GLENVIEW, Ill. — Anixter Int’l (NYSE: AXE) today reported third quarter sales increased 8.1% to $2.2 billion versus $2 billion in the third quarter the prior year. Operating income increased 10.8% to $89.5 million, net income increased 26.5% to $47.6 million, and diluted earnings per share increased 26.1% to $1.40, all versus the prior year quarter, respectively.
For the third quarter ending Sept. 28, Anixter reported sales were impacted favorably by the second-quarter acquisitions of access control manufacturer Inner Range and electronic security distributor Central Security Distribution. The lower average price of copper and fluctuation in foreign currencies adversely impacted sales in the third quarter. Adjusting for these impacts, organic sales increased 7.4%.
Gross profit increased 6.8% to $424.1 million, while gross margin of 19.5% decreased by 10 basis points sequentially and 20 basis points year-over-year.
Adjusted operating expense of $324.3 million compares to $306.5 million, a 5.8% increase. This increase was driven by approximately $8 million of incremental expense from the acquisitions, higher volume, inflationary impacts mostly from freight and medical costs, and growth investments, including ongoing investment in technology.
Adjusted operating income increased 10.1% to $99.8 million. The corresponding adjusted operating margin improved 10 basis points to 4.6%. Adjusted EBITDA increased 8.4% to $111.2 million. The corresponding adjusted EBITDA margin of 5.1% is flat compared to prior year. Adjusted net income increased 23.8% to $54.8 million and adjusted diluted earnings per share increased 23.8% to $1.61.
The company reported record third quarter sales in all business segments, as well as organic growth in all segments and geographies.
The Network & Security Solutions (NSS) segment posted quarterly sales of $1.14 billion, an increase of 8.5%, or 6.4% on an organic basis. NSS security sales of $489.8 million, which represents approximately 43% of segment sales, increased 12.3%.
The Electrical & Electronic Solutions (EES) segment reported quarterly sales of $597.4 million, an increase of 7.6%, or 9.0% on an organic basis. The Utility Power Solutions (UPS) segment reported quarterly sales of $443.6 million, an increase of 7.6%, or 8.1% on an organic basis.
“Growth was driven by an acceleration in our complex services and global project businesses, our security acquisitions, and strategic initiatives including security, wireless and professional audio video,” Anixter President and CEO Bill Galvin states in a press release. “Despite challenging macro economic factors including tariffs, wage increases and broader inflationary pressures, our top priority remains improving profitability through gross margin initiatives combined with our focus on cost structure, as we balance expense discipline with growth investments in the business.”
