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]

Financial Data and Key Metrics Changes - Fiscal first-quarter sales were $928 million, a decline of 2.7% year over year, which exceeded prior expectations of a 4.5% to 5.5% decline [39][40] - Gross margin was 40.7%, in line with expectations, driven by higher-priced inventories [43] - Adjusted operating margin was 8%, a decline of 90 basis points year over year [46] - Free cash flow conversion was strong at 179% of net income, resulting in free cash flow of $82 million [48] Business Line Data and Key Metrics Changes - Average daily sales in the public sector improved by 9.8% year over year, while national accounts declined by 1.6% and core customers declined by 5.3% [40] - Vending sales were up 5% year over year, representing 18% of total company net sales [42] - Sales through implant programs also grew 5% year over year, accounting for approximately 17% of total company net sales [42] Market Data and Key Metrics Changes - The macro environment remains soft, with most manufacturing end markets contracting, particularly in automotive and heavy truck sectors [21] - Manufacturing and metalworking-related softness has been reflected in MBI readings, which have contracted for 22 consecutive months [22] Company Strategy and Development Direction - The company is committed to restoring growth and achieving market share capture and margin expansion through a mission-critical program focused on high-touch solutions, core customer reenergization, and cost optimization [9][14] - Future prospects for North American manufacturing are promising, driven by reshoring and manufacturing investment in the US [25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the near-term environment remains soft but expressed confidence in the company's ability to restore growth [9][24] - There is cautious optimism regarding 2025 outlooks, with some positive sentiment emerging from customer discussions [84] Other Important Information - The company is implementing a series of initiatives aimed at driving productivity in its distribution network and selling operations, with expected savings of $10 to $15 million [33] - The company has a strong balance sheet with net debt of $163 million, representing approximately 1.1 times EBITDA [47] Q&A Session Summary Question: Clarification on gross margin expectations - Management confirmed that for the second quarter, gross margin is expected to be flat to Q1, with potential for improvement depending on price cost management and productivity [55][60] Question: Expected savings from productivity initiatives - Management expects productivity improvements in Q2, with a range of $15 to $25 million in operating expense savings for the year [71][72] Question: Visibility on larger customers in automotive and aerospace - Management noted that conditions in automotive and heavy manufacturing remain soft, but aerospace has shown positive trends [80][84] Question: Savings from the Columbus distribution center - Management confirmed that savings from the Columbus distribution center are tracking comfortably in the $5 to $7 million range [102] Question: Opportunities in government efficiency - Management indicated that they do not anticipate significant changes in military and defense spending but are positioned to take advantage of any potential opportunities [108] Question: Tariff impact and pricing strategy - Management stated they are prepared for potential tariffs and will treat them as supplier price increases, similar to previous inflationary situations [116][119] Question: Marketing investment strategy - Management outlined that marketing efforts will focus on generating awareness and increasing retention, utilizing a mix of digital marketing and personal outreach [122][125]

MSC Industrial (MSM) came out with quarterly earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.73 per share. This compares to earnings of $1.25 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 17.81%. A quarter ago, it was expected that this distributor of industrial tools and supplies would post earnings of $1.08 per share when it actually produced earnings of $1.03, delivering a surprise of -4.63%.Over t ...

FISCAL FIRST QUARTER 2025 EARNINGS JANUARY 8, 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, expect ...

Financial Performance - Net sales for Q1 FY25 were $928.5 million, a decrease of 2.7% compared to $954.0 million in Q1 FY24[2] - Income from operations was $72.3 million, down 28.8% from $101.6 million in the prior year[2] - Diluted EPS for Q1 FY25 was $0.83, compared to $1.22 in Q1 FY24, reflecting a decline of 32.0%[3] - Adjusted operating margin for Q1 FY25 was 8.0%, down from 10.9% in the same quarter last year[2] - Net sales for the thirteen weeks ended November 30, 2024, were $928.484 million, a decrease of 2.6% compared to $953.969 million for the same period in 2023[15] - Gross profit decreased to $378.187 million, down 3.8% from $393.117 million year-over-year, resulting in a gross margin of 40.7%[15][25] - Net income attributable to MSC Industrial was $46.623 million, a decline of 32.6% from $69.350 million in the prior year[15][26] - Diluted net income per common share decreased to $0.83, down from $1.22, reflecting a 32.8% year-over-year decline[15][26] - Operating expenses increased to $303.563 million, up 4.4% from $290.633 million in the same quarter last year[15][25] - Comprehensive income attributable to MSC Industrial was $42.791 million, down from $69.798 million year-over-year[17] Cash Flow and Financial Position - The company generated significant free cash flow, with a conversion rate of approximately 100%[10] - Cash flows from operating activities improved to $101.868 million, compared to $81.168 million in the prior year[19] - The company reported a net cash increase of $27.678 million for the quarter, contrasting with a decrease of $24.247 million in the same period last year[19] - The company maintains a strong balance sheet with total assets of $2.47 billion as of November 30, 2024[13] - Current liabilities totaled $626.3 million, while total liabilities were $1.09 billion[13] Future Outlook - The outlook for Q2 FY25 anticipates average daily sales growth between -5.0% and -3.0% year-over-year[4] - The adjusted operating margin guidance for Q2 FY25 is projected to be between 6.5% and 7.5%[4] Strategic Initiatives - The company plans to continue executing its Mission Critical strategy to improve performance amid challenging macro conditions[2] - The company incurred restructuring and other costs of $2.344 million during the quarter[15][25] Other Expenses - Total other expenses rose to $11.678 million, compared to $10.250 million in the previous year[15][25]

In its upcoming report, MSC Industrial (MSM) is predicted by Wall Street analysts to post quarterly earnings of $0.73 per share, reflecting a decline of 41.6% compared to the same period last year. Revenues are forecasted to be $905.01 million, representing a year-over-year decrease of 5.1%.The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.Prior ...

MSC Industrial (MSM) reported $952.28 million in revenue for the quarter ended August 2024, representing a year-over-year decline of 8%. EPS of $1.03 for the same period compares to $1.64 a year ago.The reported revenue represents a surprise of -0.72% over the Zacks Consensus Estimate of $959.16 million. With the consensus EPS estimate being $1.08, the EPS surprise was -4.63%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Stre ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________ FORM 10-K __________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |-----------------------------------------------------------------------------|--------- ...