Anixter International Inc. Financial Statement Analysis
ANIXTER INTERNATIONAL INC.
Financial Liquidity and Capital Resources
Cash Flow
As a distributor, our use of capital is largely for working capital to support our revenue growth. Capital commitments for
property and equipment are limited to information technology assets, warehouse equipment, office furniture and fixtures and
leasehold improvements, because we operate almost entirely from leased facilities. Therefore, in any given reporting period, the
amount of cash consumed or generated by operations other than from net earnings will primarily be due to changes in working
capital.
In periods when sales are increasing, the expanded working capital needs will be funded first by cash from operations and
then from additional borrowings. In periods when sales are decreasing, we will have improved cash flows due to reduced
working capital requirements. During such periods, we will use the expanded cash flow to reduce the amount of leverage in our
capital structure until such time as economic conditions improve and growth resumes. Also, we will, from time to time, issue or
retire borrowings or equity in an effort to maintain a cost-effective capital structure consistent with our anticipated capital
requirements.
Net cash provided by operations was $227.9 million in 2019, which compares to $137.7 million of cash provided by
operations in 2018. Net cash provided by operations in 2018 of $137.7 million compares to $183.8 million in 2017. The
increase in net cash provided by operations in 2019 compared to 2018 reflects growth in net income and an improvement in
working capital efficiencies. The decrease in 2018 compared to 2017 was primarily due to higher investment in working capital
to support growth in the business.
Net cash used in investing activities was $37.1 million in 2019, which primarily related to capital expenditures. This
compares to net cash used in investing activities of $183.4 million in 2018, which included $150.1 million for the acquisition of
security businesses in Australia and New Zealand and $42.4 million for capital expenditures. Net cash used in investing
activities was $41.1 million in 2017, which related to capital expenditures.
Net cash used in financing activities was $195.9 million in 2019 compared to net cash provided by financing activities of
$1.6 million in 2018 and net cash used in financing activities of $136.1 million in 2017. During 2019, we had net repayments
on our long-term debt of $198.5 million. During 2018, we had net borrowings on our revolving lines of credit of $110.0 million
and $246.9 million from the issuance of Notes due 2025, offset by the repayment of our Notes due 2019, which had a maturity
value of $350.0 million and a make whole premium of $3.9 million. During 2017, we had net repayments on our revolving lines
of credit of $40.7 million and a repayment of our Canadian Term Loan of $100.2 million.
Liquidity and Capital Resources
Our capital structure liquidity position provides us with the flexibility to invest in the growth of the business. We will
continue to balance our focus on sales and earnings growth with continuing efforts in cost control and working capital
management. Maintaining a strong and flexible financial position continues to be vital to funding investment in strategic long-
term growth initiatives.
Certain debt agreements entered into by our operating subsidiaries contain various restrictions, including restrictions on
payments to the Company. These restrictions have not had, nor are expected to have, an adverse impact on our ability to meet
cash obligations.
At January 3, 2020, our primary liquidity source was the U.S. accounts receivable asset based revolving credit facility in
an aggregate committed amount of $600.0 million ("Receivables Facility") and the U.S. inventory asset based revolving credit
facility in an aggregate committed amount of $150.0 million ("Inventory Facility"). At January 3, 2020, there was $56.0 million
of borrowings under the Receivables Facility, and there were no borrowings under the Inventory Facility.
Receivables Facility
On October 5, 2015, we, through our wholly-owned subsidiary, Anixter Receivables Corporation ("ARC"), entered into a
Receivables Facility, which is a receivables based revolving credit facility in an aggregate committed amount of $600.0 million.
Borrowings under the Receivables Facility are secured by a first lien on all assets of ARC and supported by an unsecured
guarantee by Anixter International.
The Receivables Facility has a borrowing base of 85% of eligible receivables, subject to certain reserves.
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