2017 q2 investor relations slides
- 1. 2Q 2017 Highlights and Operating Results July 25, 2017 1
- 2. 2© 2017 Anixter Inc. 2Q 2017 Highlights and Operating Results Table of Contents Page(s) 1 Sales Overview and Highlights 4-5 2 NSS Overview 6-7 3 EES Overview 8-9 4 UPS Overview 10-11 5 Financial Performance Trends 12-16 6 Leverage Metrics 17 7 Financial Details 18 8 Outlook 19-20 9 Appendix 21-29 10 Supplemental Information 30-31
- 3. 3© 2017 Anixter Inc. Safe Harbor Statement and Non-GAAP Financial Measures 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 relationships or 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, information security risks, risks associated with substantial debt and restrictions contained in financial and operating covenants in our debt agreements, the impact and the uncertainty concerning the timing and terms of the withdrawal by the United Kingdom from the European Union, and risks associated with integration of acquired companies, including, but not limited to, the risk that the acquisitions may not provide us with the synergies or other benefits that were anticipated. 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 and non-GAAP basis. We believe that by providing non-GAAP organic growth, which adjusts for the impact of acquisitions (when applicable), foreign exchange fluctuations, copper prices and the number of billing days, 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. We calculate the year-over-year organic sales growth and operating expenses impact relating to the Power Solutions acquisition by including its 2015 comparable period results prior to the acquisition 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 or will be achieved. Historically and 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, pension settlements, etc.) in presenting adjusted operating expense, adjusted operating income, adjusted income taxes and adjusted net income 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. As a result of the recent acquisitions we have also excluded amortization of intangible assets associated with purchase accounting from acquisitions from the adjusted amounts for comparison of the non-GAAP financial measures period over period. 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 items from reported financial results, as defined above. Adjusted EBITDA leverage is defined as the percentage change in Adjusted EBITDA divided by the percentage change in net sales. We believe that adjusted operating income, EBITDA, Adjusted EBITDA, and Adjusted EBITDA leverage provide relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business segment performance. Adjusted operating income provides an understanding of the results from the primary operations of our business by excluding the effects of certain items that do not reflect the ordinary earnings of our operations. We use adjusted operating income to evaluate our period-over-period operating performance because we believe this provides a more comparable measure of our continuing business excluding certain items that are not reflective of expected ongoing operations. This measure may be useful to an investor in evaluating the underlying performance of our business. EBITDA provides us with an understanding of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA further excludes the effects of foreign exchange and other non-cash stock-based compensation, and certain items that do not reflect the ordinary earnings of our operations and that are also excluded for purposes of calculating adjusted net income, adjusted earnings per share and adjusted operating income. EBITDA and Adjusted EBITDA are used by our management for various purposes including as measures of performance of our operating entities and as a basis for strategic planning and forecasting. Adjusted EBITDA and Adjusted EBITDA leverage may be useful to an investor because this measure is widely used to evaluate a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending on the accounting methods, book value of assets, capital structure and the method by which the assets were acquired, among other factors. 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, including the related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this release. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.
- 4. 4© 2017 Anixter Inc. 2Q17 GAAP Sales Up 2.3% $Millions 2Q16 Currency Copper Organic Growth 2Q17 $1,956 $(18) $14 $49 $2,001 • Record second quarter sales of $2.0B, with growth in all 3 geographies • Organic sales increased 2.6%, driven by strong growth in UPS segment • Strong cash flow from operations of $137.1M YTD driven by ongoing working capital improvements • On track with capital allocation priority to return to our strategic leverage targets by year end 2017 • Debt-to-capital ratio improved to 48.8% and debt-to-adjusted EBITDA improved to 3.3x 1. Sales Overview and Highlights 2Q17 GAAP Sales Up 2.3% Organic Sales Growth on a Per Day Basis YOYGrowth 2Q16 (0.6)% 3Q16 (2.3)% 4Q16 4.0% 1Q17 4.0% 2Q17 2.6% (2.2)% (0.7)% 2.3% 5.6% 2.6% YOY Sales Growth GAAP Organic Organic Growth per day North America 1.2% 1.1% 1.1% EMEA 3.6% 7.6% 7.6% Emerging Markets 12.8% 13.4% 13.4% Anixter International 2.3% 2.6% 2.6% Reported organic sales growth:
- 5. 5© 2017 Anixter Inc. 1. Sales Overview and Highlights 2Q17 Segment and Geographic Sales Mix 2Q17 Sales of $2.0 Billion NA 41% EMEA 4% EM 6% NA 22% EMEA 3% EM 3% NA 21% NSS EES UPS 2Q17 Segment Mix NSS 51% EES 28% UPS 21% 2Q17 Geographic Mix NA 83% EMEA 8% EM 9%
- 6. 6© 2017 Anixter Inc. 2. NSS Overview Network & Security Solutions Sales Overview • NSS sales of $1,029M decreased 0.8% on an organic basis, reflecting fewer large projects in North America • Sequentially, NSS sales increased 4.5% • Ongoing strength in growth initiatives including complex global accounts and security, as well as in wireless and professional audio visual equipment • NSS security sales of $423.1M increased 2.1%, which was 2.7% on an organic basis. Strong unit volume growth was negatively impacted by mix and price deflation in certain product sets, primarily video products. NSS Organic Sales Growth on a Per Day Basis YOYGrowth 2Q16 4.0% 3Q16 0.7% 4Q16 7.0% 1Q17 4.2% 2Q17 (0.8)% 2.4% 2.3% 5.3% 5.8% (0.8)% 2Q17 GAAP NSS Sales (1.5)% $Millions 2Q16 Currency Organic Growth 2Q17 $1,045 $(7) -$9 $1,029 YOY Sales Growth GAAP Organic Organic Growth per day North America (2.6)% (2.2)% (2.2)% EMEA 0.7% 4.1% 4.1% Emerging Markets 4.7% 5.5% 5.5% Total NSS (1.5)% (0.8)% (0.8)% Reported organic sales growth:
- 7. 7© 2017 Anixter Inc. 2. NSS Overview Operating Income and Adjusted EBITDA Trends NSS Operating Income Trend (GAAP) $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $65 $75 $77 $62 $65 6.2% 7.1% 7.4% 6.3% 6.3% Operating Income (GAAP) • Operating income of $64.9M is flat compared to the prior year quarter. The current quarter includes $3.6M and 2Q16 included $9.4M of items impacting operating income, respectively. • Versus 1Q17, the increase in operating income reflects typical seasonality of the business Adjusted EBITDA • Adjusted EBITDA of $69.8M, or 6.8% of sales, compares to $75.7M, or 7.2% of sales, in the prior year quarter. The change in margin was due to lower volume combined with the impact of lower pricing in specific product categories combined with mix shift. • Versus 1Q17, the increase in adjusted EBITDA was driven by operating profit leverage NSS Adjusted EBITDA Trend $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $76 $79 $82 $67 $70 7.2% 7.5% 7.9% 6.8% 6.8%
- 8. 8© 2017 Anixter Inc. 3. EES Overview Electrical & Electronic Solutions Sales Overview EES Organic Sales Growth on a Per Day Basis YOYGrowth 2Q16 (1.9)% 3Q16 (3.1)% 4Q16 1.7% 1Q17 2.4% 2Q17 0.3% (3.4)% (1.6)% 0.0% 4.0% 0.3% 2Q17 GAAP EES Sales Up 1.1% $Millions 2Q16 Currency Copper Organic Growth 2Q17 $555 $(9) $14 $1 $561 YOY Sales Growth GAAP Organic Growth Organic Growth per day North America (2.9)% (4.5)% (4.5)% EMEA 7.8% 12.6% 12.6% Emerging Markets 36.4% 36.5% 36.5% Total EES 1.1% 0.3% 0.3% • EES sales of $561M increased 0.3% on an organic basis • Sequentially, sales increased 6.4% • Trends in EMEA, Emerging Markets and North America OEM business remain solid, while US industrial markets continue to be challenging • Focus remains on executing synergistic sales growth initiatives, while we continue to strengthen strategic alignment with core electrical products suppliers Reported organic sales growth:
- 9. 9© 2017 Anixter Inc. 3. EES Overview Operating Income and Adjusted EBITDA Trends EES Adjusted EBITDA Trend $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $32 $31 $26 $30 $33 5.8% 5.9% 5.1% 5.8% 5.8% Operating Income (GAAP) • Operating income increased 24.1% and operating margin of 5.3% improved by 100 bps. Current and prior year quarters include $2.1M and $7.1M of items impacting operating income, respectively. • Sequentially, the increase in operating income was driven by higher sales Adjusted EBITDA • YOY, adjusted EBITDA increased 1.4% and adjusted EBITDA margin was flat at 5.8%, primarily due to mix • Sequentially, the increase in adjusted EBITDA was driven by incremental volume EES Operating Income Trend (GAAP) $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $24 $29 $22 $28 $30 4.3% 5.4% 4.4% 5.3% 5.3%
- 10. 10© 2017 Anixter Inc. • UPS sales of $410M increased 15.8% on an organic basis, driven by synergistic sales to support a new investor owned electric utility customer and strong growth with existing IOU and public power customers • As previously disclosed, Anixter began to build sales with a large IOU customer in 4Q16 and reached the run- rate annualized incremental sales level of $100M in the current quarter • Growth in US was partially offset by continued challenging markets in Canada 4. UPS Overview Utility Power Solutions Sales Overview 2Q17 GAAP UPS Sales up 15.3% $Millions 2Q16 Currency Copper Organic Growth 2Q17 $356 $(2) $0 $56 $410 UPS Organic Sales Growth on a Per Day Basis* YOYGrowth 2Q16 (10.7)% 3Q16 (8.8)% 4Q16 (1.2)% 1Q17 5.8% 2Q17 15.8% (12.0)% (7.3)% (2.8)% 7.4% 15.8% Reported organic sales growth: *2Q16 and 3Q16 reported organic sales growth calculations are pro forma for the Power Solutions acquisition, previously disclosed and available on our Investor Relations website YOY Sales Growth GAAP Organic Growth Organic Growth per day Total UPS 15.3% 15.8% 15.8%
- 11. 11© 2017 Anixter Inc. Operating Income (GAAP) • YOY improvement in operating income and operating margin was driven by strong sales growth and lower expenses. The current and prior year quarters include $3.2M and $6.1M of items impacting operating income, respectively. • Versus 1Q17, improvement in operating income was driven by volume growth and operating leverage Adjusted EBITDA • YOY adjusted EBITDA increased 34.1% and adjusted EBITDA margin improved by 90 bps, driven by strong operating profit leverage • Lower gross margin of UPS business was more than offset by lower level of operating expense, driving adjusted EBITDA leverage of 2.2x 4. UPS Overview Operating Income and Adjusted EBITDA Trends UPS Adjusted EBITDA Trend $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $19 $21 $19 $21 $26 5.4% 5.7% 5.5% 5.5% 6.3% UPS Operating Income Trend (GAAP) $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $12 $16 $15 $16 $21 3.4% 4.3% 4.2% 4.2% 5.2%
- 12. 12© 2017 Anixter Inc. 5. Financial Performance Trends Gross Margin Trend Gross Margin Performance • YOY, the primary driver of the change in gross margin was segment mix, due to the lowest gross margin segment delivering the fastest growth • Sequentially, the majority of the decline in gross margin is due to segment and product mix Gross profit ($) Gross margin (%) Gross Margin Trend $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $393 $397 $387 $380 $396 20.1% 20.3% 20.4% 20.0% 19.8%
- 13. 13© 2017 Anixter Inc. 5. Financial Performance Trends Operating Expense Trends Adjusted Operating Expense Trend $Millions %ofSales 2Q16 3Q16 4Q16 1Q17 2Q17 $303 $300 $296 $302 $304 15.5% 15.3% 15.6% 15.9% 15.2% Operating Expense Trend (GAAP) $Millions %ofSales 2Q16 3Q16 4Q16 1Q17 2Q17 $337 $309 $306 $311 $313 17.2% 15.8% 16.2% 16.4% 15.6% Operating Expense (GAAP) • 2Q17 operating expense of $313M includes $9M of intangible amortization expense • 2Q16 operating expense of $337M included $33.7M of adjustments related to a UK pension settlement, intangible amortization, a Latin America bad debt provision, restructuring and acquisition and integration costs Adjusted Operating Expense • YOY adjusted operating expense increased 0.3% to $304.0M, or 15.2% of sales. The 30 bps improvement was driven by focus on expense discipline combined with sales leverage. • Sequentially, adjusted operating expense increased 0.7%. The 70 bps improvement in operating expense ratio versus 1Q17 was driven by sales leverage.
- 14. 14© 2017 Anixter Inc. 5. Financial Performance Trends Adjusted EBITDA and Net Income Trends Adjusted EBITDA • YOY adjusted EBITDA growth of 1.3% was driven by the strong performance in UPS. Adjusted EBITDA margin was flat, primarily due to segment mix. • Sequentially, the 50 bps improvement in adjusted EBITDA margin was driven by improved sales volume combined with operating leverage Net Income (GAAP) • YOY the majority of the change in both net income and net margin was due to after-tax expense of $23.4M in 2Q16 versus $6.1M in 2Q17, detailed on slide 13 • Versus 1Q17, the increase in both net income and net margin was driven by improved sales volume combined with operating leverage Adjusted EBITDA Trend $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $102 $108 $102 $90 $103 5.2% 5.5% 5.4% 4.7% 5.2% Net Income Trend (GAAP) $Millions Margin% 2Q16 3Q16 4Q16 1Q17 2Q17 $21 $40 $37 $31 $40 1.1% 2.1% 1.9% 1.6% 2.0%
- 15. 15© 2017 Anixter Inc. 5. Financial Performance Trends Working Capital Trends Adjusted ROTC** AdjROTC 2Q16 3Q16 4Q16 1Q17 2Q17 25.3% 27.9% 26.4% 22.5% 26.6% Working Capital as % of Sales* %ofSales 2Q16 3Q16 4Q16 1Q17 2Q17 19.2% 18.6% 18.8% 18.9% 18.5% Working Capital • Working capital ratio of 18.5% reflects a 70 bp improvement from 2Q16, driven by improvements in working capital efficiency across the business Adjusted ROTC • Adjusted ROTC of 26.6% reflects a 130 bp improvement from 2Q16, driven by growth in adjusted net income and working capital efficiency *Working Capital as a % of Sales: Defined as the net of current assets less current liabilities divided by annualized sales **ROTC and Adjusted ROTC: Return on tangible capital defined as operating profits, excluding intangible amortization and one-time items identified in our earnings releases, divided by average tangible capital
- 16. 16© 2017 Anixter Inc. 5. Financial Performance Trends Counter-Cyclical Free Cash Flow Provides Financial Flexibility Free Cash Flow GAAP Sales Growth $400 $300 $200 $100 $0 -$100 $Millions 25% 15% 5% -5% -15% -25% YOYSalesGrowth 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17 $116 3.3% Generate Strong Free Cash Flow Throughout the Economic Cycle Note: Free cash flow is not restated for acquisitions and divestitures
- 17. 17© 2017 Anixter Inc. Debt / Adjusted EBITDA 5x 4x 3x 2x 1x 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016 2Q17 2.3 3.9 4.0 2.6 2.9 2.2 2.0 2.3 3.4 2.8 2.0 2.4 2.1 2.9 3.8 3.5 3.3 6. Leverage Metrics Near Term Cash Flow Allocation Priority is to Return to Target Debt Levels Debt-to-Capital 60% 50% 40% 30% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2Q17 41% 41% 41% 35% 47% 46% 46% 51% 45% 47% 45% 50% 45% 52% 58% 51.6% 48.8% *2015 includes 12 months of Power Solutions earnings on a pro forma basis Target range: 2.5 - 3.0x Target range: 45 - 50%
- 18. 18© 2017 Anixter Inc. 7. Financial Details Impact of Currency, Copper and M&A on 2Q17 Sales $ millions 2Q17 Prior Outlook Actual Per day basis Organic sales growth 1.5 - 3.0% 2.6% 2.6% Currency* $(20 - 25) $(18.2) Copper** $8 - 10 $13.8 Combined Currency and Copper $(4.4) *2Q17 currency outlook estimated based on rates as of March 31, 2017 **2Q17 copper outlook estimated based on recent copper price of $2.55 versus 2Q16 average of $2.13
- 19. 19© 2017 Anixter Inc. 8. Outlook Sales Trends by Business and Geography North America EMEA Emerging Markets NSS é è è EES è é é UPS è Business Trend 3Q17 versus 2Q17 é Trend is likely to improve è Trend is stable ê Trend is likely to decline EMEA outlook excludes the unknown impact of Brexit
- 20. 20© 2017 Anixter Inc. 8. Outlook Estimated Sales Impacts of Currency and Copper *Currency outlook estimated based on rates as of June 30, 2017 **Copper outlook estimated based on recent copper price of $2.70 vs 3Q16 average of $2.16 and FY16 average of $2.20 $ millions 2Q17 3Q17 Outlook FY17 Outlook Organic sales growth 2.6% 2.0 - 4.0% 3.0 - 5.0% Currency* $(18.2) - $(5 - 10) Copper** $13.8 $10 - 15 $45 - 50
- 21. 21© 2017 Anixter Inc. Appendix
- 22. 22© 2017 Anixter Inc. Glossary 1H first half of fiscal year 2H second half of fiscal year B billions M millions Fx foreign exchange Bps basis points GAAP U.S. GAAP NSS Network & Security Solutions EES Electrical & Electronic Solutions UPS Utility Power Solutions ETR effective tax rate Opex total operating expense EMEA Europe, middle east and Africa CALA Central and Latin America APAC Asia Pacific, Australia and China OEM original equipment manufacturer IOU investor owned utility MRO maintenance, repair and operations YOY year-over-year NA North America EM emerging markets USD U.S. dollar WC working capital ROTC return on tangible capital
- 23. 23© 2017 Anixter Inc. Continuing Operations $ millions (except per share amounts) Positive (Negative) Impact Three Months Ended Six Months Ended June 30, 2017 July 1, 2016 June 30, 2017 July 1, 2016 Items impacting comparability of results: Items impacting operating expense and operating income: Amortization of intangible assets $(9.0) $(9.5) $(18.0) $(19.2) UK pension settlement — (9.6) — (9.6) Restructuring charge — (5.6) — (5.6) Acquisition and integration costs — (1.4) — (3.6) Latin America bad debt provision — (7.6) — (7.6) Total of items impacting operating expense and operating income $(9.0) $(33.7) $(18.0) $(45.6) Total of items impacting pre-tax income $(9.0) $(33.7) $(18.0) $(45.6) Items impacting income taxes: Tax impact of items impacting pre-tax income above $2.9 $10.3 $5.8 $14.8 Total of items impacting income taxes $2.9 $10.3 $5.8 $14.8 Net income impact of these items $(6.1) $(23.4) $(12.2) $(30.8) Diluted EPS impact of these items $(0.18) $(0.70) $(0.36) $(0.92) Anixter International Inc Items Impacting Comparability
- 24. 24© 2017 Anixter Inc. Continuing Operations $ millions (except per share amounts) Positive (Negative) Impact Three Months Ended Six Months Ended June 30, 2017 July 1, 2016 June 30, 2017 July 1, 2016 GAAP to Non-GAAP Net Income and EPS Reconciliation for continuing operations: Net income from continuing operations – GAAP $40.1 $20.8 $71.0 $44.0 Items impacting net income from continuing operations 6.1 23.4 12.2 30.8 Net income from continuing operations – Non-GAAP $46.2 $44.2 $83.2 $74.8 Diluted EPS – GAAP $1.18 $0.62 $2.09 $1.32 Diluted EPS impact of these items 0.18 0.70 0.36 0.92 Diluted EPS – Non-GAAP $1.36 $1.32 $2.45 $2.24 Anixter International Inc Items Impacting Comparability (continued)
- 25. 25© 2017 Anixter Inc. Anixter International Inc EBITDA and Adjusted EBITDA Reconciliation Continuing Operations $ millions EBITDA and Adjusted EBITDA 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 Net income $26.5 $29.5 $35.4 $5.5 $23.2 $20.8 $40.3 $36.8 $30.9 $40.1 Interest expense 14.2 12.7 15.8 21.1 20.1 19.8 19.8 19.0 18.9 17.9 Income taxes 14.6 18.8 21.5 31.1 14.2 15.3 25.1 21.8 19.0 23.7 Depreciation 5.1 5.3 5.2 6.6 7.0 7.0 7.1 6.8 7.0 7.1 Amortization of intangible assets 5.1 5.2 5.0 9.6 9.7 9.5 9.4 9.0 9.0 9.0 EBITDA $65.5 $71.5 $82.9 $73.9 $74.2 $72.4 $101.7 $93.4 $84.8 $97.8 EBITDA as a % of sales 4.7% 4.8% 5.6% 4.0% 4.1% 3.7% 5.2% 4.9% 4.5% 4.9% EBITDA $65.5 $71.5 $82.9 $73.9 $74.2 $72.4 $101.7 $93.4 $84.8 $97.8 Foreign exchange and other non-operating expense 4.0 3.5 5.5 8.1 2.8 0.8 2.1 3.4 0.2 1.0 Stock-based compensation 3.3 3.6 3.3 3.7 4.1 4.4 3.9 4.1 4.5 4.4 Restructuring charge — 5.3 — 2.9 — 5.6 (0.2) — — — Write-off of capitalized software — 3.1 — — — — — — — — Latin America bad debt provision — 2.6 — 9.1 — 7.6 — — — — Dilapidation provision — 1.7 — — — — — — — — Acquisition and integration costs — 1.0 8.1 4.1 2.2 1.4 0.7 0.8 — — UK pension settlement — 0.4 — — — 9.6 — — — — Adjusted EBITDA $72.8 $92.7 $99.8 $101.8 $83.3 $101.8 $108.2 $101.7 $89.5 $103.2 Adjusted EBITDA as a % of sales 5.3% 6.3% 6.7% 5.5% 4.6% 5.2% 5.5% 5.4% 4.7% 5.2%
- 26. 26© 2017 Anixter Inc. Network & Security Solutions EBITDA and Adjusted EBITDA Reconciliation Continuing Operations $ millions EBITDA and Adjusted EBITDA 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 Net income $55.7 $66.6 $74.1 $61.8 $58.8 $64.9 $74.9 $77.2 $61.8 $64.9 Interest expense — — — — — — — — — — Income taxes — — — — — — — — — — Depreciation 0.9 0.9 0.9 0.9 0.9 0.8 0.8 0.7 0.8 0.7 Amortization of intangible assets 3.7 3.7 3.7 3.6 3.6 3.6 3.3 3.6 3.6 3.6 EBITDA $60.3 $71.2 $78.7 $66.3 $63.3 $69.3 $79.0 $81.5 $66.2 $69.2 EBITDA as a % of sales 6.5% 7.0% 7.5% 6.8% 6.7% 6.6% 7.5% 7.8% 6.7% 6.7% EBITDA $60.3 $71.2 $78.7 $66.3 $63.3 $69.3 $79.0 $81.5 $66.2 $69.2 Stock-based compensation 0.4 0.6 0.4 0.5 0.5 0.6 0.2 0.5 0.4 0.6 Restructuring charge — 1.8 — 0.6 — 1.9 (0.1) (0.1) — — Latin America bad debt provision — 2.6 — 8.1 — 3.9 — — — — Adjusted EBITDA $60.7 $76.2 $79.1 $75.5 $63.8 $75.7 $79.1 $81.9 $66.6 $69.8 Adjusted EBITDA as a % of sales 6.5% 7.5% 7.6% 7.7% 6.7% 7.2% 7.5% 7.9% 6.8% 6.8%
- 27. 27© 2017 Anixter Inc. Electronic and Electrical Solutions EBITDA and Adjusted EBITDA Reconciliation Continuing Operations $ millions EBITDA and Adjusted EBITDA 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 Net income $35.8 $33.6 $32.5 $19.2 $22.5 $23.9 $28.7 $22.4 $27.9 $29.6 Interest expense — — — — — — — — — — Income taxes — — — — — — — — — — Depreciation 0.2 0.3 0.2 0.7 0.5 1.0 0.5 0.7 0.6 0.6 Amortization of intangible assets 1.4 1.5 1.3 2.1 2.2 2.0 2.1 2.2 2.1 2.1 EBITDA $37.4 $35.4 $34.0 $22.0 $25.2 $26.9 $31.3 $25.3 $30.6 $32.3 EBITDA as a % of sales 8.5% 7.9% 8.0% 4.4% 5.0% 4.8% 5.8% 5.0% 5.8% 5.8% EBITDA $37.4 $35.4 $34.0 $22.0 $25.2 $26.9 $31.3 $25.3 $30.6 $32.3 Stock-based compensation 0.3 0.4 0.3 0.3 0.2 0.3 0.2 0.3 0.3 0.5 Restructuring charge — 1.8 — 1.4 — 1.4 (0.1) — (0.5) — Latin America bad debt provision — — — 1.0 — 3.7 — — — — Adjusted EBITDA $37.7 $37.6 $34.3 $24.7 $25.4 $32.3 $31.4 $25.6 $30.4 $32.8 Adjusted EBITDA as a % of sales 8.6% 8.3% 8.1% 4.9% 5.0% 5.8% 5.9% 5.1% 5.8% 5.8%
- 28. 28© 2017 Anixter Inc. Utility Power Solutions EBITDA and Adjusted EBITDA Reconciliation Continuing Operations $ millions EBITDA and Adjusted EBITDA 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 Net income $2.0 $2.4 $2.7 $15.3 $14.3 $12.0 $15.8 $14.6 $16.2 $21.3 Interest expense — — — — — — — — — — Income taxes — — — — — — — — — — Depreciation — — — 1.2 1.4 0.7 1.0 1.1 1.0 1.0 Amortization of intangible assets — — — 3.9 3.9 3.9 4.0 3.2 3.3 3.3 EBITDA $2.0 $2.4 $2.7 $20.4 $19.6 $16.6 $20.8 $18.9 $20.5 $25.6 EBITDA as a % of sales 12.1% 12.8% 14.5% 5.8% 5.4% 4.7% 5.6% 5.5% 5.3% 6.2% EBITDA $2.0 $2.4 $2.7 $20.4 $19.6 $16.6 $20.8 $18.9 $20.5 $25.6 Stock-based compensation — — — 0.1 0.2 0.5 0.3 0.4 0.2 0.4 Restructuring charge — — — 0.1 — 2.2 — (0.1) 0.2 (0.1) Acquisition and integration costs — — — 0.2 0.3 — — — — — Adjusted EBITDA $2.0 $2.4 $2.7 $20.8 $20.1 $19.3 $21.1 $19.2 $20.9 $25.9 Adjusted EBITDA as a % of sales 12.1% 12.8% 14.5% 5.9% 5.6% 5.4% 5.7% 5.5% 5.5% 6.3%
- 29. 29© 2017 Anixter Inc. Anixter International Inc Adjusted Operating Expense Reconciliation $ millions Adjusted Operating Expense Margin 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 Operating expense (as reported) $250.0 $264.4 $252.7 $305.6 $310.5 $336.7 $309.4 $306.1 $310.7 $313.0 Items impacting comparability (5.1) (19.3) (13.1) (25.7) (11.9) (33.7) (9.9) (9.8) (9.0) (9.0) Adjusted operating expense $244.9 $245.1 $239.6 $279.9 $298.6 $303.0 $299.5 $296.3 $301.7 $304.0 Adjusted operating expense as a % of sales 17.7% 16.6% 16.1% 15.2% 16.4% 15.5% 15.3% 15.6% 15.9% 15.2% Power Solutions $60.6 $61.4 $68.5 $— $— $— $— $— $— $— Power Solutions items impacting comparability (amortization of intangible assets and acquisition and integration costs) (4.4) (4.4) (10.4) — — — — — — — Pro forma adjusted operating expense $301.1 $302.1 $297.7 $279.9 $298.6 $303.0 $299.5 $296.3 $301.7 $304.0 Pro forma adjusted operating expense as a % of sales 16.1% 15.1% 14.7% 15.2% 16.4% 15.5% 15.3% 15.6% 15.9% 15.2%
- 30. 30© 2017 Anixter Inc. Supplemental Information Summary of Restructuring Charges and Savings $ millions Charges Incremental Savings 1H15 2H15 1H16 2H16 1H17 Total 2Q15 $5.3 - $6.4 $6.6 - - $13.0 4Q15 $2.9 - - $2.0 $2.0 - $4.0 2Q16 $5.4 - - - $5.0 $5.0 $10.0 Cumulative $13.6 - $6.4 $8.6 $7.0 $5.0 $27.0 At run rate cost savings for all restructuring actions as of 3Q 2016
- 31. 31© 2017 Anixter Inc. Supplemental Information Billing Days and Average Copper Prices Billing Days Q1 Q2 Q3 Q4 FY 2015 65 63 64 61 253 2016 65 64 63 62 254 2017 64 64 63 62 253 2018 64 64 63 62 253 Average Copper Prices Q1 Q2 Q3 Q4 FY 2015 $2.67 $2.77 $2.39 $2.20 $2.50 2016 $2.11 $2.13 $2.16 $2.39 $2.20 2017 $2.65 $2.58 Increase (Decrease) $0.54 $0.45 % Increase (Decrease) 25.8% 21.1%