MSC Industrial Beats Q1 Estimates, Eyes Long-Term Growth Amid Near-Term Challenges

MSC Industrial Direct Company, Inc. MSM shares traded higher on Wednesday after the company reported first-quarter financial results.

Net sales declined 2.7% year-over-year to $928.48 million, beating the consensus of $904.604 million.

Average daily sales declined 2.7% year-over-year. Adjusted gross margin for the quarter was 40.7%, down from 41.2% a year ago.

Adjusted operating income for the quarter declined 28% year over year to $74.6 million, with an operating margin of 8%, down from 10.9% a year ago.

Adjusted EPS of $0.86, down 31.2% from the prior year, beating the consensus of $0.73.

As of November 30, the company held $57.266 million in cash and equivalents. Operating cash flow for the quarter totaled $101.686 million, up from $81.168 million a year ago.

Erik Gershwind, CEO, noted that near-term macro conditions remain soft, impacted by holiday and fiscal timing in December, but he expressed confidence in long-term growth. He highlighted self-help initiatives like the productivity pipeline and mission-critical strategy to support results as demand normalizes.

Outlook: MSC Industrial expects second-quarter ADS to decline 3%—5% and anticipates an adjusted operating margin of 6.5%- 7.5%.

For FY25, the company expects a free cash flow conversion of ~100% and capital expenditures of ~$100 million—$110 million.

Price Action: MSM shares are trading higher by 3.11% at $82.34 at the last check Wednesday.