MSC Industrial Supply Co. Sees Impact on Q1 Earnings Results

Fiscal 2025 Q1 Highlights

Fiscal 2025 First Quarter Highlights

• Net sales reached $928.5 million, reflecting a 2.7% decrease year-over-year.
• Operating income totaled $72.3 million, or $74.6 million when adjusted for restructuring and other related costs.
• Operating margin registered at 7.8%, or 8.0% excluding the aforementioned adjustments.
• Diluted earnings per share (EPS) stood at $0.83, compared to $1.22 from the same quarter last year.
• Adjusted diluted EPS was $0.86, down from $1.25 from the prior fiscal year quarter.

MSC Industrial Supply Co. (MSM), renowned as a leading distributor of metalworking and maintenance, repair, and operations (MRO) products, has disclosed its financial results for the first quarter of fiscal year 2025, ending November 30, 2024.

Company Performance Overview

Erik Gershwind, CEO, emphasized that despite facing a tough operating environment, the first quarter results presented a robust performance, particularly in the Public Sector, where growth was noted, as well as the ongoing expansion of MSC’s solutions portfolio. Gershwind acknowledged that while the fiscal year is off to a promising start, there is still much work to be done in improving overall metrics, as outlined in the company's three pivotal strategic pillars.

Financial Insights and Adjustments

Kristen Actis-Grande, CFO, stated the first quarter outcomes surpass expectations, noting an average daily sales decline of 2.7% year-over-year. Despite this, the gross margin met expectations, resulting in a favorable adjusted operating margin that exceeded predictions by approximately 50 basis points. Positive cash flow generation and a solid balance sheet further empower the business, allowing for dividends and share repurchase initiatives aimed at returning value to shareholders.

Looking Forward

Gershwind expressed cautious optimism for the future, addressing that the macroeconomic conditions may remain challenging in the short term, notably influenced by holiday cycles and fiscal calendar timing issues. Nevertheless, he reinforced the commitment to long-term growth initiatives, highlighting proactive measures like the Mission Critical strategy designed to enhance MSC's market position as conditions normalize within targeted sectors.

Second Quarter Fiscal 2025 Projections

In their outlook for the second quarter of fiscal 2025, MSC expects:

• Average Daily Sales growth of approximately (5.0)% to (3.0%) year-over-year.
• Adjusted operating margins to range between 6.5% and 7.5%.

Full-Year Fiscal 2025 Forecast Highlights

The company has maintained its guidance for certain financial metrics for the full fiscal year, which include:

• Depreciation and amortization expenses ranging from approximately $90 million to $95 million.
• Interest and other expenses projected to be around $45 million.
• Expected capital expenditures between approximately $100 million and $110 million.
• Free cash flow conversion anticipated to be about 100%.
• Tax rate approximated between 24.5% and 25.0%.

Conference Call Information

MSC will hold a conference call at 8:30 a.m. EDT to discuss the results of the first quarter of fiscal 2025, with details available on the company's investor relations site. Investors will have access to the call via various toll-free numbers depending on their location.

Contact

For inquiries:

• Investors: Ryan Mills, CFA - Rmills@mscdirect.com
• Media: Zivanai Mutize - Zivanai.mutize@mscdirect.com

About MSC Industrial Supply Co.

MSC Industrial Supply Co. (MSM) is a North American leader in providing a wide array of industrial supplies and services. The company’s robust offering includes an extensive inventory of over 2.4 million products and services designed to enhance productivity and operational efficiency across various industries. With over 80 years of experience, MSC endeavors to optimize supply chains and drive growth for its customers.

Frequently Asked Questions

1. What were MSC Industrial's net sales for Q1 of 2025?

Net sales were $928.5 million, down by 2.7% year-over-year.

2. How did the operating income change compared to the previous year?

Operating income decreased to $72.3 million, compared to $101.6 million in the prior year.

3. What is MSC's EPS for this quarter?

Diluted EPS for the quarter was $0.83, down from $1.22 last year.

4. What is the company's outlook for the second quarter?

MSC expects average daily sales growth to be between (5.0)% and (3.0)% year-over-year for the second quarter.

5. How does MSC plan to improve financial performance moving forward?

MSC aims to leverage its Mission Critical strategy and improve productivity to navigate through challenging market conditions.

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