MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS
FISCAL 2024 Q4 HIGHLIGHTS
Net sales of $952.3 million decreased 8.0% YoY and includes a roughly 300 basis point headwind from non-repeating Public Sector orders in the prior year
Operating income of $90.9 million, or $94.2 million adjusted to exclude acquisition-related and restructuring and other costs1
Operating margin of 9.5%, or 9.9% excluding the adjustments described above1
Diluted EPS of $0.99 vs. $1.56 in the prior fiscal year quarter
Adjusted diluted EPS of $1.03 vs. $1.64 in the prior fiscal year quarter1
FISCAL 2024 HIGHLIGHTS
Net sales of $3,821.0 million decreased 4.7% YoY and includes a roughly 160 basis point headwind from non-repeating Public Sector orders in the prior year
Operating income of $390.4 million, or $407.2 million adjusted to exclude share reclassification, acquisition-related and restructuring and other costs1
Operating margin of 10.2%, or 10.7% excluding the adjustments described above1
Diluted EPS of $4.58 and adjusted diluted EPS of $4.811
Generated strong operating cash flows of $410.7 million or 160% of net income
MELVILLE, N.Y. and DAVIDSON, N.C., Oct. 24, 2024 /PRNewswire/ -- MSC INDUSTRIAL SUPPLY CO. (NYSE:MSM), ("MSC", "MSC Industrial", or the "Company," "we", "us", or "our") a leading North American distributor of a broad range of metalworking and maintenance, repair and operations ("MRO") products and services, today reported financial results for its fiscal 2024 fourth quarter and full year ended August 31, 2024.
Financial Highlights2
FY24 Q4
FY23 Q4
Change
FY24
FY23
Change
Net Sales
$ 952.3
$ 1,035.4
(8.0) %
$ 3,821.0
$ 4,009.3
(4.7) %
Income from Operations
$ 90.9
$ 118.1
(23.0) %
$ 390.4
$ 483.7
(19.3) %
Operating Margin
9.5 %
11.4 %
10.2 %
12.1 %
Net Income Attributable to MSC
$ 55.7
$ 87.6
(36.4) %
$ 258.6
$ 343.2
(24.7) %
Diluted EPS
$ 0.99
3
$ 1.56
4
(36.5) %
$ 4.58
3
$ 6.11
4
(25.0) %
Adjusted Financial Highlights2
FY24 Q4
FY23 Q4
Change
FY24
FY23
Change
Net Sales
$ 952.3
$ 1,035.4
(8.0) %
$ 3,821.0
$ 4,009.3
(4.7) %
Adjusted Income from Operations 1
$ 94.2
$ 130.4
(27.8) %
$ 407.2
$ 504.5
(19.3) %
Adjusted Operating Margin 1
9.9 %
12.6 %
10.7 %
12.6 %
Adjusted Net Income Attributable to MSC 1
$ 58.1
$ 92.0
(36.8) %
$ 271.3
$ 353.8
(23.3) %
Adjusted Diluted EPS 1
$ 1.03
3
$ 1.64
4
(37.2) %
$ 4.81
3
$ 6.29
4
(23.5) %
1 Represents a non-GAAP financial measure. An explanation and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure are presented in the schedules accompanying this press release.
2 In millions except percentages and per share data or as otherwise noted.
3 Based on 56.2 million and 56.4 million weighted-average diluted shares outstanding for FY24 Q4 and FY24, respectively.
4 Based on 56.3 million and 56.2 million weighted-average diluted shares outstanding for FY23 Q4 and FY23, respectively.
Erik Gershwind, Chief Executive Officer, said, "During our fiscal fourth quarter, we made important progress in our Mission Critical strategy despite a challenging macro environment, particularly in heavy manufacturing. We sustained momentum in our high touch solutions, made solid progress on our web enhancements, restored gross margin stability, added to our productivity pipeline and generated strong free cash flow."
Kristen Actis-Grande, Executive Vice President and Chief Financial Officer, added, "Ongoing softness in the heavy manufacturing markets where we have significant exposure and headwinds from non-repeating orders in the prior year resulted in an average daily sales decline of 4.7% for the fiscal year. Near-term visibility remains limited underpinned by uncertainty stemming from the upcoming election and sluggish customer activity levels entering the holiday season. However, we witnessed various improvements for the fiscal year that are leading indicators for future profitability and growth. For the full year, gross margins came in at the higher end of our latest expectations, National Account customer growth outperformed the Industrial Production index and we generated robust operating cash flow. While we cannot control the external factors impacting our results, we are focused on continued improvement to drive long-term value creation."
Gershwind concluded, "As we begin fiscal year 2025, we are focused on driving efficiencies across the organization and executing the three pillars that define our new chapter of Mission Critical, maintaining momentum in the first chapter of Mission Critical, reenergizing the core customer base, and optimizing our cost to serve through productivity improvements. While headwinds in our end markets continue for now, we are laser focused on realizing our long-term goals of achieving adjusted operating margin in the mid-teens and driving 400 basis points of growth above the Industrial Production index over the cycle. We are setting a clear path to get MSC back to our historically strong performance."
First Quarter Fiscal 2025 Financial Outlook
ADS Growth (YoY)
(5.5)% - (4.5)%
Adjusted Operating Margin1
7.0% - 7.5%
Full-Year Fiscal 2025 Outlook for Certain Financial Metrics
Depreciation and amortization expense of ~$90M-$95M
Interest and other expense of ~$45M
Capital expenditures of ~$100M-$110M
Free cash flow conversion1 of ~100%
Tax rate of ~24.5%-25.0%
(1) Guidance provided is a non-GAAP figure presented on an adjusted basis. For further details see the Non-GAAP financial measures information presented in the schedules accompanying this press release.
Conference Call InformationMSC will host a conference call today at 8:30 a.m. EDT to review the Company's fiscal 2024 fourth quarter and full year results. The call, accompanying slides, and other operational statistics may be accessed at: https://investor.mscdirect.com. The conference call may also be accessed at 1-877-443-5575 (U.S.), 1-855-669-9657 (Canada) or 1-412-902-6618 (international).
An online archive of the broadcast will be available until November 7, 2024. The Company's reporting date for the fiscal 2025 first quarter is scheduled for January 8, 2025.
About MSC Industrial Supply Co.MSC Industrial Supply Co. (NYSE:MSM) is a leading North American distributor of a broad range of metalworking and maintenance, repair and operations (MRO) products and services. We help our customers drive greater productivity, profitability and growth with approximately 2.4 million products, inventory management and other supply chain solutions, and deep expertise from more than 80 years of working with customers across industries. Our experienced team of more than 7,000 associates works with our customers to help drive results for their businesses - from keeping operations running efficiently today to continuously rethinking, retooling and optimizing for a more productive tomorrow. For more information on MSC Industrial, please visit mscdirect.com.
Cautionary Note Regarding Forward-Looking Statements: Statements in this press release may constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of present or historical fact, that address activities, events or developments that MSC expects, believes or anticipates will or may occur in the future, including statements about results of operations and financial condition, expected future results, expected benefits from our investment and strategic plans and other initiatives, and expected future growth, profitability and return on invested capital, are forward-looking statements. The words "will," "may," "believes," "anticipates," "thinks," "expects," "estimates," "plans," "intends" and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. In addition, statements which refer to expectations, projections or other characterizations of future events or circumstances, statements involving a discussion of strategy, plans or intentions, statements about management's assumptions, projections or predictions of future events or market outlook and any other statement other than a statement of present or historical fact are forward-looking statements. The inclusion of any statement in this press release does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. In addition, new risks may emerge from time to time and it is not possible for management to predict such risks or to assess the impact of such risks on our business or financial results. Accordingly, future results may differ materially from historical results or from those discussed or implied by these forward-looking statements. Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: general economic conditions in the markets in which we operate; changing customer and product mixes; volatility in commodity, energy and labor prices, and the impact of prolonged periods of low, high or rapid inflation; competition, including the adoption by competitors of aggressive pricing strategies or sales methods; industry consolidation and other changes in the industrial distribution sector; the applicability of laws and regulations relating to our status as a supplier to the U.S. government and public sector; the credit risk of our customers; our ability to accurately forecast customer demands; customer cancellations or rescheduling of orders; interruptions in our ability to make deliveries to customers; supply chain disruptions; our ability to attract and retain sales and customer service personnel; the risk of loss of key suppliers or contractors or key brands; changes to trade policies or trade relationships; risks associated with opening or expanding our customer fulfillment centers; our ability to estimate the cost of healthcare claims incurred under our self-insurance plan; interruption of operations at our headquarters or customer fulfillment centers; products liability due to the nature of the products that we sell; impairments of goodwill and other indefinite-lived intangible assets; the impact of climate change; operating and financial restrictions imposed by the terms of our material debt instruments; our ability to access additional liquidity; our ability to realize the desired benefits from the Reclassification (as defined below); the significant influence that our principal shareholders will continue to have over our decisions; our ability to execute on our E-commerce strategies and maintain our digital platforms; costs associated with maintaining our information technology ("IT") systems and complying with data privacy laws; disruptions or breaches of our IT systems or violations of data privacy laws, including such disruptions or breaches in connection with our E-commerce channels; risks related to online payment methods and other online transactions; the retention of key management personnel; litigation risk due to the nature of our business; failure to comply with environmental, health, and safety laws and regulations; and our ability to comply with, and the costs associated with, social and environmental responsibility policies. Additional information concerning these and other risks is described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual and Quarterly Reports on Forms 10-K and 10-Q, respectively, and in the other reports and documents that we file with the United States Securities and Exchange Commission. We expressly disclaim any obligation to update any of these forward-looking statements, except to the extent required by applicable law.
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Balance Sheets
(In thousands)
August 31, 2024
September 2, 2023
ASSETS
Current Assets:
Cash and cash equivalents
$ 29,588
$ 50,052
Accounts receivable, net of allowance for credit losses
412,122
435,421
Inventories
643,904
726,521
Prepaid expenses and other current assets
102,475
105,519
Total current assets
1,188,089
1,317,513
Property, plant and equipment, net
360,255
319,660
Goodwill
723,894
718,174
Identifiable intangibles, net
101,147
110,641
Operating lease assets
58,649
65,909
Other assets
30,279
12,237
Total assets
$ 2,462,313
$ 2,544,134
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of debt including obligations under finance leases
$ 229,911
$ 229,935
Current portion of operating lease liabilities
21,941
21,168
Accounts payable
205,933
226,299
Accrued expenses and other current liabilities
147,642
172,034
Total current liabilities
605,427
649,436
Long-term debt including obligations under finance leases
278,853
224,391
Noncurrent operating lease liabilities
37,468
45,924
Deferred income taxes and tax uncertainties
139,283
131,801
Total liabilities
$ 1,061,031
$ 1,051,552
Commitments and Contingencies
Shareholders' Equity:
MSC Industrial Shareholders' Equity:
Preferred Stock
—
—
Class A Common Stock
57
48
Class B Common Stock
—
9
Additional paid-in capital
1,070,269
849,502
Retained earnings
456,850
755,007
Accumulated other comprehensive loss
(21,144)
(17,725)
Class A treasury stock, at cost
(114,235)
(107,677)
Total MSC shareholders' equity
1,391,797
1,479,164
Noncontrolling interest
9,485
13,418
Total shareholders' equity
1,401,282
1,492,582
Total liabilities and shareholders' equity
$ 2,462,313
$ 2,544,134
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Fiscal Quarters Ended
Fiscal Years Ended
August 31, 2024
September 2, 2023
August 31, 2024
September 2, 2023
Net sales
$ 952,284
$ 1,035,441
$ 3,820,951
$ 4,009,282
Cost of goods sold
561,676
615,907
2,248,168
2,366,317
Gross profit
390,608
419,534
1,572,783
1,642,965
Operating expenses
297,011
299,264
1,167,870
1,151,295
Restructuring and other costs
2,739
2,215
14,526
7,937
Income from operations
90,858
118,055
390,387
483,733
Other income (expense):
Interest expense
(6,615)
(4,630)
(25,770)
(22,543)
Interest income
110
270
412
1,034
Other income (expense), net
(8,213)
2,027
(22,280)
(6,068)
Total other expense
(14,718)
(2,333)
(47,638)
(27,577)
Income before provision for income taxes
76,140
115,722
342,749
456,156
Provision for income taxes
22,188
28,281
86,792
113,049
Net income
53,952
87,441
255,957
343,107
Less: Net (loss) income attributable to noncontrolling interest
(1,740)
(158)
(2,637)
(126)
Net income attributable to MSC Industrial
