Investor Marketing Presentation
March 2019
Safe Harbor Statement
The 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 not limited 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 sales strategies or financial
viability, risks associated with the sale of nonconforming products and services, political, economic or currency risks related to foreign operations, inventory obsolescence, copper price
fluctuations, customer viability, risks associated with accounts receivable, the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks, information
security risks, risks associated with substantial debt and restrictions contained in financial and operating covenants in our debt agreements, the impact and the uncertainty concerning the timing
and terms of the withdrawal by the United Kingdom from the European Union, 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 other benefits 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 undertake to update any forward looking statements. Please see our Securities and Exchange Commission (“SEC”) filings for more information.
Non-GAAP Financial Measures
In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) above, this presentation includes certain financial measures computed using non-
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 this presentation
both on a 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), foreign exchange
fluctuations, copper prices and the number of billing days, both management and investors are provided with meaningful supplemental sales information to understand 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 financial results (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 to better understand and evaluate our performance period
over period and to analyze the underlying trends of our business. We have also excluded amortization of intangible assets associated 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 from continuing operations before interest, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before foreign exchange and
other non-operating expense and non-cash stock-based compensation, excluding the other items from reported financial results, as defined above. Adjusted EBITDA leverage is defined as the
percentage change in Adjusted EBITDA divided by the percentage change in net sales. We believe that adjusted operating income, EBITDA, Adjusted EBITDA, and Adjusted EBITDA leverage
provide 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 and business
segment performance. Adjusted operating income provides an understanding of the results from the primary operations of our business by excluding the effects of certain items that 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 provides a 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 in evaluating 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 our operations and that are also
excluded for purposes of calculating adjusted net income, adjusted earnings per share and adjusted operating income. EBITDA and Adjusted EBITDA are used 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 and Adjusted 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 the calculation 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 by which 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 in accordance 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 measures have
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-GAAP financial 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 in conjunction with the Condensed
Consolidated Financial Statements, including the related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this presentation.
Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.
SAFE HARBOR STATEMENT AND
NON-GAAP FINANCIAL MEASURES
2
TABLE OF CONTENTS
3
Key Priorities
Business Overview
Innovation and Business Transformation
Financial Profile
Invest in Anixter
12345
KEY PRIORITIES
KEY PRIORITIES FOR ANIXTER
5
Our Focus
on the
Customer
Customer Access
Strategy
• Enable customers to access all solutions and expertise through
existing selling organization
• Enable customers to connect with Anixter through channels
they choose
Commitment to
Technology and
Innovation
• Specialists in highly technical solutions and new innovative
technologies
• Innovation and business transformation will provide customers
with state-of-the-art electronic business platform, support
growth in the business and create operating efficiencies
Services
• Installation enhancement services
• Project deployment services
• Supply chain programs
Will Drive
Improved
Results
Profitability
• Above-market sales growth
• Increase gross margin
• Deliver operating expense leverage
• Strong Adjusted EBITDA and consistent long-term performance
Enabling
Value
Creation
Capital Allocation
Priorities
• Organic growth
• M&A with strategic benefit that meets financial and risk criteria
• Opportunistic return to shareholders
BUSINESS OVERVIEW
ANIXTER AT A GLANCE
7
2018
Sales $8.4B
Adjusted EBITDA $411M
Adjusted EBITDA margin 4.9%
Customers >130,000
SKUs ~600k
Inventory >$1.0B
Countries ~50
Cities >300
Warehouses/Branches 316
Employees ~9,000
NYSE Ticker AXE
2018 Sales by Segment
2018 Sales by Geography
Key Metrics
($0.9)
8
OUR STRATEGIC ACTIONS ADDED $1.8 BILLION TO OUR SALES RUN RATE
2017
$6.9
$0.6
$0.1
$2.0
2018
CSD
Inner Range
Atlas Gentech
$6.2
2015
Net
impact
2014
Tri-Ed
2015
Fasteners
2015
Power
Solutions
2013
$0.2
$7.7
2016
Proforma Sales Bridge 2013 - 2018$Billions
+$2.2
2015
$7.6
($0.1)
$7.9
$0.3
$8.4
$0.4
$0.1
Acquisition Revenues
Organic Growth
Divestiture
22.5%
23.9%
2014 2018
FINANCIAL PERFORMANCE 2014-2018
9
$5.5
$8.4
2014 2018
$361
$411
2014 2018
Note: As reported, non-GAAP results
Adjusted EBITDA
($M)
Sales($B)
AdjustedROTC
11%CAGR
3%CAGR
+140bps
LEADING POSITIONS IN ATTRACTIVE BUSINESSES
10
Network & Security
Solutions
(NSS)
Electrical & Electronic
Solutions
(EES)
Utility Power
Solutions
(UPS)
Leading
Market PositionsGlobal #1 Global Top 3 North America #1
Total Addressable
Market (TAM)~$55B ~$450B ~$31B
Expected Market
Growth CAGR3 - 4% 2 - 3% ~4%
Markets are Highly
Fragmented~7% Share <1% Share <4% Share
BROAD AND DIVERSE CUSTOMER ACCESS PROVIDES GROWTH OPPORTUNITIES
AND MINIMIZES EXPOSURE AND RISK
11
Channels
Data Contractors
Network Integrators
Pro A/V Contractors
NSS
Customer Verticals
Architects/Consultants
Data Centers
Education
Security Dealers
Security Integrators
Wireless Integrators
Service Providers
Financial Services
Healthcare
Stadiums
State and Federal Gov.
Retail
Technology
UPS
Customer Verticals
Investor Owned Utilities
Public Power Utilities
Channels
Utility Co-ops
Generation & Transmission Cooperatives
Utility Contractors
Channels
Electrical Contractors
EPCs
Panel Builders
Harness Assemblers
Customer Verticals
Alternative Energy
Data Centers
Food and Beverage
Industrial Automation
Industrial Manufacturing
Lighting Manufacturing
Marine/Shipbuilding
Material Handling
Mining
Municipalities
Oil, Gas and Petrochemical
Original Equipment Manufacturers
Transportation
Water/Waste Treatment
EES
Customers
Technology is Blurring the Lines
Across Segments
THE CUSTOMER IS AT THE CENTER OF OUR GROWTH STRATEGY
12
Provide access to all solutions and
expertise through existing sales
organization
Connect with Anixter through
channel of choice
Specialists in highly technical solutions
and new innovative technologies
State-of-the-art electronic business
platforms
Global service capabilities reduce costs, risks and
complexity for our customers
Simple installation enhancement services to
complex project deployment services to long-term
integrated program solutions
CUSTOMER
Services
OUR PRODUCTS ARE CRITICAL PARTS OF A CONNECTED, CONTROLLED AND POWERED
INFRASTRUCTURE
13
NSS UPS• Infrastructure
• Video surveillance
• Access control
• Fire/intrusion
• Data centers
• Power
• Wireless
• Professional A/V
• Electrical/electronic wire and cable
• Gear, controls, transformers, power generation
• Industrial automation products
• Indoor/outdoor lighting
• Support and supplies
• Generation, transmission and distribution
• MRO supplies
• Smart grid infrastructure
• Outdoor lighting
• Security
EES• Electrical/electronic wire
and cable
• Gear, controls, transformers, power generation
• Industrial automation products
• Indoor/outdoor lighting
• Support and supplies
STRONG, DIVERSE AND GLOBAL SUPPLIERS AND CUSTOMERS
14
Suppliers Customers
PIVOT AND SHIFT INTO HIGHER GROWTH OPPORTUNITIES
15
NSS EES UPS
Emerging technologies
•5G
•IoT
Global and complex customers
Smart Building (Inner Range)
Security and Professional A/V
Wireless
Power
OEM
•Marine
•Oil and gas
•Transit
•Harness assemblers and panel shops
Industrial
•Global EPCs
•Datacenter
•Renewable Energy
•Industrial infrastructure
•Mining
Public power customers
Electrical grid upgrade
Smart meters
Storm-hardening efforts
Natural disasters
•Hurricane rebuild
•Wildfire rebuild
EMERGING TECHNOLOGIES ARE GROWTH DRIVERS FOR THE BUSINESS
16
DIFFERENTIATORS PROVIDE COMPETITIVE ADVANTAGE AND BARRIERS TO ENTRY
17
Global Capabilities with Local Presence
Reducing Costs, Risks and Complexities through our
Services
Technical Expertise
World class demonstration facilities
Expertise in emerging technologies
Application engineering and compliance
Metering labs for power utilities
Infrastructure Solutions LabSM and Solutions Briefing Centers
Sourcing
Inventory Management
Product Enhancement and Packaging
Global Logistics
E-Commerce
•International Deployment Experts
•Local Teams
•Global Support
•Deployments Services
•Product Enhancement Services
UNMATCHED GLOBAL CAPABILITIES WITH LOCAL PRESENCE
18
3,600+Technical Sales
Specialists, Multi-Level
Technical Support
130,000+Customers
$1.0 Billion+ Inventory
600,000+Products~50 Countries
35+ Currencies
20+ Languages
Approximately 316Warehouses
and Branches
Worldwide
Anixter is a Services Company
that Does Exceptional Distribution
Our Vision
19
20
REDUCING RISKS AND COMPLEXITIES THROUGH OUR SERVICES
Installation
Enhancement
Services
Project
Deployment
Services
Supply
Chain
Programs
Enhancing products through
services to reduce the total cost
of installation for our customers
Saving time, reducing costs,
mitigating risk and increasing
efficiencies through services for
multifaceted projects
Optimizing operational
efficiencies through an
integrated supply chain model
EXAMPLES OF OUR SERVICES THAT HELP LOWER COST, COMPLEXITY AND RISK
IN OUR CUSTOMERS’ SUPPLY CHAINS
21
Source-proven, quality-
controlled products
Manage manufacturer
relationships and contracts
Access competitive pricing
and product standardization
Reduce non-contract buying
Inventory management
software
Decrease write-offs from
scrap, overruns and
obsolescence
Reduce product shortages
Streamline warehouse
investment
Provision inventory
IP addressing
Cable bundling
Cable labeling
Cutting to length
Kitting and custom
packaging
Pre-assembly/sub-
assembly
Last- mile delivery
Import / export
documentation
preparation
B2B integration (EDI, JIT,
ERP)
E-procurement Punchout
catalog
Anixter.com (B2B)
eAnixter.com (contract)
Electronic invoices and
payments
Automated order confirmation
and shipment process
Sourcing Inventory
Management
Product
Enhancement and
Packaging
Global
Logistics
E-commerce
SUPPORTING CUSTOMERS THROUGH UNIQUE AND UNPARALLELED TECHNICAL EXPERTISE
22
Anixter Infrastructure Solutions LabSM
• Located at our headquarters in Glenview, IL
o Proof of concept testing and solutions building
o Data infrastructure product testing
o Independent testing
o Physical security testing
o Industrial Communications and Control module
• Certified by Underwriters Laboratories®
• Equipped to provide virtual tours around the globe
Leadership Roles in Industry Associations
• Telecommunications Industry Association (TIA)
• International Organization for Standardization (ISO)
• Institute of Electrical and Electronics Engineers (IEEE)
• Open Network Video Interface Forum (ONVIF)
• Building Industry Consulting Services International (BICSI)
• Security Industry Association (SIA)
• Control System Integrators Association (CSIA)
• National Electrical Manufacturers Association (NEMA)
• National Association of Electrical Distributors (NAED)
• Edison Electric Institute (EEI)
• National Rural Electric Cooperative (NRECA)
Building
Technologies
Data Center
and Enterprise
Networks
Physical
SecurityGear, Lighting
and Controls
Solutions Briefing
Centers
• Woburn, MA
• Indianapolis, IN
• Atlanta, GA
• Sao Paulo, Brazil
• Bracknell, U.K.
INNOVATION AND BUSINESS
TRANSFORMATION
INNOVATION AND BUSINESS TRANSFORMATION
24
• Digital Innovation
– Driven by focus on customer experience
– Best-in-class digital tools will make doing business with Anixter easier and
will support growth and innovation in the business
• Business Transformation
– Streamline and standardize global processes
– Implementation plan designed and phased to minimize disruption
– Phased implementation to mitigate risk
– Enabled by an integrated operating system
Gross Margin Improvement Funds Innovation and Business
Transformation while Enabling Operating Expense Leverage
INNOVATION AND BUSINESS TRANSFORMATION
DIGITAL INNOVATION DRIVES ACCELERATED REVENUE GROWTH
Inside sales
representative
B2B integration
(EDI, JIT, ERP)
Electronic invoices
and payments
Consolidated statements
Customer-branded
e-commerce site with
contract pricing
Branch
locations
Automated order
confirmation and
shipment notification
eProcurement
punchout catalog
or custom catalog
Anixter.com (B2B)
eAnixter.com (contract)
Making it easier and quicker for our customers to do
business with us. Anywhere, any time, any way.
25
INNOVATION AND BUSINESS TRANSFORMATION
GLOBAL BUSINESS PROCESS TRANSFORMATION
Transformation Outcomes
Enhance Reporting
and Analytics
Increase Productivity
Through Optimized
Operating Model
Increase Speed
to Market
Improve Customer
Integration
Optimize
Supply Chain
Innovation and Business Transformation
Reduce Operational
Cost
Global multi-year business
process transformation plan
considering:
•Strategic Business Drivers
•Geographic Regions
•Business Process Cycle
•Business Segments
Standardize
Global Business Process
Create a Single
Global
Platform for Growth
26
INNOVATION AND BUSINESS TRANSFORMATION
OUR JOURNEY TO A CLOUD-BASED PLATFORM
27
2012 – 2018: Enhanced digital capabilities
2014 – 2015: Strategic M&A activity
– Created numerous operating systems, customer-facing platforms and back-office processes
2018: Evaluation and preparation
– Completed business integration of recent acquisitions
– Focused on global processes, staffing global business foundational design teams with internal
and external expertise
– Selected Oracle cloud-based platform
2019: Global Processes
– Streamlining and standardizing global business processes which will result in global business
process foundational design
– Developing implementation plan for the first wave conversion
2020 – 2023: Implementation
– Phased implementation plan to mitigate risk
– Initial phase of implementation in one US-based division
– Net benefits expected by second half of 2021
– Estimate net long-term run-rate savings of $40 - 60 million when fully implemented
– Investment will be funded through gross margin improvement
FINANCIAL PROFILE
THREE LEVERS TO TRANSFORM PROFITABILITY
29
Above-market Growth
Leverage customer access strategy
Pivot and shift to growth markets
Increase global and complex services
revenue streams
Gross Margin
Improvement
Relentless focus and training
Price optimization tools
Maximize vendor rebates
Operating Expense
Leverage
Leverage fixed cost base
Tools/technology to drive sales
productivity
Warehouse network optimization
Gross Margin Improvement Funds Innovation and Business
Transformation while Enabling Operating Expense Leverage
Free cash flow: Defined as net cash provided by operating activities less capital expenditures. Free cash flow is not restated for acquisitions and divestitures
COUNTER-CYCLICAL FREE CASH FLOW PROVIDES FINANCIAL FLEXIBILITY
30
($ in millions)
Generate Strong Free Cash Flow
Throughout the Economic Cycle
STRATEGIC LEVERAGE TARGETS
31
Target range:
2.5x - 3.0x
Target range:
45% - 50%
CONSERVATIVE FINANCIAL POLICY WITH A PRUDENT APPROACH TO CAPITAL
ALLOCATION
32
• Strong free cash flow allows Anixter to maintain a conservative leverage profile and ample liquidity throughout
the business cycle
• Periods of acquisitions are immediately followed up by periods of debt reduction
$32 $22 $20 $26 $34 $32 $40 $27$33
$41 $42
$105
$35
$41
$108
$59
$111 $151
$166
$180
$36 $55
$418$823
$5
$150$272
$82$152
$267 $133
$1
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
CapEx Share Repurchases Total Dividends Acquisitions Debt Reduction Operating Cash Flow
Capital Allocation Priorities are Organic Growth, M&A and
Opportunistic Return to Shareholders
DEBT MATURITY PROFILE
33
2019 FINANCIAL GOALS
34
2019 Financial Goals
Above-market Sales Growth150 – 250 bps outperformance
3% – 6% organic growth (based on current environment)
Increase Gross Margin 20 – 40 bps improvement
Improve Profitability1.25x - 1.50x Adjusted EBITDA leverage
~5.0% Adjusted EBITDA margin
Generate Strong Cash Flow
and Maintain Financial Flexibility
Working capital ~ 18% of sales
Debt-to-adjusted EBITDA 2.5x - 3.0x
Debt-to-capital 45% - 50%
2019 Segment Adjusted EBITDA Goals
NSS Adjusted EBITDA 7.0% - 7.5%
EES Adjusted EBITDA 6.5% - 7.0%
UPS Adjusted EBITDA 5.5% - 6.0%
LONG TERM FINANCIAL GOALS
35
Long Term Financial Outlook
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%
INVEST IN ANIXTER
INVEST IN ANIXTER
37
1. Positioned for sustainable growth
• Leading positions in large, growing, fragmented businesses
• Diverse solutions across converging businesses
• Balanced sector approach provides growth opportunities while minimizing exposure and risk
2. Differentiators provide competitive advantage and barriers to entry
• Global capabilities with local presence
• Technical expertise
• Customized and scalable supply chain solutions
3. Culture of ethics and integrity
• The Blue Book guides our philosophy, culture and business style
4. Financial strength and capital efficiency
• Strong free cash flow generation through the economic cycle
5. Innovation and Business Transformation
• To drive strong financial performance and shareholder value creation
Top Related