MSC Industrial Direct (MSM) - 2024 Q4 - Annual Results

Net Sales Performance - Net sales for FY24 Q4 decreased by 8.0% YoY to $952.3 million, with a 300 basis point headwind from nonrepeating Public Sector orders[4] - Full-year net sales for FY24 decreased by 4.7% YoY to$ 3,821.0 million, including a 160 basis point headwind from nonrepeating Public Sector orders[2] - Net sales for fiscal year 2024 decreased to $3,820,951 thousand from$ 4,009,282 thousand in fiscal year 2023, a decline of 4.7%[11] - Net sales for the fiscal quarter ended August 31, 2024 were $952.28 million, with a gross margin of 41.0%[20] - Net sales for the fiscal year 2024 reached$ 3,820.95 million, with a gross profit of $1,572.78 million and a gross margin of 41.2%[21] - Net sales for the fiscal quarter ended September 2, 2023, were$ 1,035.44 million, with a gross profit of $419.53 million and a gross margin of 40.5%[23] - Net sales for the fiscal year ended September 2, 2023, were$ 4,009.3 million, with a gross profit of $1,643.0 million and a gross margin of 41.0%[24] Operating Income and Margin - Operating income for FY24 Q4 was$ 90.9 million, or $94.2 million adjusted, with an operating margin of 9.5% or 9.9% adjusted[4] - Full-year operating income for FY24 was$ 390.4 million, or $407.2 million adjusted, with an operating margin of 10.2% or 10.7% adjusted[2] - Income from operations for the fiscal quarter ended August 31, 2024 was$ 90.86 million, with an operating margin of 9.5%[20] - Operating expenses for the fiscal year 2024 were $1,167.87 million, representing 30.6% of sales, with adjusted operating expenses at$ 1,165.60 million or 30.5% of sales[21] - Operating expenses for the fiscal quarter ended September 2, 2023, were $299.26 million, representing 28.9% of sales, with adjusted operating expenses at$ 289.13 million or 27.9% of sales[23] - Income from operations was $483.7 million, with an operating margin of 12.1%, and adjusted income from operations was$ 504.5 million, with an adjusted operating margin of 12.6%[24] Earnings Per Share (EPS) - Diluted EPS for FY24 Q4 was $0.99, compared to$ 1.56 in the prior year, with adjusted diluted EPS of $1.03 vs.$ 1.64[4] - Full-year diluted EPS for FY24 was $4.58, compared to$ 6.11 in the prior year, with adjusted diluted EPS of $4.81 vs.$ 6.29[2] - Diluted net income per common share decreased to $4.58 in fiscal year 2024 from$ 6.11 in fiscal year 2023, a decline of 25.0%[11] - Diluted net income per common share for the fiscal year 2024 was $4.58, with an adjusted figure of$ 4.81[21] - Diluted net income per common share for the fiscal quarter ended September 2, 2023, was $1.56, with an adjusted figure of$ 1.64[23] - Diluted net income per common share was $6.11, with adjusted diluted net income per common share of$ 6.29[24] Cash Flow and Financial Position - Generated strong operating cash flows of $410.7 million for FY24, representing 160% of net income[2] - Cash and cash equivalents decreased to$ 29,588 thousand as of August 31, 2024, from $50,052 thousand as of September 2, 2023, a drop of 40.9%[10] - Net cash provided by operating activities for fiscal year 2024 was$ 410.70 million, compared to $699.58 million in fiscal year 2023, a decrease of 41.3%[13] - Expenditures for property, plant and equipment in fiscal year 2024 were$ 99.41 million, compared to $92.49 million in fiscal year 2023, an increase of 7.5%[13] - Repurchases of Class A Common Stock in fiscal year 2024 were$ 187.70 million, compared to $95.78 million in fiscal year 2023, an increase of 96.0%[13] - Free Cash Flow (FCF) is defined as cash flow from operations reduced by expenditures for property, plant and equipment, and FCF Conversion is calculated by dividing FCF by GAAP net income[19] Net Income and Comprehensive Income - Net income attributable to MSC Industrial for fiscal year 2024 was$ 258,594 thousand, compared to $343,233 thousand in fiscal year 2023, a decline of 24.7%[11] - Comprehensive income attributable to MSC Industrial for fiscal year 2024 was$ 255,175 thousand, down from $348,629 thousand in fiscal year 2023, a decrease of 26.8%[12] - Net income for fiscal year 2024 was$ 255.96 million, compared to $343.11 million in fiscal year 2023, a decrease of 25.4%[13] - Net income attributable to MSC Industrial for the fiscal quarter ended August 31, 2024 was$ 55.69 million, with diluted earnings per share of $0.99[20] - Net income attributable to MSC Industrial for the fiscal year 2024 was$ 258.59 million, with adjusted net income at $271.25 million[21] - Net income attributable to MSC Industrial for the fiscal quarter ended September 2, 2023, was$ 87.60 million, with adjusted net income at $92.02 million[23] - Net income attributable to MSC Industrial was$ 343.2 million, with adjusted net income of $353.8 million[24] - For the fiscal year ended August 31, 2024, net income attributable to MSC Industrial was$ 258.6 million, compared to $343.2 million for the fiscal year ended September 2, 2023[26] Debt and Liabilities - Long-term debt including obligations under finance leases increased to$ 278,853 thousand as of August 31, 2024, from $224,391 thousand as of September 2, 2023, a rise of 24.3%[10] - Total liabilities increased slightly to$ 1,061,031 thousand as of August 31, 2024, from $1,051,552 thousand as of September 2, 2023, an increase of 0.9%[10] Return on Invested Capital (ROIC) - Return on Invested Capital (ROIC) is calculated using non-GAAP net operating profit after tax (NOPAT) divided by average invested capital, and is used to monitor and evaluate operating performance[18] - Non-GAAP NOPAT for the fiscal year ended August 31, 2024, was$ 291.5 million, compared to $363.9 million for the fiscal year ended September 2, 2023[26] - Adjusted Non-GAAP NOPAT for the fiscal year ended August 31, 2024, was$ 304.1 million, compared to $379.5 million for the fiscal year ended September 2, 2023[26] - Invested capital for the fiscal year ended August 31, 2024, was$ 1,871.0 million, compared to $1,883.4 million for the fiscal year ended September 2, 2023[26] - Net income to average invested capital for the fiscal year ended August 31, 2024, was 13.7%, compared to 17.6% for the fiscal year ended September 2, 2023[26] - Non-GAAP ROIC for the fiscal year ended August 31, 2024, was 15.5%, compared to 18.6% for the fiscal year ended September 2, 2023[26] Future Outlook - FY25 Q1 ADS growth is expected to be between (5.5)% and (4.5)%, with an adjusted operating margin forecast of 7.0% to 7.5%[5] - Full-year FY25 outlook includes depreciation and amortization expense of ~$ 90M- $95M, interest and other expense of ~$ 45M, and capital expenditures of ~ $100M-$ 110M[5] - The company aims to achieve adjusted operating margin in the mid-teens and drive 400 basis points of growth above the Industrial Production index over the cycle[4]