MSC Industrial (MSM) Tops Q1 EPS by 2c, Revenues Beat

MSC Industrial (NYSE: MSM) reported Q1 EPS of $1.10, $0.02 better than the analyst estimate of $1.08. Revenue for the quarter came in at $771.9 million versus the consensus estimate of $770.18 million.

Erik Gershwind, president and chief executive officer, said, "Our fiscal first quarter reflected building momentum for our Mission Critical initiative against the backdrop of a challenging but improving environment. We saw continued sequential improvement in sales of non-safety and non-janitorial product lines, while sales of safety and janitorial products, anchored by our PPE program, grew roughly 20%. That momentum continued into December, which we forecast at 2.4% growth over prior year. Inside of the company, we made solid progress against our growth initiatives. We also saw strong execution on the pricing and purchasing fronts, yielding a 30 basis point sequential improvement in gross margin in the quarter despite a headwind from some large PPE sales."

Kristen Actis-Grande, executive vice president and chief financial officer, added, "Average daily sales were $12.5 million for the quarter and our gross margin was 41.9%. Operating expenses as a percentage of sales after adjusting for $4.0 million of restructuring and other related costs was flat with the prior year period, despite lower sales levels. This was the result of our Mission Critical program, which delivered $8 million of gross cost out in the quarter. While one quarter does not make a year, I am encouraged by the solid start. Our goal remains $90 million to $100 million of gross cost take out through fiscal 2023 versus fiscal 2019. Our reported operating margin was significantly impacted by a $26.7 million asset impairment charge resulting from growing uncertainty over our ability to secure deliveries of nitrile gloves for which we prepaid in September and have not yet received. We are, of course, pursuing all possible paths to either secure the gloves or a refund of our prepayments. From the outset of the pandemic, we have been successful in procuring critical PPE supplies to support our customers. We remain pleased with our PPE program, which has consisted of hundreds of global supply transactions leading to substantial revenues and the ability to support our customers during the pandemic."

Gershwind concluded, "Our company\'s sights are set on two goals to be achieved by the end of fiscal 2023: growing at least 400 basis points above the Industrial Production Index and returning ROIC back into the high teens. We have five growth initiatives powering our market share aspirations, and we are executing significant structural cost reductions that we expect will improve operating expenses as a percent of sales by at least 200 basis points. As we move towards the middle of our fiscal 2021, we are encouraged by the momentum that is building inside of the company, and this is evidenced both by improving operating numbers and the increasing pace with which we are operating the business. We are also encouraged by an environment that, while challenging, is showing some positive indicators, with good news on the vaccine and the recently passed stimulus package hopefully improving the economic outlook over the coming quarters."

For earnings history and earnings-related data on MSC Industrial (MSM) click here.

You May Also Be Interested In

• Alphabet (GOOGL) soars 16% on Q1 results beat, first-ever dividend
• COPT Defense Properties (CDP) Reports In-Line Q1 EPS; offers guidance
• SPS Commerce (SPSC) Tops Q1 EPS by 12c