By Bridget McCrea
Anixter International Inc. (NYSE: AXE) reported sales of $1.67 billion for the quarter ended January 2, 2015, a 4.4 percent increase compared to the year-ago quarter. Excluding the impact of the following items, organic sales decreased by 2.1 percent, year-over-year: $145.4 million favorable impact from the acquisition of Tri-Ed, $10.1 million unfavorable impact from the lower average price of copper, and $30.5 million unfavorable impact from the fluctuation in foreign exchange.
On a per day basis, Anixter’s organic sales increased approximately 4.3 percent. Sequential sales were favorably impacted by $117.4 million from the acquisition of Tri-Ed, offset by $20.9 million unfavorable foreign exchange, and three fewer billing days this quarter. Sequentially, sales decreased 0.9 percent on a per day organic basis which follows historical seasonal trends.
Anixter’s operating income of $88.8 million compares to $95.6 million in the prior year quarter. Excluding the negative impact of $2.6 million of acquisition and strategic tax project costs, adjusted operating income of $91.4 million compares to $95.6 million in the prior year quarter, a 4.4 percent decrease. The company’s adjusted EBITDA of $106.9 million compares to $106.6 million in the prior year quarter.
The company’s adjusted net income of $46.4 million compares to $53.3 million in the prior year quarter. Including the negative impact of $0.05 for acquisition and strategic tax project costs and the negative impact of $0.11 for the change in the country mix of earnings, Anixter’s reported diluted earnings per share of $1.23 compares to $1.75 in the prior year quarter.
“While enterprise cabling and security solutions, our largest segment, delivered its second consecutive quarter of strong global performance, our electrical and electronic wire and cable segment performed below our expectations,” said Bob Eck, president and CEO, in a company press release. “Our fasteners segment experienced strong favorable trends in both North America and emerging markets geographies, which were offset by the impacts of the challenging economic environment in continental Europe and the previously disclosed transition of one customer to a dual-source supply program at the end of 2013.”
Anixter’s gross margin of 22.4 percent for the fourth quarter of 2014 compares to 23.2 percent in the year-ago quarter and 22.7 percent in the third quarter of this year. The decrease in gross margin reflected project mix and lower margins in each segment. In enterprise cabling and security solutions, the increase in security as a portion of the total business adversely impacted gross margin.
In electrical and electronic wire and cable, competitive pressures, faster growth by the firm’s industrial customers and lower copper prices adversely impacted gross margin. In fasteners, customer mix and the previously disclosed benefit from the sale of inventory in the prior year quarter associated with the customer transition adversely impacted gross margin.
“Looking ahead, we expect the positive trends in our ECS business to continue, reflecting improved market conditions in our core business and strong organic growth in our security business,” Eck said, in the release. “Related to the macro economic landscape, we believe that lower energy prices will benefit our business in the long term through the positive impact on domestic GDP growth although the full benefit may be largely mitigated by dollar strength. As we move into 2015, we believe that the full year organic sales growth will be in the 3 – 5 percent range.”
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McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.
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