OREANDA-NEWS. Anixter International Inc. (NYSE: AXE) today reported quarterly sales of $2.0 billion for the quarter ended July 1, 2016, a 32.1 percent increase compared to the year-ago quarter. Excluding the impact of the following items, organic sales decreased 0.6 percent year-over-year:

  • $526.8 million favorable impact from the acquisition of Power Solutions
  • $22.2 million unfavorable impact from the lower average price of copper
  • $16.5 million unfavorable impact from the fluctuation in foreign currencies

The current quarter had 64 billing days, compared to 63 billing days in the year-ago quarter. Further excluding the favorable impact from one additional billing day, organic sales per day decreased 2.2 percent year-over-year.

All commentary in this release reflects results from continuing operations unless otherwise noted. Please refer to the tables at the end of this release for the reconciliations from our reported results prepared in accordance with U.S. GAAP to the adjusted amounts.

Net income of $20.8 million compares to $29.5 million in the prior year quarter. Current quarter results include a UK pension settlement, amortization of intangible assets, Latin America bad debt provision, restructuring charge and acquisition and integration costs. Excluding the above operating expense items, which had a $33.7 million pre-tax and $23.4 million after-tax impact, adjusted net income of $44.2 million compares to adjusted net income of $41.6 million in the prior year quarter, an increase of 6.3 percent. Diluted earnings per share of $0.62 compares to $0.88 and adjusted diluted earnings per share of $1.32 compares to $1.24, both versus prior year quarter.

Earnings Impact of Adjustments to Operating Income
    Three months ended
(In millions, except per share amounts)   July 1, 2016
UK pension settlement   $9.6
Amortization of intangible assets   9.5
Latin America bad debt provision   7.6
Restructuring charge   5.6
Acquisition and integration costs   1.4
Total pre-tax impact   $33.7
Total after-tax impact   $23.4
Adjusted Diluted EPS impact   $0.70
     

Adjusted EBITDA of $101.8 million, or 5.2 percent of sales, compares to $92.7 million, or 6.3 percent of sales, in the prior year quarter, an increase of 9.8 percent.

On a year-over-year basis, currency fluctuations and lower average copper prices negatively impacted earnings by $4.3 million pre-tax and $2.5 million net of tax. Excluding the $0.07 negative impact of currency and copper, our adjusted earnings per diluted share would have been $1.39, a 12.1 percent increase from the prior year quarter.

"Reflecting the underlying strength in our North America network infrastructure business, we delivered our 11th consecutive quarter of growth in our Network and Security Solutions segment," commented Bob Eck, President and CEO. "We were pleased with the significant improvement in our EES segment, exiting the quarter with strong momentum as we integrate the low voltage portion of the Power Solutions acquisition into the segment. Finally, the combined effects of the weaker industrial economy and lower commodity prices on a year-over-year basis continue to be headwinds for both the industrial portion of our EES segment and our UPS segment. In light of a persistent slow global growth environment, we will continue to focus on margin improvement, ongoing expense discipline and working capital efficiencies."

Income Statement Detail

Gross margin of 20.1 percent compares to 20.4 percent sequentially, with the decline primarily caused by segment and product mix. The decrease versus prior year gross margin of 22.2 percent is due primarily to the Power Solutions acquisition.

Operating expense of $336.7 million, or 17.2 percent of sales, compares to prior year operating expense of $264.4 million, or 17.9 percent of sales, reflecting the impact of the Power Solutions acquisition. The $5.6 million of restructuring costs included in operating expense will deliver approximately $10 million of annualized savings. Excluding the $33.7 million of expense outlined above, adjusted operating expense of $303.0 million, or 15.5 percent of sales, compares to prior year adjusted operating expense of $245.1 million, or 16.6 percent of sales.

Operating income of $56.7 million, or 2.9 percent of sales compares to $64.5 million or 4.4 percent in the prior year quarter. Excluding current quarter operating expense items outlined above, adjusted operating income increased 8.0 percent to $90.4 million or 4.6 percent of sales compared to $83.8 million or 5.7 percent in the prior year quarter.

Interest expense of $19.8 million compares to $12.7 million in the prior year quarter, reflecting the issuance of incremental debt to finance the Power Solutions acquisition. Foreign exchange and other expense of $0.8 million compares to $3.5 million in the prior year quarter.

Our second quarter effective tax rate was 42.4 percent. A large portion of the 360 basis point increase from the prior year effective tax rate of 38.8 percent was due to the change in the country mix of earnings since many of the current year operating expense charges of $33.7 million were incurred in countries with low income tax rates or have valuation allowances recorded against deferred tax assets. Our projected full year GAAP effective tax rate is 40.1 percent and our adjusted effective full year rate for non-GAAP operating results is 37.2 percent.

Segment Update

Network & Security Solutions ("NSS") sales of $1.0 billion increased by 3.3%. On an organic basis NSS sales increased 4.0 percent, adjusting for the $8.0 million unfavorable impact from foreign exchange, driven by solid trends in North America, EMEA and Asia Pacific.

Second quarter NSS security sales of $410.6 million, which represents approximately 40 percent of total segment sales, increased 3.7 percent from the prior year quarter. Adjusted for the $2.9 million negative currency impact, organic security sales growth was 4.5 percent.

NSS operating income of $64.9 million compares to $66.6 million in the prior year quarter and $58.8 million in the first quarter of 2016. NSS adjusted EBITDA of $75.7 million compares to $76.2 million in the prior year quarter and $63.8 million in the first quarter of 2016. The corresponding adjusted EBITDA margin of 7.2 percent compares to 7.5 percent in the prior year quarter and 6.7 percent in the first quarter of 2016.

Electrical & Electronic Solutions (“EES”) sales of $555.1 million compares to $449.5 million in the prior year period, an increase of 23.5 percent. EES organic sales decreased 1.9 percent, adjusting for the $6.7 million unfavorable impact from foreign exchange, $21.8 million impact from lower average copper prices and $145.1 million from the low voltage business of the Power Solutions acquisition.

EES operating income of $23.9 million compares to $33.6 million in the prior year quarter and $22.5 million in the first quarter of 2016. The majority of the decline in operating income versus prior year was caused by lower copper pricing and weakness in the industrial sector.

EES adjusted EBITDA of $32.3 million compares to $37.6 million in the prior year period and $25.4 million in the first quarter of 2016. The corresponding adjusted EBITDA margin of 5.8 percent compares to 8.3 percent in the prior year period and 5.0 percent in the first quarter of 2016. Approximately two-thirds of the decline in adjusted EBITDA margin versus prior year was caused by lower copper pricing and weakness in the industrial sector, with the balance due to the low voltage business of the Power Solutions acquisition.

Utility Power Solutions(“UPS”) sales of $355.9 million compares to $361.1 in the first quarter of 2016. As indicated in the prior two quarters, sales in this segment continue to be negatively impacted by lower sales in Canada due to weakness in oil and gas regions along with the timing of utility customers' major project spend.

UPS operating income of $12.0 million compares to $14.3 million in the first quarter of 2016. UPS adjusted EBITDA was $19.3 million, or 5.4 percent of sales, which compares to $20.1 million, or 5.6 percent of sales, in the first quarter of 2016.

Cash Flow and Leverage

Year-to-date we generated $149.4 million in cash flow from operations which compares to $39.3 million in the prior year period, driven primarily by working capital efficiencies. Year-to-date we have invested $16.4 million in capital expenditures which compares to $22.1 million in the prior year period. We expect to invest approximately $40 - 45 million in capital investments, lower than our original plans, to adjust for the current business environment. We now expect to generate $180 - $200 million in cash flow from operations for the full year.

"While our leading market positions and exposure to attractive end markets resulted in solid growth in our NSS segment, our EES and UPS segments face challenging headwinds. As a result, we continue to have a strong focus on improving our margin, cost structure and working capital efficiency," commented Ted Dosch, Executive Vice President - Finance and CFO. "Reflecting our relentless focus on working capital, we were pleased to achieve working capital as a percent of sales of 19.2 percent for the quarter compared to 21.4 percent at year end 2015. Turning to our capital structure, our capital allocation priorities include achieving our debt-to-capital target range of 45 - 50% by the second half of 2017, funded by the strong free cash flow we expect to generate from our repositioned platform."

Key capital structure and credit-related statistics for the quarter:

  • Debt-to-total capital ratio improved to 54.8% from 58.2% at the end of 2015
  • Weighted average cost of borrowed capital of 4.7% was the same as the year-ago quarter
  • $522.9 million available under revolving lines of credit and secured accounts receivable and inventory facilities

Business Outlook

"As we enter the second half of the year, our NSS segment continues to experience positive momentum in all regions except CALA, driven by strength in projects with global customers," commented Bob Eck. "While our EES segment continues to experience weakness related to industrial and manufacturing end market exposure, sales trends are improving in all regions except CALA. Our UPS segment continues to experience soft trends related to its exposure to oil and gas end markets in the US and Canada, combined with the timing impact of major capital projects. Reflecting diverging trends across our business and across the broad economy, as well as the uncertainty created by Brexit, we remain cautious regarding prospects for a recovery in the second half of 2016. Combining our more positive outlook in NSS with an improving outlook in our EES and UPS segments, we now expect full year 2016 sales growth between 20 to 24 percent. The acquisition will increase sales by 24 percent, while currency and copper will each have a negative impact of 1 percent. The net result is an organic sales growth rate in the negative 2 percent to positive 2 percent range."

Financial Results from Continuing Operations

    Three Months Ended   Six Months Ended
    Jul 1,   Jul 3,   Percent   Jul 1,   Jul 3,   Percent
(In millions, except per share amounts)   2016   2015   Change   2016   2015   Change
Net Sales   $ 1,955.7     $ 1,480.4     32 %   $ 3,771.9     $ 2,865.5     32 %
Operating Income   $ 56.7     $ 64.5     (12 )%   $ 117.0     $ 123.8     (6 )%
Net Income   $ 20.8     $ 29.5     (30 )%   $ 44.0     $ 56.0     (21 )%
Diluted Earnings Per Share   $ 0.62     $ 0.88     (30 )%   $ 1.32     $ 1.68     (21 )%
Diluted Weighted Shares   33.5     33.4     — %   33.4     33.4     — %
                                     

 

About Anixter

Anixter International is a leading global distributor of Network & Security Solutions, Electrical & Electronic Solutions and Utility Power Solutions. We help build, connect, protect, and power valuable assets and critical infrastructures. From enterprise networks to industrial MRO supply to video surveillance applications to electric power distribution, we offer full-line solutions, and intelligence, that create reliable, resilient systems that sustain businesses and communities. Through our unmatched global distribution network along with our supply chain and technical expertise, we help lower the cost, risk and complexity of our customers’ supply chains.

Anixter adds value to the distribution process by providing our customers access to 1) innovative supply chain solutions, 2) over 450,000 products and $1.2 billion in inventory, 3) approximately 320 warehouses/branch locations with approximately 9.0 million square feet of space and 4) locations in over 300 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.

 

         
ANIXTER INTERNATIONAL INC.        
Condensed Consolidated Statements of Operations (Unaudited)        
                 
    Three Months Ended   Six Months Ended
(In millions, except per share amounts)   July 1, 2016   July 3, 2015   July 1, 2016   July 3, 2015
       
                 
Net sales   $ 1,955.7     $ 1,480.4     $ 3,771.9     $ 2,865.5  
Cost of goods sold   1,562.3     1,151.5     3,007.7     2,227.3  
Gross profit   393.4     328.9     764.2     638.2  
Operating expenses   336.7     264.4     647.2     514.4  
Operating income   56.7     64.5     117.0     123.8  
Other expense:                
Interest expense   (19.8 )   (12.7 )   (39.9 )   (26.9 )
Other, net   (0.8 )   (3.5 )   (3.6 )   (7.5 )
Income from continuing operations before income taxes   36.1     48.3     73.5     89.4  
Income tax expense from continuing operations   15.3     18.8     29.5     33.4  
Net income from continuing operations   20.8     29.5     44.0     56.0  
(Loss) income from discontinued operations before income taxes   (0.5 )   46.5     (1.2 )   57.7  
Income tax (benefit) expense from discontinued operations   (0.2 )   4.6     (0.5 )   23.2  
Net (loss) income from discontinued operations   (0.3 )   41.9     (0.7 )   34.5  
Net income   $ 20.5     $ 71.4     $ 43.3     $ 90.5  
Income (loss) per share:                
Basic:                
Continuing operations   $ 0.62     $ 0.89     $ 1.32     $ 1.69  
Discontinued operations   (0.01 )   1.26     (0.02 )   1.04  
Net Income   $ 0.61     $ 2.15     $ 1.30     $ 2.73  
Diluted:                
Continuing operations   $ 0.62     $ 0.88     $ 1.32     $ 1.68  
Discontinued operations   (0.01 )   1.26     (0.03 )   1.03  
Net Income   $ 0.61     $ 2.14     $ 1.29     $ 2.71  
                 
Weighted-average common shares outstanding:                
Basic   33.4     33.2     33.3     33.2  
Diluted   33.5     33.4     33.4     33.4  
                 
Reportable Segments                
Net sales:       (As revised*)       (As revised*)
Network & Security Solutions   $ 1,044.7     $ 1,011.7     $ 1,993.8     $ 1,939.7  
Electrical & Electronic Solutions   555.1     449.5     1,061.1     890.3  
Utility Power Solutions   355.9     19.2     717.0     35.5  
    $ 1,955.7     $ 1,480.4     $ 3,771.9     $ 2,865.5  
Operating income:                
Network & Security Solutions   $ 64.9     $ 66.6     $ 123.7     $ 122.3  
Electrical & Electronic Solutions   23.9     33.6     46.4     69.4  
Utility Power Solutions   12.0     2.4     26.3     4.4  
Corporate   (44.1 )   (38.1 )   (79.4 )   (72.3 )
    $ 56.7     $ 64.5     $ 117.0     $ 123.8  
                 
* Revised due to change in composition of our reportable segments.
 
 
ANIXTER INTERNATIONAL INC.
Condensed Consolidated Balance Sheets (Unaudited)
         
    July 1, 2016   January 1, 2016
(In millions)    
         
ASSETS        
Current assets:        
Cash and cash equivalents   $ 133.2     $ 151.3  
Accounts receivable, net   1,350.5     1,326.4  
Inventories   1,186.5     1,182.6  
Other current assets   50.9     67.5  
Total current assets   2,721.1     2,727.8  
Property and equipment, net   140.6     131.8  
Goodwill   767.0     756.5  
Intangible assets, net   437.0     453.8  
Other assets   72.9     72.1  
Total assets   $ 4,138.6     $ 4,142.0  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable   $ 1,001.8     $ 905.6  
Accrued expenses   217.2     250.6  
Total current liabilities   1,219.0     1,156.2  
5.50% Senior notes due 2023   346.0     345.8  
5.125% Senior notes due 2021   395.3     394.9  
5.625% Senior notes due 2019   347.2     346.8  
Canadian term loan   162.1     172.9  
Revolving lines of credit   270.0     390.1  
Other   2.2     2.6  
Unamortized debt issuance costs   (8.4 )   (10.2 )
Other liabilities   155.4     163.5  
Total liabilities   2,888.8     2,962.6  
Total stockholders' equity   1,249.8     1,179.4  
Total liabilities and stockholders' equity   $ 4,138.6     $ 4,142.0  
                 
 
ANIXTER INTERNATIONAL INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
         
    Six Months Ended
    July 1, 2016   July 3, 2015
(In millions)    
         
Operating activities:        
Net income   $ 43.3     $ 90.5  
Adjustments to reconcile net income to net cash provided by operating activities:        
Gain on sale of business, net of tax expense of $10.0 in 2015   —     (49.3 )
Depreciation   14.0     11.9  
Amortization of intangible assets   19.2     10.7  
Stock-based compensation   8.4     7.4  
Deferred income taxes   1.4     —  
Accretion of debt discount   1.1     0.8  
Amortization of deferred financing costs   1.0     0.7  
Pension plan contributions   (10.5 )   (12.1 )
Pension plan expenses   15.2     5.9  
Excess income tax benefit from employee stock plans   (0.2 )   (0.5 )
Changes in current assets and liabilities, net   62.4     (30.5 )
Other, net   (5.9 )   3.8  
Net cash provided by operating activities   149.4     39.3  
Investing activities:        
Capital expenditures, net   (16.4 )   (22.1 )
Proceeds from sale of business   —     358.0  
Other, net   (4.7 )   2.2  
Net cash (used in) provided by investing activities   (21.1 )   338.1  
Financing activities:        
Proceeds from borrowings   376.7     508.8  
Repayments of borrowings   (496.7 )   (573.8 )
Repayments of Canadian term loan   (23.1 )   —  
Retirement of Notes due 2015   —     (200.0 )
Repayments of term loan   —     (2.5 )
Excess income tax benefit from employee stock plans   0.2     0.5  
Other, net   (0.6 )   (1.0 )
Net cash used in financing activities   (143.5 )   (268.0 )
(Decrease) increase in cash and cash equivalents   (15.2 )   109.4  
Effect of exchange rate changes on cash balances   (2.9 )   4.8  
Cash and cash equivalents at beginning of period   151.3     92.0  
Cash and cash equivalents at end of period   $ 133.2     $ 206.2  
                 
     
ANIXTER INTERNATIONAL INC.
Financial Measures That Supplement GAAP (Unaudited)
                                   
Second Quarter 2016 Sales Growth Trends
   

 

Q2 2016

   Q2 2015    
        Foreign                       Organic
    As   Exchange   Copper   As   As   Acquisition   Pro   Growth/
(In millions)   Reported   Impact   Impact   Adjusted   Revised*   Impact   Forma   (Decline)
                                   
Network & Security Solutions                                
  North America   $ 838.7     $ 3.2     $ —     $ 841.9     $ 801.9     $ —     $ 801.9     5.0 %
  Europe   85.8     1.1     —     86.9     83.8     —     83.8     3.6 %
  Emerging Markets   120.2     3.7     —     123.9     126.0     —     126.0     (1.8 )%
  NSS   $ 1,044.7     $ 8.0     $ —     $ 1,052.7     $ 1,011.7     $ —     $ 1,011.7     4.0 %
                                   
Electrical & Electronic Solutions                                
  North America   $ 454.7     $ 2.5     $ 18.1     $ 475.3     $ 315.4     $ 145.1     $ 460.5     3.2 %
  Europe   59.2     2.9     1.5     63.6     63.6     —     63.6     (0.2 )%
  Emerging Markets   41.2     1.3     2.2     44.7     70.5     —     70.5     (36.6 )%
  EES   $ 555.1     $ 6.7     $ 21.8     $ 583.6     $ 449.5     $ 145.1     $ 594.6     (1.9 )%
                                   
Utility Power Solutions                                
  North America   $ 355.9     $ 1.8     $ 0.4     $ 358.1     $ 19.2     $ 381.7     $ 400.9     (10.7 )%
  UPS   $ 355.9     $ 1.8     $ 0.4     $ 358.1     $ 19.2     $ 381.7     $ 400.9     (10.7 )%
                                   
Total   $ 1,955.7     $ 16.5     $ 22.2     $ 1,994.4     $ 1,480.4     $ 526.8     $ 2,007.2     (0.6 )%
                                   
Geographic Sales                                
  North America   $ 1,649.3     $ 7.5     $ 18.5     $ 1,675.3     $ 1,136.5     $ 526.8     $ 1,663.3     0.7 %
  Europe   145.0     4.0     1.5     150.5     147.4     —     147.4     2.0 %
  Emerging Markets   161.4     5.0     2.2     168.6     196.5     —     196.5     (14.3 )%
Total   $ 1,955.7     $ 16.5     $ 22.2     $ 1,994.4     $ 1,480.4     $ 526.8     $ 2,007.2     (0.6 )%
 
June Year-to-Date 2016 Sales Growth Trends
   

 

YTD 2016

   YTD 2015    
        Foreign                       Organic
    As   Exchange   Copper   As   As   Acquisition   Pro   Growth/
(In millions)   Reported   Impact   Impact   Adjusted   Revised*   Impact   Forma   (Decline)
                                   
Network & Security Solutions                                
  North America   $ 1,586.7     $ 11.0     $ —     $ 1,597.7     $ 1,528.5     $ —     $ 1,528.5     4.5 %
  Europe   167.2     3.5     —     170.7     168.0     —     168.0     1.6 %
  Emerging Markets   239.9     10.0     —     249.9     243.2     —     243.2     2.7 %
  NSS   $ 1,993.8     $ 24.5     $ —     $ 2,018.3     $ 1,939.7     $ —     $ 1,939.7     4.1 %
                                   
Electrical & Electronic Solutions                                
  North America   $ 859.5     $ 7.9     $ 35.3     $ 902.7     $ 627.5     $ 281.3     $ 908.8     (0.7 )%
  Europe   116.9     5.9     2.7     125.5     134.4     —     134.4     (6.7 )%
  Emerging Markets   84.7     2.9     3.8     91.4     128.4     —     128.4     (28.9 )%
  EES   $ 1,061.1     $ 16.7     $ 41.8     $ 1,119.6     $ 890.3     $ 281.3     $ 1,171.6     (4.4 )%
                                   
Utility Power Solutions                                
  North America   $ 717.0     $ 7.0     $ 0.8     $ 724.8     $ 35.5     $ 728.1     $ 763.6     (5.1 )%
  UPS   $ 717.0     $ 7.0     $ 0.8     $ 724.8     $ 35.5     $ 728.1     $ 763.6     (5.1 )%
                                   
Total   $ 3,771.9     $ 48.2     $ 42.6     $ 3,862.7     $ 2,865.5     $ 1,009.4     $ 3,874.9     (0.3 )%
                                   
Geographic Sales                                
  North America   $ 3,163.2     $ 25.9     $ 36.1     $ 3,225.2     $ 2,191.5     $ 1,009.4     $ 3,200.9     0.8 %
  Europe   284.1     9.4     2.7     296.2     302.4     —     302.4     (2.1 )%
  Emerging Markets   324.6     12.9     3.8     341.3     371.6     —     371.6     (8.2 )%
Total   $ 3,771.9     $ 48.2     $ 42.6     $ 3,862.7     $ 2,865.5     $ 1,009.4     $ 3,874.9     (0.3 )%
 

* Revised due to change in composition of our reportable segments.
 
     
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 1, 2016   July 3, 2015   July 1, 2016   July 3, 2015
         
        (As revised*)       (As revised*)
Continuing operations                
Items impacting comparability of results:                
Items impacting operating income:                
Amortization of intangible assets   $ (9.5 )   $ (5.2 )   $ (19.2 )   $ (10.3 )
UK pension settlement   (9.6 )   (0.4 )   (9.6 )   (0.4 )
Restructuring charge   (5.6 )   (5.3 )   (5.6 )   (5.3 )
Acquisition and integration costs   (1.4 )   (1.0 )   (3.6 )   (1.0 )
Write-off of capitalized software   —     (3.1 )   —     (3.1 )
Latin America bad debt provision   (7.6 )   (2.6 )   (7.6 )   (2.6 )
Dilapidation provision   —     (1.7 )   —     (1.7 )
Total of items impacting operating income   $ (33.7 )   $ (19.3 )   $ (45.6 )   $ (24.4 )
Items impacting other expenses:                
Foreign exchange loss from the devaluation of foreign currencies   —     —     —     (0.7 )
Total of items impacting other expenses   $ —     $ —     $ —     $ (0.7 )

Total of items impacting pre-tax income

   $ (33.7 )   $ (19.3 )   $ (45.6 )   $ (25.1 )
Items impacting income taxes:                
Tax impact of items impacting pre-tax income above   $ 10.3     $ 7.2     $ 14.8     $ 9.3  
Total of items impacting income taxes   $ 10.3     $ 7.2     $ 14.8     $ 9.3  
Net income impact of these items   $ (23.4 )   $ (12.1 )   $ (30.8 )   $ (15.8 )
Diluted EPS impact of these items   $ (0.70 )   $ (0.36 )   $ (0.92 )   $ (0.47 )
                 
GAAP to Non-GAAP Net Income and EPS Reconciliation for continuing operations:                
Net income from continuing operations – GAAP   $ 20.8     $ 29.5     $ 44.0     $ 56.0  
Items impacting net income from continuing operations   23.4     12.1     30.8     15.8  
Net income from continuing operations – Non-GAAP   $ 44.2     $ 41.6     $ 74.8     $ 71.8  
                 
Diluted EPS – GAAP   $ 0.62     $ 0.88     $ 1.32     $ 1.68  
Diluted EPS impact of these items   0.70     0.36     0.92     0.47  
Diluted EPS – Non-GAAP   $ 1.32     $ 1.24     $ 2.24     $ 2.15  
                 
* Revised due to change in composition of items impacting comparability of results to include amortization of intangible assets.
     
Items Impacting Comparability of Operating Income by Segment   Three Months Ended July 1, 2016
(In millions)   NSS   EES   UPS   Corporate   Total
                     
Operating income - GAAP   $ 64.9     $ 23.9     $ 12.0     $ (44.1 )   $ 56.7  
Operating margin - GAAP   6.2 %   4.3 %   3.4 %   nm   2.9 %
                     
Total of items impacting operating income   $ 9.4     $ 7.1     $ 6.1     $ 11.1     $ 33.7  
                     
Adjusted operating income - Non-GAAP   $ 74.3     $ 31.0     $ 18.1     $ (33.0 )   $ 90.4  
Adjusted operating margin - Non-GAAP   7.1 %   5.6 %   5.1 %   nm   4.6 %
                     
                     
Items Impacting Comparability of Operating Income by Segment   Six Months Ended July 1, 2016
    NSS   EES   UPS   Corporate   Total
                     
Operating income - GAAP   $ 123.7     $ 46.4     $ 26.3     $ (79.4 )   $ 117.0  
Operating margin - GAAP   6.2 %   4.4 %   3.7 %   nm   3.1 %
                     
Total of items impacting operating income   $ 13.0     $ 9.3     $ 10.3     $ 13.0     $ 45.6  
                     
Adjusted operating income - Non-GAAP   $ 136.7     $ 55.7     $ 36.6     $ (66.4 )   $ 162.6  
Adjusted operating margin - Non-GAAP   6.9 %   5.2 %   5.1 %   nm   4.3 %
nm - not meaningful                    
     
Items Impacting Comparability of Operating Income by Segment   Three Months Ended July 3, 2015 (As revised*)
(In millions)   NSS   EES   UPS   Corporate   Total
                     
Operating income - GAAP   $ 66.6     $ 33.6     $ 2.4     $ (38.1 )   $ 64.5  
Operating margin - GAAP   6.6 %   7.5 %   12.5 %   nm   4.4 %
                     
Total of items impacting operating income   $ 8.1     $ 3.3     $ —     $ 7.9     $ 19.3  
                     
Adjusted operating income - Non-GAAP   $ 74.7     $ 36.9     $ 2.4     $ (30.2 )   $ 83.8  
Adjusted operating margin - Non-GAAP   7.4 %   8.2 %   12.5 %   nm   5.7 %
                     
                     
Items Impacting Comparability of Operating Income by Segment   Six Months Ended July 3, 2015 (As revised*)
    NSS   EES   UPS   Corporate   Total
                     
Operating income - GAAP   $ 122.3     $ 69.4     $ 4.4     $ (72.3 )   $ 123.8  
Operating margin - GAAP   6.3 %   7.8 %   12.5 %   nm   4.3 %
                     
Total of items impacting operating income   $ 11.8     $ 4.7     $ —     $ 7.9     $ 24.4  
                     
Adjusted operating income - Non-GAAP   $ 134.1     $ 74.1     $ 4.4     $ (64.4 )   $ 148.2  
Adjusted operating margin - Non-GAAP   6.9 %   8.3 %   12.5 %   nm   5.2 %
nm - not meaningful                    
                     
* Revised due to change in composition of our reportable segments.
                 
ANIXTER INTERNATIONAL INC.                
                 
2016 and 2015 Effective Tax Rate – GAAP and Non-GAAP                
    Three Months Ended   Six Months Ended
    July 1, 2016   July 3, 2015   July 1, 2016   July 3, 2015
(In millions)        
        (As revised*)       (As revised*)
Income from continuing operations before taxes – GAAP   $ 36.1     $ 48.3     $ 73.5     $ 89.4  
Income tax expense – GAAP   $ 15.3     $ 18.8     $ 29.5     $ 33.4  
Effective income tax rate   42.4 %   38.8 %   40.1 %   37.3 %
                 
Total of items impacting pre-tax income above   $ 33.7     $ 19.3     $ 45.6     $ 25.1  
Total of items impacting income taxes above   $ 10.3     $ 7.2     $ 14.8     $ 9.3  
                 
Income from continuing operations before income taxes – Non-GAAP   $ 69.8     $ 67.6     $ 119.1     $ 114.5  
Income tax expense – Non-GAAP   $ 25.6     $ 26.0     $ 44.3     $ 42.7  
Adjusted effective income tax rate   37.2 %   37.3 %   37.2 %   37.3 %
                 
* Revised due to change in composition of items impacting comparability of results to include amortization of intangible assets.
 
2016 EBITDA by Segment
    Three Months Ended July 1, 2016
(In millions)   NSS   EES   UPS   Corporate   Total
Net income from continuing operations   $ 64.9     $ 23.9     $ 12.0     $ (80.0 )   $ 20.8  
Interest expense   —     —     —     19.8     19.8  
Income taxes   —     —     —     15.3     15.3  
Depreciation   0.8     1.0     0.7     4.5     7.0  
Amortization of intangible assets   3.6     2.0     3.9     —     9.5  
EBITDA   $ 69.3     $ 26.9     $ 16.6     $ (40.4 )   $ 72.4  
EBITDA leverage   -0.8x   -1.0x   0.3x   nm   nm
EBITDA as a % of sales   6.6 %   4.8 %   4.7 %   nm   3.7 %
                     
Foreign exchange and other non-operating expense   $ —     $ —     $ —     $ 0.8     $ 0.8  
Stock-based compensation   0.6     0.3     0.5     3.0     4.4  
UK pension settlement   —     —     —     9.6     9.6  
Restructuring charge   1.9     1.4     2.2     0.1     5.6  
Latin America bad debt provision   3.9     3.7     —     —     7.6  
Acquisition and integration costs   —     —     —     1.4     1.4  
Adjusted EBITDA   $ 75.7     $ 32.3     $ 19.3     $ (25.5 )   $ 101.8  
Adjusted EBITDA leverage   -0.2x   -0.6x   0.4x   nm   0.3x
Adjusted EBITDA as a % of sales   7.2 %   5.8 %   5.4 %   nm   5.2 %
                     
    Six Months Ended July 1, 2016
    NSS   EES   UPS   Corporate   Total
Net income from continuing operations   $ 123.7     $ 46.4     $ 26.3     $ (152.4 )   $ 44.0  
Interest expense   —     —     —     39.9     39.9  
Income taxes   —     —     —     29.5     29.5  
Depreciation   1.7     1.5     2.1     8.7     14.0  
Amortization of intangible assets   7.2     4.2     7.8     —     19.2  
EBITDA   $ 132.6     $ 52.1     $ 36.2     $ (74.3 )   $ 146.6  
EBITDA leverage   0.3x   -1.5x   0.4x   nm   0.2x
EBITDA as a % of sales   6.7 %   4.9 %   5.0 %   nm   3.9 %
                     
Foreign exchange and other non-operating expense   $ —     $ —     $ —     $ 3.6     $ 3.6  
Stock-based compensation   1.1     0.5     0.7     6.2     8.5  
UK pension settlement   —     —     —     9.6     9.6  
Restructuring charge   1.9     1.4     2.2     0.1     5.6  
Latin America bad debt provision   3.9     3.7     —     —     7.6  
Acquisition and integration costs   —     —     0.3     3.3     3.6  
Adjusted EBITDA   $ 139.5     $ 57.7     $ 39.4     $ (51.5 )   $ 185.1  
Adjusted EBITDA leverage   0.7x   -1.2x   0.4x   nm   0.4x
Adjusted EBITDA as a % of sales   7.0 %   5.4 %   5.5 %   nm   4.9 %
                     
nm - not meaningful                    
 
2015 EBITDA by Segment
    Three Months Ended July 3, 2015 (As revised*)
(In millions)   NSS   EES   UPS   Corporate   Total
Net income from continuing operations   $ 66.6     $ 33.6     $ 2.4     $ (73.1 )   $ 29.5  
Interest expense   —     —     —     12.7     12.7  
Income taxes   —     —     —     18.8     18.8  
Depreciation   0.9     0.3     —     4.1     5.3  
Amortization of intangible assets   3.7     1.5     —     —     5.2  
EBITDA   $ 71.2     $ 35.4     $ 2.4     $ (37.5 )   $ 71.5  
EBITDA leverage   .5x   nm   -.5x   nm   -1.2x
EBITDA as a % of sales   7.0 %   7.9 %   12.8 %   nm   4.8 %
                     
Foreign exchange and other non-operating expense   $ —     $ —     $ —     $ 3.5     $ 3.5  
Stock-based compensation   0.6     0.4     —     2.6     3.6  
UK pension settlement   —     —     —     0.4     0.4  
Restructuring charge   1.8     1.8     —     1.7     5.3  
Acquisition and integration costs   —     —     —     1.0     1.0  
Write-off of capitalized software   —     —     —     3.1     3.1  
Latin America bad debt provision   2.6     —     —     —     2.6  
Dilapidation provision   —     —     —     1.7     1.7  
Adjusted EBITDA   $ 76.2     $ 37.6     $ 2.4     $ (23.5 )   $ 92.7  
Adjusted EBITDA leverage   .9x   nm   -.5x   nm   .7x
Adjusted EBITDA as a % of sales   7.5 %   8.3 %   12.8 %   nm   6.3 %
                     
    Six Months Ended July 3, 2015 (As revised*)
    NSS   EES   UPS   Corporate   Total
Net income from continuing operations   $ 122.3     $ 69.4     $ 4.4     $ (140.1 )   $ 56.0  
Interest expense   —     —     —     26.9     26.9  
Income taxes   —     —     —     33.4     33.4  
Depreciation   1.8     0.5     —     8.1     10.4  
Amortization of intangible assets   7.4     2.9     —     —     10.3  
EBITDA   $ 131.5     $ 72.8     $ 4.4     $ (71.7 )   $ 137.0  
EBITDA leverage   .4x   nm   -6.2x   nm   -.8x
EBITDA as a % of sales   6.8 %   8.2 %   12.5 %   nm   4.8 %
                     
Foreign exchange and other non-operating expense   $ —     $ —     $ —     $ 7.5     $ 7.5  
Stock-based compensation   1.0     0.7     —     5.2     6.9  
UK pension settlement   —     —     —     0.4     0.4  
Restructuring charge   1.8     1.8     —     1.7     5.3  
Acquisition and integration costs   —     —     —     1.0     1.0  
Write-off of capitalized software   —     —     —     3.1     3.1  
Latin America bad debt provision   2.6     —     —     —     2.6  
Dilapidation provision   —     —     —     1.7     1.7  
Adjusted EBITDA   $ 136.9     $ 75.3     $ 4.4     $ (51.1 )   $ 165.5  
Adjusted EBITDA leverage   .6x   nm   -6.2x   nm   0x
Adjusted EBITDA as a % of sales   7.1 %   8.4 %   12.5 %   nm   5.8 %
                     
nm - not meaningful                    
                     
* Revised due to change in composition of our reportable segments.