MELVILLE, N.Y. and DAVIDSON, N.C., July 7,
2015 /PRNewswire/ -- MSC INDUSTRIAL SUPPLY CO. (NYSE:
MSM), "MSC" or the "Company," a premier distributor of
Metalworking and Maintenance, Repair and Operations ("MRO")
supplies to industrial customers throughout North America, today reported results for its
fiscal third quarter ended May 30,
2015.
Net sales for the fiscal third quarter 2015 were $745.5 million compared to net sales of
$720.5 million in the same quarter a
year ago, an increase of 3.5% on an average daily sales basis.
Adjusted operating income for the fiscal third quarter 2015 was
$104.5 million, or 14.0% of net
sales, compared to $107.3 million, or
14.9% of net sales, in the same quarter a year ago. GAAP operating
income for the fiscal third quarter 2015 was $104.2 million, or 14.0% of net sales, compared
to $104.9 million, or 14.6% of net
sales, in the same quarter a year ago.
Excluding the after-tax effects of non-recurring costs, adjusted
net income for the fiscal third quarter 2015 was $63.5 million, or $1.03 per diluted share, compared to $66.2 million, or $1.06 per diluted share, in the same quarter a
year ago. GAAP net income for the fiscal third quarter 2015 was
$63.3 million, or $1.03 per diluted share, compared to $64.7 million, or $1.03 per diluted share, in the same quarter a
year ago.
Erik Gershwind, President and
Chief Executive Officer, stated, "Our organic growth for the third
quarter was in-line with our guidance and reflected the continued
impact of the soft pricing environment and the lingering effects of
the rapid change in oil prices, softening export demand, and
foreign exchange headwinds, all of which continue to drag on
broader manufacturing activity. We did, however, see growth well
above the market driven by continued traction from our share gain
programs as customers increasingly leverage our supply chain
solutions."
Jeff Kaczka, Executive Vice
President and Chief Financial Officer, commented, "Despite the
challenging demand environment, we achieved earnings per share well
above our guidance range. A key driver was the prompt actions that
we took to manage our operating expenses. We achieved operating
expenses as a percent of sales at the same level as the year ago
quarter, even though sales growth was only low single-digits and we
increased our investment spending. The second driver was another
quarter of gross margin stabilization, which reflected our
successful countermeasure efforts, offset by the gross margin
headwinds from large account growth and the soft pricing
environment."
Mr. Gershwind concluded, "We remain focused on our growth
initiatives and growing above the market, executing on our gross
margin stabilization countermeasures and managing expenses
carefully, all factors under our control. Longer-term, the industry
fundamentals remain favorable. Between the large and fragmented MRO
marketplace where large customers are consolidating their spend,
the positive impact that lower energy prices will have on U.S.
manufacturing, and our actions to strategically grow our business
in value-added, high-retention market segments, I have great
confidence that we are well positioned."
Outlook
MSC expects net sales for fiscal fourth quarter 2015 to be
between $735 million and $747
million. At the midpoint, average daily sales growth is
expected to be 2.0%. The Company expects GAAP and adjusted diluted
earnings per share for the fiscal fourth quarter 2015 to be between
$0.93 and $0.97.
An explanation and reconciliation of the non-GAAP financial
measures contained in this press release to the most directly
comparable GAAP financial measures are included in the attached
tables.
Conference Call Information
MSC will host a conference call today at 8:30 a.m. Eastern Time to review the Company's
fiscal third quarter 2015 results. The call, accompanying slides
and other operational statistics may be accessed on MSC's website
located at: http://investor.mscdirect.com. A replay of the
conference call will be available on the Company's website until
Friday, August 7, 2015.
Alternatively, the conference call can be accessed by dialing
1-888-317-6003 (U.S.) or 1-412-317-6061 (international). A replay
will be available within one hour of the conclusion of the call and
will remain available until Friday, August
7, 2015. The replay is accessible by dialing 1-877-344-7529
(U.S.) or 1-412-317-0088 (international) and entering passcode
10067016.
The Company's reporting date for fiscal fourth quarter 2015
results will be October 27, 2015.
About MSC Industrial Supply Co. MSC Industrial Supply Co.
(NYSE: MSM) is a leading North American distributor of metalworking
and maintenance, repair, and operations (MRO) products and
services. We help our customers drive greater productivity,
profitability and growth with more than 1 million products,
inventory management and other supply chain solutions, and deep
expertise from more than 70 years of working with customers across
industries.
Our experienced team of over 6,500 associates is dedicated to
working side by side 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.
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 historical fact, that address
activities, events or developments that we expect, believe or
anticipate will or may occur in the future, including statements
about expected future results, expected benefits from our
investment and strategic plans, and expected future margins, are
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. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
hereof. The inclusion of any statement in this release does not
constitute an admission by MSC or any other person that the events
or circumstances described in such statement are material. Factors
that could cause actual results to differ materially from those in
forward-looking statements include: problems with successfully
integrating acquired operations, unanticipated delays or costs
associated with expanding our customer fulfillment centers,
current economic, political and social conditions, changing
customer and product mixes, financial restrictions on outstanding
borrowings, industry consolidation, the loss of key suppliers or
supply chain disruptions, competition, general economic conditions
in the markets in which we operate, volatility in commodity and
energy prices, credit risk of our customers, risk of cancellation
or rescheduling of orders, work stoppages or other business
interruptions (including those due to extreme weather conditions)
at transportation centers or shipping ports, the risk of war,
terrorism and similar hostilities, dependence on our information
systems and the risk of business disruptions arising from changes
to our information systems, disruptions due to computer system or
network failures, computer viruses, physical or electronics
break-ins and cyber-attacks, dependence on key personnel, goodwill
and intangible assets recorded as a result of our acquisitions
could be impaired, disclosing our use of "conflict minerals" in
certain of the products we distribute could raise reputational and
other risks, and the outcome of potential government or regulatory
proceedings or future litigation relating to pending or future
claims, inquiries or audits. 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 the reports on Forms 10-K and 10-Q that
we file with the U.S. Securities and Exchange Commission. We assume
no obligation to update any of these forward-looking
statements.
MSC INDUSTRIAL
SUPPLY CO. AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(In
thousands)
|
|
|
May 30,
|
|
August 30,
|
|
2015
|
|
2014
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
24,863
|
|
$
|
47,154
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
406,224
|
|
|
382,784
|
Inventories
|
|
510,783
|
|
|
449,814
|
Prepaid expenses and
other current assets
|
|
39,370
|
|
|
40,410
|
Deferred income
taxes
|
|
41,253
|
|
|
41,253
|
Total current
assets
|
|
1,022,493
|
|
|
961,415
|
Property, plant and
equipment, net
|
|
289,074
|
|
|
294,348
|
Goodwill
|
|
625,258
|
|
|
629,335
|
Identifiable
intangibles, net
|
|
124,431
|
|
|
138,314
|
Other
assets
|
|
31,983
|
|
|
37,335
|
Total
assets
|
$
|
2,093,239
|
|
$
|
2,060,747
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Revolving credit
note
|
$
|
213,000
|
|
$
|
70,000
|
Current maturities of
long-term debt
|
|
26,158
|
|
|
26,829
|
Accounts
payable
|
|
114,380
|
|
|
116,283
|
Accrued
liabilities
|
|
103,350
|
|
|
96,052
|
Total current
liabilities
|
|
456,888
|
|
|
309,164
|
Long-term debt, net
of current maturities
|
|
221,112
|
|
|
240,235
|
Deferred income taxes
and tax uncertainties
|
|
112,697
|
|
|
112,785
|
Total
liabilities
|
|
790,697
|
|
|
662,184
|
Commitments and
Contingencies
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Preferred
Stock
|
|
-
|
|
|
-
|
Class A common
stock
|
|
56
|
|
|
56
|
Class B common
stock
|
|
13
|
|
|
13
|
Additional paid-in
capital
|
|
599,626
|
|
|
573,730
|
Retained
earnings
|
|
1,198,070
|
|
|
1,286,068
|
Accumulated other
comprehensive loss
|
|
(14,392)
|
|
|
(5,054)
|
Class A treasury
stock, at cost
|
|
(480,831)
|
|
|
(456,250)
|
Total shareholders'
equity
|
|
1,302,542
|
|
|
1,398,563
|
Total liabilities and
shareholders' equity
|
$
|
2,093,239
|
|
$
|
2,060,747
|
MSC INDUSTRIAL
SUPPLY CO. AND SUBSIDIARIES
Condensed
Consolidated Statements of Income
(In thousands,
except per share data)
(Unaudited)
|
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
May 30,
|
|
May 31,
|
|
May 30,
|
|
May 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net sales
|
$
|
745,483
|
|
$
|
720,476
|
|
$
|
2,182,974
|
|
$
|
2,060,499
|
Cost of goods
sold
|
|
407,066
|
|
|
387,082
|
|
|
1,193,534
|
|
|
1,105,429
|
Gross
profit
|
|
338,417
|
|
|
333,394
|
|
|
989,440
|
|
|
955,070
|
Operating
expenses
|
|
234,173
|
|
|
228,508
|
|
|
705,351
|
|
|
671,712
|
Income from
operations
|
|
104,244
|
|
|
104,886
|
|
|
284,089
|
|
|
283,358
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(1,807)
|
|
|
(827)
|
|
|
(4,786)
|
|
|
(2,641)
|
Interest
income
|
|
166
|
|
|
5
|
|
|
606
|
|
|
14
|
Other income
(expense), net
|
|
10
|
|
|
101
|
|
|
(370)
|
|
|
(377)
|
Total other
expense
|
|
(1,631)
|
|
|
(721)
|
|
|
(4,550)
|
|
|
(3,004)
|
Income before
provision for income taxes
|
|
102,613
|
|
|
104,165
|
|
|
279,539
|
|
|
280,354
|
Provision for income
taxes
|
|
39,271
|
|
|
39,469
|
|
|
107,253
|
|
|
107,100
|
Net income
|
$
|
63,342
|
|
$
|
64,696
|
|
$
|
172,286
|
|
$
|
173,254
|
Per Share
Information:
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.03
|
|
$
|
1.04
|
|
$
|
2.79
|
|
$
|
2.77
|
Diluted
|
$
|
1.03
|
|
$
|
1.03
|
|
$
|
2.78
|
|
$
|
2.76
|
Weighted average
shares used in computing net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
61,287
|
|
|
61,896
|
|
|
61,294
|
|
|
62,137
|
Diluted
|
|
61,424
|
|
|
62,212
|
|
|
61,510
|
|
|
62,447
|
Cash dividend
declared per common share
|
$
|
0.40
|
|
$
|
0.33
|
|
$
|
4.20
|
|
$
|
0.99
|
MSC INDUSTRIAL
SUPPLY CO. AND SUBSIDIARIES
Condensed
Consolidated Statements of Comprehensive Income
(In
thousands)
(Unaudited)
|
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
May 30,
|
|
May 31,
|
|
May 30,
|
|
May 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net income, as
reported
|
$
|
63,342
|
|
$
|
64,696
|
|
$
|
172,286
|
|
$
|
173,254
|
Foreign currency
translation adjustments
|
|
59
|
|
|
1,515
|
|
|
(9,338)
|
|
|
(319)
|
Comprehensive
income
|
$
|
63,401
|
|
$
|
66,211
|
|
$
|
162,948
|
|
$
|
172,935
|
MSC INDUSTRIAL
SUPPLY CO. AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(In
thousands)
(Unaudited)
|
|
|
Thirty-Nine Weeks
Ended
|
|
May 30,
|
|
May 31,
|
|
2015
|
|
2014
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
Net income
|
$
|
172,286
|
|
$
|
173,254
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
52,095
|
|
|
48,354
|
Stock-based
compensation
|
|
11,299
|
|
|
13,020
|
Loss on disposal of
property, plant, and equipment
|
|
665
|
|
|
1,250
|
Provision for doubtful
accounts
|
|
4,305
|
|
|
3,163
|
Deferred income taxes
and tax uncertainties
|
|
(88)
|
|
|
-
|
Excess tax benefits
from stock-based compensation
|
|
(3,770)
|
|
|
(4,741)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(29,547)
|
|
|
(26,628)
|
Inventories
|
|
(62,832)
|
|
|
(9,826)
|
Prepaid expenses and
other current assets
|
|
967
|
|
|
(4,878)
|
Other
assets
|
|
3,356
|
|
|
1,884
|
Accounts payable and
accrued liabilities
|
|
14,237
|
|
|
31,776
|
Total
adjustments
|
|
(9,313)
|
|
|
53,374
|
Net cash provided by
operating activities
|
|
162,973
|
|
|
226,628
|
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
|
(38,176)
|
|
|
(55,882)
|
Investment in available for sale securities
|
|
-
|
|
|
(25,011)
|
Cash used in business acquisition, net of cash received
|
|
-
|
|
|
1,434
|
Net cash used in
investing activities
|
|
(38,176)
|
|
|
(79,459)
|
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
Purchases of treasury
stock
|
|
(26,411)
|
|
|
(115,606)
|
Payments of regular
cash dividends
|
|
(74,143)
|
|
|
(62,010)
|
Payments of special
cash dividend
|
|
(185,403)
|
|
|
-
|
Payments on capital
lease and financing obligations
|
|
(1,574)
|
|
|
(1,545)
|
Excess tax benefits
from stock-based compensation
|
|
3,770
|
|
|
4,741
|
Proceeds from sale of
Class A common stock in connection with associate stock
purchase plan
|
|
3,271
|
|
|
2,922
|
Proceeds from exercise
of Class A common stock options
|
|
8,848
|
|
|
17,565
|
Borrowings under
financing obligations
|
|
530
|
|
|
480
|
Borrowings under
Credit Facility
|
|
306,000
|
|
|
50,000
|
Payments of notes
payable and revolving credit note under the Credit
Facility
|
|
(181,750)
|
|
|
(54,375)
|
Net cash used in
financing activities
|
|
(146,862)
|
|
|
(157,828)
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
|
(226)
|
|
|
141
|
Net decrease in cash
and cash equivalents
|
|
(22,291)
|
|
|
(10,518)
|
Cash and cash
equivalents – beginning of period
|
|
47,154
|
|
|
55,876
|
Cash and cash
equivalents – end of period
|
$
|
24,863
|
|
$
|
45,358
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
|
|
|
Cash paid for income
taxes
|
$
|
88,553
|
|
$
|
91,446
|
Cash paid for
interest
|
$
|
4,190
|
|
$
|
2,369
|
Non-GAAP Financial Measures
To supplement MSC's unaudited selected financial data presented
on a basis consistent with Generally Accepted Accounting Principles
("GAAP"), the Company discloses certain non-GAAP financial
measures, including adjusted operating income, adjusted net income,
and adjusted net income per diluted share. The adjusted
supplemental measures exclude non-recurring costs associated with
the Class C Solutions Group ("CCSG") acquisition, the co-location
of our corporate headquarters in Davidson, North Carolina, and executive
transition and separation costs, and related tax effects. These
non-GAAP measures are not in accordance with or an alternative for
GAAP, and may be different from non-GAAP measures used by other
companies. We believe that these non-GAAP measures have limitations
in that they do not reflect all of the amounts associated with
MSC's results of operations as determined in accordance with GAAP
and that these measures should only be used to evaluate MSC's
results of operations in conjunction with the corresponding GAAP
measures. The presentation of this additional information is not
meant to be considered in isolation or as a substitute for the most
directly comparable GAAP measures. We compensate for the
limitations of non-GAAP financial measures by relying upon GAAP
results to gain a complete picture of Company performance.
In calculating non-GAAP financial measures, we exclude these
non-recurring costs to facilitate a review of the comparability of
the Company's operating performance on a period-to-period basis
because such costs are not, in our view, related to the Company's
ongoing operational performance. We use non-GAAP measures to
evaluate the operating performance of our business, for comparison
with forecasts and strategic plans, and for benchmarking
performance externally against competitors. In addition, we use
certain non-GAAP financial measures as performance metrics for
management incentive programs. Since we find these measures to be
useful, we believe that investors benefit from seeing results
"through the eyes" of management in addition to seeing GAAP
results. We believe that these non-GAAP measures, when read in
conjunction with the Company's GAAP financials, provide useful
information to investors by offering:
- The ability to make more meaningful period-to-period
comparisons of the Company's on-going operating
results;
- The ability to better identify trends in the Company's
underlying business and perform related trend analyses;
and
- A better understanding of how management plans and
measures the Company's underlying business.
The following tables reconcile GAAP operating income, GAAP net
income and GAAP net income per diluted share ("EPS") to non-GAAP
adjusted operating income, adjusted net income, and adjusted net
income per diluted share:
|
Thirteen Weeks
Ended
|
|
May 30,
2015
|
|
(dollars in
thousands)
|
|
Margin
|
GAAP Operating
income
|
$
|
104,244
|
|
14.0
|
%
|
Non-recurring
costs
|
|
237
|
|
|
|
Adjusted Operating
income
|
$
|
104,481
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
May 31,
2014
|
|
(dollars in
thousands)
|
|
Margin
|
GAAP Operating
income
|
$
|
104,886
|
|
14.6
|
%
|
Non-recurring
costs
|
|
2,426
|
|
|
|
Adjusted Operating
income
|
$
|
107,312
|
|
14.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
Thirteen Weeks
Ended
|
|
May 30,
2015
|
|
May 31,
2014
|
|
(dollars in
thousands)
|
Net sales
|
$
|
745,483
|
|
$
|
720,476
|
Cost of goods
sold
|
|
407,066
|
|
|
387,082
|
Gross
profit
|
|
338,417
|
|
|
333,394
|
Operating
Expenses
|
|
234,173
|
|
|
228,508
|
Income from
Operations
|
|
104,244
|
|
|
104,886
|
Non-recurring
costs
|
|
237
|
|
|
2,426
|
Adjusted Operating
income
|
$
|
104,481
|
|
$
|
107,312
|
|
Thirteen Weeks
Ended
|
|
May 30,
2015
|
(dollars in
thousands, except per share amounts)
|
$(after
tax)
|
Diluted
EPS
|
GAAP net
income
|
$
|
63,342
|
|
$
|
1.03
|
Non-recurring
costs*
|
|
146
|
|
|
-
|
Adjusted net
income
|
$
|
63,488
|
|
$
|
1.03
|
|
|
|
|
|
|
* On a pre-tax basis
includes approximately $237 of non-recurring executive transition
costs related to the planned retirement of the Company's Chief
Financial Officer. The non-recurring costs were calculated using an
effective tax rate of 38.3%.
|
|
Thirteen Weeks
Ended
|
|
May 31,
2014
|
(dollars in
thousands, except per share amounts)
|
$(after
tax)
|
|
Diluted EPS
**
|
GAAP net
income
|
$
|
64,696
|
|
$
|
1.03
|
Non-recurring
costs*
|
|
1,507
|
|
|
0.02
|
Adjusted net
income
|
$
|
66,203
|
|
$
|
1.06
|
|
|
|
|
|
|
* On a pre-tax basis
includes approximately $127 of non-recurring relocation costs
associated with the Co-Location of the Company's headquarters in
Davidson, North Carolina and approximately $2,299 of non-recurring
integration costs associated with the CCSG acquisition. The
non-recurring costs were calculated using an effective tax rate of
37.9%.
|
** Individual amounts
of earnings per share may not agree to the total due to
rounding
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/msc-reports-fiscal-2015-third-quarter-results-and-provides-fiscal-fourth-quarter-guidance-300109313.html
SOURCE MSC Industrial Supply Co.