PRELIMINARY FISCAL 2024 Q3 RESULTS
- Net sales of approximately $978-$980 million
down 7.3%-7.1% YoY and includes a roughly 300 basis point headwind
from non-repeating Public Sector orders in the prior year
- Average daily sales up approximately 3% sequentially compared
to the fiscal second quarter, which had one less selling day
- GAAP Earnings Per Share (EPS) expected to be in the range of
$1.26 - $1.28
- Adjusted EPS* expected to be in the range of $1.32 - $1.34
- Company to discuss preliminary financial results and drivers of
updated outlook on June 14, 2024 at
8:30AM EDT
- Company to release final fiscal third quarter 2024 financial
results and conduct conference call on July
2, 2024 at 8:30AM EDT
* 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.
|
MELVILLE, N.Y. and DAVIDSON, N.C., June 13,
2024 /PRNewswire/ -- MSC INDUSTRIAL SUPPLY CO.
(NYSE: MSM), "MSC," "MSC Industrial" or the "Company," a
leading North American distributor of a broad range of metalworking
and maintenance, repair and operations (MRO) products and services,
today provided preliminary unaudited financial results for its
fiscal third quarter ended June 1,
2024 and updated its outlook for the full fiscal year 2024.
The third quarter results announced today are preliminary and
subject to change based on the completion of the Company's
quarter-end review process.
![MSC Industrial Supply Co. MSC Industrial Supply Co.](https://mma.prnewswire.com/media/406094/MSC_Logo.jpg)
Erik Gershwind, President and
Chief Executive Officer, said, "Today, we announced softer than
expected preliminary third quarter results and are lowering our
full year 2024 outlook, primarily driven by two factors. First,
while average daily sales improved sequentially, ongoing heavy
manufacturing softness and a slower than anticipated ramp in our
Core Customer resulted in a lower sequential revenue improvement
than anticipated. Second, gross margins were approximately 60 basis
points below our expectations primarily due to, in roughly equal
proportion, increased product and customer mix headwinds and
unexpected dilution from our web price realignment. The latter
tracks back to complexities that were not uncovered during the
pilot phase of the web price alignment and the time it took to
identify the cause of the unexpected dilution."
Gershwind continued, "We are taking decisive actions in response
to these results. We are maintaining focus on the areas of the
business that are delivering, such as In Plant, Vending and other
high touch solutions, making changes to accelerate Core Customer
growth initiatives, especially the website rollout, and have taken
corrective actions on the web price realignment to improve gross
margin trends. We are determined to execute the next chapter of our
Mission Critical journey and achieve our long-term goals of growing
400 basis points or more above the Industrial Production Index and
achieving adjusted operating margin in the mid-teens."
Fiscal 2024 Full
Year Financial Outlook
|
|
Current
|
Prior
|
ADS Growth
(YoY)
|
(4.7)% -
(4.3)%
|
0% - 5%
|
Adjusted Operating
Margin1
|
10.5% -
10.7%
|
12.0% -
12.8%
|
Depreciation and
Amortization Expense
|
~$80M
|
~$85M
|
Interest and Other
Expense
|
~$45M
|
$40M - $50M
|
Operating Cash Flow
Conversion2
|
>125%
|
>125%
|
Tax Rate
|
24.0% -
24.5%
|
24.0% -
24.5%
|
|
(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.
|
(2) The Company defines
Operating Cash Flow Conversion as Net cash provided by operating
activities as a percentage of Net income. The Company's management
uses Operating Cash Flow Conversion to evaluate the Company's
operating performance, in particular how efficiently the Company
turns its sales and profits into cash, and to assess the efficiency
of the Company's use of working capital. The Company believes
Operating Cash Flow Conversion is useful to investors for the
foregoing reasons and as a measure of the rate at which the Company
converts its net income reported in accordance with GAAP to cash
inflows, which helps investors assess whether the Company is
generating sufficient cash flow to provide an adequate
return.
|
Conference Call Information
MSC will host a conference
call Friday, June 14th at
8:30 a.m. EDT to review the Company's
preliminary third quarter details and updated outlook. The call and
accompanying slides 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
June 28, 2024. The Company's
reporting date for its fiscal 2024 third quarter is scheduled for
July 2, 2024.
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
Statements
Statements 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 we expect, believe or anticipate 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, profitability and return
on invested capital, 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 and energy prices, the impact of prolonged periods of
low, high or rapid inflation, and fluctuations in interest rates;
competition, including the adoption by competitors of aggressive
pricing strategies or sales methods; industry consolidation and
other changes in the industrial distribution sector; our ability to
realize the expected benefits from our investment and strategic
plans; our ability to realize the expected cost savings and
benefits from our restructuring activities and structural cost
reductions; the retention of key management personnel; the credit
risk of our customers; the risk of customer cancellation or
rescheduling of orders; difficulties in calibrating customer demand
for our products, which could cause an inability to sell excess
products ordered from manufacturers resulting in inventory
write-downs or could conversely cause inventory shortages of such
products; work stoppages, labor shortages or other disruptions,
including those due to extreme weather conditions, at
transportation centers, shipping ports, our headquarters or our
customer fulfillment centers; disruptions or breaches of our
information technology systems or violations of data privacy laws;
our ability to attract, train and retain qualified sales and
customer service personnel and metalworking and specialty sales
specialists; the risk of loss of key suppliers or contractors or
key brands or supply chain disruptions; changes to governmental
trade or sanctions policies, including the impact from significant
import restrictions or tariffs or moratoriums on economic activity
with certain countries or regions; risks related to opening or
expanding our customer fulfillment centers; our ability to estimate
the cost of healthcare claims incurred under our self-insurance
plan; litigation risk due to the nature of our business; risks
associated with the integration of acquired businesses or other
strategic transactions; financial restrictions on outstanding
borrowings; our ability to maintain our credit facilities or incur
additional borrowings on terms we deem attractive; the failure to
comply with applicable environmental, health and safety laws and
regulations and other laws and regulations applicable to our
business; the outcome of government or regulatory proceedings;
goodwill and other indefinite-lived intangible assets recorded as a
result of our acquisitions could become impaired; our common stock
price may be volatile due to factors outside of our control; the
significant influence that our principal shareholders will continue
to have over our decisions; and our ability to realize the desired
benefits from the share reclassification. 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.
Preliminary Non-GAAP Financial Measures
To supplement MSC's preliminary unaudited selected financial
data presented consistent with accounting principles generally
accepted in the United States
("GAAP"), the Company discloses certain non-GAAP financial
measures, including non-GAAP net income and non-GAAP diluted
earnings per share, that exclude restructuring and other costs, and
tax effects.
These non-GAAP financial measures are not presented in
accordance with GAAP or an alternative for GAAP financial measures
and may be different from similar non-GAAP financial measures used
by other companies. The presentation of this additional information
is not meant to be considered in isolation or as a substitute for
the most directly comparable GAAP financial measure and should only
be used to evaluate MSC's results of operations in conjunction with
the corresponding GAAP financial measure.
This press release also includes certain forward-looking
information that is not presented in accordance with GAAP. The
Company believes that a quantitative reconciliation of such
forward-looking information to the most directly comparable
financial measure calculated and presented in accordance with GAAP
cannot be made available without unreasonable efforts because a
reconciliation of these non-GAAP financial measures would require
the Company to predict the timing and likelihood of potential
future events such as restructurings, M&A activity and other
infrequent or unusual gains and losses. Neither the timing or
likelihood of these events, nor their probable significance, can be
quantified with a reasonable degree of accuracy. Accordingly, a
reconciliation of such forward-looking information to the most
directly comparable GAAP financial measure is not provided.
- Preliminary Results Excluding Restructuring and Other
Costs
In calculating preliminary non-GAAP financial measures, we
exclude restructuring and other costs, and tax effects. Management
makes these adjustments to facilitate a review of the Company's
operating performance on a comparable basis between periods, for
comparing with forecasts and strategic plans, for identifying and
analyzing trends in the Company's underlying business and for
benchmarking performance externally against competitors. We believe
that investors benefit from seeing results from the perspective of
management in addition to seeing results presented in accordance
with GAAP for the same reasons and purposes for which management
uses such non-GAAP financial measures.
MSC INDUSTRIAL DIRECT
CO., INC.
|
Reconciliation of GAAP
and Non-GAAP Preliminary Financial Information
|
Thirteen Weeks Ended
June 1, 2024
|
(In millions, except
per share data)
|
|
|
|
GAAP net
income
|
|
~ $71.0 million to ~
$72.0 million
|
Restructuring and other
costs, net of tax benefit
|
|
~ $3.5
million
|
Non-GAAP net
income
|
|
~ $74.5 million to ~
$75.5 million
|
|
|
|
GAAP net income per
common share
|
|
~ $1.26 to ~
$1.28
|
Non-GAAP net income per
common share
|
|
~ $1.32 to ~
$1.34
|
|
|
|
Weighted-average
diluted shares used in computing net income per common
share
|
|
~ 56,351
|
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SOURCE MSC Industrial Supply Co.