Anixter reports flat sales in third quarter results

For the quarter ended September 28, 2012, Anixter International Inc. (NYSE: AXE), reported flat sales of $1.61 billion compared to the same period in 2011. The distributor’s organic sales increased by 0.4% excluding the impact of the following items: $31.8 million of sales from the acquisition of Jorvex (which was completed at the end of the second quarter of 2012); $17.7 million from the unfavorable effects of copper pricing; and $23.1 million from unfavorable foreign exchange effects.

Headquartered in Glenview, Ill., Anixter is a global distributor of communication and security products, electrical and electronic wire & cable, fasteners and other small parts. The firm’s third quarter operating income of $67.3 million included a $27.2 million impairment charge and an inventory lower of cost or market adjustment of $1.2 million. This combined non-cash charge of $28.4 million was a result of weaker macroeconomic conditions in Europe, driving lower operating income and a reduction in projected future cash flows.

During the third quarter, Anixter’s net income from continuing operations was $19.8 million compared to $61.6 million for the same period one year earlier. Excluding the impairment and inventory charges of $27.4 million net of tax, adjusted net income from continuing operations would have been $47.2 million as compared to $52.8 million in the prior year quarter excluding a net tax benefit of $8.8 million.

Diluted earnings per share from continuing operations of $0.59 declined from $1.78 per diluted share reported in the year ago quarter primarily due to the impairment and inventory charges. Excluding the current quarter charge of $0.82 per diluted share as well as the prior year tax benefit of $0.25 per diluted share, net income from continuing operations would have been $1.41 per diluted share, a decrease of 8% from the prior year quarter diluted adjusted earnings per share of $1.53.

Cash flow generated from Anixter’s operations during the third quarter was $66.7 million compared to $18.7 million during the same period in 2011. The higher cash generation in the quarter was primarily due to a reduction in working capital requirements compared to the prior year quarter.

“While the quarter was challenging from a macro economic perspective, which is reflected in lower sales in our Europe segment and our OEM supply end market, we remain confident in the underlying health of our business and our ability to capitalize on a variety of opportunities throughout our business,” said Robert Eck, president and CEO, in a press release.

“The strength of our global natural resource development and power generation markets helped to fuel 8 percent organic growth in our global electrical and electronic wire & cable end markets,” Eck continued. “This strong performance included a record quarter for our Canadian wire and cable business and 29% organic growth for our emerging markets wire and cable business.”

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