Anixter International’s Sales Jump in Fourth Quarter Thanks to Acquisition of Power Solutions

Despite jump in sales, fourth-quarter earnings fell short of Wall Street expectations.

GLENVIEW, Ill. — Anixter International on Tuesday reported quarterly sales of $1.84 billion for the quarter ended Jan. 1, 2016, a 26.4% increase compared to the year-ago quarter. The current quarter and year-ago quarter each had 61 billing days. Excluding the impact of the following items, organic sales decreased by 0.5% year-over-year.

  • $479.6 million favorable impact from the acquisition of Power Solutions
  • $27.8 million unfavorable impact from the lower average price of copper
  • $57.6 million unfavorable impact from the fluctuation in foreign currencies

Adjusted net income of $29.3 million compares to $36.7 million in the prior year quarter and adjusted earnings per diluted share of 88 cents compares to $1.10 in the prior year quarter. On a year-over-year basis, Anixter says its earnings were negatively impacted by currency and copper by $8.8 million pre tax and $5.3 million net of tax (16 cents diluted earnings per share). According to the company, excluding the 15 cents diluted earnings per share impact of the higher tax rate related to the first nine months of 2015 and the negative impact of currency and copper, its core adjusted diluted earnings per share would have been $1.19, an 8.2% increase from the prior year quarter.

Fourth-quarter earnings were $4.6 million. For the year, Anixter reported profit of $127.6 million, or $3.81 per share. Revenue was $6.19 billion.

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In the fourth quarter of 2015, in connection with the acquisition of Power Solutions, the company’s legacy Enterprise Cabling & Security Solutions (ECS) segment was renamed Network & Security Solutions (NSS). The low voltage business of Power Solutions was combined with Anixter’s historical Electrical and Electronic Wire & Cable (W&C) segment and renamed Electrical & Electronic Solutions (EES). The high voltage business of Power Solutions forms the Utility Power Solutions (UPS) segment. Subsequently, in January 2016, the company says it disclosed pro forma results for historical periods.

“In spite of significant macroeconomic headwinds that affected the global economy, we delivered solid growth in our network and security businesses, driven by acceleration in our North America geography,” said Bob Eck, president and CEO of Anixter. “In our EES and UPS segments, the soft industrial economy combined with even weaker commodity prices causes results to be lower than we had expected at the beginning of the quarter. Given our cautious outlook for any near term improvement in market conditions, we have taken further restructuring actions across our business and will continue to focus on margin improvement, ongoing expensive discipline and working capital efficiencies.”

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