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Anixter International Inc. Reports Second Quarter Net Income of $1.43 Per Diluted Share on Sales of $1.61 Billion

GLENVIEW, Ill. July 26, 2011 July 1, 2011

  • $1.61 billion
  • Operating income increased 40 percent year-on-year
  • Net income increased 51 percent year-on-year

Financial Results

(In millions, except per share amounts)

Three Months Ended

Six Months Ended

July 1,

July 2,

Percent

July 1,

July 2,

Percent

2011

2010

Change

2011

2010

Change

Net Sales

$1,612.8

$1,367.2

18%

$3,130.3

$2,639.8

19%

Operating Income

$97.8

$70.1

40%

$180.9

$127.1

42%

Net Income

$52.1

$34.6

51%

$96.4

$40.5

138%

Diluted Earnings Per Share

$1.43

$0.98

46%

$2.66

$1.14

133%

Diluted Weighted Shares

36.3

35.4

3%

36.2

35.6

2%

Second Quarter Highlights

  • $1.61 billion $1.37 billion
    • $29.8 million
    • $30.4 million
    • $47.2 million

Exclusive of the effects of the above items, sales increased by 10 percent organically.

  • $97.8 million $70.1 million
  • Operating margin in the current quarter was 6.1 percent compared to 5.1 percent in the year ago quarter. The strong operating margin improvement was driven by higher gross margin due primarily to the favorable sales mix and better operating leverage on higher sales.
  • $0.1 million $0.8 million
  • $1.6 million $1.6 million $2.1 million Venezuela
  • The tax rate in the current quarter was 37.5 percent versus 40.0 percent in the year ago quarter. This lower rate was primarily due to higher earnings from international operations.  
  • $52.1 million $1.43 $34.6 million $0.98 Venezuela $0.8 million $0.5 million
  • $18.3 million $36.6 million

Second Quarter Sales Trends  

Robert Eck

North America Europe

Second Quarter Operating Results

"The sales momentum that has been building throughout this recovery is reflected in our strong operating profit performance, which was driven by top-line growth coupled with excellent gross margin management," commented Eck. "Specifically, second quarter operating margin of 6.1 percent reached its highest level in three years, due to a favorable end market sales mix driving a 30 basis point improvement in gross margin combined with operating expense leverage delivering a 70 basis point improvement in operating expense as a percentage of sales. This performance resulted in an incremental operating profit leverage of 11 percent on the increased year-on-year sales."

$275.5 million $8.5 million $9.0 million $15.1 million

Company-wide

North America

Europe $5.3 million

Emerging Markets

Cash Flow and Leverage

$18.3 million Ted Dosch $36.6 million

$16.3 million

Key capital structure and credit-related statistics for the second quarter include:

  • Quarter-end debt-to-total capital ratio of 46.1 percent compared to 47.4 percent at the end of the first quarter and 46.9 percent at the end of 2010
  • $57.1 million $46.0 million
  • Second quarter weighted average cost of borrowed capital of 5.0 percent compared to 6.3 percent in the year ago quarter
  • 60 percent of quarter-end borrowings have fixed interest rates, either by terms of the borrowing agreement or through hedging contracts
  • $259.8 million
  • $245.0 million $275.0 million

Business Outlook

Eck commented, "Strong first half sales results position us very well to continue leveraging our global supply chain platform through the balance of the year. While growing markets will positively impact our business, volatile sovereign debt markets and unclear U.S. tax policies create uncertainty for future levels of corporate spending. Nevertheless, we believe that our strategic growth initiatives position us well to achieve strong year-on-year sales growth and operating leverage in the second half of the year."

"Overall, these strategic growth initiatives have driven improved market share while maintaining or improving gross margin. We expect our future growth to be fueled by adding new products to our portfolio where appropriate; developing an end market presence in either Electrical Wire & Cable or OEM Supply in countries where our current presence is large but limited primarily to the Enterprise Cabling and Security Solutions end market; and selectively expanding our geographic presence. We also remain optimistic about the broad growth opportunities in our security business especially as we continue the integration of the Clark Security Products acquisition into our growing Enterprise Cabling and Security Solutions business," Eck concluded.

Second Quarter Earnings Call

9:30 am central time Tuesday, July 26, 2011 www.anixter.com www.companyboardroom.com America Online (www.streetevents.com)

About Anixter

$1 billion Chicago

Safe Harbor Statement

The statements in this news release that use such words as "believe," "expect," "intend," "anticipate," "contemplate," "estimate," "plan," "project," "should," "may," "will,"  or similar expressions are forward-looking statements.  They are subject to a number of factors that could cause the company’s actual results to differ materially from what is indicated here.  These factors include general economic conditions, the level of customer demand particularly for capital projects in the markets we serve,  changes in supplier sales strategies or financial viability, 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, potential impairment of goodwill and risks associated with integration of acquired companies.  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 the company’s Securities and Exchange Commission filings for more information.

Additional information about Anixter is available on the Internet at www.anixter.com .

ANIXTER INTERNATIONAL INC.

Condensed Consolidated Statements of Operations

Three Months Ended

Six Months Ended

July 1,

July 2,

July 1,

July 2,

(In millions, except per share amounts)

2011

2010

2011

2010

Net sales

$ 1,612.8

$ 1,367.2

$ 3,130.3

$ 2,639.8

Cost of goods sold

1,239.5

1,054.2

2,404.3

2,037.1

Gross profit

373.3

313.0

726.0

602.7

Operating expenses

275.5

242.9

545.1

475.6

Operating income  

97.8

70.1

180.9

127.1

Interest expense

(12.8)

(13.2)

(25.6)

(28.8)

Net (loss) gain on retirement of debt

(0.1)

0.8

(29.7)

Other, net

(1.6)

(1.1)

(1.1)

Income before income taxes

83.3

57.7

154.2

67.5

Income tax expense

31.2

23.1

57.8

27.0

Net income  

$      52.1

$      34.6

$      96.4

$      40.5

Net income per share:

  Basic

$      1.50

$      1.02

$      2.78

$      1.19

  Diluted

$      1.43

$      0.98

$      2.66

$      1.14

Average shares outstanding:

  Basic

34.8

33.9

34.7

34.1

  Diluted

36.3

35.4

36.2

35.6

Geographic Segments

Net sales:

   North America

$ 1,141.3

$    983.4

$ 2,211.0

$ 1,879.5

   Europe

296.0

251.9

587.3

505.1

   Asia Pacific and Latin America

175.5

131.9

332.0

255.2

$ 1,612.8

$ 1,367.2

$ 3,130.3

$ 2,639.8

Operating income (loss):

   North America

$      84.8

$      63.3

$    160.7

$    114.2

   Europe

4.8

(0.7)

4.8

(0.2)

   Asia Pacific and Latin America

8.2

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