 35.2% | 37.1% | 37.5% |
Net income | $38.1 | $43.0 | $49.3 | $40.5 | $165.8 |
Diluted shares outstanding | 33.3 | 33.3 | 33.4 | 33.4 | 33.3 |
Diluted EPS | $1.14 | $1.29 | $1.48 | $1.21 | $4.97 |
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2014 INCOME STATEMENT DETAILS: CONTINUING
OPERATIONS - EBITDA AND ADJUSTED EBITDA
(Unaudited)
EBITDA | $66.7 | $81.7 | $87.6 | $88.7 |
Acquisition and strategic project costs | - | - | 5.7 | 1.5 |
Other, net | 9.7 | 1.9 | 2.0 | 2.4 |
Stock-based compensation | 3.0 | 3.0 | 3.3 | 3.3 |
Adjusted EBITDA | $79.4 | $86.6 | $98.6 | $95.9 |
Adjusted EBITDA as a % of sales | 6.2% | 6.5% | 6.9% | 6.6% |
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SALES OUTLOOK - CONTINUING OPERATIONS
INCLUDING IMPACT OF CURRENCY, COPPER AND TRI-ED
$ millions | 2014 Actual (Unaudited) (continuing ops) | Outlook for 2015 (February 3, 2015, including Fasteners) | Outlook for 2015 (April 20, 2015, continuing ops only) |
Organic sales growth per day | 3.5% | 3 - 5% | 2 - 4% |
Net billing day impact | (1.3)% | - | - |
Organic sales growth | 2.2% | 3 - 5% | 2 - 4% |
Foreign exchange | $(48.1) | $(90 - 100) | $(100 - 120) |
Copper | $(30.6) | $(75 - 80) | $(50 - 60) |
Tri-Ed acquisition | $176.0 | ~ $450 (3 quarters of Tri-Ed) | ~ $450 (3 quarters of Tri-Ed) |
Adjusted EBITDA leverage* | na | Mid-to-high single digits | Mid-to-high single digits |
* Adjusted EBITDA leverage is defined as the change in adjusted EBITDA divided by the change in sales.
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