Msc Industrial Direct Co Inc 10-Q for FY2026 Q2
Msc Industrial Direct Co Inc (MSM)
10-Q
2026-04-01
For: 2026-02-28
View Original
Added on
April 08, 2026
About this 10-Q
Msc Industrial Direct Co Inc filed this 10-Q on April 1, 2026, covering the quarter ended February 28, 2026 (FY2026 Q2).
Headline figures
Quarter ended February 28, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $917.77M
- up 2.9% from $891.72M a year earlier
- Net income
- $42.48M
- up 8.1% from net income of $39.31M a year earlier
- Diluted EPS
- $0.76
- up 8.6% from $0.70 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-Q
______________________________
| (Mark One) | |||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
| OR | |||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _____ to _____
Commission File Number: 1-14130
__________________
(Exact name of registrant as specified in its charter)
__________________
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) | ||||
(516 ) 812-2000
(Registrant’s telephone number, including area code)
__________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | Emerging growth company o | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of March 20, 2026, 55,834,311 shares of Class A Common Stock of the registrant were outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) contains forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Discussions containing such forward‑looking statements may be found in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 3, “Quantitative and Qualitative Disclosures About Market Risk” of Part I and Item 1, “Legal Proceedings” and Item 1A, “Risk Factors” of Part II of this Report, as well as within this Report generally. The words “will,” “may,” “believes,” “anticipates,” “thinks,” “expects,” “estimates,” “plans,” “intends” and similar expressions are intended to identify 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. MSC Industrial Direct Co., Inc. (together with its wholly owned subsidiaries and entities in which it maintains a controlling financial interest, “MSC,” “MSC Industrial,” the “Company,” “we,” “us” or “our”) expressly disclaims any obligation to publicly disclose any revisions to these forward‑looking statements to reflect events or circumstances occurring subsequent to filing this Report with the United States Securities and Exchange Commission (the “SEC”), except to the extent required by applicable law. These forward‑looking statements are subject to risks and uncertainties, including, without limitation, those discussed in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 3, “Quantitative and Qualitative Disclosures About Market Risk” of Part I and Item 1, “Legal Proceedings” and Item 1A, “Risk Factors” of Part II of this Report, as well as in Item 1A, “Risk Factors” of Part I and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of Part II of our Annual Report on Form 10-K for the fiscal year ended August 30, 2025. 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 and the impact of any lapse in funding for the federal government;
•the credit risk of our customers;
•our ability to accurately forecast customer demand;
•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, including tariff policies;
•risks associated with opening or expanding our customer fulfillment centers (“CFCs”);
•our ability to estimate the cost of healthcare claims incurred under our self-insurance plan;
•interruption of operations at our headquarters or CFCs;
•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;
•the significant influence that our principal shareholders will continue to have over our decisions;
•our ability to execute on our E-commerce strategies and to 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.
MSC INDUSTRIAL DIRECT CO., INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2026
TABLE OF CONTENTS
| Page | ||||||||
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MSC INDUSTRIAL DIRECT CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| February 28, 2026 | August 30, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Identifiable intangibles, net | |||||||||||
| Operating lease assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Current portion of debt including obligations under finance leases | $ | $ | |||||||||
| Current portion of operating lease liabilities | |||||||||||
| Accounts payable | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt including obligations under finance leases | |||||||||||
| Noncurrent operating lease liabilities | |||||||||||
| Deferred income taxes and tax uncertainties | |||||||||||
| Total liabilities | |||||||||||
| Commitments and Contingencies | |||||||||||
| Shareholders’ Equity: | |||||||||||
| MSC Industrial Shareholders’ Equity: | |||||||||||
Preferred Stock; $ | |||||||||||
Class A Common Stock; $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Class A treasury stock, at cost, | ( | ( | |||||||||
| Total MSC Industrial shareholders’ equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
1
MSC INDUSTRIAL DIRECT CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Restructuring and other costs | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Total other expense | ( | ( | ( | ( | |||||||||||||||||||
| Income before provision for income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Less: Net loss attributable to noncontrolling interest | ( | ( | ( | ( | |||||||||||||||||||
| Net income attributable to MSC Industrial | $ | $ | $ | $ | |||||||||||||||||||
| Per share data attributable to MSC Industrial: | |||||||||||||||||||||||
| Net income per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted-average shares used in computing net income per common share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
2
MSC INDUSTRIAL DIRECT CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| Net income, as reported | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income, net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
Comprehensive income(1) | |||||||||||||||||||||||
| Comprehensive income attributable to noncontrolling interest: | |||||||||||||||||||||||
| Net loss | |||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
| Comprehensive income attributable to MSC Industrial | $ | $ | $ | $ | |||||||||||||||||||
(1)There were no material income taxes associated with other comprehensive income during the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025.
See accompanying Notes to Condensed Consolidated Financial Statements.
3
MSC INDUSTRIAL DIRECT CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share data)
(Unaudited)
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| Class A Common Stock | |||||||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | |||||||||||||||||||
| Ending Balance | |||||||||||||||||||||||
| Additional Paid-in Capital | |||||||||||||||||||||||
| Beginning Balance | |||||||||||||||||||||||
| Associate Incentive Plans | |||||||||||||||||||||||
| Repurchase and retirement of Class A Common Stock, including excise tax | ( | ( | ( | ||||||||||||||||||||
| Purchase of Noncontrolling Interest | ( | ||||||||||||||||||||||
| Ending Balance | |||||||||||||||||||||||
| Retained Earnings | |||||||||||||||||||||||
| Beginning Balance | |||||||||||||||||||||||
| Net Income | |||||||||||||||||||||||
| Repurchase and retirement of Class A Common Stock, including excise tax | ( | ( | ( | ||||||||||||||||||||
| Regular cash dividends declared on Class A Common Stock | ( | ( | ( | ( | |||||||||||||||||||
| Dividend equivalents declared, net of cancellations | ( | ( | ( | ( | |||||||||||||||||||
| Ending Balance | |||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||||||||||||||
| Beginning Balance | ( | ( | ( | ( | |||||||||||||||||||
| Foreign Currency Translation Adjustment | ( | ( | |||||||||||||||||||||
| Ending Balance | ( | ( | ( | ( | |||||||||||||||||||
| Treasury Stock | |||||||||||||||||||||||
| Beginning Balance | ( | ( | ( | ( | |||||||||||||||||||
| Associate Incentive Plans | |||||||||||||||||||||||
| Repurchase of Class A Common Stock, including excise tax | ( | ( | ( | ( | |||||||||||||||||||
| Ending Balance | ( | ( | ( | ( | |||||||||||||||||||
| Total Shareholders’ Equity Attributable to MSC Industrial | |||||||||||||||||||||||
| Noncontrolling Interest | |||||||||||||||||||||||
| Beginning Balance | |||||||||||||||||||||||
| Foreign Currency Translation Adjustment | ( | ( | |||||||||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| Purchase of Noncontrolling Interest | ( | ||||||||||||||||||||||
| Ending Balance | |||||||||||||||||||||||
| Total Shareholders’ Equity | $ | $ | $ | $ | |||||||||||||||||||
| Dividends declared per Class A Common Share | $ | $ | $ | $ | |||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
MSC INDUSTRIAL DIRECT CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Twenty-Six Weeks Ended | |||||||||||
| February 28, 2026 | March 1, 2025 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of cloud computing arrangements | |||||||||||
| Non-cash operating lease cost | |||||||||||
| Stock-based compensation | |||||||||||
| Loss on disposal of property, plant and equipment | |||||||||||
| Property, plant and equipment asset impairment | |||||||||||
| Non-cash changes in fair value of estimated contingent consideration | |||||||||||
| Provision for credit losses | |||||||||||
| Expenditures for cloud computing arrangements | ( | ( | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | |||||||||||
| Inventories | ( | ( | |||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Operating lease liabilities | ( | ( | |||||||||
| Other assets | |||||||||||
| Accounts payable and accrued liabilities | ( | ||||||||||
| Total adjustments | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Expenditures for property, plant and equipment | ( | ( | |||||||||
| Cash used in acquisitions, net of cash acquired | ( | ( | |||||||||
| Net proceeds from sale of property | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Repurchases of Class A Common Stock | ( | ( | |||||||||
| Payments of regular cash dividends | ( | ( | |||||||||
| Proceeds from sale of Class A Common Stock in connection with Associate Stock Purchase Plan | |||||||||||
| Proceeds from exercise of Class A Common Stock options | |||||||||||
| Borrowings under credit facilities | |||||||||||
| Payments under credit facilities | ( | ( | |||||||||
| Purchase of noncontrolling interest | ( | ||||||||||
| Borrowings under financing obligations | |||||||||||
| Other, net | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents—beginning of period | |||||||||||
| Cash and cash equivalents—end of period | $ | $ | |||||||||
| Supplemental Disclosure of Cash Flow Information: | |||||||||||
| Cash paid for income taxes | $ | $ | |||||||||
| Cash paid for interest | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
5
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
Note 1. Basis of Presentation
The unaudited Condensed Consolidated Financial Statements have been prepared by the management of MSC Industrial Direct Co., Inc. (together with its wholly owned subsidiaries and entities in which it maintains a controlling financial interest, “MSC Industrial” or the “Company”) and in the opinion of management include all normal recurring adjustments necessary to present fairly the Company’s financial position as of February 28, 2026 and August 30, 2025, results of operations for the thirteen and twenty-six weeks ended February 28, 2026 and March 1, 2025, and cash flows for the twenty-six weeks ended February 28, 2026 and March 1, 2025. The financial information as of August 30, 2025 was derived from the Company’s audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 30, 2025.
Fiscal Year
The Company operates on a 52/53-week fiscal year ending on the Saturday closest to August 31st of each year. References to “fiscal year 2026” refer to the period from August 31, 2025 to August 29, 2026, which is a 52-week fiscal year. References to “fiscal year 2025” refer to the period from September 1, 2024 to August 30, 2025, which is a 52-week fiscal year. The fiscal quarters ended February 28, 2026 and March 1, 2025 refer to the thirteen weeks ended as of those dates.
Principles of Consolidation
The unaudited Condensed Consolidated Financial Statements include the accounts of MSC Industrial Direct Co., Inc., its wholly owned subsidiaries and entities in which it maintains a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.
Accounting Standards Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. The ASU primarily enhances and expands both the income tax rate reconciliation disclosure and the income taxes paid disclosure. The ASU is effective for annual periods beginning after December 15, 2024 (MSC’s fiscal year 2026) on a prospective basis. The adoption of this guidance is not expected to affect the Company’s Consolidated Financial Statements and the Company is currently evaluating the standard to determine the impact of adoption on its disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires public entities to include more detailed disclosures about specific categories of expenses such as inventory purchases, employee compensation, depreciation, amortization and selling costs within the notes to the financial statements. The ASU is effective for fiscal year periods beginning after December 15, 2026 (MSC’s fiscal year 2028) and interim periods within fiscal years beginning after December 15, 2027 (MSC’s first quarter of fiscal year 2029), with early adoption permitted. The adoption of this guidance is not expected to affect the Company’s Consolidated Financial Statements and the Company is currently evaluating the standard to determine the impact of adoption on its disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350-40): Targeted Improvements to Accounting for Internal-Use Software. The ASU primarily amends guidance for
6
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
accounting and disclosure of internal-use software, including clarifying the requirements for capitalizing costs and removal of references to the stage-based approach for capitalizing costs. The ASU is effective for annual periods beginning after December 15, 2027 (MSC’s fiscal year 2029) on a prospective, retrospective or modified prospective approach. The Company is currently evaluating the standard to determine the impact of adoption on its Consolidated Financial Statements and disclosures.
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to have a material impact on the Consolidated Financial Statements.
Note 2. Revenue
Revenue Recognition
Net sales include product revenue and shipping and handling charges, net of estimated sales returns and any related sales incentives. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. All revenue is recognized when the Company satisfies its performance obligations under the contract, which is determined to occur when the customer obtains control of the products, and invoicing occurs at approximately the same point in time. The Company’s product sales have standard payment terms that do not exceed one year . The Company considers shipping and handling as activities to fulfill its performance obligations. Substantially all of the Company’s contracts have a single performance obligation, to deliver products, and are short-term in nature. The Company estimates product returns based on historical return rates. Total accrued sales returns were $6,497 and $7,089 as of February 28, 2026 and August 30, 2025, respectively, and are reported as Accrued expenses and other current liabilities in the unaudited Condensed Consolidated Balance Sheets. Sales taxes and value-added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales.
Consideration Payable to Customers
The Company offers customers sales incentives, which primarily consist of volume rebates, and upfront sign-on payments. These volume rebates and sign-on payments are not in exchange for a distinct good or service and result in a reduction of net sales from the goods transferred to the customer at the later of when the related revenue is recognized or when the Company promises to pay the consideration. The Company estimates its volume rebate accruals and records its sign-on payments based on various factors, including contract terms, historical experience, and performance levels. Total accrued sales incentives, primarily related to volume rebates, were $30,354 and $22,948 as of February 28, 2026 and August 30, 2025, respectively, and are included in Accrued expenses and other current liabilities in the unaudited Condensed Consolidated Balance Sheets. Sign-on payments, not yet recognized as a reduction of net sales, are recorded in Prepaid expenses and other current assets in the unaudited Condensed Consolidated Balance Sheets and were $6,090 and $6,723 as of February 28, 2026 and August 30, 2025, respectively.
Contract Assets and Liabilities
The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company records a contract liability when customers prepay but the Company has not yet satisfied its performance obligations. The Company did not
Disaggregation of Revenue
The Company serves a large number of customers of various types and in diverse industries, which are subject to different economic and industry factors. The Company’s presentation of net sales by customer end-market, customer type and geography most reasonably depicts how the nature, amount, timing and uncertainty of Company revenue and cash flows are affected by economic and industry factors. The Company does not disclose net sales information by product category as it is impracticable to do so as a result of its numerous product offerings and the way its business is managed.
7
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
The following table presents the Company’s percentage of revenue by customer end-market for the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 (2) | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| Manufacturing Heavy | % | % | % | % | |||||||||||||||||||
| Manufacturing Light | % | % | % | % | |||||||||||||||||||
| Public Sector | % | % | % | % | |||||||||||||||||||
| Retail/Wholesale | % | % | % | % | |||||||||||||||||||
| Commercial Services | % | % | % | % | |||||||||||||||||||
Other (1) | % | % | % | % | |||||||||||||||||||
| Total | % | % | % | % | |||||||||||||||||||
(1)The Other category primarily makes up specific industry classifications that do not individually exceed 3% of net sales.
(2)Prior year data includes the effect of a reclassification of end-markets, primarily between Manufacturing Heavy/Light and Other.
The Company groups customers into three categories by type of customer: national account, public sector and core and other. National account customers include Fortune 1000 companies, large privately held companies, and international companies doing business in North America. Public sector customers are governments and their instrumentalities such as federal agencies, state governments, and public sector healthcare providers. Federal government customers include the United States General Services Administration, the United States Department of Defense, the United States Marine Corps, the United States Coast Guard, the United States Postal Service, the United States Department of Energy, large and small military bases, Veterans Affairs hospitals, and correctional facilities. The Company has individual state and local contracts, as well as contracts through partnerships with several state co-operatives. Core and other customers are those customers that are not national account customers or public sector customers.
The following table presents the Company’s percentage of revenue by customer type for the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| National Account Customers | % | % | % | % | |||||||||||||||||||
| Public Sector Customers | % | % | % | % | |||||||||||||||||||
| Core and Other Customers | % | % | % | % | |||||||||||||||||||
| Total | % | % | % | % | |||||||||||||||||||
The Company’s revenue originating from the following geographic areas was as follows for the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| United States | % | % | % | % | |||||||||||||||||||
| Mexico | % | % | % | % | |||||||||||||||||||
| Canada | % | % | % | % | |||||||||||||||||||
| North America | % | % | % | % | |||||||||||||||||||
| Other foreign countries | % | % | % | % | |||||||||||||||||||
| Total | % | % | % | % | |||||||||||||||||||
8
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
Note 3. Net Income per Share
Basic net income per share is computed by dividing net income by the weighted-average number of shares of the Company’s Class A Common Stock (“Class A Common Stock”) outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of Class A Common Stock outstanding during the period, including potentially dilutive shares of Class A Common Stock equivalents outstanding during the period. The dilutive effect of potential shares of Class A Common Stock is determined using the treasury stock method. The following table sets forth the computation of basic and diluted net income per common share under the treasury stock method for the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income attributable to MSC Industrial, as reported | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average shares outstanding for basic net income per share | |||||||||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||||||||
| Weighted-average shares outstanding for diluted net income per share | |||||||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Potentially dilutive securities | |||||||||||||||||||||||
Potentially dilutive securities attributable to outstanding share-based awards are excluded from the calculation of diluted net income per share when the combined exercise price and average unamortized fair value are greater than the average market price of Class A Common Stock, and, therefore, their inclusion would be anti-dilutive.
Note 4. Stock-Based Compensation
The Company accounts for all stock-based payments in accordance with Accounting Standards Codification Topic 718, “Compensation—Stock Compensation,” as amended. Stock-based compensation expense included in Operating expenses for the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025 was as follows:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
Stock-based compensation expense (1) | $ | $ | $ | $ | |||||||||||||||||||
| Deferred income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
| Stock-based compensation expense, net | $ | $ | $ | $ | |||||||||||||||||||
(1)Includes equity award acceleration costs associated with associate severance and separation, which are included in Restructuring and other costs in the unaudited Condensed Consolidated Statements of Income for the thirteen- and twenty-six-week periods ended February 28, 2026. See Note 9, “Restructuring and Other Costs” for additional information.
9
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
Restricted Stock Units and Performance Share Units
The Company grants restricted stock units (“RSUs”) and performance share units (“PSUs”) as part of its long-term stock-based compensation program. RSUs vest over four-years or five-years , depending on the position of the associate, and PSUs cliff vest after a three-year performance period based on the achievement of specific performance goals as set forth in the applicable award agreement. Based on the extent to which the performance goals are achieved, vested shares may range from 0 % to 200 % of the target award amount. If the performance conditions are not met or are not expected to be met, recognized compensation expense associated with the grant will be reversed.
The following table summarizes the Company’s non-vested RSU and PSU award activity under the MSC Industrial Direct Co., Inc. 2015 Omnibus Incentive Plan (the “2015 Omnibus Incentive Plan”) and the 2023 Omnibus Incentive Plan (the “2023 Omnibus Incentive Plan”) (based on target award amounts for PSUs) for the twenty-six-week period ended February 28, 2026:
| Restricted Stock Units | Performance Share Units | ||||||||||||||||||||||
| Shares | Weighted-Average Grant Date Fair Value per Share | Shares | Weighted-Average Grant Date Fair Value per Share | ||||||||||||||||||||
Non-vested at August 30, 2025 | $ | $ | |||||||||||||||||||||
| Granted | |||||||||||||||||||||||
| Vested | ( | ||||||||||||||||||||||
| Forfeited | ( | ( | |||||||||||||||||||||
Non-vested at February 28, 2026 (1) | $ | $ | |||||||||||||||||||||
The fair value of each RSU and PSU granted is the closing stock price on the New York Stock Exchange of Class A Common Stock on the date of grant. RSUs are expensed over the vesting period of each respective grant and PSUs are expensed over the three-year performance period of each respective grant. Forfeitures of share-based awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimated forfeitures. The Company uses historical data to estimate pre-vesting RSU and PSU forfeitures and records stock-based compensation expense only for RSU and PSU awards that are expected to vest. Upon vesting, and, in the case of the PSUs, subject to the achievement of specific performance goals, a portion of the RSU and PSU awards may be withheld to satisfy the statutory income tax withholding obligation, and the remaining RSUs and PSUs will be settled in shares of Class A Common Stock. These awards accrue dividend equivalents on the underlying RSUs and PSUs (in the form of additional stock units) based on dividends declared on Class A Common Stock, and these dividend equivalents are paid to the award recipient in the form of unrestricted shares of Class A Common Stock on the vesting dates of the underlying RSUs and PSUs, subject, in the case of the dividend equivalents on the underlying PSUs, to the same performance vesting requirements. The unrecognized stock-based compensation costs related to the RSUs and PSUs at February 28, 2026 were $34,831 and $6,494 , respectively, which are expected to be recognized over a weighted-average period of 3.0 and 1.9 years, respectively.
Note 5. Fair Value
Fair value accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The below fair value hierarchy prioritizes the inputs used to measure fair value into three levels, with Level 1 being of the highest priority. The three levels of inputs used to measure fair value are as follows:
Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.
Level 3 — Unobservable inputs which are supported by little or no market activity.
10
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and outstanding indebtedness. Cash and cash equivalents include investments in a money market fund which are reported at fair value. The fair value of money market funds is determined using quoted prices for identical investments in active markets, which are considered to be Level 1 inputs within the fair value hierarchy. The Company uses a market approach to determine the fair value of its debt instruments, utilizing quoted prices in active markets, interest rates and other relevant information generated by market transactions involving similar instruments. Therefore, the inputs used to measure the fair value of the Company’s debt instruments are classified as Level 2 within the fair value hierarchy. The reported carrying amounts of the Company’s financial instruments approximated their fair values as of February 28, 2026 and March 1, 2025.
During the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025, the Company had no
Note 6. Accounts Receivable
Accounts receivables at February 28, 2026 and August 30, 2025 consisted of the following:
| February 28, 2026 | August 30, 2025 | ||||||||||
| Accounts receivable | $ | $ | |||||||||
| Less: allowance for credit losses | ( | ( | |||||||||
| Accounts receivable, net | $ | $ | |||||||||
In the second quarter of fiscal year 2023, the Company entered into a Receivables Purchase Agreement (the “RPA”), by and among MSC A/R Holding Co., LLC, a wholly owned subsidiary of the Company (the “Receivables Subsidiary”), as seller, the Company, as master servicer, certain purchasers from time to time party thereto (collectively, the “Purchasers”), and Wells Fargo Bank, National Association, as administrative agent. Under the RPA, the Receivables Subsidiary may sell certain eligible receivables to the Purchasers. The RPA was amended in December 2025, which provided for, among other things, an extension of the scheduled termination date to December 8, 2028, the addition of a joining purchaser and an increase to the maximum aggregate commitment by $50,000 to a total of $350,000 which the Company has fully utilized as of February 28, 2026. The RPA continues to include customary representations and warranties for facilities of this type.
The Company continues to provide collection services for the receivables sold to the Purchasers. As cash is collected on sold receivables, the Receivables Subsidiary continuously sells new qualifying receivables to the Purchasers so that the total principal amount outstanding of receivables sold is approximately $350,000 . The total principal amount outstanding of receivables sold was approximately $350,000 and $300,000 as of February 28, 2026 and August 30, 2025, respectively. The amount of receivables retained and pledged as collateral by the Company as of February 28, 2026 and August 30, 2025 was $307,606 and $359,465 , respectively.
11
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
The following table summarizes the activity and amounts outstanding under the RPA for the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025.
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| Receivables sold under the RPA | $ | $ | $ | $ | |||||||||||||||||||
| Cash collected on sold receivables under the RPA | $ | $ | $ | $ | |||||||||||||||||||
The receivables sold incurred fees due to the Purchasers of $3,873 and $7,517 during the thirteen- and twenty-six-week periods ended February 28, 2026, respectively, and $3,863 and $8,065 during the thirteen- and twenty-six-week periods ended March 1, 2025, respectively, which were recorded within Other expense, net in the unaudited Condensed Consolidated Statements of Income. The financial covenants under the RPA are substantially the same as those under the Credit Facilities (as defined below). See Note 7, “Debt” for more information about these financial covenants.
Note 7. Debt
Debt at February 28, 2026 and August 30, 2025 consisted of the following:
| February 28, 2026 | August 30, 2025 | |||||||||||||
| Amended Revolving Credit Facility | $ | $ | ||||||||||||
| Uncommitted Credit Facilities | ||||||||||||||
| Long-Term Note Payable | ||||||||||||||
| Private Placement Debt: | ||||||||||||||
| Financing arrangements | ||||||||||||||
| Obligations under finance leases | ||||||||||||||
| Less: unamortized debt issuance costs | ( | ( | ||||||||||||
| Total debt, including obligations under finance leases | $ | $ | ||||||||||||
| Less: current portion | ( | (1) | ( | (2) | ||||||||||
| Total long-term debt, including obligations under finance leases | $ | $ | ||||||||||||
(1)Consists of $217,000 from the Uncommitted Credit Facilities (as defined below), $100,000 from the 2.90 % Senior Notes, Series B, due July 28, 2026, $388 from financing arrangements, $194 from obligations under finance leases and net of unamortized debt issuance costs of $349 expected to be amortized in the next 12 months.
(2)Consists of $217,000 from the Uncommitted Credit Facilities (as defined below), $100,000 from the 2.90 % Senior Notes, Series B, due July 28, 2026, $17 from financing arrangements, $200 from obligations under finance leases and net of unamortized debt issuance costs of $349 expected to be amortized in the next 12 months.
In April 2017, the Company entered into a $600,000 revolving credit facility, which was subsequently amended (as amended, the “Amended Revolving Credit Facility”). The Amended Revolving Credit Facility, which matures on July 16, 2030, provides for a five-year unsecured revolving loan facility on a committed basis. The interest rate for borrowings under the Amended Revolving Credit Facility is based on either the Adjusted Term SOFR Rate (as defined in the Amended Revolving Credit Facility) or a base rate, plus a spread based on the Company’s consolidated net leverage ratio at the end
12
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
of each fiscal reporting quarter. The Company currently elects to have loans under the Amended Revolving Credit Facility bear interest based on the Adjusted Term SOFR Rate with one-month interest periods.
The Amended Revolving Credit Facility permits up to $50,000 to be used to fund letters of credit. The Amended Revolving Credit Facility also permits the Company to initiate one or more incremental term loan facilities and/or to increase the revolving loan commitments in an aggregate amount not to exceed $300,000 . Subject to certain limitations, each such incremental term loan facility or revolving loan commitment increase will be on terms as agreed to by the Company, the administrative agent and the lenders providing such financing. Outstanding letters of credit were $9,328 and $6,304 at February 28, 2026 and August 30, 2025, respectively.
Uncommitted Credit Facilities
During fiscal years 2025 and 2026, the Company either extended or amended all three 230,000 217,000 one year of entering into such Uncommitted Credit Facility and contains certain limited covenants which are substantially the same as the limited covenants contained in the Amended Revolving Credit Facility. All of the Uncommitted Credit Facilities are unsecured and rank equally in right of payment with the Company’s other unsecured indebtedness.
During the twenty-six-week period ended February 28, 2026, the Company borrowed an aggregate $218,000 and repaid an aggregate $193,000 under the Credit Facilities. As of February 28, 2026 and August 30, 2025, the weighted-average interest rates on borrowings under the Credit Facilities were 4.53 % and 5.19 %, respectively.
Private Placement Debt
In July 2016, the Company completed the issuance and sale of $100,000 aggregate principal amount of 2.90 % Senior Notes, Series B, due July 28, 2026; in March 2020, the Company completed the issuance and sale of $50,000 aggregate principal amount of 2.60 % Senior Notes, due March 5, 2027; and, in April 2024, the Company completed the issuance and sale of $50,000 aggregate principal amount of 5.73 % Senior Notes, due April 18, 2027 (collectively, the “Private Placement Debt”). Interest is payable semiannually at the fixed stated interest rates. All of the Private Placement Debt is unsecured.
Covenants
Note 8. Shareholders’ Equity
Common Stock Repurchases and Treasury Stock
In June 2021, the Board of Directors of the Company (the “Board”) terminated the existing share repurchase plan and authorized a new share repurchase plan (the “Share Repurchase Plan”) to purchase up to 5,000 shares of Class A Common Stock. There is no expiration date for the Share Repurchase Plan. As of February 28, 2026, the maximum number of shares of Class A Common Stock that were available for repurchase under the Share Repurchase Plan was 1,313 shares. The Share Repurchase Plan allows the Company to repurchase shares at any time and in any increments it deems appropriate in accordance with Rule 10b-18 under the Exchange Act.
13
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
During the thirteen- and twenty-six-week periods ended February 28, 2026, the Company repurchased 9 shares and 160 shares, respectively, of Class A Common stock for $764 and $13,723 , respectively. From these totals, 9 shares and 60 shares, respectively, were repurchased by the Company to satisfy the Company’s associates’ tax withholding liability associated with its stock-based compensation program and are reflected at cost as treasury stock in the unaudited Condensed Consolidated Financial Statements for the thirteen- and twenty-six-week periods ended February 28, 2026 and the remainder were immediately retired. During the thirteen- and twenty-six-week periods ended March 1, 2025, the Company repurchased 158 shares and 377 shares, respectively, of Class A Common Stock for $12,469 and $30,541 , respectively. From these totals, 5 shares and 75 shares, respectively, were repurchased by the Company to satisfy the Company’s associates’ tax withholding liability associated with its stock-based compensation program and are reflected at cost as treasury stock in the unaudited Condensed Consolidated Financial Statements for the thirteen- and twenty-six-week periods ended March 1, 2025 and the remainder were immediately retired.
As of August 30, 2025, the Company had accrued $71 for excise tax on share repurchases which was included in Accrued expenses and other current liabilities in the unaudited Condensed Consolidated Balance Sheets. As of February 28, 2026, no accrual was required.
The Company reissued 16 shares and 28 shares of treasury stock during the thirteen- and twenty-six-week periods ended February 28, 2026, respectively, and reissued 17 shares and 31 shares of treasury stock during the thirteen- and twenty-six-week periods ended March 1, 2025, respectively, to fund the MSC Industrial Direct Co., Inc. Amended and Restated Associate Stock Purchase Plan.
Dividends on Common Stock
The Company paid aggregate regular cash dividends of $1.74 per share totaling $97,175 for the twenty-six-week period ended February 28, 2026. For the twenty-six-week period ended March 1, 2025, the Company paid aggregate regular cash dividends of $1.70 per share totaling $94,933 .
On March 19, 2026, the Board declared a regular cash dividend of $0.87 per share, payable on April 22, 2026, to shareholders of record at the close of business on April 8, 2026. The dividend is expected to result in aggregate payments of $48,576 based on the number of shares outstanding on March 20, 2026.
Note 9. Restructuring and Other Costs
Optimization of Company Operations, Profitability Improvement and Growth Acceleration
The Company continues to identify opportunities for improvements in its workforce realignment, strategy and staffing, and its focus on performance management, to ensure it has the right skill sets and number of associates to execute its long-term vision. As such, from time to time the Company extends voluntary and involuntary severance and separation benefits to certain associates in order to facilitate its workforce realignment. During the twenty-six weeks ended February 28, 2026, the Company reduced its headcount by eliminating various positions as part of its sales optimization efforts as the Company implements its refreshed go to market strategy. Workforce realignment actions related to this restructuring event were substantially completed as of February 28, 2026.
As part of the Company’s strategic realignment efforts to optimize its supply chain and distribution network and enhance operational efficiency, the Company engaged consultants beginning in fiscal year 2024 and ending in fiscal year 2025. As such, the Company incurred consulting-related costs in order to facilitate its network optimization and workforce realignment that qualify as exit and disposal costs under accounting principles generally accepted in the United States of America.
In addition, from time to time, the Company incurs certain expenses that are an integral component of, and directly contribute to, its restructuring activities, which do not qualify as exit and disposal costs under accounting principles generally accepted in the United States of America. These expenses include professional and consulting-related costs directly associated with the optimization of the Company’s operations and profitability improvement, which are also included in Restructuring and other costs in the unaudited Condensed Consolidated Statements of Income.
14
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
The following table summarizes Restructuring and other costs for the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | ||||||||||||||||||||
| Consulting-related costs | $ | $ | $ | $ | |||||||||||||||||||
| Associate severance and separation costs | |||||||||||||||||||||||
| Equity award acceleration costs associated with severance | |||||||||||||||||||||||
| Total Restructuring and other costs | $ | $ | $ | $ | |||||||||||||||||||
Liabilities associated with Restructuring and other costs are included in Accrued expenses and other current liabilities in the unaudited Condensed Consolidated Balance Sheet as of February 28, 2026. The following table summarizes activity related to liabilities associated with Restructuring and other costs for the twenty-six-week period ended February 28, 2026:
| Consulting-related costs | Associate severance and separation costs | Total | |||||||||||||||||||||
| Balance at August 30, 2025 | $ | $ | $ | ||||||||||||||||||||
| Additions | |||||||||||||||||||||||
| Payments and other adjustments | ( | ( | ( | ||||||||||||||||||||
| Balance at February 28, 2026 | $ | $ | $ | ||||||||||||||||||||
Note 10. Income Taxes
The Company’s effective tax rate was 24.5 % for both twenty-six-week periods ended February 28, 2026 and March 1, 2025. The effective tax rate is higher than the federal statutory tax rate primarily due to state taxes.
In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was passed in the United States. This act introduces significant changes to United States federal tax law, including making certain provisions of the Tax Cuts and Jobs Act of 2017 permanent and introducing new measures impacting corporate taxation. The OBBBA contains a number of tax provisions including, but not limited to, immediate expensing of domestic research and experimental expenditures and bonus depreciation modifications. These tax provisions apply to our fiscal year 2025 and future periods. The Company is in the process of analyzing its tax elections under the OBBBA however we do not expect these elections to have a material impact on the fiscal year 2026 effective tax rate.
Note 11. Legal Proceedings
In the ordinary course of business, there are various claims, lawsuits and pending actions against the Company incidental to the operation of its business. Although the outcome of these matters, both individually and in aggregate, is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.
In addition to the matters set forth above, on March 14, 2025, a complaint was filed in the Supreme Court of the State of New York, County of New York by Macomb County Retiree Health Care Fund (“MCRHC”) against the Company and certain officers, directors and shareholders of the Company (the “Macomb Litigation”). In June 2025, MCRHC filed an amended complaint. The amended complaint alleges, among other things, breaches of fiduciary duties for actions related to
15
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
the Reclassification (as defined below) and seeks damages, recovery of costs and expenses and such other relief as the court may deem proper. On November 14, 2025, the Company's motion to dismiss the amended complaint was denied. On February 20, 2026, the Company filed an appeal of the trial court’s decision with respect to the Company’s motion to dismiss. We have incurred, and may be required in the future to incur further, legal fees and other expenses related to the Macomb Litigation as the Company continues to vigorously defend itself; however, the ultimate cost to resolve this matter is not reasonably estimable at this time.
Note 12. Segment Reporting
The Company operates in one
16
MSC INDUSTRIAL DIRECT CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts and shares in thousands, except per share data)
(Unaudited)
The following table presents selected financial information regarding the Company's single reportable segment for the thirteen- and twenty-six-week periods ended February 28, 2026 and March 1, 2025:
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||||
| February 28, 2026 | March 1, 2025 | February 28, 2026 | March 1, 2025 | |||||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||
| Payroll and payroll-related costs | ||||||||||||||||||||
| Freight expense | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Restructuring and other costs | ||||||||||||||||||||
Other segment items (1) | ||||||||||||||||||||
| Income from operations | ||||||||||||||||||||
| Operating Margin | ||||||||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||
| Interest income | ||||||||||||||||||||
Other expense, net (2) | ( | ( | ( | ( | ||||||||||||||||
| Income before provision for income taxes | ||||||||||||||||||||
| Provision for income taxes | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||||||
(2) Other expense, net is primarily composed of fees related to the Company's securitization agreement.
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following is intended to update the information contained in MSC Industrial Direct Co., Inc.’s (together with its wholly owned subsidiaries and entities in which it maintains a controlling financial interest, “MSC,” “MSC Industrial,” the “Company,” “we,” “us” or “our”) Annual Report on Form 10-K for the fiscal year ended August 30, 2025 and presumes that readers have access to, and will have read, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part II of such Annual Report on Form 10-K.
Our Business
MSC is a leading North American distributor of a broad range of metalworking, maintenance, repair and operations (“MRO”), and production fastener and hardware products and services. We help our customers drive greater productivity, profitability and operational performance with industry-leading inventory management and supply chain solutions and deep expertise from more than 80 years of working with customers across industries. We offer approximately 2.5 million active, saleable stock-keeping units through our E-commerce channels, including our website, www.mscdirect.com (the “MSC website”); our inventory management solutions; our catalogs; our brochures; and our customer care centers, customer fulfillment centers (“CFCs”), regional inventory centers and warehouses. We service our customers from five CFCs, nine regional inventory centers, 37 warehouses, and five manufacturing locations. We continue to implement our strategies to gain market share, generate new customers, increase sales to existing customers and diversify our customer base.
Our business model focuses on providing overall procurement cost reduction and just-in-time delivery to meet our customer’s needs. Many of our products are carried in stock, and orders for these in-stock products are typically fulfilled the day on which the order is received. We focus on offering inventory, process and procurement solutions that reduce supply chain costs and improve plant floor productivity for our customers. We aim to achieve ongoing cost reductions throughout our business by implementing cost-saving strategies and leveraging our existing infrastructure. Additionally, we provide our customers with further procurement cost-saving solutions through technologies such as our Vendor Managed Inventory (“VMI”), Customer Managed Inventory (“CMI”) and vending programs — helping reduce downtime and ensure critical products are available when and where they are needed. Our vending machines in service totaled 30,414 as of February 28, 2026, compared to 28,085 as of March 1, 2025, and our In-Plant programs totaled 423 locations as of February 28, 2026, compared to 387 as of March 1, 2025. Our sales force, which focuses on a more complex and high-touch role, drives value for our customers by enabling them to achieve higher levels of growth, profitability and productivity. Our field sales and service associate headcount was 2,473 as of February 28, 2026, compared to 2,726 as of March 1, 2025.
Highlights
Highlights during the twenty-six weeks ended February 28, 2026 include:
•We generated $123.8 million of cash from operations, compared to $156.3 million for the same period in the prior fiscal year.
•We had net borrowings of $25.0 million on our credit facilities, compared to net borrowings of $30.3 million for the same period in the prior fiscal year.
•We paid out an aggregate $97.2 million in regular cash dividends, compared to an aggregate $94.9 million in regular cash dividends for the same period in the prior fiscal year.
•We repurchased 160 thousand shares of MSC’s Class A Common Stock, par value $0.001 per share (“Class A Common Stock”) for $13.7 million, excluding excise taxes, compared to 377 thousand shares repurchased for $30.5 million, excluding excise taxes, for the same period in the prior fiscal year.
•We amended our Receivables Purchase Agreement (the “RPA”) which increased the amount available under the facility by $50.0 million. Proceeds from the RPA were utilized to pay down existing debt on our credit facilities.
•We incurred $7.3 million in Restructuring and other costs, compared to $3.8 million for the same period in the prior fiscal year, consisting primarily of current year severance and separation costs associated with the Company’s sales optimization efforts as well as consulting-related costs in the current and prior fiscal year.
Our Strategy
The first phase of our Company-wide initiative, referred to as “Mission Critical,” focused on market share capture and improved profitability. We successfully executed on the first phase of Mission Critical initiatives at the end of fiscal year 2023, which included solidifying our market-leading metalworking business, with an emphasis on selling our product portfolio, expanding our solutions, improving our digital and E-commerce capabilities and diversifying our customers and
18
end-markets. The next phase of our Mission Critical journey, which began in fiscal year 2024, is anchored in three pillars: (i) maintaining the momentum of the first phase of the Mission Critical program and our existing growth drivers, (ii) increasing our focus on both core customers and OEM fasteners, and (iii) driving productivity improvements and reducing operating expenses as a percentage of net sales. To accomplish the next phase of our Mission Critical journey, we intend to leverage investments in advanced analytics to improve supply chain performance and upgrade our digital core to unlock productivity within our order-to-cash and procure-to-pay processes. In fiscal year 2024, we completed our web price realignment initiative. In fiscal year 2025, we launched our enhanced marketing efforts, rolled out several E-commerce enhancements and began our sales optimization initiative, which included investment in an enhanced, data-driven territory model to optimize field seller portfolios. The Company continued its sales optimization efforts during the first half of fiscal year 2026.
Our primary objective is to grow sales profitably while offering our customers highly technical and high-touch solutions to solve their most complex challenges on the plant floor. We have experienced success to date as measured by the growth rates of our high-touch programs, such as vending and in-plant programs, and the rate of new customer implementations. Our strategy is to position ourselves as a mission-critical partner to our customers. We intend to selectively pursue strategic acquisitions that expand or complement our business in new and existing markets or further enhance the value and offerings we provide.
Business Environment
The United States economy has experienced various macroeconomic pressures in recent years including pricing pressure from tariffs and inflation, sustained high interest rates, increased fuel costs and general economic and political uncertainty. The impact from tariffs was most significant in the latter half of the Company's fiscal year 2025 and has continued into fiscal year 2026. Furthermore, as a supplier to the United States federal government, the federal government shutdown during the Company’s fiscal first quarter and the partial federal government shut downs during the Company’s fiscal second quarter negatively impacted sales to our public sector end-market. Additionally, increased fuel costs resulting from the conflict in Iran and geopolitical tensions in the region has increased macroeconomic uncertainty generally and may lead to higher freight expense and cost pressure on the products offered by the Company. These pressures have impacted, and may continue to impact in the future, the Company’s business, financial condition and results of operations.
We utilize various indices when evaluating the level of our business activity, including the Industrial Production (“IP”) Index. Through statistical analysis, we have found that trends in our customers’ activity have correlated to changes in the IP Index. The IP Index measures short-term changes in industrial production. Growth in the IP Index compared to the prior quarter indicates growth in the manufacturing, mining and utilities industries. Approximately 67% of our revenues came from sales in the manufacturing sector during both the thirteen- and twenty-six-week periods ended February 28, 2026. After giving effect to the annual technical revisions to calculations of the IP Index which occurred in November 2025, the IP Index over the three months ended February 2026 and the average for the three- and 12-month periods ended February 2026 were as follows:
| Period | IP Index | |||||||
| December | 101.7 | |||||||
| January | 102.4 | |||||||
| February | 102.6 | |||||||
| Fiscal Year 2026 Q2 Average | 102.2 | |||||||
| 12-Month Average | 101.6 | |||||||
The average IP Index for the three months ended February 2026 was 102.2, an increase compared to the prior quarter average of 101.7 and an increase from an average of 100.5 during the comparative quarter in the prior year.
During fiscal year 2026, the Company has experienced a more constructive demand environment compared to much of fiscal year 2025. The heavy manufacturing industry, which represented 58% of our revenues during the thirteen-week period ended February 28, 2026, showed signs of expansion. Several IP subindexes, including Aerospace, Machinery and Equipment, Primary Metals and Fabricated Metals improved. Non-manufacturing demand, in particular the Company’s public sector end-market, recovered from lower sales levels in the first fiscal quarter as a result of the federal government shutdown but such recovery was partially offset by the partial federal government shutdowns during January and February and continuing into our third fiscal quarter. We will monitor the current economic conditions for the impact on our customers and markets and assess both risks and opportunities that may affect our business and operations.
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Thirteen-Week Period Ended February 28, 2026 Compared to the Thirteen-Week Period Ended March 1, 2025
The table below summarizes the Company’s results of operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:
| Thirteen Weeks Ended | |||||||||||||||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | Change | |||||||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||
| Net sales | $ | 917,774 | 100.0 | % | $ | 891,717 | 100.0 | % | $ | 26,057 | 2.9 | % | |||||||||||||||||||||||
| Cost of goods sold | 540,186 | 58.9 | % | 526,487 | 59.0 | % | 13,699 | 2.6 | % | ||||||||||||||||||||||||||
| Gross profit | 377,588 | 41.1 | % | 365,230 | 41.0 | % | 12,358 | 3.4 | % | ||||||||||||||||||||||||||
| Operating expenses | 310,342 | 33.8 | % | 301,578 | 33.8 | % | 8,764 | 2.9 | % | ||||||||||||||||||||||||||
| Restructuring and other costs | 2,454 | 0.3 | % | 1,406 | 0.2 | % | 1,048 | 74.5 | % | ||||||||||||||||||||||||||
| Income from operations | 64,792 | 7.1 | % | 62,246 | 7.0 | % | 2,546 | 4.1 | % | ||||||||||||||||||||||||||
| Total other expense | (8,774) | (1.0) | % | (10,533) | (1.2) | % | 1,759 | (16.7) | % | ||||||||||||||||||||||||||
| Income before provision for income taxes | 56,018 | 6.1 | % | 51,713 | 5.8 | % | 4,305 | 8.3 | % | ||||||||||||||||||||||||||
| Provision for income taxes | 13,860 | 1.5 | % | 12,566 | 1.4 | % | 1,294 | 10.3 | % | ||||||||||||||||||||||||||
| Net income | 42,158 | 4.6 | % | 39,147 | 4.4 | % | 3,011 | 7.7 | % | ||||||||||||||||||||||||||
| Less: Net loss attributable to noncontrolling interest | (326) | 0.0 | % | (167) | 0.0 | % | (159) | 95.2 | % | ||||||||||||||||||||||||||
| Net income attributable to MSC Industrial | $ | 42,484 | 4.6 | % | $ | 39,314 | 4.4 | % | $ | 3,170 | 8.1 | % | |||||||||||||||||||||||
Net Sales
Net sales increased 2.9%, or $26.1 million, to $917.8 million for the thirteen-week period ended February 28, 2026, as compared to $891.7 million for the same period in the prior fiscal year. The $26.1 million increase in net sales was comprised of a positive impact from pricing of $58.8 million and favorable foreign exchange impact of $2.9 million, partially offset by $35.6 million of lower sales volume. The positive pricing impact was inclusive of changes in customer and product mix, discounting, favorable tariff-related pricing actions and other items. Of the $26.1 million increase in net sales during the thirteen-week period ended February 28, 2026, sales to our core and other customers increased $26.5 million, sales to our national account customers increased $0.6 million and sales to our public sector customers decreased $1.0 million.
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The table below shows, among other things, the change in our average daily sales (“ADS”) by total Company, by customer end-market and by customer type for the thirteen-week periods ended February 28, 2026 and March 1, 2025, each as compared to the same period in the prior fiscal year:
ADS Percentage Change
(Unaudited)
| Thirteen Weeks Ended | |||||||||||
| February 28, 2026 | March 1, 2025 | ||||||||||
| Net Sales (in thousands) | $ | 917,774 | $ | 891,717 | |||||||
| Sales Days | 63 | 63 | |||||||||
ADS (1) (in millions) | $ | 14.6 | $ | 14.2 | |||||||
Total Company ADS Percent Change (2) | 2.9 | % | (4.7) | % | |||||||
| Customer End-Market: | |||||||||||
Manufacturing Customers ADS Percent Change (2)(3) | 2.7 | % | (6.3) | % | |||||||
Manufacturing Customers Percent of Total Net Sales (3) | 67 | % | 67 | % | |||||||
Non-Manufacturing Customers ADS Percent Change (2)(3) | 3.5 | % | (1.2) | % | |||||||
Non-Manufacturing Customers Percent of Total Net Sales (3) | 33 | % | 33 | % | |||||||
| Customer Type: | |||||||||||
National Account Customers ADS Percent Change (2) | 0.2 | % | (5.4) | % | |||||||
| National Account Customers Percent of Total Net Sales | 36 | % | 37 | % | |||||||
Public Sector Customers ADS Percent Change (2) | (1.2) | % | 13.2 | % | |||||||
| Public Sector Customers Percent of Total Net Sales | 9 | % | 9 | % | |||||||
Core and Other Customers ADS Percent Change (2) | 5.5 | % | (6.8) | % | |||||||
| Core and Other Customers Percent of Total Net Sales | 55 | % | 54 | % | |||||||
(1)ADS is calculated using the number of business days in the United States for the periods indicated. The Company believes ADS is a key performance indicator because it shows the effectiveness of the Company’s selling performance on a consistent basis between periods.
(2)Percent reflects the change from the 2025 fiscal period to the 2026 fiscal period and the change from the 2024 fiscal period to the 2025 fiscal period, respectively.
(3)Prior year data includes the effect of a reclassification of end-markets, primarily between Manufacturing Heavy/Light and Other.
We believe that our ability to transact business with our customers directly through the MSC website as well as through various other electronic portals gives us a competitive advantage over smaller suppliers. Sales made through our E-commerce platforms, including sales made through Electronic Data Interchange (“EDI”) systems, VMI systems, Extensible Markup Language ordering-based systems, vending, hosted systems and other electronic portals, represented 64.1% of consolidated net sales for the thirteen-week period ended February 28, 2026, as compared to 63.6% of consolidated net sales for the same period in the prior fiscal year.
Gross Profit
Gross profit increased 3.4%, or $12.4 million, to $377.6 million for the thirteen-week period ended February 28, 2026, compared to $365.2 million for the same period in the prior fiscal year. Gross profit margin was 41.1% for the thirteen-week period ended February 28, 2026, as compared to 41.0% for the same period in the prior fiscal year. The increase in gross profit was primarily a result of an increase in net sales, as described above, while the increase in gross profit margin was primarily a result of favorable pricing actions as a result of tariff-driven product cost inflation concerns.
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Operating Expenses
Operating expenses increased 2.9%, or $8.8 million, to $310.3 million for the thirteen-week period ended February 28, 2026, as compared to $301.6 million for the same period in the prior fiscal year. Operating expenses were 33.8% of net sales for both the thirteen-week periods ended February 28, 2026 and March 1, 2025. The largest contribution to the increase in Operating expenses was higher depreciation and amortization expense.
Payroll and payroll-related costs, which include salary, incentive compensation, sales commission and fringe benefit costs, were $171.2 million, or 55.2% of total Operating expenses, for the thirteen-week period ended February 28, 2026, as compared to $173.3 million, or 57.5% of total Operating expenses, for the same period in the prior fiscal year. The headcount reduction actions during fiscal year 2026 resulted in lower salary, sales commissions and incentive compensation costs, which was partially offset by our annual merit increase.
Freight expense was $35.0 million for the thirteen-week period ended February 28, 2026, as compared to $35.8 million for the same period in the prior fiscal year. The primary driver of the decrease was favorable third-party shipping rates achieved through our network optimization initiatives.
Depreciation and amortization was $24.8 million for the thirteen-week period ended February 28, 2026, as compared to $22.5 million for the same period in the prior fiscal year. The primary drivers of the increase in depreciation and amortization were increased capital expenditures related to E-commerce and digital initiatives.
Restructuring and Other Costs
We incurred $2.5 million in Restructuring and other costs for the thirteen-week period ended February 28, 2026, as compared to $1.4 million for the same period in the prior fiscal year. The increase was primarily related to higher severance and separation benefits associated with the Company’s workforce realignment actions in the current fiscal year. See Note 9, “Restructuring and Other Costs” in the Notes to Condensed Consolidated Financial Statements for additional information.
Income from Operations
Income from operations increased 4.1%, or $2.5 million, to $64.8 million for the thirteen-week period ended February 28, 2026, as compared to $62.2 million for the same period in the prior fiscal year. Income from operations as a percentage of net sales increased to 7.1% for the thirteen-week period ended February 28, 2026, as compared to 7.0% for the same period in the prior fiscal year. The increase in income from operations as a percentage of net sales was primarily attributable to, as described above, an increase in gross profit margin.
Total Other Expense
Total other expense decreased 16.7%, or $1.8 million, to $8.8 million for the thirteen-week period ended February 28, 2026, as compared to $10.5 million for the same period in the prior fiscal year. The decrease was primarily due to lower interest costs on our Credit Facilities and remeasurement gains from foreign exchange compared to foreign exchange losses in the prior year.
Provision for Income Taxes
The Company’s effective tax rate for the thirteen-week period ended February 28, 2026 was 24.7%, as compared to 24.3% for the same period in the prior fiscal year. The increase in the effective tax rate was primarily due to lower permanent deductions compared to the prior year.
Net Income
The factors which affected net income for the thirteen-week period ended February 28, 2026, as compared to the same period in the prior fiscal year, have been discussed above.
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Twenty-Six-Week Period Ended February 28, 2026 Compared to the Twenty-Six-Week Period Ended March 1, 2025
The table below summarizes the Company’s results of operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:
| Twenty-Six Weeks Ended | |||||||||||||||||||||||||||||||||||
| February 28, 2026 | March 1, 2025 | Change | |||||||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||
| Net sales | $ | 1,883,458 | 100.0 | % | $ | 1,820,201 | 100.0 | % | $ | 63,257 | 3.5 | % | |||||||||||||||||||||||
| Cost of goods sold | 1,113,193 | 59.1 | % | 1,076,784 | 59.2 | % | 36,409 | 3.4 | % | ||||||||||||||||||||||||||
| Gross profit | 770,265 | 40.9 | % | 743,417 | 40.8 | % | 26,848 | 3.6 | % | ||||||||||||||||||||||||||
| Operating expenses | 621,910 | 33.0 | % | 605,141 | 33.2 | % | 16,769 | 2.8 | % | ||||||||||||||||||||||||||
| Restructuring and other costs | 7,324 | 0.4 | % | 3,750 | 0.2 | % | 3,574 | 95.3 | % | ||||||||||||||||||||||||||
| Income from operations | 141,031 | 7.5 | % | 134,526 | 7.4 | % | 6,505 | 4.8 | % | ||||||||||||||||||||||||||
| Total other expense | (17,499) | (0.9) | % | (22,211) | (1.2) | % | 4,712 | (21.2) | % | ||||||||||||||||||||||||||
| Income before provision for income taxes | 123,532 | 6.6 | % | 112,315 | 6.2 | % | 11,217 | 10.0 | % | ||||||||||||||||||||||||||
| Provision for income taxes | 30,266 | 1.6 | % | 27,474 | 1.5 | % | 2,792 | 10.2 | % | ||||||||||||||||||||||||||
| Net income | 93,266 | 5.0 | % | 84,841 | 4.7 | % | 8,425 | 9.9 | % | ||||||||||||||||||||||||||
| Less: Net loss attributable to noncontrolling interest | (1,022) | (0.1) | % | (1,096) | (0.1) | % | 74 | (6.8) | % | ||||||||||||||||||||||||||
| Net income attributable to MSC Industrial | $ | 94,288 | 5.0 | % | $ | 85,937 | 4.7 | % | $ | 8,351 | 9.7 | % | |||||||||||||||||||||||
Net Sales
Net sales increased 3.5%, or $63.3 million, to $1,883.5 million for the twenty-six-week period ended February 28, 2026, as compared to $1,820.2 million for the same period in the prior fiscal year. The $63.3 million increase in net sales was comprised of a positive impact from pricing of $97.8 million and favorable foreign exchange impact of $3.9 million, partially offset by $38.4 million of lower sales volume. Of the $63.3 million increase in net sales during the twenty-six-week period ended February 28, 2026, sales to our core and other customers increased $58.4 million, sales to our national account customers increased $10.4 million and sales to our public sector customers decreased $5.5 million.
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The table below shows, among other things, the change in our ADS by total Company, by customer end-market and by customer type for the twenty-six-week periods ended February 28, 2026 and March 1, 2025, each as compared to the same period in the prior fiscal year:
ADS Percentage Change
(Unaudited)
| Twenty-Six Weeks Ended | |||||||||||
| February 28, 2026 | March 1, 2025 | ||||||||||
| Net Sales (in thousands) | $ | 1,883,458 | $ | 1,820,201 | |||||||
| Sales Days | 125 | 125 | |||||||||
ADS (1) (in millions) | $ | 15.1 | $ | 14.6 | |||||||
Total Company ADS Percent Change (2) | 3.5 | % | (3.7) | % | |||||||
| Customer End-Market: | |||||||||||
Manufacturing Customers ADS Percent Change (2) | 3.1 | % | (4.9) | % | |||||||
| Manufacturing Customers Percent of Total Net Sales | 67 | % | 67 | % | |||||||
Non-Manufacturing Customers ADS Percent Change (2) | 4.2 | % | (1.0) | % | |||||||
| Non-Manufacturing Customers Percent of Total Net Sales | 33 | % | 33 | % | |||||||
| Customer Type: | |||||||||||
National Account Customers ADS Percent Change (2) | 1.5 | % | (3.5) | % | |||||||
| National Account Customers Percent of Total Net Sales | 36 | % | 37 | % | |||||||
Public Sector Customers ADS Percent Change (2) | (3.2) | % | 11.4 | % | |||||||
| Public Sector Customers Percent of Total Net Sales | 9 | % | 9 | % | |||||||
Core and Other Customers ADS Percent Change (2) | 6.0 | % | (6.0) | % | |||||||
| Core and Other Customers Percent of Total Net Sales | 55 | % | 54 | % | |||||||
(1)ADS is calculated using the number of business days in the United States for the periods indicated. The Company believes ADS is a key performance indicator because it shows the effectiveness of the Company’s selling performance on a consistent basis between periods.
(2)Percent reflects the change from the 2025 fiscal period to the 2026 fiscal period and the change from the 2024 fiscal period to the 2025 fiscal period, respectively.
We believe that our ability to transact business with our customers directly through the MSC website as well as through various other electronic portals gives us a competitive advantage over smaller suppliers. Sales made through our E-commerce platforms, including sales made through EDI systems, VMI systems, Extensible Markup Language ordering-based systems, vending, hosted systems and other electronic portals, represented 64.1% of consolidated net sales for the twenty-six-week period ended February 28, 2026, as compared to 63.7% of consolidated net sales for the same period in the prior fiscal year.
Gross Profit
Gross profit increased 3.6%, or $26.8 million, to $770.3 million for the twenty-six-week period ended February 28, 2026, compared to $743.4 million for the same period in the prior fiscal year. Gross profit margin was 40.9% for the twenty-six-week period ended February 28, 2026, as compared to 40.8% for the same period in the prior fiscal year. The increase in gross profit was primarily a result of higher net sales, as described above, while the increase in gross profit margin was primarily a result of favorable pricing actions as a result of tariff-driven product cost inflation concerns.
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Operating Expenses
Operating expenses increased 2.8%, or $16.8 million, to $621.9 million for the twenty-six-week period ended February 28, 2026, as compared to $605.1 million for the same period in the prior fiscal year. Operating expenses were 33.0% of net sales for the twenty-six-week period ended February 28, 2026, as compared to 33.2% for the same period in the prior fiscal year. The increase in Operating expenses was primarily a result of advertising expense and higher depreciation and amortization expense. The decrease in operating expenses as a percentage of net sales was primarily due to growth in net sales outpacing the increase in Operating expenses.
Payroll and payroll-related costs, which include salary, incentive compensation, sales commission and fringe benefit costs, were $345.7 million, or 55.6% of total Operating expenses, for the twenty-six-week period ended February 28, 2026 as compared to $347.0 million, or 57.3% of total Operating expenses, for the same period in the prior fiscal year. The headcount reduction actions during fiscal year 2026 resulted in lower salary, sales commissions and incentive compensation costs, which was partially offset by our annual merit increase.
Freight expense was $71.4 million for the twenty-six-week period ended February 28, 2026, as compared to $73.3 million for the same period in the prior fiscal year. The primary driver of the decrease was favorable third-party shipping rates achieved through our network optimization initiatives.
Depreciation and amortization was $49.4 million for the twenty-six-week period ended February 28, 2026, as compared to $43.7 million for the same period in the prior fiscal year. The primary drivers of the increase in depreciation and amortization were increased capital expenditures related to E-commerce and digital initiatives.
Advertising expense was $26.5 million for the twenty-six-week period ended February 28, 2026, as compared to $22.8 million for the same period in the prior fiscal year. The primary driver of the increase was higher search engine marketing spend as part of the Company's enhanced marketing efforts which began in fiscal year 2025.
Restructuring and Other Costs
We incurred $7.3 million in Restructuring and other costs for the twenty-six-week period ended February 28, 2026, as compared to $3.8 million for the same period in the prior fiscal year. The increase was primarily related to higher severance and separation benefits associated with the Company’s workforce realignment actions in the current fiscal year. See Note 9, “Restructuring and Other Costs” in the Notes to Condensed Consolidated Financial Statements for additional information.
Income from Operations
Income from operations increased 4.8%, or $6.5 million, to $141.0 million for the twenty-six-week period ended February 28, 2026, as compared to $134.5 million for the same period in the prior fiscal year. Income from operations as a percentage of net sales increased to 7.5% for the twenty-six-week period ended February 28, 2026, as compared to 7.4% for the same period in the prior fiscal year. The increase in income from operations as a percentage of net sales was primarily attributable to, as described above, an increase in gross profit margin and a decrease in Operating expenses as a percentage of net sales.
Total Other Expense
Total other expense decreased 21.2%, or $4.7 million, to $17.5 million for the twenty-six-week period ended February 28, 2026, as compared to $22.2 million for the same period in the prior fiscal year. The decrease was primarily due to lower interest costs on our Credit Facilities, lower fees incurred associated with the Receivables Purchase Agreement and remeasurement gains from foreign exchange compared to foreign exchange losses in the prior year.
Provision for Income Taxes
The Company’s effective tax rate was 24.5% for both the twenty-six-week periods ended February 28, 2026 and March 1, 2025.
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Net Income
The factors which affected net income for the twenty-six-week period ended February 28, 2026, as compared to the same period in the prior fiscal year, have been discussed above.
Liquidity and Capital Resources
| February 28, 2026 | August 30, 2025 | $ Change | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Total debt | $ | 511,750 | $ | 485,699 | $ | 26,051 | |||||||||||
| Less: Cash and cash equivalents | 46,192 | 56,228 | (10,036) | ||||||||||||||
| Net debt | $ | 465,558 | $ | 429,471 | $ | 36,087 | |||||||||||
| Total shareholders’ equity | $ | 1,385,224 | $ | 1,396,502 | $ | (11,278) | |||||||||||
As of February 28, 2026, we had $46.2 million in cash and cash equivalents, substantially all with well-known financial institutions. Historically, our primary financing needs have been to fund our working capital requirements necessitated by our sales growth and the costs of acquisitions, new products, new facilities, facility expansions, investments in vending solutions, technology investments, and productivity investments. Cash generated from operations, together with borrowings under our credit facilities and net proceeds from the private placement notes, have been used to fund these needs, to repurchase shares of Class A Common Stock from time to time, and to pay dividends to our shareholders.
As of February 28, 2026, total borrowings outstanding, representing amounts due under our credit facilities and notes, as well as all finance leases and financing arrangements, were $511.8 million, net of unamortized debt issuance costs of $1.4 million, as compared to total borrowings outstanding of $485.7 million, net of unamortized debt issuance costs of $1.5 million, as of the end of fiscal year 2025. The increase in total borrowings outstanding was driven by higher net borrowings under our credit facilities. See Note 7, “Debt” in the Notes to Condensed Consolidated Financial Statements for more information about these balances.
We believe, based on our current business plan, that our existing cash, financial resources and cash flow from operations will be sufficient to fund anticipated capital expenditures and operating cash requirements for at least the next 12 months. We will continue to evaluate our financial position in light of future developments and to take appropriate action as it is warranted.
The table below summarizes certain information regarding the Company’s cash flows for the periods indicated:
| Twenty-Six Weeks Ended | |||||||||||
| February 28, 2026 | March 1, 2025 | ||||||||||
| (In thousands) | |||||||||||
| Net cash provided by operating activities | $ | 123,809 | $ | 156,334 | |||||||
| Net cash used in investing activities | (42,508) | (50,747) | |||||||||
| Net cash used in financing activities | (91,344) | (93,090) | |||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | 7 | (809) | |||||||||
| Net (decrease) increase in cash and cash equivalents | $ | (10,036) | $ | 11,688 | |||||||
Cash Flows from Operating Activities
Net cash provided by operating activities was $123.8 million for the twenty-six weeks ended February 28, 2026, compared to $156.3 million for the twenty-six weeks ended March 1, 2025. The decrease was primarily due to the following:
•an increase in the change of inventories in the current fiscal year relative to the prior year due to inventory management countermeasures in response to tariffs;
•an increase in the change of prepaid expenses and other current assets in the current fiscal year due primarily to an increase in vendor rebate receivables and IT-related prepayments;
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•a decrease in the change of accounts payable and accrued liabilities as compared to the prior year period due primarily to a decrease in the annual incentive compensation accrual; partially offset by
•a decrease in the change of accounts receivable in the current fiscal year primarily attributable to the RPA amendment; and
•an increase in net income.
The table below summarizes certain information regarding the Company’s operations as of the periods indicated:
| February 28, 2026 | August 30, 2025 | March 1, 2025 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
Working Capital (1) | $ | 520,686 | $ | 497,208 | $ | 571,722 | |||||||||||
Current Ratio (2) | 1.7 | 1.7 | 1.9 | ||||||||||||||
Days’ Sales Outstanding (3) | 32.8 | 37.8 | 35.9 | ||||||||||||||
Inventory Turnover (4) | 3.5 | 3.4 | 3.4 | ||||||||||||||
(1)Working Capital is calculated as current assets less current liabilities.
(2)Current Ratio is calculated as total current assets divided by total current liabilities.
(3)Days’ Sales Outstanding is calculated as accounts receivable divided by net sales, using trailing two months sales data.
(4)Inventory Turnover is calculated as total cost of goods sold divided by inventory, using a 13-month trailing average inventory.
Working capital and current ratio decreased as of February 28, 2026 compared to March 1, 2025 primarily due to higher Current portion of debt including obligations under finance leases and lower Accounts receivable, partially offset by higher Inventories and Prepaid expenses and other current assets. Working capital increased as of February 28, 2026 compared to August 30, 2025 primarily due to higher Inventories and higher Prepaid expenses and other current assets, partially offset by lower Accounts receivable and Accrued expenses and other current liabilities balances.
Days’ sales outstanding as of February 28, 2026 decreased compared to both August 30, 2025 and March 1, 2025. The improvement in days’ sales outstanding was driven by both improved collections from our national account customers and the RPA amendment in the second quarter of fiscal year 2026.
Inventory turnover as of February 28, 2026 increased compared to both August 30, 2025 and March 1, 2025. Inventory turnover continues to improve due to category management efforts and supply chain efficiencies to optimize inventory levels.
Cash Flows from Investing Activities
Net cash used in investing activities for the twenty-six weeks ended February 28, 2026 and March 1, 2025 was $42.5 million and $50.7 million, respectively. The use of cash for both the twenty-six weeks ended February 28, 2026 and March 1, 2025 was primarily due to expenditures for property, plant and equipment mainly related to vending programs and other infrastructure and technology investments.
Cash Flows from Financing Activities
Net cash used in financing activities was $91.3 million for the twenty-six weeks ended February 28, 2026, compared to $93.1 million for the twenty-six weeks ended March 1, 2025, primarily due to the following:
•$13.7 million, or 160 thousand shares, in aggregate repurchases of Class A Common Stock during the twenty-six weeks ended February 28, 2026, compared to $30.5 million, or 377 thousand shares, in aggregate repurchases of Class A Common Stock during the twenty-six weeks ended March 1, 2025;
•$97.2 million of regular cash dividends paid during the twenty-six weeks ended February 28, 2026, compared to $94.9 million of regular cash dividends paid during the twenty-six weeks ended March 1, 2025;
•net borrowings of $25.0 million under our credit facilities and private placement debt during the twenty-six weeks ended February 28, 2026, compared to net borrowings of $30.3 million during the twenty-six weeks ended March 1, 2025; and
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•acquisition of the remaining interest of Wm. F. Hurst Co., LLC for $8.2 million during the twenty-six weeks ended February 28, 2026, which increased the Company's ownership from 80% to 100%.
Capital Expenditures
We continue to invest in E-commerce and vending platforms, CFCs and distribution network, and other infrastructure and technology.
Long-Term Debt
Credit Facilities
In April 2017, the Company entered into a $600.0 million revolving credit facility, which was subsequently amended. The current unused balance of $500.7 million from the revolving credit facility, which is reduced by outstanding letters of credit, is available for working capital purposes if necessary. As of February 28, 2026, the Company also had three uncommitted credit facilities, totaling $230.0 million in aggregate maximum uncommitted availability. As of February 28, 2026, we were in compliance with the operating and financial covenants of our credit facilities. See Note 7, “Debt” in the Notes to Condensed Consolidated Financial Statements for more information about these balances.
Private Placement Debt
In July 2016, we completed the issuance and sale of unsecured senior notes. In June 2018 and March 2020, we entered into additional note purchase agreements. In April 2024, the Company completed the issuance and sale of senior notes. See Note 7, “Debt” in the Notes to Condensed Consolidated Financial Statements for more information about these transactions.
Leases and Financing Arrangements
As of February 28, 2026, certain of our operations were conducted on leased premises. These leases are for varying periods, the longest extending to fiscal year 2032. In addition, we are obligated under certain equipment and automobile operating and finance leases, which expire on varying dates through fiscal year 2029.
From time to time, we enter into financing arrangements with vendors to purchase certain information technology equipment or software.
Critical Accounting Estimates
On an ongoing basis, we evaluate our critical accounting policies and estimates, including those related to revenue recognition, inventory valuation, allowance for credit losses, warranty reserves, contingencies and litigation, income taxes, and accounting for goodwill and long-lived assets. We make estimates, judgments and assumptions in determining the amounts reported in the unaudited Condensed Consolidated Financial Statements and accompanying Notes. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The estimates are used to form the basis for making judgments about the carrying values of assets and liabilities and the amount of revenues and expenses reported that are not readily apparent from other sources. Actual results may differ from these estimates.
There have been no material changes outside the ordinary course of business in the Company’s critical accounting policies, as disclosed in its Annual Report on Form 10-K for the fiscal year ended August 30, 2025.
Recently Adopted Accounting Standards
See Note 1, “Basis of Presentation” in the Notes to Condensed Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
For information regarding our exposure to certain market risks, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Interest Rate Risks” under Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of Part II of our Annual Report on Form 10-K for the fiscal year ended
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August 30, 2025. Except as described in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this Report, there have been no significant changes in our financial instrument portfolio or interest rate risk since our August 30, 2025 fiscal year-end.
Item 4. Controls and Procedures.
Our senior management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, with the participation of our Chief Executive Officer and our Chief Financial Officer, as well as other key members of our management, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this Report, to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is (i) accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange Act) during the fiscal quarter ended February 28, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In the ordinary course of business, there are various claims, lawsuits and pending actions against the Company incidental to the operation of its business. Although the outcome of these matters, both individually and in aggregate, is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.
In addition to the matters referred to above, on March 14, 2025, a complaint was filed in the Supreme Court of the State of New York, County of New York by Macomb County Retiree Health Care Fund (“MCRHC”) against the Company and certain officers, directors and shareholders of the Company (the “Macomb Litigation”). In June 2025, the MCRHC filed an amended complaint. The action is purportedly brought by MCRHC individually, and on behalf of others similarly situated, as a class action or in the alternative, as a derivative action on behalf of the Company. The amended complaint also asserts a breach of contract claim against the Company. The amended complaint alleges, among other things, breaches of fiduciary duties for actions related to the Reclassification and seeks damages, recovery of costs and expenses and such other relief as the court may deem proper. On November 14, 2025, the Company’s motion to dismiss the amended complaint was denied. On February 20, 2026, the Company filed an appeal of the trial court’s decision with respect to the Company’s motion to dismiss. We have incurred, and may be required in the future to incur further, legal fees and other expenses related to the Macomb Litigation as the Company continues to vigorously defend itself; however, the ultimate cost to resolve this matter is not reasonably estimable at this time.
Item 1A. Risk Factors.
In addition to the other information set forth in this Report, you should carefully consider the risks and the uncertainties discussed in Item 1A, “Risk Factors” of Part I of our Annual Report on Form 10-K for the fiscal year ended August 30, 2025, which could materially affect our business, financial condition and/or operating results. There have been no material changes in the Company’s risk factors from those disclosed in our Annual Report on Form 10-K. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be not material also may materially and adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table sets forth repurchases by the Company of its outstanding shares of Class A Common Stock, which are listed on the New York Stock Exchange, during the thirteen-week period ended February 28, 2026:
Issuer Purchases of Equity Securities
| Period | Total Number of Shares Purchased(1) | Average Price Paid Per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(3) | ||||||||||||||||||||||
| 11/30/25-12/30/25 | 7,224 | $ | 86.13 | — | 1,313,423 | |||||||||||||||||||||
| 12/31/25-1/29/26 | 536 | $ | 84.79 | — | 1,313,423 | |||||||||||||||||||||
| 1/30/26-2/28/26 | 1,072 | $ | 92.03 | — | 1,313,423 | |||||||||||||||||||||
| Total | 8,832 | — | ||||||||||||||||||||||||
(1)During the thirteen weeks ended February 28, 2026, 8,832 shares of Class A Common Stock were withheld by the Company as payment to satisfy our associates’ tax withholding liability associated with our stock-based compensation program and are included in the total number of shares purchased.
(2)Activity is reported on a trade date basis. Average price paid per share excludes excise tax levied by the Inflation Reduction Act of 2022.
(3)In June 2021, the Board of Directors of the Company terminated the existing share repurchase plan and authorized a new share repurchase plan (the “Share Repurchase Plan”) to purchase up to 5,000,000 shares of Class A Common Stock. There is no expiration date for the Share Repurchase Plan. As of February 28, 2026, the maximum number of shares of Class A Common Stock that may yet be repurchased under the Share Repurchase Plan was 1,313,423 shares.
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Item 5. Other Information.
Insider Trading Arrangements
During the quarter ended February 28, 2026 none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted terminated
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Item 6. Exhibits.
EXHIBIT INDEX
| Exhibit No. | Description | |||||||
Joinder and Amendment No. 1 to Receivables Purchase Agreement, dated as of December 10, 2025, by and among MSC Industrial Direct Co., Inc, MSC A/R Holding Co., LLC, Wells Fargo Bank, National Association and the purchasers listed thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 12, 2025). | ||||||||
| 101.INS | Inline XBRL Instance Document.* | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document.* | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.* | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.* | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.* | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.* | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).* | |||||||
* | Filed herewith. | |||||||
| ** | Furnished herewith. | |||||||
| † | Indicates a management contract or compensatory plan or arrangement. | |||||||
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MSC INDUSTRIAL DIRECT CO., INC. (Registrant) | ||||||||
Dated: April 1, 2026 | By: | /s/ MARTINA MCISAAC | ||||||
Martina McIsaac President and Chief Executive Officer (Principal Executive Officer) | ||||||||
Dated: April 1, 2026 | By: | /s/ GREG CLARK | ||||||
Greg Clark Vice President and Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||||||||
33
Exhibit 10.5
MSC INDUSTRIAL DIRECT CO., INC.
2023 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
NON-EXECUTIVE DIRECTOR
Participant: %%FIRST_NAME_MIDDLE_NAME_LAST_NAME%-%
RSUs Granted: %%TOTAL_SHARES_GRANTED,'999,999,999'%-%
Grant Date: %%OPTION_DATE,'Month DD, YYYY'%-%
This RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is entered into on the date set forth on the signature page hereto, by and between MSC Industrial Direct Co., Inc. (the “Company”) and the above-named participant (the “Participant”). The Company and the Participant may hereinafter each be referred to as a “Party” and collectively as the “Parties.”
WHEREAS, the Parties desire to enter into this Agreement for the purpose of establishing the terms and conditions of RSUs (as defined below) that have been granted to the Participant.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1.Definitions. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Company’s 2023 Omnibus Incentive Plan (the “Plan”).
2.Grant of Award. The Participant is hereby granted an Award (the “Award”) of restricted stock units (“RSUs”) issued under the Plan, evidencing the grant thereof by the Board of Directors of the Company on the grant date (the “Grant Date”), and the Participant hereby accepts the Award, in each case, on the terms and subject to the conditions set forth in this Agreement.
3.Vesting Dates. Subject to Sections 7, 8 and 11 below, the applicable percentage of the RSUs shall vest on each “Vesting Date” in accordance with the following schedule, provided that the Participant remains an associate of, or in the service of, the Company (or a Subsidiary) during the entire period commencing on the Grant Date and ending on the applicable Vesting Date:
| Vesting Date | Percentage of RSUs Vested | ||||
| %%VEST_DATE_PERIOD1,'Month DD, YYYY'%-% | 100% | ||||
4.Settlement; Rights as a Shareholder. Upon vesting, each RSU shall be converted into the right to receive one (1) share of the Company’s Class A Common Stock, par value $0.001 per share (a “Share”), upon settlement. Settlement of vested RSUs shall be made promptly following the date such RSUs shall have vested and in any case within sixty (60) days following the date of vesting, provided that the Participant shall not be permitted, directly or indirectly, to designate the year of settlement. Any fractional share upon vesting shall be used to satisfy the Company’s withholding obligation, if applicable; any fractional RSU that is not used to satisfy a withholding obligation shall be disregarded. Unless and until such time as Shares are issued in settlement of vested RSUs, the Participant shall have no ownership of the Shares allocated to the RSUs and, subject to the provisions of Section 5, shall have no rights as a shareholder with respect to such Shares. Upon settlement, the Company shall cause the Company’s transfer agent to issue a certificate or certificates for the Shares in the name of the Participant, or to make a book entry record of such issuance, and the Participant shall thereupon have all rights as a shareholder with respect to such Shares, including the right to vote such Shares and to receive all dividends and other distributions paid with respect to such Shares. The Company may place on the certificates representing the Shares such legend or legends as the Company may deem appropriate and the Company may place a stop transfer order with respect to such Shares with the transfer agent(s) for the Shares.
5.Dividend Equivalents. Any dividends paid in cash on Shares prior to vesting of the RSUs shall be credited to the Participant as additional RSUs, as if the RSUs then held by the Participant had been converted to Shares. The amount of such credit, which may be in whole and/or fractional RSUs (carried to three decimals), shall be determined based on the Fair Market Value of Shares on the date of payment of such dividend. All such additional RSUs credited to the Participant shall be subject to the same vesting requirements applicable to the RSUs underlying the Award and shall be settled in accordance with, and at the time of, settlement of vested RSUs pursuant to this Agreement.
6.No Transfer. This Award and the RSUs are non-transferable and may not be assigned, pledged or hypothecated and shall not be subject to execution, attachment or similar process. Upon any attempt to effect any such disposition, or upon the levy of any such process, the Award shall immediately become null and void and the RSUs shall be forfeited.
7.Termination of Services by Reason of Death, Disability or Retirement. If the Participant ceases to provide services as a Non-Executive Director by reason of death, disability or retirement, the RSUs shall fully vest and any forfeiture restrictions on this Award shall lapse on the date of such death, disability or termination of services by reason of retirement. For purposes of this Agreement only, retirement means the Participant’s cessation of service as a Non-Executive Director with the express approval of the Board (which may be withheld in the Board’s sole discretion), provided further that if necessary for the Award to satisfy Section 409A of the Code, a “disability” must also be a “disability” within the meaning of Section 409A of the Code and a “termination of services by reason of retirement” must also be a “separation from service” within the meaning of Section 409A of the Code.
8.Other Termination of Services. If the Participant ceases to provide services as a Non-Executive Director for any reason other than death, disability or retirement, this Award and the RSUs represented by this Award that have not yet vested as of such date shall be forfeited to the Company forthwith and all rights of the Participant under this Award and such unvested RSUs represented by this Award shall immediately terminate.
9.Withholding Taxes. The Participant has agreed to, and hereby does, instruct the Company to satisfy the Company’s minimum statutory withholding obligations with Shares that are to be delivered upon settlement of the RSUs, to the extent that, and at such time as, the
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Company is required by law. The Committee may establish such procedures as it deems appropriate for the settlement of withholding obligations with Shares.
10.Death of Participant. If any of the RSUs shall vest upon the death of the Participant, any Shares to be delivered upon settlement shall be registered in the name of the estate of the Participant unless the Company shall have theretofore received in writing a beneficiary designation, in which event they shall be registered in the name of the designated beneficiary.
11.Change in Control. Upon any Change in Control as provided under the Plan, and otherwise subject to the Plan, the RSUs shall fully vest and any forfeiture restrictions on this Award shall lapse on the date of such Change in Control.
12.Effect of Amendment of Plan; Amendment of Agreement. No discontinuation, modification or amendment of the Plan may, without the express written consent of the Participant, adversely affect the rights of the Participant under this Award, except as expressly provided under the Plan.
This Agreement may be amended as provided under the Plan, but except as provided thereunder any such amendment shall not adversely affect Participant’s rights hereunder without Participant’s consent.
13.No Limitation on Rights of the Company; Adjustment of Award. The grant of this Award shall not in any way affect the right or power of the Company to make adjustments, reclassifications or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. The number and kind of shares subject to this Award and other related terms shall be adjusted by the Committee in accordance with Section 12.2 of the Plan.
14.Compliance with Applicable Law. Notwithstanding anything herein to the contrary, the Company shall not be obligated to issue or deliver or cause to be issued or delivered any certificates for Shares, unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded. The Company shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement. The Company may require, as a condition of the issuance and delivery of such certificates and in order to ensure compliance with such laws, regulations and requirements, that the Participant makes such covenants, agreements and representations as the Company, in its sole discretion, considers necessary or desirable.
15.No Right to Continued Service. The execution of this Agreement shall not be construed as conferring any legal rights upon the Participant for the continuation of service to the Company as a Non-Executive Director, or otherwise, nor shall it interfere with the right of the Company’s Board of Directors or shareholders to terminate the Participant’s service to the Company as a Non-Executive Director, or otherwise, if permissible. The adoption and maintenance of the Plan shall not constitute an inducement to, or condition of, the Participant’s service to the Company as a Non-Executive Director, or otherwise. Participation in the Plan with respect to this Award shall not entitle the Participant to participate with respect to any other award.
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16.Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally or sent by certified, registered or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service. Any such notice shall be deemed given when received by the intended recipient.
17.Governing Law. Except to the extent preempted by Federal law, this Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of New York without regard to any principles thereof relating to the conflicts of laws that would result in the application of the laws of any other jurisdiction.
18.Receipt of Plan. The Participant acknowledges receipt of a copy of the Plan, and represents that the Participant is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the terms and provisions of this Agreement and of the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee with respect to any questions arising under this Agreement or the Plan.
19.Entire Agreement. The Plan and this Agreement constitute the entire agreement and understanding of the Parties with respect to the subject matter of this Agreement, and supersede all prior understandings and agreements, whether oral or written, between the Parties hereto with respect to the specific subject matter hereof. To the extent any provisions of the Agreement are inconsistent or in conflict with any terms or provisions of the Plan, the Plan shall govern.
IN WITNESS WHEREOF, the Company and the Participant have duly executed this Agreement as of %%OPTION_DATE,'Month DD, YYYY'%-%.
FOR MSC INDUSTRIAL DIRECT CO., INC. USE ONLY
ACCEPTED BY MSC INDUSTRIAL DIRECT CO., INC.
By: Neal Dongre, Senior Vice President, General Counsel & Corporate Secretary
/s/ Neal Dongre
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EXHIBIT 31.1
CERTIFICATION
I, Martina McIsaac, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 1, 2026
| /s/ MARTINA MCISAAC | |||||
| Martina McIsaac | |||||
| President and Chief Executive Officer (Principal Executive Officer) | |||||
EXHIBIT 31.2
CERTIFICATION
I, Greg Clark, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 1, 2026
| /s/ GREG CLARK | |||||
| Greg Clark | |||||
| Vice President and Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||||
EXHIBIT 32.1
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES‑OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc. (the “Company”) for the fiscal quarter ended February 28, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Martina McIsaac, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that:
(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 1, 2026
| By: | /s/ MARTINA MCISAAC | |||||||
| Name: | Martina McIsaac President and Chief Executive Officer (Principal Executive Officer) | |||||||
A signed original of this written statement required by Section 906 has been provided to MSC Industrial Direct Co., Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES‑OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc. (the “Company”) for the fiscal quarter ended February 28, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Greg Clark, Interim Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that:
(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 1, 2026
| By: | /s/ GREG CLARK | |||||||
| Name: | Greg Clark Vice President and Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||||||
A signed original of this written statement required by Section 906 has been provided to MSC Industrial Direct Co., Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.