MSC Industrial Direct Reports 7.1% Drop in Q3 Net Sales

MSC Industrial Supply Co. (NYSE: MSM) reported its fiscal 2024 third-quarter results, revealing a 7.1% year-over-year decrease in net sales to $979.4 million. Operating income stood at $106.8 million, representing a 21.1% decline compared to the same period last year. The operating margin also experienced a decrease, standing at 10.9% compared to 12.8% in the prior year's quarter.

Net income attributable to MSC decreased by 24.7% year-over-year to $71.7 million, while diluted earnings per share (EPS) also fell by 24.9% to $1.27 compared to $1.69 in the prior fiscal year quarter.

Adjusted for restructuring and other costs, the company's operating income was $111.5 million, with an adjusted operating margin of 11.4%. Adjusted net income attributable to MSC decreased by 22.9% to $75.2 million, and adjusted diluted EPS fell by 23.6% to $1.33 compared to $1.74 in the prior fiscal year quarter.

Looking at the year-to-date figures, net sales for fiscal 2024 decreased by 3.5% to $2,868.7 million, while income from operations and net income attributable to MSC declined by 18.1% and 20.6%, respectively. Diluted EPS for the year-to-date period was $3.59, down 21.3% from the previous year.

The company's revised full-year financial outlook includes a current adjusted operating margin of 10.5% to 10.7%, down from the prior outlook of 12.0% to 12.8%. Additionally, the fiscal 2024 full-year financial outlook indicates a year-over-year ADS growth of -4.7% to -4.3%.

Erik Gershwind, President and CEO, attributed the third-quarter performance to unexpected gross margin pressure and a slower-than-expected recovery in average daily sales. He emphasized corrective actions to improve gross margin trending and accelerate progress on the rollout of web enhancements.

Kristen Actis-Grande, Executive Vice President and CFO, highlighted a 7.1% decline in average daily sales in the fiscal third quarter due to non-repeating public sector orders in the prior year and softness in manufacturing verticals with heavy exposure.

The company's management is focused on realizing the expected benefits of their organic growth investments to drive progress towards long-term targets. Gershwind expressed confidence in the company's talent and strategy to achieve long-term goals and create meaningful value for all stakeholders.

MSC Industrial Supply Co. is scheduled to host a conference call today at 8:30 a.m. EDT to review the fiscal 2024 third-quarter results. The company's reporting date for its fiscal 2024 fourth quarter and full-year results is scheduled for October 24, 2024. As a result of these announcements, the company's shares have moved -1.4% on the market, and are now trading at a price of $78.23. Check out the company's full 8-K submission here.

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