MSC Industrial Direct Q2 Highlights: 12% Revenue Growth, Earnings Beat, Strong Productivity & More

  • MSC Industrial Direct Co Inc MSM reported second-quarter FY23 sales growth of 11.5% year-over-year to $961.6 million, beating the consensus of $934.07 million.
  • Gross margin contracted 121 bps to 41.3%. Adjusted Operating income increased 16.8% Y/Y to $117.2 million, and the margin expanded by 60 bps to 12.2%.
  • Adjusted EPS increased 12.4% Y/Y to $1.45, beating the consensus of $1.34.
  • MSC Industrial generated cash from operating activities YTD of $416.44 million, compared to $57.42 million a year ago. It held cash and equivalents of $49.62 million as of March 4, 2023.
  • The company repurchased over 150,000 shares during the quarter at an average purchase price per share of $81.76.
  • MSM delivered average daily sales growth ~11% higher than the IP Index and double-digit average daily sales growth for the fourth consecutive quarter.
  • "Productivity was strong once again, which led to operating margin expansion as benefits from our Mission Critical initiatives continue to mitigate ongoing headwinds. Looking to the future, we have reoriented our category management focus to improve product and supplier assortment and streamline our cost position. We expect to begin seeing early benefits in late fiscal 2023, with most of the benefits materializing in fiscal 2024," commented Kristen Actis-Grande, Executive Vice President and Chief Financial Officer.
  • FY23 Outlook: MSM expects ADS Growth of 5.0%-9.0%. Current net sales growth tracking to middle to high end of range. The company expects Adjusted Operating Margin of 12.7%-13.3%. It sees Adjusted operating margin tracking to middle of range.
  • Price Action: MSM shares are trading higher by 3.99% at $87.75 premarket on Tuesday.
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