Research Desk Line-up: MSC Industrial Direct Post Earnings Coverage
LONDON, UK / ACCESSWIRE / November 8, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Anixter International Inc. (NYSE: AXE) ("Anixter"), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=AXE, following the Company's announcement of its third quarter fiscal 2017 operating results on October 24, 2017. The maker of security products, wires, and fasteners missed top- and bottom-line expectations, while it also provided organic sales outlook for the upcoming quarter and the full year. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
Get more of our free earnings reports coverage from other constituents of the Industrial Equipment Wholesale industry. Pro-TD has currently selected MSC Industrial Direct Co., Inc. (NYSE: MSM) for due-diligence and potential coverage as the Company reported on October 31, 2017, its financial results for Q4 FY17 and full year which ended on September 02, 2017. Register for a free membership today, and be among the early birds that get access to our report on MSC Industrial Direct when we publish it.
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Anixter reported sales of $2.02 billion for the quarter ended September 29, 2017; a 3.1% increase compared to $1.96 billion in Q3 2016. Anixter's sales numbers fell short of analysts' estimates of $2.05 billion.
During Q3 2017, Anixter's gross margin was 19.7% compared to 20.3% in Q3 2016, with the y-o-y margin decline attributed to customer, product, and segment mix. The Company's operating expenses totaled $316.2 million, or 15.7% of sales, for the reported quarter compared to $309.4 million, or 15.8% of sales, in the prior year's same quarter. Excluding current and prior year's same quarter expenses of $9.9 million, adjusted operating expenses were $306.3 million in Q3 2017 compared to $299.5 million in Q3 2016.
For Q3 2017, Anixter's operating income totaled 81.0 million, or 4.0% of sales, compared to $87.3 million, or 4.5% of sales, in Q3 2016. The Company's adjusted operating income was $90.9 million in the reported quarter versus $97.2 million in the prior year's comparable quarter. Anixter's adjusted EBITDA was $102.7 million, or 5.1% of sales, for the reported quarter compared to $108.2 million, or 5.5% of sales, in Q3 2016.
For Q3 2017, Anixter reported a net income of $37.6 million, including amortization of intangible assets and acquisition and integration costs, which combined had a $9.9 million pre-tax and a $6.6 million after-tax impact. For Q3 2016, net income totaled $40.3 million, inclusive of amortization of intangible assets; acquisition and integration costs; and a favorable tax benefit, which combined had a $9.9 million pre-tax and a $6.0 million after-tax impact. The Company reported an adjusted net income of $44.2 million for Q3 2017 compared to $46.3 million for the year ago corresponding period.
For Q3 2017, Anixter posted diluted earnings per share (EPS) of $1.11 compared to $1.20 for Q3 2016, and adjusted diluted EPS of $1.30 compared to $1.38 for the prior year's same quarter; missing Wall Street's estimates of $1.51.
During Q3 2017, Anixter's Network & Security Solutions (NSS) division's sales totaled $1.05 billion, almost flat compared to $1.05 billion in Q3 2016. The NSS segment's organic sales decreased 0.7% on a y-o-y basis due to a reduction in large project activity and the impact of hurricanes and earthquakes, combined with strong project billings in the prior year's comparable quarter. For Q3 2017, the NSS segment's security sales were $437.5 million, which represents approximately 42% of segment sales, increasing 4.0% on a y-o-y basis.
For Q3 2017, the NSS segment reported operating income of $67.5 million compared to $74.9 million in Q3 2016. The segment's adjusted EBITDA totaled $72.3 million for the reported quarter versus $79.1 million in the prior year's corresponding quarter. The adjusted EBITDA margin totaled 6.9% compared to 7.5% in Q3 2016.
During Q3 2017, Anixter's Electrical & Electronic Solutions (EES) segment's sales were $555.0 million compared to $535.1 million in Q3 2016; reflecting an increase of 3.7%. The EES segment's operating income was $26.8 million for the reported quarter compared to $28.7 million in the prior year's same quarter. The segment posted adjusted EBITDA of $29.7 million versus $31.4 million in Q3 2016. The EES segment's corresponding adjusted EBITDA margin was 5.4% in the reported quarter compared to 5.9% in Q3 2016.
For Q3 2017, Anixter's Utility Power Solutions (UPS) unit recorded sales of $412.2 million, up 11.0% compared to sales of $371.3 million in Q3 2016. The UPS segment's organic sales increased 10.5% on a y-o-y basis, driven by synergistic sales to support a new investor-owned electric utility customer and a strong growth with existing investor-owned utility and public power customers.
During Q3 2017, the UPS segment's operating income was $19.8 million compared to $15.8 million in Q3 2016. The UPS segment's adjusted EBITDA of $24.8 million increased 17.7% from $21.1 million in the prior year's same quarter, while adjusted EBITDA margin totaled 6.0% in the reported quarter, up 30 basis points versus 5.7% in the prior year's comparable quarter.
Cash Flow and Leverage
Anixter generated $110.1 million in cash flow from operations year-to-date through Q3 2017, compared to $238.6 million in the year ago corresponding period. The drop was primarily attributed to higher working capital investment to support growth in the business. The Company is forecasting full year 2017 cash flow from operations in the range of $200 million - $220 million.
On a year-to-date basis, Anixter invested $30.9 million in capital expenditure, compared to $24.9 million in the prior year's same period. For FY17, the Company is estimating to invest $45 million - $50 million in capital expenditure.
For Q3 2017, Anixter's debt-to-total capital ratio improved to 46.6% from 51.6% at the end of 2016. The Company's debt-to-adjusted EBITDA ratio improved to 3.2 times from 3.5 times at the end of 2016. At the end of the reported quarter, the Company had $685.9 million available under revolving lines of credit and secured accounts receivable and inventory facilities.
For Q4 2017, Anixter is forecasting organic sales growth in the range of 2.5% - 3.5%. For FY17, the Company is estimating organic sales growth on a per day basis in the band of 3.0% - 3.5%.
At the closing bell, on Tuesday, November 07, 2017, Anixter Intl.'s stock slipped 1.35%, ending the trading session at $65.95. A total volume of 177.79 thousand shares have exchanged hands, which was higher than the 3-month average volume of 134.97 thousand shares. The stock is trading at a PE ratio of 15.40 and currently has a market cap of $2.23 billion.
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