TMCnet News
Anixter International Inc. Reports Fourth Quarter 2013 ResultsGLENVIEW, Ill. --(Business Wire)-- Anixter International Inc. (NYSE: AXE): Fourth Quarter Highlights
Anixter International Inc. (NYSE: AXE) today reported sales of $1.60 billion for the quarter ended January 3, 2014, a 3.5 percent increase compared to the year-ago quarter. Organic sales, which excludes the impact of the following two items, increased by 4.7 percent year-over-year:
Operating income in the current quarter of $95.6 million increased by 148 percent compared to year-ago results which included pre-tax charges of $46.7 million, attributable to the impairment of goodwill and long-lived assets, pension-related adjustments and restructuring charges. On an adjusted basis, operating income increased by 12.1 percent, driven by the strong performance of our OEM Supply segment and improved gross margins in all three segments. Operating margin of 6.0 percent increased by 10 basis points sequentially and increased by 50 basis points year-over-year, on an adjusted basis. Net income from continuing operations of $58.2 million compares to $5.2 million in the year-ago quarter. The current quarter tax expense was favorably impacted by $4.8 million due to the decline in our effective tax rate driven by a change in the country mix of earnings. The adjusted net income for the current quarter of $53.4 million compares to the adjusted net income for the prior year quarter of $42.8 million, an increase of 24.8 percent. All year-over-year comparisons reflected in the following comparisons are presented on an adjusted basis. Reconciliations are provided in the supplemental information at the end of this release. "While we experienced gradually improving market trends in all of our segments and geographies, we were especially pleased to achieve significant sales and profit growth in our OEM Supply segment, reflecting the results of actions we have taken to reposition the business for profitable growth. The performance in this segment fueled double-digit sales increases and strong growth in profits in our European geography," commented Bob Eck, President and CEO. "Overall, we are encouraged by the improving performance within each of our segments across our global markets, reflecting the value of our global capabilities to an increasing number of global customers." Income Statement Detail Gross margin of 23.2 percent for the fourth quarter of 2013 compares to 22.9 percent in the third quarter 2013 and 22.2 percent in the year-ago quarter, driven by improvement in all segments. Gross profit dollars increased by 9.4 percent on an organic basis, which excludes the impact of foreign exchange and copper pricing, compared to the 4.7 percent organic sales increase. Operating expenses of $275.8 million for the fourth quarter of 2013 increased by 7.1 percent versus the prior year quarter on an adjusted basis, with the increase primarily caused by an additional week in this year's fourth quarter combined with higher employee incentives and benefit costs. Interest expense of $11.2 million decreased by $5.0 million compared to the prior year quarter due to the redemption of the convertible notes in the first quarter of 2013. Foreign exchange and other expenses of $3.8 million increased $2.0 million from the prior year quarter primarily reflecting the negative impact of a strengthening U.S. dollar in multiple foreign markets. Our adjusted annual effective tax rate of 33.7 percent declined from 36.5 percent in the year-ago period, primarily due to a change in the country mix of earnings. Segment Update Enterprise Cabling and Security Solutions ("ECS") sales of $811.3 million compare to $800.0 million in the prior year period. The 1.4 percent increase was driven by improvements in our Emerging Markets geographies, reflecting the timing of projects and the strengthening of Latin American markets. We continue to experience a slow recovery in our US markets as many customers continue to be cautious regarding capital investments. Organically, ECS sales increased 1.9 percent. On a sequential basis, ECS sales increased 0.9 percent from the third quarter of 2013, driven by improvements in our Emerging Markets geographies. Security Solutions sales were flat versus the prior year quarter excluding the impact of the previously disclosed contract that concluded in the fourth quarter of 2012. ECS operating income of $41.2 million compares to adjusted operating income of $44.3 million in the year ago quarter. The year-over-year decrease was caused by higher operating expenses primarily resulting from the quarter having one additional week. Operating margin for ECS of 5.1 percent compares to adjusted operating margin of 5.5 percent in the year ago quarter. Sequentially, operating margin declined by 20 basis points versus the third quarter. Electrical and Electronic Wire and Cable ("W&C") achieved fourth quarter sales of $539.6 million, an 0.8 percent decrease from the prior year period, primarily caused by a drop of approximately 9 percent in the average price of copper. Emerging markets sales increased by 11 percent reflecting project strength in our Asia Pacific geography. Excluding the $9.9 million unfavorable impact from a $0.32 decline in the average price of copper, and the $6.7 million unfavorable impact from foreign exchange, organic sales increased by 2.2 percent. Sequentially, global sales increased by 2.1 percent versus the third quarter of 2013 as industrial project business strengthened as the quarter progressed. For the full year, Industrial Communications and Control sales of $243 million increased by 20 percent versus 2012, as a result of our strategic growth initiative. Operating income of $40.9 million compares to adjusted operating income of $43.7 million in the year ago quarter. The year-over-year decrease was caused primarily by geographic mix and the additional week of operating expenses. Operating margin of 7.6 percent compares to 7.9 percent in the third quarter of 2013 and an adjusted operating margin of 8.0 percent in the year ago quarter. OEM Supply ("OEM") sales increased by 23.6 percent from the prior year quarter to a fourth quarter record of $247.6 million, reflecting the continued ramp up of a contract in Europe and improvement in North America heavy truck production levels. Excluding the $2.2 million favorable impact from foreign exchange, organic sales increased by 22.5 percent. On a sequential basis, sales increased by 10.2 percent driven primarily by strength in Europe. Operating income of $13.5 million compares to an adjusted operating loss of $2.7 million in the year ago quarter. Operating margin of 5.5 percent compares to an adjusted operating margin of negative 1.4 percent in the prior year quarter and 3.7 percent in the third quarter of 2013. Cash Flow and Leverage In the quarter, the company generated $137.2 million of cash from operations bringing the year-to-date cash flow from operations to $334.5 million. This compares to $142.9 million of cash from operations for the full year 2012 and is a result of our relentless focus on improving working capital efficiency combined with the effects of slower growth in the business. "We were pleased to declare and pay a $5.00 per share special dividend in the fiscal fourth quarter of 2013, reflecting the strength of our balance sheet, our significant cash flow generation and our steadfast commitment to return value to shareholders," commented Ted Dosch, Executive Vice President - Finance and CFO. "Our financial position continues to be excellent and we constantly evaluate the optimal use of our funds. We remain committed to investing in our growth initiatives and returning excess capital to our shareholders, as we have done consistently over the past five years." Key capital structure and credit-related statistics for the quarter:
Business Outlook "As we enter 2014, we believe we are well-positioned for global growth in all of our segments. In addition to a gradually improving economy, we have strategic initiatives which we believe will enable us to gain market share and exceed market growth across our business. For the year, we expect mid-single digit organic growth, compared to a 0.5 percent decrease in organic sales for 2013." Eck concluded, "We have taken aggressive measures to align our cost structure with the current economic environment, while continuing to invest in our strategic growth initiatives, including security, emerging markets, industrial communication and control, in-building wireless and e-commerce. As companies continue their relentless focus on managing expenses, our business model, which is based on helping our customers lower their supply chain costs and reduce execution risk across the globe, is of even greater value."
Financial Results From Continuing Operations
Fourth Quarter Earnings Call Details The company 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 Anixter's website at anixter.com/investor. Dial-in numbers for the call are as follows:
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 "Fourth Quarter 2013 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, and OEM supply fasteners and other small parts. The company adds value to the distribution process by providing its customers access to 1) innovative inventory management programs 2) approximately 450,000 products and $1 billion in inventory 3) approximately 210 warehouses with 7 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 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. Non-GAAP Financial Measures In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") above, this report includes certain financial measures computed using non-GAAP components as defined by the Securities and Exchange Commission. Specifically, net sales comparisons to the prior corresponding period, both worldwide and in relevant segments, are discussed in this report both on a GAAP basis and excluding acquisitions, foreign exchange effects and the impact of copper prices ("non-GAAP"). We believe that by reporting organic growth which excludes the impact of acquisitions, foreign exchange effects and the impact of 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. From time to time, we may also exclude other items from reported financial results (e.g., impairment charges, inventory adjustments, restructuring charges, tax items, 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. 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. 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 analysis of financial condition and results of operations included in this report. 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
|