MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2025 SECOND QUARTER RESULTS

FISCAL 2025 Q2 HIGHLIGHTS

Net sales of $891.7 million decreased 4.7% YoY

Operating income of $62.2 million, or $63.7 million adjusted to exclude restructuring and other costs1

Operating margin of 7.0%, or 7.1% excluding the adjustments described above1

Diluted EPS of $0.70 vs. $1.10 in the prior fiscal year quarter

Adjusted diluted EPS of $0.72 vs. $1.18 in the prior fiscal year quarter1

MELVILLE, N.Y. and DAVIDSON, N.C., April 3, 2025 /PRNewswire/ -- MSC INDUSTRIAL SUPPLY CO. (NYSE:MSM) ("MSC," "MSC Industrial," 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 2025 second quarter ended March 1, 2025.

Financial Highlights 2

FY25 Q2

FY24 Q2

Change

FY25 YTD

FY24 YTD

Change

Net Sales

$  891.7

$   935.3

(4.7) %

$ 1,820.2

$ 1,889.3

(3.7) %

Income from Operations

$   62.2

$     91.2

(31.7) %

$   134.5

$   192.8

(30.2) %

Operating Margin

7.0 %

9.7 %

7.4 %

10.2 %

Net Income Attributable to MSC

$   39.3

$     61.8

(36.4) %

$     85.9

$   131.2

(34.5) %

Diluted EPS

$   0.70

3

$     1.10

4

(36.4) %

$     1.54

3

$     2.32

4

(33.6) %

Adjusted Financial Highlights 2

FY25 Q2

FY24 Q2

Change

FY25 YTD

FY24 YTD

Change

Net Sales

$  891.7

$   935.3

(4.7) %

$ 1,820.2

$ 1,889.3

(3.7) %

Adjusted Income from Operations 1

$   63.7

$     97.8

(34.9) %

$   138.3

$   201.5

(31.4) %

Adjusted Operating Margin 1

7.1 %

10.5 %

7.6 %

10.7 %

Adjusted Net Income Attributable to MSC 1

$   40.4

$     66.8

(39.6) %

$     88.8

$   136.7

(35.1) %

Adjusted Diluted EPS 1

$   0.72

3

$     1.18

4

(39.0) %

$     1.59

3

$     2.42

4

(34.3) %

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 55.9 million and 56.0 million weighted-average diluted shares outstanding for FY25 Q2 and FY25 YTD, respectively.

4 Based on 56.5 million and 56.6 million weighted-average diluted shares outstanding for FY24 Q2 and FY24 YTD, respectively.

Erik Gershwind, Chief Executive Officer, said, "During our fiscal second quarter, we continued expanding our solutions footprint, maintained momentum in the Public Sector, and completed important milestones in reenergizing our core customer growth rate. This included launching our website upgrades and an enhanced marketing campaign. Amid a challenging operating environment with industrial demand at low levels, we generated solid results that landed within our guidance range."

Kristen Actis-Grande, Executive Vice President and Chief Financial Officer, added, "Average daily sales declined 4.7% year-over-year, but we are encouraged by January and February performance which exceeded historical month-over-month trends. Additionally, our strong gross margin performance, partly aided by favorable supplier rebates, resulted in an operating margin of 7.0% and adjusted operating margin of 7.1%, slightly above the midpoint of our guidance range. We also utilized our healthy balance sheet and strong operating cash flow performance to return approximately $60 million to shareholders in the form of dividends and share repurchases during the fiscal second quarter."

Gershwind concluded, "While we are encouraged by positive early indicators from our growth initiatives and improving sequential growth rate trends, we have more work to do, and the environment remains uncertain. We are focused on executing our Mission Critical productivity and growth initiatives. Looking forward, this will strengthen MSC's position in the marketplace and ability to achieve our long-term objectives of reaching 400 basis points or more of growth above the IP Index and expanding operating margins to the mid-teens."   

Third Quarter Fiscal 2025 Financial Outlook

ADS Growth (YoY)

(2.0)% - 0.0%

Adjusted Operating Margin1

8.7% - 9.3%

Full-Year Fiscal 2025 Outlook for Certain Financial Metrics Maintained

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 2025 second quarter 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 April 17, 2025. The Company's reporting date for its fiscal 2025 third quarter is scheduled for July 1, 2025.

Contact Information

Investors:

Media:

Ryan Mills, CFA

Zivanai Mutize

Head of Investor Relations

Head of Corporate Communications

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 StatementsStatements 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 and profitability, 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; 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, including tariff policies; 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; 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; our ability to remediate a material weakness in our internal control over financial reporting and to maintain effective internal control over financial reporting and our disclosure controls and procedures in the future; 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.

Condensed Consolidated Balance Sheets

(In thousands)

 

March 1,2025

August 31,2024

ASSETS

(Unaudited)

Current Assets:

     Cash and cash equivalents

$                  41,276

$                  29,588

     Accounts receivable, net of allowance for credit losses

395,300

412,122

     Inventories

644,971

643,904

     Prepaid expenses and other current assets

112,808

102,475

          Total current assets

1,194,355

1,188,089

Property, plant and equipment, net

372,842

360,255

Goodwill

721,663

723,894

Identifiable intangibles, net

93,144

101,147

Operating lease assets

50,020

58,649

Other assets

30,154

30,279

          Total assets

$             2,462,178

$             2,462,313

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Current portion of debt including obligations under finance leases

$                234,056

$                229,911

Current portion of operating lease liabilities

19,920

21,941

Accounts payable

213,057

205,933

Accrued expenses and other current liabilities

155,600

147,642

Total current liabilities

622,633

605,427

Long-term debt including obligations under finance leases

304,931

278,853

Noncurrent operating lease liabilities

30,740

37,468

Deferred income taxes and tax uncertainties

139,284

139,283

Total liabilities

1,097,588

1,061,031

Commitments and Contingencies

Shareholders' Equity:

     Preferred Stock

—

—

     Class A Common Stock

57

57

     Additional paid-in capital

1,079,823

1,070,269

     Retained earnings

422,813

456,850

     Accumulated other comprehensive loss

(27,515)

(21,144)

     Class A treasury stock, at cost

(118,686)

(114,235)

          Total MSC Industrial shareholders' equity

1,356,492

1,391,797

     Noncontrolling interest

8,098

9,485

          Total shareholders' equity

1,364,590

1,401,282

          Total liabilities and shareholders' equity

$             2,462,178

$             2,462,313

 

MSC INDUSTRIAL DIRECT CO., INC.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 

Thirteen Weeks Ended

Twenty-Six Weeks Ended

March 1,2025

March 2,2024

March 1,2025

March 2,