MELVILLE, N.Y. and DAVIDSON, N.C., Jan.
11, 2017 /PRNewswire/ --
FISCAL Q1 2017 HIGHLIGHTS
- Net sales of $686.3 million, a
decline of 2.9% year-over-year
- Gross margin of 45.0% reflecting continued stabilization in a
challenging pricing environment
- Operating margin of 13.2%, an increase year-over-year, despite
a decline in net sales
- Diluted EPS of $0.95, which was
3 cents above the midpoint of
guidance
MSC INDUSTRIAL SUPPLY CO. (NYSE: MSM), "MSC" or the
"Company," a premier distributor of Metalworking and Maintenance,
Repair and Operations ("MRO") products and services to industrial
customers throughout North
America, today reported financial results for its fiscal
2017 first quarter ended December 3,
2016.
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Financial
Highlights1
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FY17
Q1
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FY16
Q1
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Change
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Net Sales
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$686.3
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$706.8
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-2.9%
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Operating
Income
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90.6
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90.4
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0.2%
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% of Net
Sales
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13.2%
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12.8%
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Net Income
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54.1
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55.0
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-1.7%
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Diluted
EPS
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$0.95
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2
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$0.89
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3
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6.7%
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1In
millions unless noted. 2Based on 56.6 million diluted
shares outstanding for FY17 Q1.3 Based on 61.4 million
diluted shares outstanding for FY16 Q1.
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Erik Gershwind, president and
chief executive officer, said, "While the demand environment
remained difficult in our first quarter and pricing remained soft,
we saw a better than expected November. As we moved into December,
the start of our fiscal second quarter, we saw growth in sales, as
well as improvement across all of our customer types and a higher
mix of machinery, machine tool accessories, tool holders, and
tooling package orders. These capital-related sales have
historically increased when customers are more optimistic about
investing in their businesses."
Rustom Jilla, executive vice
president and chief financial officer, added, "Our first quarter
operating margin of 13.2 percent improved over the prior year
period despite lower sales, with stable gross margins and continued
expense discipline, which offers a glimpse into our leverage
potential. Diluted earnings per share were 3
cents above the mid-point of our guidance, with
approximately 2 cents from higher
than expected sales and the remainder as a result of tight expense
management. Our EPS also increased 6
cents year-over-year due to lower operating expenses and
last August's share buyback. Finally, our cash flow conversion
remained strong, with 139 percent of our net income translating
into cash flow from operations."
Gershwind concluded, "We have operated in the midst of a
prolonged industrial recession, one that was particularly acute in
our primary end markets of metalworking manufacturing. We are,
however, seeing signs of greater optimism. At present, it appears
that there is a leveling in manufacturing occurring and, in
December, we saw greater spending on categories that are indicative
of customer optimism. We are certainly more positive than even a
few short months ago. Even so, we would need to see sustained
increases in order activity before we declare that the environment
has turned."
Outlook
Based on current market conditions, the Company expects net
sales for the second quarter of fiscal 2017 to be between
$688 million and $701 million. At the
midpoint, average daily sales are expected to increase roughly
1.5%, as compared to last year's second quarter. The Company
expects diluted earnings per share for the fiscal second quarter
2017 to be between $0.86 and
$0.90.
Conference Call Information
MSC will host a conference call today at 8:30 a.m. EST to review the Company's fiscal 2017
first quarter results. The call, accompanying slides, and other
operational statistics may be accessed at:
http://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
January 18, 2017.
The Company's reporting date for fiscal 2017 second quarter
results will be April 13, 2017.
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 over 75 years of working with customers across
industries.
Our experienced team of more than 6,000 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.
For more information on MSC, please
visit mscdirect.com.
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: general economic conditions in
the markets in which we operate, current economic, political and
social conditions, changing customer and product mixes,
competition, industry consolidation, 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, financial restrictions
on outstanding borrowings, 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, the inability to successfully manage the upgrade of
our core financial systems, the loss of key suppliers or supply
chain disruptions, problems with successfully integrating acquired
operations, opening or expanding our customer fulfillment centers
exposes us to risks of delays, the risk of war, terrorism and
similar hostilities, dependence on key personnel, goodwill and
intangible assets recorded as a result of our acquisitions could be
impaired, 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)
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December
3,
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September
3,
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2016
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2016
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(unaudited)
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ASSETS
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Current
Assets:
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Cash and cash
equivalents
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$
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32,122
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$
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52,890
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Accounts receivable,
net of allowance for doubtful accounts
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391,685
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392,463
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Inventories
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453,965
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444,221
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Prepaid expenses and
other current assets
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41,473
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45,290
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Deferred income
taxes
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—
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46,627
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Total current
assets
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919,245
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981,491
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Property, plant and
equipment, net
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319,696
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320,544
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Goodwill
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623,473
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624,081
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Identifiable
intangibles, net
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103,140
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105,307
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Other
assets
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33,925
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33,528
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Total
assets
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$
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1,999,479
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$
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2,064,951
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LIABILITIES AND
SHAREHOLDERS' EQUITY
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Current
Liabilities:
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Revolving credit
note
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$
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166,000
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$
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217,000
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Current maturities of
long-term debt
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72,356
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50,050
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Accounts
payable
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112,357
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110,601
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Accrued
liabilities
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107,744
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100,951
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Total current
liabilities
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458,457
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478,602
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Long-term debt, net
of current maturities
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305,416
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339,772
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Deferred income taxes
and tax uncertainties
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101,574
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148,201
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Total
liabilities
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865,447
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966,575
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Commitments and
Contingencies
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Shareholders'
Equity:
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Preferred
Stock
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—
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—
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Class A common
stock
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53
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53
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Class B common
stock
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12
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12
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Additional paid-in
capital
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595,118
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584,017
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Retained
earnings
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1,068,617
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1,040,148
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Accumulated other
comprehensive loss
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(20,645)
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(19,098)
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Class A treasury
stock, at cost
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(509,123)
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(506,756)
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Total shareholders'
equity
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1,134,032
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1,098,376
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Total liabilities and
shareholders' equity
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$
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1,999,479
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$
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2,064,951
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MSC INDUSTRIAL
SUPPLY CO. AND SUBSIDIARIES Condensed Consolidated
Statements of Income (In thousands, except per share
data) (Unaudited)
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Thirteen Weeks
Ended
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December
3,
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November
28,
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2016
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2015
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Net sales
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$
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686,271
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$
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706,819
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Cost of goods
sold
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377,536
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387,847
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Gross
profit
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308,735
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318,972
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Operating
expenses
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218,135
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228,584
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Income from
operations
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90,600
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90,388
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Other (expense)
income:
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Interest
expense
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(2,934)
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(1,556)
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Interest
income
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163
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163
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Other (expense)
income, net
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(284)
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63
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Total other
expense
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(3,055)
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(1,330)
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Income before
provision for income taxes
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87,545
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89,058
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Provision for income
taxes
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33,442
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34,029
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Net income
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$
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54,103
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$
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55,029
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Per Share
Information:
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Net income per common
share:
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Basic
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$
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0.96
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$
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0.89
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Diluted
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$
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0.95
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$
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0.89
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Weighted average
shares used in computing net income per common share:
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Basic
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56,381
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61,296
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Diluted
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56,572
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61,408
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Cash dividends
declared per common share
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$
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0.45
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$
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0.43
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MSC INDUSTRIAL
SUPPLY CO. AND SUBSIDIARIES Condensed Consolidated
Statements of Comprehensive Income (In
thousands) (Unaudited)
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Thirteen Weeks
Ended
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December
3,
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November
28,
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2016
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2015
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Net income, as
reported
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$
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54,103
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$
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55,029
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Foreign currency
translation adjustments
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(1,547)
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(1,115)
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Comprehensive
income
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$
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52,556
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$
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53,914
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MSC INDUSTRIAL
SUPPLY CO. AND SUBSIDIARIES Condensed Consolidated
Statements of Cash Flows (In
thousands) (Unaudited)
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Thirteen Weeks
Ended
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December
3,
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November
28,
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2016
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2015
|
Cash Flows from
Operating Activities:
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Net income
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$
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54,103
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$
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55,029
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Adjustments to
reconcile net income to net cash provided by operating
activities:
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Depreciation and
amortization
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15,447
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17,925
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Stock-based
compensation
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3,538
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3,621
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Loss on disposal of
property, plant, and equipment
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49
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247
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Provision for doubtful
accounts
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1,305
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|
2,997
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Deferred income taxes
and tax uncertainties
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—
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(78)
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Excess tax benefits
from stock-based compensation
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(525)
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(154)
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Changes in operating
assets and liabilities:
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Accounts
receivable
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(1,021)
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|
12,567
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Inventories
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|
(10,299)
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|
|
13,832
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Prepaid expenses and
other current assets
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3,792
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(3,226)
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Other
assets
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(465)
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|
|
583
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Accounts payable and
accrued liabilities
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|
9,511
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|
18,767
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Total
adjustments
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|
21,332
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|
|
67,081
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Net cash provided by
operating activities
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75,435
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122,110
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Cash Flows from
Investing Activities:
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Expenditures for property, plant and equipment
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(12,497)
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(15,575)
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Net cash used in
investing activities
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(12,497)
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(15,575)
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Cash Flows from
Financing Activities:
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Repurchases of common
stock
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(3,207)
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(5,796)
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Payments of cash
dividends
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(25,495)
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(26,391)
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Payments on capital
lease and financing obligations
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(388)
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(161)
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Excess tax benefits
from stock-based compensation
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|
525
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|
154
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Proceeds from sale of
Class A common stock in connection with associate stock purchase
plan
|
|
909
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|
826
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Proceeds from exercise
of Class A common stock options
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|
6,931
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|
|
268
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Borrowings under
financing obligations
|
|
739
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|
|
453
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Borrowings under
Credit Facility
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|
15,000
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|
35,000
|
Private Placement Loan
financing costs
|
|
(142)
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|
|
—
|
Payments of notes
payable and revolving credit note under the Credit
Facility
|
|
(78,500)
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|
|
(111,250)
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Net cash used in
financing activities
|
|
(83,628)
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|
|
(106,897)
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Effect of foreign
exchange rate changes on cash and cash equivalents
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|
(78)
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|
|
(26)
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Net decrease in cash
and cash equivalents
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|
(20,768)
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(388)
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Cash and cash
equivalents – beginning of year
|
|
52,890
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|
|
38,267
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Cash and cash
equivalents – end of year
|
$
|
32,122
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|
$
|
37,879
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Supplemental
Disclosure of Cash Flow Information:
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|
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Cash paid for income
taxes
|
$
|
1,983
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|
$
|
4,495
|
Cash paid for
interest
|
$
|
1,400
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|
$
|
1,247
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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/msc-reports-fiscal-2017-first-quarter-results-300389095.html
SOURCE MSC Industrial Supply Co.