4Q 2019 Highlights and Operating...

4Q 2019 Highlights and Operating Results

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2© 2020 Anixter Inc.

Table of Contents

Page

3 Safe Harbor Statement and Non-GAAP Financial Measures

4 Financial Results

5 Sales Overview

7 Overview of Financial Performance and Trends

14 Segment Results and Trends

20 Working Capital and Adjusted ROTC

21 Leverage Metrics

22 Outlook

28 Appendix


Safe Harbor Statement and Non-GAAP Financial MeasuresSafe Harbor StatementThe statements in this release other than historical facts are forward-looking statements made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of factors that could cause our actual results to differ materially from what is indicated here. These factors include but are notlimited to general economic conditions, the level of customer demand particularly for capital projects in the markets we serve, changes in supplier relationships or in supplier salesstrategies or financial viability, risks associated with the sale of nonconforming products and services, political, economic or currency risks related to foreign operations, inventoryobsolescence, copper price fluctuations, customer viability, risks associated with accounts receivable, risks associated with pension expense and funding, the impact of regulation andregulatory, investigative and legal proceedings and legal compliance risks, information security risks, disruption or failure of information systems, disruptions to logistics capability orsupply chain, risks associated with substantial debt and restrictions contained in financial and operating covenants in our debt agreements, the impact and the uncertainty concerning thetiming and terms of the withdrawal by the United Kingdom from the European Union, unanticipated changes in our tax provision and tax liabilities related to the enactment of the Tax Cutsand Jobs Act, and risks associated with integration of acquired companies, including, but not limited to, the risk that the acquisitions may not provide us with the synergies or otherbenefits that were anticipated. These uncertainties may cause our actual results to be materially different than those expressed in any forward looking statements. We do not undertaketo update any forward looking statements. Please see our Securities and Exchange Commission (“SEC”) filings for more information.

Non-GAAP Financial MeasuresIn addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) above, this release includes certain financial measures computed usingnon-GAAP components as defined by the SEC. Specifically, net sales comparisons to the prior corresponding period, both worldwide and in relevant segments, are discussed in thisrelease both on an U.S. GAAP and non-GAAP basis. We believe that by providing non-GAAP organic growth, which adjusts for the impact of acquisitions (when applicable), foreignexchange fluctuations, copper prices and the number of billing days (when applicable), both management and investors are provided with meaningful supplemental sales information tounderstand and analyze our underlying trends and other aspects of our financial performance. Historically and from time to time, we may also exclude other items from reported financialresults (e.g., impairment charges, inventory adjustments, restructuring charges, tax items, currency devaluations, pension settlements, etc.) in presenting adjusted operating expense,adjusted operating income, adjusted income taxes and adjusted net income so that both management and financial statement users can use these non-GAAP financial measures tobetter understand and evaluate our performance period over period and to analyze the underlying trends of our business. We have also excluded amortization of intangible assetsassociated with purchase accounting from acquisitions from the adjusted amounts for comparison of the non-GAAP financial measures period over period.

EBITDA is defined as net income before interest, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before foreign exchange and other non-operatingexpense and non-cash stock-based compensation, excluding the other items from reported financial results, as defined above. Adjusted EBITDA leverage is defined as the percentagechange in Adjusted EBITDA divided by the percentage change in net sales. We believe that adjusted operating income, EBITDA, Adjusted EBITDA, and Adjusted EBITDA leverageprovide relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated andbusiness segment performance. Adjusted operating income provides an understanding of the results from the primary operations of our business by excluding the effects of certain itemsthat do not reflect the ordinary earnings of our operations. We use adjusted operating income to evaluate our period-over-period operating performance because we believe this providesa more comparable measure of our continuing business excluding certain items that are not reflective of expected ongoing operations. This measure may be useful to an investor inevaluating the underlying performance of our business. EBITDA provides us with an understanding of earnings before the impact of investing and financing charges and income taxes.Adjusted EBITDA further excludes the effects of foreign exchange and other non-cash stock-based compensation, and certain items that do not reflect the ordinary earnings of ouroperations and that are also excluded for purposes of calculating adjusted net income, adjusted earnings per share and adjusted operating income. EBITDA and Adjusted EBITDA areused by our management for various purposes including as measures of performance of our operating entities and as a basis for strategic planning and forecasting. Adjusted EBITDA andAdjusted EBITDA leverage may be useful to an investor because this measure is widely used to evaluate a company’s operating performance without regard to items excluded from thecalculation of such measure, which can vary substantially from company to company depending on the accounting methods, book value of assets, capital structure and the method bywhich the assets were acquired, among other factors. They are not, however, intended as an alternative measure of operating results or cash flow from operations as determined inaccordance with U.S. GAAP.

Non-GAAP financial measures provide insight into selected financial information and should be evaluated in the context in which they are presented. These non-GAAP financial measureshave limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAPfinancial measures as reported by us may not be comparable to similarly titled amounts reported by other companies. The non-GAAP financial measures should be considered inconjunction with the Condensed Consolidated Financial Statements, including the related notes, and Management’s Discussion and Analysis of Financial Condition and Results ofOperations. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.


Financial Results

Three Months Ended Twelve Months Ended

(In millions, except per share amounts)January 3,

2020December 28,

2018Percent Change

January 3,2020

December 28,2018

Percent Change

Select Reported Measures

Net Sales $ 2,252.3 $ 2,119.1 6% $ 8,845.6 $ 8,400.2 5%

Operating Income $ 85.4 $ 87.3 (2)% $ 367.5 $ 309.7 19%

Net Income $ 101.0 $ 41.8 142% $ 262.9 $ 156.3 68%

Diluted Earnings Per Share $ 2.93 $ 1.22 140% $ 7.67 $ 4.58 67%

Diluted Weighted Shares 34.5 34.1 1% 34.3 34.1 1%

Select Non-GAAP Measures

Adjusted EBITDA $ 120.8 $ 108.5 11% $ 472.2 $ 410.9 15%

Adjusted Net Income $ 75.1 $ 52.4 44% $ 256.5 $ 198.8 29%

Adjusted Diluted Earnings Per Share $ 2.18 $ 1.53 43% $ 7.48 $ 5.83 28%


Sales Overview

4Q19 Segment and Geographic Mix

NSS 53%

EES 27%

UPS 20%

NA 80%

EMEA 7%

EM 13%

4Q19 Sales: $2.3 billion

YOY Sales Growth

GAAP Organic

North America 6.2% 6.2%EMEA 6.9% 8.5%

Emerging Markets 6.5% 6.9%Anixter International 6.3% 6.5%

YOY Sales Growth

GAAP Organic

Network and Security Solutions (NSS) 7.7% 8.0%Electrical and Electronic Solutions (EES) 4.8% 5.0%

Utility Power Solutions (UPS) 4.4% 4.4%Anixter International 6.3% 6.5%


Sales Overview

FY19 Segment and Geographic Mix

NSS 53%

EES 27%

UPS 20%

NA 81%

EMEA 7%

EM 12%

FY19 Sales: $8.8 billion

YOY Sales Growth

GAAP Organic

North America 4.5% 5.0%EMEA (5.3)% (1.5)%

Emerging Markets 18.9% 15.2%Anixter International 5.3% 5.6%

YOY Sales Growth

GAAP Organic

Network and Security Solutions (NSS) 8.0% 7.8%Electrical and Electronic Solutions (EES) 0.4% 1.8%

Utility Power Solutions (UPS) 5.1% 5.4%Anixter International 5.3% 5.6%


Overview of Financial Performance and Trends

Two Year Cumulative YOY Organic Sales GrowthO

rgan

ic S

ales

Gro

wth

%

Cumulative YOY Organic Sales Growth

1.6%

4.9%

7.4%

5.1% 4.8%

7.7%

6.0%

2.6%6.5%

5.6%

2018 2019

1Q 19 2Q 19 3Q 19 4Q 19 FY 190.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

9.3%

10.9%

10.0%

11.6%

10.4%


$ M

illio

ns

GAAP Sales +6.3%, Organic Sales +6.5%

$2,119 $2 $1

$130 $2,252

4Q18 Currency Copper OrganicGrowth

4Q19


4Q19 Sales Growth G

AA

P S

ales

($ M

illio

ns) O

rganic Sales G

rowth %

Sales Growth Trend

$2,014 $1,964$2,138 $2,179 $2,119 $2,109

$2,263 $2,222 $2,252

4.2%

1.6%

4.9%

7.4%

5.1%

7.7% 6.0%

2.6%

6.5%

4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

• Record fourth quarter sales of $2.3B

• Reported and organic growth in all segments and geographies

• 4Q19 was a 14 week quarter due to our fiscal calendar. We estimate that, due to the timing of the holidays, the difference in effective selling days was 2 1/2 days.

• Organic sales growth of 6.5% reflects organic growth in all segments and all geographies

• On an average daily sales basis,

organic daily sales were up 2.3%, with all segments showing growth

• 4Q two year cumulative growth of 12% compares to 10% in 3Q


$ M

illio

ns

GAAP Sales +5.3%, Organic Sales +5.6%

$8,449$64 $15

$318

$8,846

FY18 Currency Copper OrganicGrowth

FY19


FY19 Sales Growth G

AA

P S

ales

($ M

illio

ns) O

rganic Sales G

rowth %

Sales Growth Trend

$7,927 $8,400 $8,846

3.0%

4.8%

5.6%

2017 2018 2019

• Record full year sales of $8.8B

• Reported and organic growth in all segments

• Due to the timing of the holidays, it is estimated that there were 2 1/2 more effective selling days in 2019 compared to 2018

• Strong 3 year organic growth trend, due to our focus on the customer, and our competitive differentiators:

◦ Global capabilities with local presence

◦ Technical expertise

◦ Customized and scalable supply chain solutions

$8,846



Gross Margin Trend

• Gross profit increased 7.1%, to $461M, resulting in gross margin of 20.4% • Gross margin increased 15 basis points Y/Y and 30 basis points sequentially, as the long term strategies

that have been implemented continue to show strong results• Five consecutive quarters of year-over-year gross margin improvement

Gro

ss P

rofit

($ M

illio

ns)

Gross M

argin %

Gross Margin Trend

$380

$396 $397 $398

$385

$419$424

$430

$419

$450 $446

$461

20.0%19.8% 19.7% 19.8%

19.6% 19.6% 19.5%

20.3%19.9% 19.9%

20.1%20.4%

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19300

350

400

450

500

+15 bps Y/Y+50 bps

Y/Y +60 bps Y/Y+30 bps

Y/Y+30 bps

Y/Y



Operating Expense Trend$

Mill

ions

% of S

ales

Operating Expense Trend (GAAP)

$323

$348

$335$343 $344 $344 $345

$37516.5% 16.3%

15.4%16.2% 16.3%

15.2% 15.5%

16.7%

Operating Expense (GAAP) Opex as % of sales (GAAP)

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19275

300

325

350

375 • 4Q19 operating expense was 16.7% of sales, a 50 basis point increase versus prior year

• 4Q19 operating expense increased by $32.4M. The quarter had an additional week due to our fiscal calendar, and this extra week represented additional expenses of approximately $16 million year over year

• 4Q19 also had $13M of merger-related expenses

$ M

illio

ns

% of S

alesOperating Expense Trend (Non-GAAP)

$313 $324 $324 $334 $336 $335 $336 $354

16.0%

15.1% 14.9%

15.8% 15.9%

14.8%15.1%

15.7%

Adj Operating Expense Adj Opex as % of sales

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

• Adjusted operating expense increased 6.0%, and decreased as a percentage of sales by 10 basis points

• The year-over-year increase in operating expense was due to higher volume related costs and the impact of the extra week of expenses

• Expenses were up sequentially and increased 60 basis points as a percentage of sales



Operating Income Trend$

Mill

ions

% of S

ales

Operating Income and Operating Margin Trend (GAAP)

$62

$71

$90 $87

$75

$106$102

$85

3.1% 3.3%

4.1% 4.1%

3.5%

4.7% 4.6%

3.8%

Operating Income (GAAP) Operating Margin (GAAP)

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q1940

60

80

100

120

$ M

illio

ns

% of S

alesOperating Income and Operating Margin Trend (Non-GAAP)

$71

$96 $100 $96$83

$115 $111 $1073.6%

4.5% 4.6% 4.5%

3.9%

5.1% 5.0%4.7%

Adj Operating Income Adj Operating Margin

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

• Adjusted operating income of $106.8M compares to $96.2M. The corresponding adjusted operating margin of 4.7% compares to 4.5%

• Sequentially, adjusted operating income of $106.8M decreased from $110.6M due to the extra week of expenses in 4Q19. The corresponding adjusted operating margin of 4.7% compares to 5.0%.

• Operating income decreased 2.2% to $85.4M

• The corresponding operating margin of 3.8% compares to 4.1%, a 30 basis point decline, as higher gross margins were offset by increased expenses from the extra week in 4Q19 and $13 million of merger-related expenses



Net Income and Adjusted EBITDA TrendN

et In

com

e ($

Mill

ions

)

Net M

argin (%)

Net Income and Net Margin Trend (GAAP)

$32 $35

$48$42 $39

$64$59

$101

1.6% 1.6%

2.2% 2.0% 1.9%

2.8% 2.7%

4.5%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q190

15

30

45

60

75

90

105

Adj

EB

ITD

A ($

Mill

ions

)

Adj E

BITD

A %

Adjusted EBITDA and Adjusted EBITDA Margin Trend (Non-GAAP)

$83

$108 $111 $109$97

$129 $126 $121

4.2%

5.0% 5.1% 5.1%

4.6%

5.7% 5.6%5.4%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

• The increase in net income from $41.8M to $101.0M was driven primarily by volume growth, strong gross margin improvement, and a lower effective tax rate

• The increase in adjusted EBITDA was driven by expense leverage and gross margin improvement

• Adjusted EBITDA margin of 5.4% compares to 5.1%

• Sequentially, adjusted EBITDA margin of 5.4% compares to 5.6%


Segment Results and Trends

Network & Security Solutions Sales

• NSS record fourth quarter sales increased 7.7% to $1,205M, driven by broad based growth with global accounts, complex integrated supply programs and growth initiatives including security and professional audio video

• NSS security sales, which represents approximately 44% of segment sales, increased 7.7% to $527M driven by global integrators and professional audio video projects

YO

Y C

hang

e

NSS Organic Sales Growth Trend

(0.5)%

4.7%

6.4%

4.7%

10.7%

8.4%

4.3%

8.0%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

$ M

illio

ns

NSS GAAP Sales +7.7%, Organic Sales +8.0%

$1,118 $3

$84 $1,205

4Q18 FX OrganicGrowth

4Q19

• NSS organic sales growth was 8.0%, which marks the 7th quarter of consecutive organic growth for NSS with strong performance in both network infrastructure and security

• Organic average daily sales were up 3.8%

• 4Q two-year cumulative growth of 13% compares to 11% in 3Q

• Solid organic growth in all regions with North America up 6.4%, EMEA up 9.9% and Emerging Markets up 13.5%



NSS Operating Income and Adjusted EBITDA $

Mill

ions

Margin %

NSS Operating Income and Operating Margin Trend (GAAP)

$54

$66

$75$78

$71

$86 $85 $845.4%6.0%

6.6% 6.9%6.4%

7.2% 7.2% 6.9%


1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

50

60

70

80

90 • NSS operating income increased 7.7% to $83.5M, driven by strong sales growth and gross margin improvement

• The corresponding operating margin was flat at 6.9%

• The 14th week of expenses represented approximately $7M of additional expense for 4Q19

$ M

illio

ns

Margin %

NSS Adjusted EBITDA and Adjusted EBITDA Margin (Non-GAAP)

$59

$76$82 $84

$78

$94 $92 $905.9%

6.9% 7.2% 7.5%7.0%

7.8% 7.8% 7.5%

Adjusted EBITDA Adj EBITDA Margin

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

• NSS adjusted EBITDA increased 8.3% to $90.4M

• The corresponding adjusted EBITDA margin of 7.5% is the same as prior quarter

• Adjusted EBITDA leverage was 1.1x



Electrical & Electronic Solutions Sales Y

OY

Gro

wth

EES Organic Sales Growth Trend

3.7%4.7%

9.0%

0.5% 2.3% 2.3%

(2.2)%

5.0%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

0%

3%

6%

9%

$ M

illio

ns

EES GAAP Sales +4.8%, Organic Sales +5.0%

$571 $1

$27 $599


4Q19

• EES record fourth quarter sales increased 4.8% to $599M, driven by growth in both the C&I and OEM businesses

• Currency was flat and copper was only a $1M headwind for the quarter

• EES organic sales increased 5.0%

• Organic sales were up in North America and EMEA, and declined in the Emerging Markets

• Organic average daily sales were down 1.0%

• 4Q two-year cumulative growth of 6% compares with 7% growth in 3Q



EES Operating Income and Adjusted EBITDA$

Mill

ions

Margin %

EES Adjusted EBITDA and Adjusted EBITDA Margin Trend (Non-GAAP)

$35

$40$37

$34 $33

$42$40 $416.1%

6.7%

6.1%5.9% 5.8%

6.9% 6.8% 6.8%

Adj EBITDA Adj EBITDA Margin

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

• EES adjusted EBITDA increased 20.8% to $40.6M

• The corresponding adjusted EBITDA margin increased 90 basis points to 6.8%, due to operating leverage

• Adjusted EBITDA leverage was 4.3x

$ M

illio

ns

Margin %

EES Operating Income and Operating Margin Trend (GAAP)

$31

$36$34

$31$29

$38$35

$37

5.5%5.9% 5.7% 5.5%

5.1%

6.3% 6.1% 6.2%


1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q190

15

30

45

• EES operating income increased 18.3% to $36.9M

• The corresponding operating margin increased 70 basis points to 6.2% due to operating leverage

• 14th week of expenses represented approximately $4M of additional expense for 4Q19


• UPS record fourth quarter sales increased 4.4% to $449M, driven by growth in both the U.S. and Canada

• UPS organic sales growth was 4.4%, which marks the 12th consecutive quarter of organic sales growth for UPS

• Organic growth was broad based, with strong sales results in IOU and Public Power

• Organic average daily sales were flat

• 4Q two-year cumulative growth of 18% compares to 13% in 3Q


Utility Power Solutions Sales $

Mill

ions

UPS GAAP Sales +4.4%, Organic Sales +4.4%

$430

$19 $449


4Q19

YO

Y G

row

th

UPS Organic Sales Growth Trend

4.0%

5.8%

8.1%

13.3%

7.9%

5.0%4.4% 4.4%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q190%

4%

8%

12%


• UPS operating income of $18.2M compares to $21.2M

• The corresponding operating margin of 4.0% decreased from 4.9%

• The 14th week of expenses represented approximately $2M of additional expense for 4Q19


UPS Operating Income and Adjusted EBITDA$

Mill

ions

Margin %

UPS Adjusted EBITDA and Adjusted EBITDA Margin Trend (Non-GAAP)

$21$23 $24

$26$23

$27 $28

$23

5.2% 5.3% 5.4%5.9%

5.3%6.0% 6.1%

5.0%

Adj EBITDA Adj EBITDA margin

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

$ M

illio

ns

Margin %

UPS Operating Income and Operating Margin Trend (GAAP)

$16

$18

$20$21

$19

$23$24

$18

4.1% 4.1% 4.5%4.9%

4.3%5.1% 5.1%

4.0%


1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q1910

15

20

25

• UPS adjusted EBITDA decreased 11.0% to $22.7M primarily due to the extra week of expenses.

• The corresponding adjusted EBITDA margin declined 90 basis points to 5.0%,


Working Capital and Adjusted ROTCA

dj R

OTC

%

Adjusted ROTC

25.4%

23.9%

25.0%

2017 2018 2019

% o

f Sal

es

Working Capital as Percent of Sales18.7%

18.4%

18.2%

2017 2018 2019

• Working capital ratio of 18.2% decreased 20 basis points compared to 2018

• Adjusted ROTC of 25.0% compares to 23.9% in 2018

Working Capital as Percent of Sales - current assets less current liabilities divided by rolling four-quarter sales (excluding current portion of operating lease liability related to the 1Q19 adoption of ASC 842, Leases)

Adjusted ROTC - rolling four-quarter adjusted operating income divided by average tangible capital (excluding right-of-use operating lease assets related to the 1Q19 adoption of ASC 842, Leases)


Debt / Adjusted EBITDA

2.3

3.9 4.0

2.6

2.9

2.22.0

2.3

3.4

2.8

2.0

2.4

2.1

2.9

3.8

3.5

3.1 3.0

2.2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016 2017 2018 20191.5

2

2.5

3

3.5

4

4.5

Leverage Metrics

Strategic Leverage Targets

Debt-to-Capital

41% 41% 41% 35%

47%

46% 46%

51%

45%

47%

45%

50%

45%

52%

58%

52%

46%44%

36.3%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201930%

35%

40%

45%

50%

55%

60%

*2015 includes 12 months of Power Solutions earnings on a pro forma basis

Target range:2.5x - 3.0x

Target range:45% - 50%


Outlook

Growth Drivers

* Currency outlook estimated based on rates as of January 3, 2020** Copper outlook estimated based on recent copper price of ~$2.55, which compares to 1Q19 average of $2.81

and FY19 average of $2.72

$ millions 1Q20 Outlook FY20 Outlook

Reported Sales Growth 2% - 5% 1% - 5%

Organic Sales Growth 2% - 5% 1% - 5%

Currency* $0 - 5 $15 - 20

Copper** $(5 - 10) $(20 - 25)

Gross Margin 20.0% - 20.2% 20.2% - 20.4%

Gross Margin 10 - 30 basis points 10 - 30 basis points


Outlook

Other 1Q20 Estimates

* Anixter's fiscal 4th quarter had an extra week of expenses compared to 1Q20

In millions 1Q20 Outlook

Operating Expenses Flat with 4Q19

Interest Expense Flat with 4Q19

Other, net expense $(2.0)

Adjusted Effective Tax Rate 25.5% - 26.0%

Number of Fully Diluted Shares 34.5


Outlook

2020 Financial Goals

2019 Actual 2020 Outlook

Above Market Sales Growth 5.6% organic growth 1% - 5% organic growth

Increase gross margin 40 basis point improvement 10 - 30 basis point improvement

Improve profitability2.8x adjusted EBITDA leverage 1.5x - 2.0x adjusted EBITDA leverage

5.3% adjusted EBITDA margin 5.3% to 5.6% adjusted EBITDA margin

Generate Strong Cash Flow

Operating Cash Flow $228 million Operating Cash Flow $175 - $225 million

Capex $40 million Capex $45 - $50 million

Free cash flow $188 million Free cash flow $125 - $180 million

Maintain strong balance sheetWorking capital ~18% of sales Working capital ~18% of sales

Debt-to-Adjusted EBITDA: 2.2xDebt-to-Capital: 36.3%

Debt-to-Adjusted EBITDA: 2.0x - 2.5xDebt-to-Capital: 35% - 40%


Outlook

Effective Tax Rate

FY19 Actual FY20 Outlook

Effective Income Tax Rate (GAAP) 10.4% 25.5% - 26.0%

Adjusted Effective Income Tax Rate (non-GAAP) 24.8% 25.5% - 26.0%


Outlook

2020 Segment Adjusted EBITDA Goals

2019 Actuals 2020 Goals

NSS 7.5% 7.5% - 8.0%

EES 6.6% 6.6% - 7.0%

UPS 5.6% 5.6% - 6.0%


Outlook

Long Term Financial Goals

Long Term Financial Goals

Organic Sales Growth 3% - 5%

Adjusted EBITDA Margin >6.0%

Adjusted EBITDA Leverage >1.5x

Working Capital as a % of Sales <18%

Debt / Adjusted EBITDA 2.5x - 3.0x

Debt-to-total Capital 45% - 50%


Appendix


Glossary

1H first half of fiscal yearB billionsM millionsFx foreign exchangeGAAP U.S. GAAPNSS Network & Security SolutionsEES Electrical & Electronic SolutionsUPS Utility Power SolutionsETR effective tax rateOpex total operating expenseEMEA Europe, middle east and AfricaEM Emerging marketsCALA Central and Latin AmericaAPAC Asia Pacific, Australia and ChinaOEM original equipment manufacturerIOU investor owned utilityY/Y year-over-yearUSD U.S. dollarWC working capitalROTC return on tangible capitalFree Cash Flow cash from operations less capital expenditures


Outlook

Impact of Currency and Copper on 4Q19 Sales

$ millions 4Q19

Prior Outlook Actual

Organic sales growth 2.5% - 4.5% 6.5%

Currency $(10 - 15) $(2.4)

Copper $(2 - 4) $(1.3)


In millions (except per share amounts)

Favorable (Unfavorable) ImpactThree Months Ended Twelve Months Ended

January 3, 2020

December 28, 2018

January 3, 2020

December 28, 2018

Items impacting comparability of results:Items impacting operating expense and operating income:Amortization of intangible assets $ (8.6) $ (8.7) $ (35.0) $ (37.3)Merger costs (12.8) — (12.8) —Restructuring charge — — — (9.4)Acquisition and integration costs — — 0.3 (2.9)CEO retirement agreement expense — — — (2.6)U.K. facility relocation costs — (0.2) — (1.0)Total of items impacting operating expense and operating income $ (21.4) $ (8.9) $ (47.5) $ (53.2)

Items impacting other expenses:Loss on extinguishment of debt $ — $ (4.6) $ — $ (4.6)Total of items impacting other expenses $ — $ (4.6) $ — $ (4.6)Total of items impacting pre-tax income $ (21.4) $ (13.5) $ (47.5) $ (57.8)Items impacting income taxes:

Tax impact of items impacting pre-tax income above $ 2.2 $ 1.4 $ 8.8 $ 12.6Transition tax on deferred foreign income — 2.8 — 2.8Rate change impact of net deferred tax liability — (0.7) — (0.7)

Reversal of deferred income tax valuation allowances 45.9 (0.4) 45.9 1.4Tax expense related to domestic perm. tax differences — — — (0.7)Tax expense related to prior year tax positions (0.8) (0.2) (0.8) (0.1)

Total of items impacting income taxes $ 47.3 $ 2.9 $ 53.9 $ 15.3Net income impact of these items $ 25.9 $ (10.6) $ 6.4 $ (42.5)

Diluted EPS impact of these items $ 0.75 $ (0.31) $ 0.19 $ (1.25)

Anixter International Inc

Items Impacting Comparability


In millions (except per share amounts)

Favorable (Unfavorable) ImpactThree Months Ended Twelve Months Ended

January 3, 2020

December 28, 2018

January 3, 2020

December 28, 2018

U.S. GAAP to Non-GAAP Net Income and EPS Reconciliation:Net income – U.S. GAAP $ 101.0 $ 41.8 $ 262.9 $ 156.3Items impacting net income (25.9) 10.6 (6.4) 42.5Net income – Non-GAAP $ 75.1 $ 52.4 $ 256.5 $ 198.8

Diluted EPS – U.S. GAAP $ 2.93 $ 1.22 $ 7.67 $ 4.58Diluted EPS impact of these items (0.75) 0.31 (0.19) 1.25Diluted EPS – Non-GAAP $ 2.18 $ 1.53 $ 7.48 $ 5.83


Items Impacting Comparability (continued)



EBITDA and Adjusted EBITDA Reconciliation

$ millions

EBITDA and Adjusted EBITDA

1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Net income $32.1 $34.8 $47.6 $41.8 $39.1 $63.5 $ 59.3 $ 101.0Interest expense 18.2 19.0 19.3 19.8 20.4 19.4 18.5 18.8Income taxes 13.6 14.2 21.0 18.1 16.9 22.1 22.8 (31.3)Depreciation 7.4 7.7 8.2 8.4 9.3 9.7 9.7 8.5Amortization of intangible assets 9.3 9.7 9.6 8.7 8.8 8.8 8.8 8.6EBITDA $ 80.6 $ 85.4 $ 105.7 $ 96.8 $ 94.5 $ 123.5 $ 119.1 $ 105.6EBITDA as a % of sales 4.1% 4.0% 4.9% 4.6% 4.5% 5.5% 5.4 % 4.7 %

EBITDA $ 80.6 $ 85.4 $ 105.7 $ 96.8 $ 94.5 $ 123.5 $ 119.1 $ 105.6Foreign exchange and other non-operating expense (income) (2.3) 3.3 1.6 7.6 (1.8) 0.7 1.2 (3.1)

Stock-based compensation 4.6 7.2 3.2 3.9 4.1 5.2 5.2 5.5Merger costs — — — — — — — 12.8Restructuring charge — 9.2 0.2 — — — — —Acquisition and integration costs 0.3 2.3 0.3 — (0.3) — — —U.K. facility relocation costs 0.2 0.4 0.2 0.2 — — — —Adjusted EBITDA $ 83.4 $ 107.8 $ 111.2 $ 108.5 $ 96.5 $ 129.4 $ 125.5 $ 120.8Adjusted EBITDA as a % of sales 4.2% 5.0% 5.1% 5.1% 4.6% 5.7% 5.6 % 5.4 %


Network & Security Solutions


$ millions


1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Net income $53.5 $66.1 $75.0 $77.6 $70.9 $86.3 $ 84.8 $ 83.5Interest expense — — — — — — — —Income taxes — — — — — — — —Depreciation 0.8 0.9 0.9 1.2 2.4 2.4 2.4 2.2Amortization of intangible assets 3.8 4.2 5.0 4.0 4.1 4.2 4.1 4.0EBITDA $ 58.1 $ 71.2 $ 80.9 $ 82.8 $ 77.4 $ 92.9 $ 91.3 $ 89.7EBITDA as a % of sales 5.8% 6.5% 7.1% 7.4% 7.0% 7.7% 7.7 % 7.5 %

EBITDA $ 58.1 $ 71.2 $ 80.9 $ 82.8 $ 77.4 $ 92.9 $ 91.3 $ 89.7Stock-based compensation 0.4 0.4 0.4 0.6 0.6 0.7 0.7 0.7U.K. facility relocation costs — 0.1 0.1 — — — — —Restructuring charge — 2.1 — — — — — —Acquisition and integration costs — 2.3 0.2 0.1 — — — —Adjusted EBITDA $ 58.5 $ 76.1 $ 81.6 $ 83.5 $ 78.0 $ 93.6 $ 92.0 $ 90.4Adjusted EBITDA as a % of sales 5.9% 6.9% 7.2% 7.5% 7.0% 7.8% 7.8 % 7.5 %


Electrical & Electronic Solutions


$ millions


1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Net income $31.4 $35.6 $34.1 $31.2 $29.1 $38.2 $ 35.3 $ 36.9Interest expense — — — — — — — —Income taxes — — — — — — — —Depreciation 0.5 0.7 0.6 0.6 1.8 1.8 1.8 1.9Amortization of intangible assets 2.2 2.1 1.4 1.3 1.4 1.3 1.4 1.3EBITDA $ 34.1 $ 38.4 $ 36.1 $ 33.1 $ 32.3 $ 41.3 $ 38.5 $ 40.1EBITDA as a % of sales 6.0% 6.3% 6.0% 5.8% 5.7% 6.8% 6.6 % 6.7 %

EBITDA $ 34.1 $ 38.4 $ 36.1 $ 33.1 $ 32.3 $ 41.3 $ 38.5 $ 40.1Stock-based compensation 0.4 0.4 0.3 0.3 0.3 0.5 0.4 —Restructuring charge — 1.3 — — — — 0.5 0.5U.K. facility relocation costs 0.2 0.3 0.1 0.2 — — — —Adjusted EBITDA $ 34.7 $ 40.4 $ 36.5 $ 33.6 $ 32.6 $ 41.8 $ 39.4 $ 40.6Adjusted EBITDA as a % of sales 6.1% 6.7% 6.1% 5.9% 5.8% 6.9% 6.8 % 6.8 %


Utility Power Solutions


$ millionsEBITDA and Adjusted EBITDA

1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 4Q 19

Net income $16.4 $17.9 $19.9 $21.2 $18.5 $23.1 $ 23.8 $ 18.2Interest expense — — — — — — — —Income taxes — — — — — — — —Depreciation 0.9 0.9 1.1 0.7 0.9 0.9 1.0 0.9Amortization of intangible assets 3.3 3.4 3.2 3.4 3.3 3.3 3.3 3.3EBITDA $ 20.6 $ 22.2 $ 24.2 $ 25.3 $ 22.7 $ 27.3 $ 28.1 $ 22.4EBITDA as a % of sales 5.1% 5.1% 5.4% 5.9% 5.3% 6.0% 6.1% 5.0%

EBITDA $ 20.6 $ 22.2 $ 24.2 $ 25.3 $ 22.7 $ 27.3 $ 28.1 $ 22.4Stock-based compensation 0.3 0.2 (0.1) 0.2 0.1 0.1 0.1 0.3Restructuring charge — 0.7 — — (0.1) — — —Adjusted EBITDA $ 20.9 $ 23.1 $ 24.1 $ 25.5 $ 22.7 $ 27.4 $ 28.2 $ 22.7Adjusted EBITDA as a % of sales 5.2% 5.3% 5.4% 5.9% 5.3% 6.0% 6.1 % 5.0 %


Supplemental Information

Billing Days and Average Copper Prices

Billing Days

Q1 Q2 Q3 Q4 FY

2017 64 64 63 62 2532018 64 64 63 62 2532019 64 64 63 66 * 2572020 65 63 64 61 253

Average Copper Prices

Q1 Q2 Q3 Q4 FY

2017 $2.65 $2.58 $2.89 $3.10 $2.802018 $3.14 $3.09 $2.73 $2.75 $2.932019 $2.81 $2.78 $2.62 $2.68 $2.72

Increase (Decrease) $(0.33) $(0.31) $(0.11) $(0.07) $(0.21)% Increase (Decrease) (11)% (10)% (4)% (3)% (7)%

*We estimate that, due to the timing of the holidays, the effective selling days in Q4 2019 were approximately 64 1/2 days

4Q 2019 Highlights and Operating...

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