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Anixter International Inc. Reports Operating Results (10-Q)

August 02, 2012 | About:
10qk

10qk

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Anixter International Inc. (AXE) filed Quarterly Report for the period ended 2012-06-29.

Anixter International Inc. has a market cap of $1.82 billion; its shares were traded at around $55.18 with a P/E ratio of 9.5 and P/S ratio of 0.3. Anixter International Inc. had an annual average earning growth of 17% over the past 10 years. GuruFocus rated Anixter International Inc. the business predictability rank of 2-star.

Highlight of Business Operations:

The Company reported sales of $1,577.0 million in the three months ended June 29, 2012, an increase of $11.7 million, or 0.7% over sales of $1,565.3 million in the corresponding prior year period. Unfavorable effects of foreign exchange rates and a decrease in copper prices decreased sales by $34.4 million and $17.1 million, respectively, as compared to the prior year quarter. Excluding these unfavorable effects, the Companys net sales increased $63.2 million, or approximately 4.0%. The Companys slower revenue growth was primarily driven by persistent softness in the data infrastructure market coupled with a reduction in production rates by several OEM Supply customers. The Company believes this is due to the uncertain macro economic environment, reflected in lower levels of both corporate and consumer spending. The Companys Electrical Wire & Cable business grew at a faster year-over-year rate in the second quarter than the first quarter of this year while the Enterprise Cabling and Security and OEM Supply businesses experienced slower year-over-year growth than in the first quarter of this year. A stronger US dollar and lower copper prices contributed to the slower revenue growth rate.

Net Sales: When compared to the second quarter of 2011, North America net sales in the second quarter of 2012 increased 2.7% to $1,128.8 million from $1,099.4 million. Excluding unfavorable effects of foreign exchange rate changes of $9.3 million and the unfavorable impact of copper prices of $15.6 million, North America net sales were $1,153.7 million in the second quarter of 2012, which represents an increase of $54.3 million, or approximately 4.9%, as compared to the year ago quarter. The Company believes its positive sales results reflect the success of its strategic growth initiatives.

Operating Expenses: Operating expenses increased 0.6% from $527.2 million in the year ago period to $530.5 million in the first six months of 2012. The first half of 2012 operating expenses were reduced by $8.9 million due to changes in foreign exchange rates while the prior year included a $5.3 million restructuring charge in Europe. Excluding changes in foreign exchange rates and the restructuring charge, operating expenses increased $17.5 million, or 3.4%. The current period increase in operating expenses include higher pension benefit costs of $4.6 million, acquisition related costs of $0.6 million and higher variable costs associated with the increase in organic sales of 4.7%.

Net Sales: When compared to the first six months of 2011, North America net sales in the first six months of 2012 increased $69.8 million, or 3.3%, to $2,197.9 million from $2,128.1 million. Excluding unfavorable effects of foreign exchange rate changes and lower copper prices of $12.6 million and $28.7 million, respectively, North America net sales were $2,239.2 million in the first six months of 2012, which represents an increase of $111.1 million, or approximately 5.2%, as compared to the corresponding period in the prior year. The Company believes its positive sales results reflect the success of its strategic growth initiatives.

Operating Income: The operating margin increased to 7.1% in the first six months of 2012 compared to 7.0% in the first six months of 2011. The improvement in operating margin was driven by sales mix. Operating income increased by $5.5 million, or 3.6%, in the first six months of 2012 as compared to the year ago period. Unfavorable foreign exchange rate changes and lower copper prices decreased operating income by $1.0 million and $6.3 million, respectively. Excluding the impact of foreign exchange rate changes and copper pricing, operating income would have improved 8.6%.

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