Core Insights - MSC Industrial reported revenue of $891.72 million for the quarter ended February 2025, a decrease of 4.7% year-over-year [1] - The earnings per share (EPS) for the quarter was $0.72, down from $1.18 in the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $898.71 million, resulting in a surprise of -0.78% [1] - The company achieved an EPS surprise of +5.88%, with the consensus EPS estimate being $0.68 [1] Performance Metrics - MSC Industrial's shares returned +1.9% over the past month, contrasting with the Zacks S&P 500 composite's decline of -4.7% [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3] - Sales Days were reported at 63, matching the average estimate from eight analysts [4] - The total company average daily sales (ADS) was $14.20 million, slightly below the estimated $14.27 million from five analysts [4] - The total company ADS percent change was -4.7%, compared to the average estimate of -3.9% from seven analysts [4]

Financial Performance - Net sales for the thirteen weeks ended March 1, 2025, were $891.7 million, a decrease of 4.7% compared to $935.3 million for the same period in 2024[15]. - Gross profit for the thirteen weeks ended March 1, 2025, was $365.2 million, down 6.0% from $388.6 million in the prior year[15]. - Net income attributable to MSC Industrial for the thirteen weeks ended March 1, 2025, was $39.3 million, a decline of 36.5% from $61.8 million in the same period last year[15]. - Basic net income per share for the thirteen weeks ended March 1, 2025, was $0.70, compared to $1.10 for the same period in 2024, representing a decrease of 36.4%[15]. - For the twenty-six weeks ended March 1, 2025, net income was $84.841 million, a decrease of 34.9% compared to $130.693 million for the same period in 2024[22]. - Comprehensive income attributable to MSC Industrial for the thirteen weeks ended March 1, 2025, was $36.8 million, down from $61.8 million in the prior year[17]. Assets and Liabilities - Total current assets increased slightly to $1,194.4 million as of March 1, 2025, from $1,188.1 million as of August 31, 2024[13]. - Total liabilities rose to $1,097.6 million as of March 1, 2025, compared to $1,061.0 million as of August 31, 2024[13]. - The company’s total assets remained stable at $2,462.2 million as of March 1, 2025, compared to $2,462.3 million as of August 31, 2024[13]. - Total shareholders' equity attributable to MSC Industrial was $1.356 billion as of March 1, 2025, down from $1.390 billion as of March 2, 2024[20]. Cash Flow and Dividends - Cash and cash equivalents at the end of the period increased to $41.276 million from $22.227 million year-over-year[22]. - Regular cash dividends declared on Class A Common Stock were $94.933 million for the twenty-six weeks ended March 1, 2025, slightly up from $93.964 million in 2024[22]. - Total cash dividends paid were $1.70 per share, totaling $94,933 for the twenty-six-week period ended March 1, 2025, compared to $1.66 per share totaling $93,964 for the same period in 2024[79]. Operating Expenses - Operating expenses for the thirteen weeks ended March 1, 2025, were $301.6 million, an increase of 3.4% from $291.2 million in the prior year[15]. - Depreciation and amortization expenses increased to $44.671 million for the twenty-six weeks ended March 1, 2025, compared to $40.372 million in 2024[22]. - Total restructuring and other costs amounted to $1,406 for the thirteen-week period and $3,750 for the twenty-six-week period ended March 1, 2025, compared to $6,181 and $7,097 for the same periods in 2024, respectively[87]. Stock and Share Repurchase - The company repurchased $30.541 million of Class A Common Stock during the twenty-six weeks ended March 1, 2025, compared to $148.677 million in the same period of 2024[22]. - The Company repurchased 158 shares of Class A Common Stock for $12,469 during the thirteen-week period ended March 1, 2025, and 377 shares for $30,541 during the twenty-six-week period[76]. - The Company had $213,750 outstanding under its Uncommitted Credit Facilities as of March 1, 2025, compared to $209,500 as of August 31, 2024[70]. Market Conditions and Future Outlook - The company anticipates continued challenges in the market, including supply chain disruptions and competition, which may impact future performance[8]. - The company is currently evaluating the impact of new accounting standards on its disclosures, with no expected material impact on financial statements[28]. Customer Base and Revenue Sources - The Company serves a diverse customer base with 59% of revenue from heavy manufacturing for the thirteen weeks ended March 1, 2025[40]. - Revenue from the United States accounted for 95% of total revenue for both the thirteen and twenty-six weeks ended March 1, 2025[43]. - National account customers represented 37% of total revenue for both the thirteen weeks ended March 1, 2025, and March 2, 2024[41]. Tax and Legal Matters - The effective tax rate increased to 24.5% for the twenty-six-week period ended March 1, 2025, up from 23.7% for the same period in 2024, primarily due to a lower tax benefit from stock-based compensation[89]. - A class action complaint was filed against the company on March 14, 2025, alleging breaches of fiduciary duties, but the company believes it has substantial defenses[92].

Financial Data and Key Metrics Changes - Fiscal second quarter sales were $892 million, a decline of 4.7% year-over-year [32] - Average daily sales decreased by 5.5% sequentially, despite January and February outperforming historical trends [32] - Gross margin was 41%, down 50 basis points year-over-year, while adjusted operating margin was 7.1%, a decline of 340 basis points year-over-year [36][38] - GAAP earnings per share were $0.70 compared to $1.10 in the prior year quarter, and adjusted earnings per share were $0.72 compared to $1.18 in the prior year [38] Business Line Data and Key Metrics Changes - In-plant program count increased by 24% year-over-year to 387 programs, and total installed vending machines grew by 9% to over 28,000 machines [10] - Average daily sales in vending were up 1% year-over-year, representing 18% of total company net sales [35] - Sales through in-plant programs also grew 1% year-over-year, accounting for approximately 18% of total company net sales [35] Market Data and Key Metrics Changes - The industrial production (IP) readings across most top manufacturing end markets continued to contract, impacting performance [18] - Customer sentiment and future outlook have shown improvement, with recent MBI readings hovering around 50 [18] Company Strategy and Development Direction - The company is focused on improving execution and returning to growth despite a soft demand environment [8] - Key initiatives include enhancing the website for better customer experience, expanding the OEM product line, and maintaining momentum in high-touch solutions [11][17] - The company is navigating the tariff landscape with a playbook covering purchasing, pricing, and assortment management [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about future prospects, citing a solid long-term manufacturing outlook and improving execution [19] - The near-term environment remains choppy, but the company feels well-positioned to navigate uncertainties [19] Other Important Information - The company repurchased approximately 158,000 shares during the quarter, returning about $60 million to shareholders [41] - Capital expenditures increased to $30 million, with free cash flow conversion at approximately 63% for the fiscal second quarter [40] Q&A Session Summary Question: Thoughts on top-line guidance for the back-half - Management indicated that the guidance assumes some potential softening in end markets but remains focused on share gain initiatives [52][54] Question: Details on recent price increases - The price increase in late March was small, primarily covering items where the company is the importer of record, with an estimated 0.5% impact on the top line [66] Question: Update on digital KPIs and sales expectations - Management noted improvements in conversion rates and average order value, indicating positive momentum in digital performance [116] Question: Insights on individual end markets, particularly automotive and aerospace - Management acknowledged continued softness in heavy manufacturing but noted progressive improvement, especially in aerospace [91][92] Question: Impact of in-plant and vending growth on margins - Management indicated that while in-plant and vending programs may pressure gross margins initially, they are expected to benefit operating margins in the long run [145][150]

FISCAL SECOND QUARTER 2025 EARNINGS APRIL 3, 2025 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements in this presentation 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, expecte ...

Financial Performance - Net sales for Q2 FY25 were $891.7 million, a decrease of 4.7% compared to $935.3 million in Q2 FY24[2] - Income from operations was $62.2 million, down 31.7% from $91.2 million in the prior year quarter[2] - Operating margin decreased to 7.0% from 9.7% year-over-year[2] - Net income attributable to MSC was $39.3 million, a decline of 36.4% from $61.8 million in Q2 FY24[2] - Diluted EPS for Q2 FY25 was $0.70, compared to $1.10 in the same quarter last year, reflecting a 36.4% decrease[3] - Average daily sales declined 4.7% year-over-year, but January and February showed improved performance[2] - Gross profit for the twenty-six weeks ended March 1, 2025, was $743.4 million, down 5.0% from $781.7 million in the prior year[14] - Net income attributable to MSC Industrial for the thirteen weeks ended March 1, 2025, was $39.3 million, a decline of 36.6% from $61.8 million in the same period last year[14] - The company reported a diluted net income per share of $0.70 for the thirteen weeks ended March 1, 2025, compared to $1.10 for the same period in 2024[14] - Comprehensive income attributable to MSC Industrial for the twenty-six weeks ended March 1, 2025, was $79.6 million, down from $131.6 million in the prior year[16] - For the twenty-six weeks ended March 2, 2024, net sales reached $1.89 billion, with a gross margin of 41.4%[30] - Operating income for the same period was $192.8 million, with an operating margin of 10.2%[30] - The company reported a net income of $130.7 million for the twenty-six weeks, with diluted earnings per share of $2.32[30] Shareholder Returns - The company returned approximately $60 million to shareholders through dividends and share repurchases during Q2 FY25[2] - The company repurchased $30.5 million of Class A Common Stock during the twenty-six weeks ended March 1, 2025[18] Future Outlook - The outlook for Q3 FY25 anticipates average daily sales growth between -2.0% and 0.0%[4] - MSC aims to achieve long-term objectives of 400 basis points or more of growth above the IP Index and expand operating margins to the mid-teens[2] - The company expects continued growth in net sales and improvements in operating margins in the upcoming quarters[27] - MSC Industrial is focusing on market expansion and new product development to drive future growth[27] Operating Expenses - Operating expenses were $291.2 million, representing 31.1% of sales[28] - Total other expenses for the second quarter were $11.2 million[28] - The company incurred restructuring and other costs of $1.4 million for the thirteen weeks ended March 1, 2025[24] - Restructuring and other costs amounted to $7.1 million for the twenty-six weeks[30] - Total other expense for the thirteen weeks ended March 1, 2025, was $(10.5) million, compared to $(11.2) million in the same period last year[14] Cash Flow - Cash flows from operating activities for the twenty-six weeks ended March 1, 2025, were $156.3 million, slightly down from $159.9 million in the prior year[18] - Cash and cash equivalents at the end of the period were $41.3 million, an increase from $22.2 million at the end of the same period last year[18]

Core Insights - MSC Industrial Supply Co. reported a decline in net sales and income for the fiscal 2025 second quarter, with net sales of $891.7 million, down 4.7% year-over-year, and net income attributable to MSC of $39.3 million, a decrease of 36.4% compared to the same quarter last year [2][5][4]. Financial Performance - Net Sales: $891.7 million in Q2 FY25 compared to $935.3 million in Q2 FY24, reflecting a 4.7% decrease [2][5]. - Income from Operations: Reported at $62.2 million, down 31.7% from $91.2 million in the prior year [2][5]. - Operating Margin: 7.0% for Q2 FY25, down from 9.7% in Q2 FY24 [2][5]. - Net Income: $39.3 million in Q2 FY25, a decline of 36.4% from $61.8 million in Q2 FY24 [2][5]. - Diluted EPS: $0.70 for Q2 FY25, compared to $1.10 in the same quarter last year, marking a 36.4% decrease [2][5]. Adjusted Financial Metrics - Adjusted Income from Operations: $63.7 million in Q2 FY25, down 34.9% from $97.8 million in Q2 FY24 [2][5]. - Adjusted Operating Margin: 7.1% for Q2 FY25, compared to 10.5% in Q2 FY24 [2][5]. - Adjusted Net Income: $40.4 million in Q2 FY25, a decrease of 39.6% from $66.8 million in Q2 FY24 [2][5]. - Adjusted Diluted EPS: $0.72 for Q2 FY25, down from $1.18 in the prior year [2][5]. Operational Insights - The company maintained momentum in the Public Sector and launched website upgrades and enhanced marketing campaigns to drive growth [4]. - Average daily sales declined 4.7% year-over-year, but January and February showed improved performance compared to historical trends [4]. - MSC returned approximately $60 million to shareholders through dividends and share repurchases during the fiscal second quarter [4]. Future Outlook - The company aims to strengthen its market position and achieve long-term objectives, including a growth rate of 400 basis points above the Industrial Production Index and expanding operating margins to the mid-teens [4].

Group 1 - MSC Industrial Supply Co. announced the appointment of Sara Dulski as a member of the Industry Supply Association (ISA) Board of Directors [1] - Sara Dulski leads a portfolio at MSC that includes metalworking production tools and value-added services, bringing a forward-thinking approach to the ISA [2] - ISA serves as the channel association for the industrial Maintenance, Repair, Operations, and Production (MROP) industry, providing networking, education, and tools for its members [3] Group 2 - Sara Dulski expressed enthusiasm for her new role, emphasizing the opportunity to strengthen the industrial supply channel and collaborate on impactful initiatives [4] - Brendan Breen, ISA CEO, highlighted Dulski's background and passion for innovation as valuable assets to the board, which will enhance ISA's ability to deliver value to its members [4] Group 3 - MSC Industrial Supply Co. is a leading distributor in North America, offering approximately 2.4 million products and services related to metalworking and MRO, with over 80 years of industry experience [7] - The company employs more than 7,000 associates who work to improve productivity and efficiency for their customers [7]

Core Viewpoint - MSC Industrial Direct Company, Inc. reported a decline in earnings and revenues for the first quarter of fiscal 2025, primarily due to weak demand and increased operating expenses, despite beating earnings estimates [1][2]. Financial Performance - Adjusted earnings per share (EPS) for the first quarter were 86 cents, exceeding the Zacks Consensus Estimate of 73 cents, but down 31% from $1.25 in the same quarter last year [1]. - Revenues totaled $928.5 million, a decrease of 2.7% year-over-year, impacted by weak demand and unfavorable foreign exchange, although it surpassed the Zacks Consensus Estimate of $905 million [2]. - Average daily sales fell 2.7% year-over-year, better than the company's guidance of a 4.5-5.5% decline [3]. Cost and Margin Analysis - The cost of goods sold decreased by 1.9% to $550 million, while gross profit fell 4% to $378 million, resulting in a gross margin of 40.7%, down from 41.2% a year ago [4]. - Operating expenses rose 4% year-over-year to approximately $304 million, driven by higher payroll costs and investments in digital initiatives [5]. - Adjusted operating income was $74.6 million, down 28% from $104 million in the prior-year quarter, with an adjusted operating margin of 8% compared to 10.9% previously [6]. Cash Flow and Debt Position - Cash and cash equivalents increased to $57.3 million from $29.6 million at the end of fiscal 2024, with cash flow from operating activities rising to $102 million from $81 million year-over-year [7]. - The company repurchased approximately 150,000 shares and returned over $60 million to shareholders through dividends and share repurchases, while long-term debt rose to $290 million from $279 million [8]. Future Outlook - MSC Industrial anticipates average daily sales to decline by 3-5% year-over-year in the second quarter of fiscal 2025, with expected adjusted operating margins between 6.5% and 7.5% [9]. Stock Performance - The company's shares have decreased by 11.9% over the past year, contrasting with an 8.8% growth in the industrial services industry [10].

Core Insights - MSC Industrial reported revenue of $928.48 million for the quarter ended November 2024, reflecting a year-over-year decline of 2.7% [1] - The earnings per share (EPS) for the same period was $0.86, down from $1.25 a year ago, but exceeded the consensus EPS estimate of $0.73 by 17.81% [1] - The reported revenue surpassed the Zacks Consensus Estimate of $905.01 million by 2.59% [1] Performance Metrics - MSC Industrial's stock has returned -5.3% over the past month, underperforming the Zacks S&P 500 composite's -2.8% change [3] - The company has a Zacks Rank of 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3] - Sales Days were reported at 62, matching the average estimate based on eight analysts [4] - The total company average daily sales (ADS) was $15 million, slightly above the $14.59 million average estimate from six analysts [4] - Days Sales Outstanding (DSO) was 41, compared to the average estimate of 40 from two analysts [4]

Financial Performance - Net sales for the thirteen weeks ended November 30, 2024, were $928.484 million, a decrease of 2.9% compared to $953.969 million for the same period in 2023[15] - Gross profit for the quarter was $378.187 million, down from $393.117 million, reflecting a gross margin of approximately 40.7%[15] - Net income attributable to MSC Industrial for the quarter was $46.623 million, a decline of 32.6% from $69.350 million in the prior year[15] - Basic net income per share decreased to $0.83 from $1.23, representing a decline of 32.5% year-over-year[15] - Comprehensive income attributable to MSC Industrial was $42.791 million, down from $69.798 million in the prior year[17] - Net income for the thirteen weeks ended November 30, 2024, was $45,694, a decrease of 34.7% compared to $69,128 for the same period in 2023[21] - Basic and diluted net income per common share were both $0.83, compared to $1.23 and $1.22, respectively, for the same period last year[15] Assets and Liabilities - Total assets increased to $2.474 billion as of November 30, 2024, compared to $2.462 billion at the end of the previous quarter[13] - Total liabilities rose to $1.090 billion, up from $1.061 billion, indicating an increase in financial obligations[13] - Shareholders' equity attributable to MSC Industrial decreased to $1.375 billion from $1.392 billion, reflecting a reduction in retained earnings[13] - Total debt, including obligations under finance leases, increased to $519,967 as of November 30, 2024, from $508,764 as of August 31, 2024[66] Cash Flow and Operating Activities - Net cash provided by operating activities increased to $101,868, up 25.5% from $81,168 in the prior year[21] - Total adjustments to reconcile net income to net cash provided by operating activities were $56,174, significantly higher than $12,040 in the previous year[21] - Cash and cash equivalents at the end of the period rose to $57,266, compared to $25,805 at the end of the same period last year[21] - Cash and cash equivalents increased significantly to $57.266 million from $29.588 million, indicating improved liquidity[13] Dividends and Shareholder Returns - Dividends declared per Class A Common Share increased to $0.85 from $0.83, indicating a commitment to returning value to shareholders[19] - Regular cash dividends paid were $0.85 per share totaling $47,537 for the thirteen-week period ended November 30, 2024, compared to $0.83 per share totaling $47,192 for the same period in 2023[79] - The Company repurchased 219 shares of Class A Common Stock for $18,072 during the thirteen-week period ended November 30, 2024, compared to 1,367 shares for $132,045 in the same period of 2023[77] Restructuring and Costs - The company reported a restructuring cost of $2.344 million for the quarter, compared to $0.916 million in the same period last year[15] - Total restructuring and other costs for the thirteen-week period ended November 30, 2024, were $2,344, significantly higher than $916 for the same period in 2023[87] Revenue Sources - Revenue from the manufacturing heavy sector accounted for 57% of total revenue, down from 59% in the prior year[42] - The public sector contributed 9% to total revenue, an increase from 8% in the previous year[42] - The company’s revenue from the United States accounted for 95% of total revenue for both the thirteen-week periods ended November 30, 2024, and December 2, 2023[44] - The percentage of revenue by customer type remained stable, with National Account Customers at 37%, Public Sector Customers at 9%, and Core and Other Customers at 54% for the period ended November 30, 2024[44] Accounting and Compliance - The company is currently evaluating the impact of new accounting standards on its consolidated financial statements and disclosures[30] - The effective tax rate for the thirteen-week period ended November 30, 2024, was 24.6%, an increase from 24.3% for the same period in 2023[89] - The Company was in compliance with all operating and financial covenants of the Credit Facilities and Private Placement Debt as of November 30, 2024[73] Other Financial Metrics - The company reported stock-based compensation expense of $3,562 for the thirteen weeks ended November 30, 2024, compared to $5,201 in the same period of 2023, indicating a reduction of 31.5%[47] - Total accrued sales returns were $7,704 as of November 30, 2024, slightly down from $8,120 as of August 31, 2024[35] - Total accrued sales incentives related to volume rebates were $23,731, up from $23,386 as of August 31, 2024[38] - Expenditures for property, plant, and equipment were $20,168, compared to $18,433 in the prior year[21] - The company had 137 non-vested performance share units (PSUs) at November 30, 2024, with a weighted-average grant date fair value of $86.31 per share[49] - The company classified its Columbus customer fulfillment center as held for sale, with a carrying value of approximately $31,758 as of November 30, 2024[61] - The company had $210,250 outstanding under the Uncommitted Credit Facilities as of November 30, 2024, compared to $209,500 as of August 31, 2024[70] - Outstanding letters of credit were $6,304 as of November 30, 2024, unchanged from August 31, 2024[69]