FISCAL 2024 Q4 HIGHLIGHTS
- Net sales of $952.3 million
decreased 8.0% YoY and includes a roughly 300 basis point headwind
from non-repeating Public Sector orders in the prior year
- Operating income of $90.9
million, or $94.2 million
adjusted to exclude acquisition-related and restructuring and other
costs1
- Operating margin of 9.5%, or 9.9% excluding the adjustments
described above1
- Diluted EPS of $0.99 vs.
$1.56 in the prior fiscal year
quarter
- Adjusted diluted EPS of $1.03 vs.
$1.64 in the prior fiscal year
quarter1
FISCAL 2024 HIGHLIGHTS
- Net sales of $3,821.0 million
decreased 4.7% YoY and includes a roughly 160 basis point headwind
from non-repeating Public Sector orders in the prior year
- Operating income of $390.4
million, or $407.2 million
adjusted to exclude share reclassification, acquisition-related and
restructuring and other costs1
- Operating margin of 10.2%, or 10.7% excluding the adjustments
described above1
- Diluted EPS of $4.58 and adjusted
diluted EPS of $4.811
- Generated strong operating cash flows of $410.7 million or 160% of net income
MELVILLE, N.Y. and DAVIDSON, N.C., Oct. 24,
2024 /PRNewswire/ -- MSC INDUSTRIAL SUPPLY CO.
(NYSE: MSM), ("MSC", "MSC Industrial", or the "Company," "we",
"us", or "our") a leading North American distributor of a broad
range of metalworking and maintenance, repair and operations
("MRO") products and services, today reported financial results for
its fiscal 2024 fourth quarter and full year ended
August 31, 2024.
|
Financial
Highlights2
|
|
FY24
Q4
|
|
FY23
Q4
|
|
Change
|
|
FY24
|
|
FY23
|
|
Change
|
|
Net Sales
|
|
$ 952.3
|
|
$
1,035.4
|
|
(8.0) %
|
|
$
3,821.0
|
|
$
4,009.3
|
|
(4.7) %
|
|
Income from
Operations
|
|
$ 90.9
|
|
$ 118.1
|
|
(23.0) %
|
|
$ 390.4
|
|
$ 483.7
|
|
(19.3) %
|
|
Operating
Margin
|
|
9.5 %
|
|
11.4 %
|
|
|
|
10.2 %
|
|
12.1 %
|
|
|
|
Net Income Attributable
to MSC
|
|
$ 55.7
|
|
$ 87.6
|
|
(36.4) %
|
|
$ 258.6
|
|
$ 343.2
|
|
(24.7) %
|
|
Diluted EPS
|
|
$ 0.99
|
3
|
$ 1.56
|
4
|
(36.5) %
|
|
$ 4.58
|
3
|
$ 6.11
|
4
|
(25.0) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Highlights2
|
|
FY24
Q4
|
|
FY23
Q4
|
|
Change
|
|
FY24
|
|
FY23
|
|
Change
|
|
Net Sales
|
|
$ 952.3
|
|
$
1,035.4
|
|
(8.0) %
|
|
$
3,821.0
|
|
$
4,009.3
|
|
(4.7) %
|
|
Adjusted Income from
Operations 1
|
|
$ 94.2
|
|
$ 130.4
|
|
(27.8) %
|
|
$ 407.2
|
|
$ 504.5
|
|
(19.3) %
|
|
Adjusted Operating
Margin 1
|
|
9.9 %
|
|
12.6 %
|
|
|
|
10.7 %
|
|
12.6 %
|
|
|
|
Adjusted Net Income
Attributable to MSC 1
|
|
$ 58.1
|
|
$ 92.0
|
|
(36.8) %
|
|
$ 271.3
|
|
$ 353.8
|
|
(23.3) %
|
|
Adjusted Diluted EPS
1
|
|
$ 1.03
|
3
|
$ 1.64
|
4
|
(37.2) %
|
|
$ 4.81
|
3
|
$ 6.29
|
4
|
(23.5) %
|
|
|
1 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.
|
|
2 In
millions except percentages and per share data or as otherwise
noted.
|
|
3 Based on
56.2 million and 56.4 million weighted-average diluted shares
outstanding for FY24 Q4 and FY24, respectively.
|
|
4 Based on
56.3 million and 56.2 million weighted-average diluted shares
outstanding for FY23 Q4 and FY23, respectively.
|
Erik Gershwind, Chief Executive
Officer, said, "During our fiscal fourth quarter, we made important
progress in our Mission Critical strategy despite a challenging
macro environment, particularly in heavy manufacturing. We
sustained momentum in our high touch solutions, made solid progress
on our web enhancements, restored gross margin stability, added to
our productivity pipeline and generated strong free cash flow."
Kristen Actis-Grande, Executive
Vice President and Chief Financial Officer, added, "Ongoing
softness in the heavy manufacturing markets where we have
significant exposure and headwinds from non-repeating orders in the
prior year resulted in an average daily sales decline of 4.7% for
the fiscal year. Near-term visibility remains limited underpinned
by uncertainty stemming from the upcoming election and sluggish
customer activity levels entering the holiday season. However, we
witnessed various improvements for the fiscal year that are leading
indicators for future profitability and growth. For the full year,
gross margins came in at the higher end of our latest expectations,
National Account customer growth outperformed the Industrial
Production index and we generated robust operating cash flow.
While we cannot control the external factors impacting our results,
we are focused on continued improvement to drive long-term value
creation."
Gershwind concluded, "As we begin fiscal year 2025, we are
focused on driving efficiencies across the organization and
executing the three pillars that define our new chapter of Mission
Critical — maintaining momentum in the first chapter of Mission
Critical, reenergizing the core customer base, and optimizing our
cost to serve through productivity improvements. While headwinds in
our end markets continue for now, we are laser focused on realizing
our long-term goals of achieving adjusted operating margin in the
mid-teens and driving 400 basis points of growth above the
Industrial Production index over the cycle. We are setting a clear
path to get MSC back to our historically strong performance."
|
First Quarter Fiscal
2025 Financial Outlook
|
|
ADS Growth
(YoY)
|
(5.5)% -
(4.5)%
|
|
Adjusted Operating
Margin1
|
7.0% - 7.5%
|
Full-Year Fiscal 2025 Outlook for Certain Financial
Metrics
- Depreciation and amortization expense of ~$90M-$95M
- Interest and other expense of ~$45M
- Capital expenditures of ~$100M-$110M
- Free cash flow conversion1 of ~100%
- Tax rate of ~24.5%-25.0%
|
(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.
|
Conference Call Information
MSC will host a conference
call today at 8:30 a.m. EDT to review
the Company's fiscal 2024 fourth quarter and full year results. The
call, accompanying slides, and other operational statistics 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
November 7, 2024. The Company's
reporting date for the fiscal 2025 first quarter is scheduled for
January 8, 2025.
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 MSC expects, believes or anticipates 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, energy and labor prices, and the impact of
prolonged periods of low, high or rapid inflation; competition,
including the adoption by competitors of aggressive pricing
strategies or sales methods; industry consolidation and other
changes in the industrial distribution sector; the applicability of
laws and regulations relating to our status as a supplier to the
U.S. government and public sector; the credit risk of our
customers; our ability to accurately forecast customer demands;
customer cancellations or rescheduling of orders; interruptions in
our ability to make deliveries to customers; supply chain
disruptions; our ability to attract and retain sales and customer
service personnel; the risk of loss of key suppliers or contractors
or key brands; changes to trade policies or trade relationships;
risks associated with opening or expanding our customer fulfillment
centers; our ability to estimate the cost of healthcare claims
incurred under our self-insurance plan; interruption of operations
at our headquarters or customer fulfillment centers; products
liability due to the nature of the products that we sell;
impairments of goodwill and other indefinite-lived intangible
assets; the impact of climate change; operating and financial
restrictions imposed by the terms of our material debt instruments;
our ability to access additional liquidity; our ability to realize
the desired benefits from the Reclassification (as defined below);
the significant influence that our principal shareholders will
continue to have over our decisions; our ability to execute on our
E-commerce strategies and maintain our digital platforms; costs
associated with maintaining our information technology ("IT")
systems and complying with data privacy laws; disruptions or
breaches of our IT systems or violations of data privacy laws,
including such disruptions or breaches in connection with our
E-commerce channels; risks related to online payment methods and
other online transactions; the retention of key management
personnel; litigation risk due to the nature of our business;
failure to comply with environmental, health, and safety laws and
regulations; and our ability to comply with, and the costs
associated with, social and environmental responsibility policies.
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.
|
MSC INDUSTRIAL
DIRECT CO., INC.
|
|
Consolidated Balance
Sheets
|
|
(In
thousands)
|
|
|
August 31,
2024
|
|
September 2,
2023
|
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
29,588
|
|
$
50,052
|
|
Accounts receivable, net of
allowance for credit losses
|
412,122
|
|
435,421
|
|
Inventories
|
643,904
|
|
726,521
|
|
Prepaid expenses and other
current assets
|
102,475
|
|
105,519
|
|
Total current assets
|
1,188,089
|
|
1,317,513
|
|
Property, plant and
equipment, net
|
360,255
|
|
319,660
|
|
Goodwill
|
723,894
|
|
718,174
|
|
Identifiable
intangibles, net
|
101,147
|
|
110,641
|
|
Operating lease
assets
|
58,649
|
|
65,909
|
|
Other assets
|
30,279
|
|
12,237
|
|
Total assets
|
$
2,462,313
|
|
$
2,544,134
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Current portion of debt
including obligations under finance leases
|
$
229,911
|
|
$
229,935
|
|
Current portion of operating
lease liabilities
|
21,941
|
|
21,168
|
|
Accounts payable
|
205,933
|
|
226,299
|
|
Accrued expenses and other
current liabilities
|
147,642
|
|
172,034
|
|
Total current liabilities
|
605,427
|
|
649,436
|
|
Long-term debt
including obligations under finance leases
|
278,853
|
|
224,391
|
|
Noncurrent operating
lease liabilities
|
37,468
|
|
45,924
|
|
Deferred income taxes
and tax uncertainties
|
139,283
|
|
131,801
|
|
Total liabilities
|
$
1,061,031
|
|
$
1,051,552
|
|
Commitments and
Contingencies
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
MSC Industrial
Shareholders' Equity:
|
|
|
|
|
Preferred Stock
|
—
|
|
—
|
|
Class A Common
Stock
|
57
|
|
48
|
|
Class B Common
Stock
|
—
|
|
9
|
|
Additional paid-in
capital
|
1,070,269
|
|
849,502
|
|
Retained earnings
|
456,850
|
|
755,007
|
|
Accumulated other
comprehensive loss
|
(21,144)
|
|
(17,725)
|
|
Class A treasury stock, at
cost
|
(114,235)
|
|
(107,677)
|
|
Total MSC shareholders' equity
|
1,391,797
|
|
1,479,164
|
|
Noncontrolling
interest
|
9,485
|
|
13,418
|
|
Total shareholders' equity
|
1,401,282
|
|
1,492,582
|
|
Total liabilities and shareholders' equity
|
$
2,462,313
|
|
$
2,544,134
|
|
MSC INDUSTRIAL
DIRECT CO., INC.
|
|
Consolidated
Statements of Income
|
|
(In thousands,
except per share data)
|
|
|
(Unaudited)
|
|
|
|
|
|
Fiscal Quarters
Ended
|
|
Fiscal Years
Ended
|
|
August 31,
2024
|
|
September 2,
2023
|
|
August 31,
2024
|
|
September 2,
2023
|
|
Net sales
|
$
952,284
|
|
$
1,035,441
|
|
$
3,820,951
|
|
$
4,009,282
|
|
Cost of goods
sold
|
561,676
|
|
615,907
|
|
2,248,168
|
|
2,366,317
|
|
Gross profit
|
390,608
|
|
419,534
|
|
1,572,783
|
|
1,642,965
|
|
Operating
expenses
|
297,011
|
|
299,264
|
|
1,167,870
|
|
1,151,295
|
|
Restructuring and other
costs
|
2,739
|
|
2,215
|
|
14,526
|
|
7,937
|
|
Income from operations
|
90,858
|
|
118,055
|
|
390,387
|
|
483,733
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest expense
|
(6,615)
|
|
(4,630)
|
|
(25,770)
|
|
(22,543)
|
|
Interest income
|
110
|
|
270
|
|
412
|
|
1,034
|
|
Other income (expense), net
|
(8,213)
|
|
2,027
|
|
(22,280)
|
|
(6,068)
|
|
Total other
expense
|
(14,718)
|
|
(2,333)
|
|
(47,638)
|
|
(27,577)
|
|
Income before provision for income taxes
|
76,140
|
|
115,722
|
|
342,749
|
|
456,156
|
|
Provision for income
taxes
|
22,188
|
|
28,281
|
|
86,792
|
|
113,049
|
|
Net income
|
53,952
|
|
87,441
|
|
255,957
|
|
343,107
|
|
Less: Net (loss) income
attributable to noncontrolling interest
|
(1,740)
|
|
(158)
|
|
(2,637)
|
|
(126)
|
|
Net income attributable to MSC Industrial
|
$
55,692
|
|
$
87,599
|
|
$
258,594
|
|
$
343,233
|
|
Per share data
attributable to MSC Industrial:
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
0.99
|
|
$
1.57
|
|
$
4.60
|
|
$
6.14
|
|
Diluted
|
$
0.99
|
|
$
1.56
|
|
$
4.58
|
|
$
6.11
|
|
Weighted average shares used
in computing
net income per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
56,061
|
|
55,939
|
|
56,257
|
|
55,918
|
|
Diluted
|
56,223
|
|
56,269
|
|
56,441
|
|
56,210
|
|
MSC INDUSTRIAL
DIRECT CO., INC.
|
|
Consolidated
Statements of Comprehensive Income
|
|
(In
thousands)
|
|
|
Fiscal Years
Ended
|
|
August 31,
2024
|
|
September 2,
2023
|
|
Net income, as
reported
|
$
255,957
|
|
$
343,107
|
|
Other comprehensive
income, net of tax:
|
|
|
|
|
Foreign currency translation
adjustments
|
(4,715)
|
|
7,091
|
|
Comprehensive
income
|
251,242
|
|
350,198
|
|
Comprehensive income
attributable to noncontrolling interest:
|
|
|
|
|
Net loss
|
2,637
|
|
126
|
|
Foreign currency translation
adjustments
|
1,296
|
|
(1,695)
|
|
Comprehensive income
attributable to MSC Industrial
|
$
255,175
|
|
$
348,629
|
|
MSC INDUSTRIAL
DIRECT CO., INC.
|
|
Consolidated
Statements of Cash Flows
|
|
(In
thousands)
|
|
Fiscal Years
Ended
|
|
August 31,
2024
|
|
September 2,
2023
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
Net income
|
$
255,957
|
|
$
343,107
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
80,886
|
|
75,129
|
|
Amortization of cloud
computing arrangements
|
1,988
|
|
1,192
|
|
Non-cash operating
lease cost
|
22,973
|
|
20,966
|
|
Stock-based
compensation
|
18,848
|
|
18,639
|
|
Loss on disposal of
property, plant and equipment
|
687
|
|
557
|
|
Non-cash changes in
fair value of estimated contingent consideration
|
906
|
|
104
|
|
Provision for credit
losses
|
7,355
|
|
10,275
|
|
Expenditures for cloud
computing arrangements
|
(20,282)
|
|
(2,748)
|
|
Deferred income taxes
and tax uncertainties
|
9,706
|
|
6,697
|
|
Changes in operating
assets and liabilities, net of amounts associated with business
acquired:
|
|
|
|
|
Accounts
receivable
|
18,846
|
|
247,653
|
|
Inventories
|
85,098
|
|
(4,860)
|
|
Prepaid expenses and
other current assets
|
2,027
|
|
(6,605)
|
|
Operating lease
liabilities
|
(23,383)
|
|
(21,173)
|
|
Other assets
|
3,149
|
|
628
|
|
Accounts payable and
accrued liabilities
|
(54,065)
|
|
10,021
|
|
Total
adjustments
|
154,739
|
|
356,475
|
|
Net cash provided by
operating activities
|
410,696
|
|
699,582
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(99,406)
|
|
(92,493)
|
|
Cash used in
acquisitions, net of cash acquired
|
(23,990)
|
|
(20,182)
|
|
Net cash used in
investing activities
|
(123,396)
|
|
(112,675)
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Repurchases of Class A
Common Stock
|
(187,695)
|
|
(95,779)
|
|
Payments of regular
cash dividends
|
(187,280)
|
|
(176,715)
|
|
Proceeds from sale of
Class A Common Stock in connection with associate stock purchase
plan
|
4,426
|
|
4,415
|
|
Proceeds from exercise
of Class A Common Stock options
|
9,587
|
|
28,677
|
|
Borrowings under credit
facilities
|
434,500
|
|
333,000
|
|
Payments under credit
facilities
|
(381,000)
|
|
(548,000)
|
|
Payments under Shelf
Facility Agreements and Private Placement Debt
|
(50,000)
|
|
(125,000)
|
|
Proceeds from other
long-term debt
|
50,000
|
|
—
|
|
Payments on finance
lease and financing obligations
|
(3,625)
|
|
(2,193)
|
|
Other, net
|
3,735
|
|
1,195
|
|
Net cash used in
financing activities
|
(307,352)
|
|
(580,400)
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
(412)
|
|
8
|
|
Net increase (decrease)
in cash and cash equivalents
|
(20,464)
|
|
6,515
|
|
Cash and cash
equivalents—beginning of period
|
50,052
|
|
43,537
|
|
Cash and cash
equivalents—end of period
|
$
29,588
|
|
$
50,052
|
|
Supplemental Disclosure
of Cash Flow Information:
|
|
|
|
|
Cash paid for income
taxes
|
$
79,088
|
|
$
106,962
|
|
Cash paid for
interest
|
$
24,721
|
|
$
22,432
|
Non-GAAP Financial Measures
To supplement MSC's 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
return on invested capital (as defined below), non-GAAP income from
operations, non-GAAP operating margin, non-GAAP provision for
income taxes, non-GAAP net income and non-GAAP diluted earnings per
share, that exclude restructuring and other costs,
acquisition-related costs, share reclassification costs, and
employee retention credit ("ERC") tax benefit (prior year) and tax
effects, as well as free cash flow conversion, which is a measure
calculated using free cash flow, which is a non-GAAP measure.
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, capital
expenditures 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.
- Results Excluding Restructuring and Other Costs,
Acquisition-Related Costs, Share Reclassification Costs
and ERC Tax Benefit (prior year)
In calculating certain non-GAAP financial measures, we exclude
restructuring and other costs, acquisition-related costs, share
reclassification costs, ERC tax benefit (prior year) and tax
effects. Management makes these adjustments to facilitate a review
of the Company's operating performance on a comparable basis
between periods, for comparison 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.
- Return on Invested Capital ("ROIC")
ROIC is calculated using a non-GAAP financial measure. We
calculate ROIC by dividing non-GAAP net operating profit after tax
("NOPAT") by average invested capital, a GAAP measure. NOPAT is
defined as tax effected income from operations. Average invested
capital is defined as net debt plus shareholder's equity using a
trailing 13-month average. We believe that ROIC is useful to
investors as a measure of performance and of the effectiveness of
the use of capital in our operations. We use ROIC as one measure to
monitor and evaluate operating performance. This method of
determining non-GAAP ROIC may differ from other companies' methods
and therefore may not be comparable to those used by other
companies. ROIC should be considered in addition to, rather than as
a substitute for, other information provided in accordance with
GAAP. The financial measure calculated under GAAP which is most
directly comparable to ROIC is considered to be the ratio of Net
income to Average invested capital. See below for the calculation
of ROIC and the reconciliation to the comparable GAAP measure.
- Free Cash Flow ("FCF") and Free Cash Flow Conversion
("FCF Conversion")
FCF is a non-GAAP financial measure which we define as cash flow
from operations reduced by "Expenditures for property, plant and
equipment". We believe that FCF, although similar to cash flow from
operations, is a useful additional measure since capital
expenditures are a necessary component of ongoing operations. FCF
Conversion is a percentage calculated by dividing FCF by GAAP net
income. We believe FCF Conversion is useful to investors for
the same reasons as FCF 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.
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
|
Fiscal Quarter Ended
August 31, 2024
|
|
(In thousands, except
percentages and per share data)
|
|
|
|
|
|
|
|
|
|
GAAP
Financial
Measure
|
|
Items Affecting
Comparability
|
Non-GAAP
Financial
Measure
|
|
Total MSC
Industrial
|
|
Restructuring
and Other Costs
|
|
Acquisition-
related Costs
|
|
Adjusted Total
MSC
Industrial
|
|
Net Sales
|
$ 952,284
|
|
$
—
|
|
$
—
|
|
$ 952,284
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
561,676
|
|
—
|
|
—
|
|
561,676
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
390,608
|
|
—
|
|
—
|
|
390,608
|
|
Gross Margin
|
41.0 %
|
|
— %
|
|
— %
|
|
41.0 %
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
297,011
|
|
—
|
|
614
|
|
296,397
|
|
Operating Expenses as %
of Sales
|
31.2 %
|
|
— %
|
|
(0.1) %
|
|
31.1 %
|
|
|
|
|
|
|
|
|
|
Restructuring and Other
Costs
|
2,739
|
|
2,739
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
90,858
|
|
(2,739)
|
|
(614)
|
|
94,211
|
|
Operating
Margin
|
9.5 %
|
|
0.3 %
|
|
0.1 %
|
|
9.9 %
|
|
|
|
|
|
|
|
|
|
Total Other
Expense
|
(14,718)
|
|
—
|
|
—
|
|
(14,718)
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
76,140
|
|
(2,739)
|
|
(614)
|
|
79,493
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
22,188
|
|
(797)
|
|
(179)
|
|
23,164
|
|
Net income
|
53,952
|
|
(1,942)
|
|
(435)
|
|
56,329
|
|
Net loss attributable
to noncontrolling interest
|
(1,740)
|
|
—
|
|
—
|
|
(1,740)
|
|
Net income attributable
to MSC Industrial
|
$
55,692
|
|
$
(1,942)
|
|
$
(435)
|
|
$
58,069
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
Diluted
|
$
0.99
|
|
$
(0.03)
|
|
$
(0.01)
|
|
$
1.03
|
|
|
*Individual amounts may
not agree to the total due to rounding.
|
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
|
Fiscal Year Ended
August 31, 2024
|
|
(In thousands, except
percentages and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Financial
Measure
|
|
Items Affecting
Comparability
|
Non-GAAP
Financial
Measure
|
|
Total MSC
Industrial
|
|
Restructuring
and Other Costs
|
|
Acquisition-
related Costs
|
|
Share
Reclassification
Costs
|
|
Adjusted
Total MSC
Industrial
|
|
Net Sales
|
$3,820,951
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
3,820,951
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
2,248,168
|
|
—
|
|
—
|
|
—
|
|
2,248,168
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
1,572,783
|
|
—
|
|
—
|
|
—
|
|
1,572,783
|
|
Gross Margin
|
41.2 %
|
|
— %
|
|
— %
|
|
— %
|
|
41.2 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
1,167,870
|
|
—
|
|
1,079
|
|
1,187
|
|
1,165,604
|
|
Operating Expenses as %
of Sales
|
30.6 %
|
|
— %
|
|
0.0 %
|
|
0.0 %
|
|
30.5 %
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other
Costs
|
14,526
|
|
14,526
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
390,387
|
|
(14,526)
|
|
(1,079)
|
|
(1,187)
|
|
407,179
|
|
Operating
Margin
|
10.2 %
|
|
0.4 %
|
|
0.0 %
|
|
0.0 %
|
|
10.7 %
|
|
|
|
|
|
|
|
|
|
|
|
Total Other
Expense
|
(47,638)
|
|
—
|
|
—
|
|
—
|
|
(47,638)
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
342,749
|
|
(14,526)
|
|
(1,079)
|
|
(1,187)
|
|
359,541
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
86,792
|
|
(3,577)
|
|
(266)
|
|
(293)
|
|
90,928
|
|
Net income
|
255,957
|
|
(10,949)
|
|
(813)
|
|
(894)
|
|
268,613
|
|
Net loss attributable
to noncontrolling interest
|
(2,637)
|
|
—
|
|
—
|
|
—
|
|
(2,637)
|
|
Net income attributable
to MSC Industrial
|
$
258,594
|
|
$
(10,949)
|
|
$
(813)
|
|
$
(894)
|
|
$
271,250
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
4.58
|
|
$
(0.19)
|
|
$
(0.01)
|
|
$
(0.02)
|
|
$
4.81
|
|
|
*Individual amounts may
not agree to the total due to rounding.
|
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
|
Fiscal Quarter Ended
September 2, 2023
|
|
(In thousands, except
percentages and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Financial
Measure
|
|
Items Affecting
Comparability
|
|
Non-GAAP
Financial
Measure
|
|
Total MSC
Industrial
|
|
Restructuring
and Other Costs
|
|
Share
Reclassification
Costs
|
|
ERC Tax
Benefit
|
|
Adjusted Total
MSC
Industrial
|
|
Net Sales
|
$
1,035,441
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1,035,441
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
615,907
|
|
—
|
|
—
|
|
—
|
|
615,907
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
419,534
|
|
—
|
|
—
|
|
—
|
|
419,534
|
|
Gross Margin
|
40.5 %
|
|
— %
|
|
— %
|
|
— %
|
|
40.5 %
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
299,264
|
|
—
|
|
10,139
|
|
—
|
|
289,125
|
|
Operating Expenses as %
of Sales
|
28.9 %
|
|
— %
|
|
(1.0) %
|
|
— %
|
|
27.9 %
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other
Costs
|
2,215
|
|
2,215
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
118,055
|
|
(2,215)
|
|
(10,139)
|
|
—
|
|
130,409
|
|
Operating
Margin
|
11.4 %
|
|
0.2 %
|
|
1.0 %
|
|
— %
|
|
12.6 %
|
|
|
|
|
|
|
|
|
|
|
|
Total Other
Expense
|
(2,333)
|
|
—
|
|
—
|
|
6,566
|
|
(8,899)
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
115,722
|
|
(2,215)
|
|
(10,139)
|
|
6,566
|
|
121,510
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
28,281
|
|
(523)
|
|
(2,394)
|
|
1,550
|
|
29,648
|
|
Net income
|
87,441
|
|
(1,692)
|
|
(7,745)
|
|
5,016
|
|
91,862
|
|
Net loss attributable to
noncontrolling
interest
|
(158)
|
|
—
|
|
—
|
|
—
|
|
(158)
|
|
Net income attributable to
MSC
Industrial
|
$
87,599
|
|
$
(1,692)
|
|
$
(7,745)
|
|
$
5,016
|
|
$
92,020
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
1.56
|
|
$
(0.03)
|
|
$
(0.14)
|
|
$
0.09
|
|
$
1.64
|
|
|
*Individual amounts may
not agree to the total due to rounding.
|
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
|
Fiscal Year Ended
September 2, 2023
|
|
(In thousands, except
percentages and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Financial
Measure
|
|
Items Affecting
Comparability
|
|
Non-GAAP
Financial
Measure
|
|
Total MSC
Industrial
|
|
Restructuring
and Other
Costs
|
|
Acquisition-
related Costs
|
|
Share
Reclassification
Costs
|
|
ERC Tax
Benefit
|
|
Adjusted Total
MSC
Industrial
|
|
Net Sales
|
$
4,009,282
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
4,009,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
2,366,317
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,366,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
1,642,965
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,642,965
|
|
Gross Margin
|
41.0 %
|
|
— %
|
|
— %
|
|
— %
|
|
— %
|
|
41.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
1,151,295
|
|
—
|
|
398
|
|
12,388
|
|
—
|
|
1,138,509
|
|
Operating Expenses as %
of
Sales
|
28.7 %
|
|
— %
|
|
0.0 %
|
|
(0.3) %
|
|
— %
|
|
28.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other
Costs
|
7,937
|
|
7,937
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
483,733
|
|
(7,937)
|
|
(398)
|
|
(12,388)
|
|
—
|
|
504,456
|
|
Operating
Margin
|
12.1 %
|
|
0.2 %
|
|
0.0 %
|
|
0.3 %
|
|
— %
|
|
12.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other
Expense
|
(27,577)
|
|
—
|
|
—
|
|
—
|
|
6,566
|
|
(34,143)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for
income taxes
|
456,156
|
|
(7,937)
|
|
(398)
|
|
(12,388)
|
|
6,566
|
|
470,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
113,049
|
|
(2,040)
|
|
(100)
|
|
(3,183)
|
|
1,687
|
|
116,685
|
|
Net income
|
343,107
|
|
(5,897)
|
|
(298)
|
|
(9,205)
|
|
4,879
|
|
353,628
|
|
Net income attributable
to
noncontrolling interest
|
(126)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(126)
|
|
Net income attributable
to
MSC Industrial
|
$ 343,233
|
|
$
(5,897)
|
|
$
(298)
|
|
$
(9,205)
|
|
$
4,879
|
|
$ 353,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
6.11
|
|
$
(0.10)
|
|
$
(0.01)
|
|
$
(0.16)
|
|
$
0.09
|
|
$
6.29
|
|
|
*Individual amounts may
not agree to the total due to rounding.
|
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
|
Fiscal Years Ended
August 31, 2024 and September 2, 2023
|
|
(In thousands, except
percentages)
|
|
|
|
|
|
|
Fiscal Year
Ended
|
|
Fiscal Year
Ended
|
|
|
August 31,
2024
|
|
September 2,
2023
|
|
|
(a) Net income
attributable to MSC Industrial (twelve-month trailing)
|
$
258,594
|
|
$
343,233
|
|
|
NOPAT
|
|
|
|
|
|
Income from Operations
(twelve-month trailing)
|
390,387
|
|
483,733
|
|
|
Effective tax
rate
|
25.3 %
|
|
24.8 %
|
|
|
(b) Non-GAAP
NOPAT
|
291,532
|
|
363,850
|
|
|
(c) Adjusted Non-GAAP
NOPAT
|
304,072
|
1
|
379,531
|
2
|
|
Invested
Capital
|
|
|
|
|
|
Total MSC Industrial
shareholders' equity
|
$
1,391,797
|
|
$
1,479,164
|
|
|
Current portion of debt
including obligations under finance leases
|
229,911
|
|
229,935
|
|
|
Long-term debt
including obligations under finance leases
|
278,853
|
|
224,391
|
|
|
Total Debt
|
508,764
|
|
454,326
|
|
|
Cash and cash
equivalents
|
$
29,588
|
|
$
50,052
|
|
|
Net debt
|
479,176
|
|
404,274
|
|
|
Invested
capital
|
1,870,973
|
|
1,883,438
|
|
|
(d) Average invested
capital (thirteen-month trailing average)
|
1,883,503
|
|
1,951,818
|
|
|
(e) Adjusted average
invested capital (thirteen-month trailing average)
|
1,900,259
|
1
|
1,953,516
|
2
|
|
|
|
|
|
|
(a)/(d) Net income to
Average invested capital
|
13.7 %
|
|
17.6 %
|
|
|
(b)/(d) Non-GAAP
ROIC
|
15.5 %
|
|
18.6 %
|
|
|
(c)/(e) Adjusted
Non-GAAP ROIC
|
16.0 %
|
|
19.4 %
|
|
|
|
|
|
|
1 Adjusted
Non-GAAP NOPAT and invested capital excludes $14.5 million of
restructuring and other costs, $1.1 million of acquisition-related
charges and $1.2 million of share reclassification costs, net of an
associated tax benefit of $4.1 million.
|
|
2 Adjusted
Non-GAAP NOPAT and invested capital excludes $7.9 million of
restructuring and other costs, $0.4 million of acquisition-related
charges and $12.4 million of share reclassification costs, net of
an associated tax benefit of $5.3 million.
|
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SOURCE MSC Industrial Supply Co.