MSC Industrial (MSM) Tops Q1 EPS by 5c

MSC Industrial (NYSE: MSM) reported Q1 EPS of $1.25, $0.05 better than the analyst estimate of $1.20. Revenue for the quarter came in at $848.5 million versus the consensus estimate of $839.43 million.

Erik Gershwind, President and Chief Executive Officer, said, "Our fiscal first quarter was a strong start to the year. Average daily sales grew 9.9% as we sustained our market share capture rate by outgrowing the Industrial Production Index by nearly 500 basis points. We translated that top line growth into double digit earnings growth and strong operating expense leverage. Gross margins, on the other hand, came in below our expectations. We implemented countermeasures quickly and saw improvement towards the end of the quarter and into December. We expect gross margins to bounce back in our fiscal second quarter and we expect to achieve our goal of keeping gross margins roughly flat for the full year."

Kristen Actis-Grande, Executive Vice President and Chief Financial Officer, added, "We produced double-digit earnings growth in the first quarter due to strong top line performance and excellent cost controls. Adjusted operating expenses as a percentage of sales dropped 70 basis points year over year fueled by productivity improvements. Our Mission Critical initiatives achieved savings of $10 million and we reinvested $7 million in the quarter. Momentum is building in our business and, as of now, we are trending towards the higher end of our annual operating margin framework. We also see low double-digit ADS growth as a possibility for fiscal 2022. If this happens, operating margins would lift beyond the ranges in our annual operating margin framework."

Gershwind concluded, "I am encouraged by the recent progress I see in the Company. Looking beyond this fiscal year, we are on track to achieve our goals of growing sales by at least 400 basis points above the Industrial Production Index and returning ROIC to the high-teens by the end of fiscal 2023."

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

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