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Page 1: Investor Marketing Presentations21.q4cdn.com › 603071597 › files › doc_presentations › ...Investor Marketing Presentation March 2019. Safe Harbor Statement The statements in

Investor Marketing Presentation

March 2019

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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

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TABLE OF CONTENTS

3

Key Priorities

Business Overview

Innovation and Business Transformation

Financial Profile

Invest in Anixter

12345

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KEY PRIORITIES

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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

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BUSINESS OVERVIEW

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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

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($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

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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

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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

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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

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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

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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

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STRONG, DIVERSE AND GLOBAL SUPPLIERS AND CUSTOMERS

14

Suppliers Customers

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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

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EMERGING TECHNOLOGIES ARE GROWTH DRIVERS FOR THE BUSINESS

16

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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

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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

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Anixter is a Services Company

that Does Exceptional Distribution

Our Vision

19

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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

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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

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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.

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INNOVATION AND BUSINESS

TRANSFORMATION

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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

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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

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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

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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

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FINANCIAL PROFILE

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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

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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

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STRATEGIC LEVERAGE TARGETS

31

Target range:

2.5x - 3.0x

Target range:

45% - 50%

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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

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DEBT MATURITY PROFILE

33

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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%

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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%

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INVEST IN ANIXTER

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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