investor presentation st quarter 2020s21.q4cdn.com/603071597/files/doc_presentations/2020/02/... ·...

Build. Connect. Power. Protect. Services. Worldwide.

INVESTOR PRESENTATION1ST QUARTER 2020

662

Safe Harbor Statement andNon-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 of1995. 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 butare 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 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 or supplychain, risks associated with substantial debt and restrictions contained in financial and operating covenants in our debt agreements, the impact and the uncertainty concerning the timingand 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 Cuts andJobs 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 other benefits thatwere 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 anyforward 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 to betterunderstand and evaluate our performance period over period and to analyze the underlying trends of our business. We have also excluded amortization of intangible assets associatedwith 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 leverage providerelevant 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 businesssegment 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 notreflect 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 morecomparable 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 theunderlying performance of our business. EBITDA provides us with an understanding of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDAfurther 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 arealso excluded for purposes of calculating adjusted net income, adjusted earnings per share and adjusted operating income. EBITDA and Adjusted EBITDA are used by our managementfor 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 leveragemay 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 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-GAAP financialmeasures 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 withthe Condensed Consolidated Financial Statements, including the related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations.Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.

© 2020 Anixter Inc.

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WESCO International and Anixter InternationalAnnounce Merger Agreement


01/13/2020

• For more Information read the full Press Release:– http://investors.anixter.com/news/news/press-release-details/2020/WESCO-International-and-Anixter-International-

Announce-Merger-Agreement-to-Create-a-Premier-Electrical-and-Data-Communications-Distribution-and-Supply-Chain-Services-Company/default.aspx

• For the latest SEC filings please visit– http://investors.anixter.com/financials/sec-filings/

TABLE OF CONTENTS

Invest in Anixter

Key Priorities & Long-term Financial Goals

Business Overview

Financial Profile

1234

664


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 andrisk

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• Will drive strong financial performance and shareholder value creation

INVEST IN ANIXTER

5© 2020 Anixter Inc.

KEY PRIORITIES FOR ANIXTER

Our Focus On The Customer Will Drive Improved Results While Enabling Value Creation

Above-Market Growth

Digital innovation will improvecustomer experience

Leverage customer access strategy

Pivot and shift to growth markets

Increase global and complexservices and revenue streams

Gross Margin Improvement

Relentless focus and training

Price optimization tools

Increase global and complexservices and revenue streams

Increase Earnings & Cash Flow

Leverage fixed cost base

Tools/technology to drive salesproductivity

Warehouse network optimization

Innovation and businesstransformation expected to have run

rate savings of $40 - $60 millionwhen fully implemented


LONG – TERM FINANCIAL GOALS

2019 Long-termGoals

Organic Sales Growth 5.6% 3% - 5%

Adjusted EBITDA Margin 5.3% >6.0%

Adjusted EBITDA Leverage 2.8x >1.5x

Working Capital as a % of Sales 18.2% <18%

Debt / Adjusted EBITDA 2.2x 2.5x - 3.0x

Debt-to-total Capital 36.3% 45% - 50%


ANIXTER AT A GLANCE

2019 Key Metrics

Eletrical &ElectronicSolutions

27%

UtilityPower

Solutions20%

Network &SecuritySolutions

53%

2019 Sales by Segment

Sales $8.8B

Adjusted EBITDA $472M

Adjusted EBITDA margin 5.3%

Debt/Adjusted EBITDA 2.2x

Debt/Total Cap 36.3%

Fitch BBB-

Moody’s Ba3

S&P BB

NYSE Ticker AXE

NorthAmerica

81%

EMEA7%

EmergingMarkets

12%

2019 Sales by Geography



SALES OVERVIEW

FY19 SEGMENT AND GEOGRAPHIC MIX

FY19 Sales: $8.8 billion

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%

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%

EES27%

UPS20%

NSS53%

NA 81%

EMEA7%

EM12%

NETWORK & SECURITY SOLUTIONS (NSS)AT A GLANCE

NetworkInfrastructure

55%SecuritySolutions

45%

Product Mix

NorthAmerica

EMEA

EmergingMarkets

Geographic Mix

4Q19 2019Sales $1.2B $4.7B

Organic Sales Growth 8.0% 7.8%

Adjusted EBITDA $90.4M $354.0M

Adjusted EBITDAMargin

7.5% 7.5%

11© 2020 Anixter Inc. Product and Geographic Mix are based on FY19 Sales

12

NETWORK & SECURITY SOLUTIONS

Products Growth Opportunities

Complex ServicesProjects

Programs

Emerging Technologies5GIoT

Inner Range Software

Professional A/V

Security

Smart Buildings

Smart Cities

Wireless

Data Center

AccessControl

VideoSurveillance

NetworkInfrastructure

Fire andLife Safety

Wireless

Network Infrastructure

Security Solutions

Our products are critical parts of a connected, controlled, and powered infrastructure that allow Anixter to pivotand shift into higher growth opportunities


ELECTRICAL & ELECTRONIC SOLUTIONS (EES)AT A GLANCE

Commercial &Industrial~60 - 65%

OEM~35 - 40%

Product Mix

NorthAmerica

EMEA

EmergingMarkets

Geographic Mix

4Q19 2019Sales $599M $2.4B




6.8% 6.6%


14

ELECTRICAL & ELECTRONIC SOLUTIONS

Products Growth OpportunitiesComplex Services

ProjectsPrograms

Data Centers

Industrial Automation

Industry 4.0

IoT

Oil, Gas, Petrochemical

Public Transit

Renewable Energy

Smart Factories

AutomotiveWire and Cable

Control Cable

Medium-Voltage

Power Cable

ContractorSolutions

ElectricalSupplies

OEM

Commercial & Industrial

Switchgear



UTILITY POWER SOLUTIONS (UPS)AT A GLANCE

InvestorOwnedUtilities~55%

Public Power~45%

Product Mix

North America

Geographic Mix

4Q19 2019Sales $449M $1.8B




5.0% 5.6%


16

UTILITY POWER SOLUTIONS

Products Growth Opportunities

Complex ServicesProjects

Programs

Electrical Grid Upgrade

Natural DisastersHurricane rebuildWildfire rebuildStorm response

Smart Grids & Smart Meters

Security Upgrades

Storm-Hardening Efforts

Pole Line

Gears Controlsand Equipment

Fiberto theHome

Wire andCable

VideoSurveillance


Public Power

Investor Owned Utilities

MRO



($0.9)

OUR STRATEGIC ACTIONS ADDED $1.8 BILLIONTO OUR SALES RUN RATE

2017

$6.9

$0.6

$0.1

$2.0

2018CSD

Inner RangeAtlas Gentech

$6.2

2015Net

impact

2014Tri-Ed

2015Fasteners

2015Power

Solutions

2013

$0.2

$7.7

2016

Proforma Sales Bridge 2013 - 2019$Billions

+$2.6

2015$7.6

($0.1)

$7.9

$0.3

$8.4

$0.4

$0.1

Acquisition Revenues

Organic Growth

Divestiture

2019

$8.8

$0.4

STRATEGIC ACQUISITIONS2014 – 2019

Power Solutions(Carve out)

Purchase Date Q3 2014 Q4 2015 Q2 2018

Purchase Price $420M $825M $151M

TTM Sales* $570M $1,900M $114M

Adjusted TTM EBITDA* $36M $79M $20M

EBITDA Synergies $15M $25M None disclosed publicly

New Products IntrusionFire & Life SafetyAccess Control

LV/HV – Switch GearTransformers

LightingElectrical Bulks

IntrusionAccess Control

New Customers Security Dealers Commercial Construction,Utility Market (IOU &

Public Power)

Security Dealers

Other Benefits Branch Network Branch Network Software/ProductDevelopment

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*Tri-Ed trailing twelve months ended June 4, 2014; HD Supply Power Solutions trailing twelve months from HD Supply Inc. SEC filings; CSD, Inner Range and Atlas Gentech trailingtwelve months ended November 30, 2017


STRONG, DIVERSE AND GLOBALSUPPLIERS AND CUSTOMERS

Suppliers Customers


LEADING POSITIONS IN ATTRACTIVEBUSINESSES

Network & SecuritySolutions

(NSS)

Electrical & ElectronicSolutions

(EES)

Utility PowerSolutions

(UPS)

LeadingMarket Positions Global #1 Global Top 3 North America #1

Total AddressableMarket (TAM) ~$55B ~$450B ~$31B

Expected MarketGrowth CAGR 3 - 4% 2 - 3% ~4%

Markets are HighlyFragmented ~7% Share <1% Share <4% Share



COMPETITIVE ADVANTAGES ANDBARRIERS TO ENTRY

Network & SecuritySolutions

Electrical & ElectronicSolutions

Utility PowerSolutions

Global Capabilitieswith Local Presence

Customized and ScalableSupply Chain Solutions

TechnicalExpertise


CORE TECHNOLOGIES

NetworkInfrastructure Data Centers | Cloud Physical Security Professional AV

Wireless LightingIndustrialNetworking &Controls

Power

Wire & Cable Automation FTTX Internet of Things(IoT)

Smart Environments Edge Computing OT Cybersecurity

REDUCING RISKS AND COMPLEXITIES THROUGHOUR SERVICES

InstallationEnhancement

Services

ProjectDeployment

Services

SupplyChain

Programs

Enhancing products throughservices to reduce the total costof installation for our customers

Saving time, reducing costs,mitigating risk and increasing

efficiencies through services formultifaceted projects

Optimizing operationalefficiencies through an

integrated supply chain model


UNMATCHED GLOBAL CAPABILITIES WITH LOCALPRESENCE

3,900+Technical SalesSpecialists, Multi-LevelTechnical Support

100,000+Customers$1.0 Billion+Inventory

~600,000Products50 Countries

35+ Currencies20+ Languages

Approximately 300+Warehousesand BranchesWorldwide


EXAMPLES OF OUR SERVICES THAT HELPLOWER COST, COMPLEXITY AND RISKIN OUR CUSTOMERS’ SUPPLY CHAINS

Source-proven, quality-controlled products

Manage manufacturerrelationships and contracts

Access competitive pricingand product standardization

Reduce non-contract buying

Inventory managementsoftware

Decrease write-offs fromscrap, overruns and

obsolescence

Reduce product shortages

Streamline warehouseinvestment

Provision inventory

IP addressing

Cable bundling

Cable labeling

Cutting to length

Kitting and custompackaging

Pre-assembly/sub-assembly

Last- mile delivery

Import / exportdocumentation

preparation

B2B integration (EDI, JIT,ERP)

E-procurement Punchoutcatalog

Anixter.com (B2B)

eAnixter.com (contract)

Electronic invoices andpayments

Automated order confirmationand shipment process

Sourcing InventoryManagement

ProductEnhancement and

Packaging

GlobalLogistics

E-commerce


COUNTER-CYCLICAL FREE CASH FLOWPROVIDES FINANCIAL FLEXIBILITY

Generate Strong Free Cash Flow Throughout the Economic Cycle

Free cash flow: Defined as net cash provided by operating activities less capital expenditures. Free cash flow is not restated for acquisitions and divestitures


5.3%


Leverage Metrics

Strategic Leverage Targets

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

Target range:2.5x - 3.0x

Target range:45% - 50%

CONSERVATIVE FINANCIAL POLICY WITH APRUDENT APPROACH TO CAPITAL ALLOCATION

Capital Allocation Priorities are Organic Growth, M&A, Debt Reduction andOpportunistic Return to Shareholders

• Strong free cash flow allows Anixter to maintain a conservative leverage profile and ample liquidity throughoutthe 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 $40

$105

$35$41

$108

$59

$111 $151

$166

$180

$36 $55

$418 $823

$5

$150$272

$82 $152

$267 $133

$1

$192

0%

20%

40%

60%

80%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


DEBT MATURITY PROFILE

29

Total availability across all credit facilities was in excess of $750 million as of September 27, 2019


2020 FINANCIAL GOALS

Above market sales growth 1% - 5% organic growth

Increase gross margin 10 - 30 bps improvement

Improve profitability1.5x – 2.0x adjusted EBITDA leverage

5.3% to 5.6% adjusted EBITDA margin

Generate strong cash flow

Operating Cash Flow $175 - $225 million

Capex $45 - $50 million

Free cash flow $125 - $180 million

Maintain strong balance sheet

Working capital ~18% of sales

Debt-to-Adjusted EBITDA: 2.0x - 2.5x

Debt-to-Capital: 35% - 40%


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%


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