8-K
Msc Industrial Direct Co Inc (MSM)
View as plain text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 8-K
___________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 24, 2024
___________________________________
MSC INDUSTRIAL DIRECT CO., INC.
(Exact name of registrant as specified in its charter)
___________________________________
| New York | 1-14130 | 11-3289165 | |||
|---|---|---|---|---|---|
| (State or other jurisdiction of<br><br>incorporation) | (Commission File Number) | (IRS Employer Identification No.) | 515 Broadhollow Road, Suite 1000, Melville , New York | 11747 | |
| --- | --- | ||||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (516) 812-2000
Not Applicable
(Former name or former address, if changed since last report)
___________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
|---|---|---|---|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | Securities registered pursuant to Section 12(b) of the Act: | |||
| --- | --- | --- | |||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||
| Class A Common Stock, par value $0.001 per share | MSM | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
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. ☐
Item 2.02. Results of Operations and Financial Condition
On October 24, 2024, MSC Industrial Direct Co., Inc. issued a press release announcing financial results for its fiscal 2024 fourth quarter and full year ended August 31, 2024. A copy of the press release is furnished with this report as Exhibit 99.1.
The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits:
| 99.1 | Press Release, datedOctoberpressreleaseq410242024.htm24, 2024, issued by MSC Industrial Direct Co., Inc. |
|---|---|
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
SIGNATURE
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 hereunto duly authorized.
| MSC INDUSTRIAL DIRECT CO., INC. | |||
|---|---|---|---|
| Date: | October 24, 2024 | By: | /s/ KRISTEN ACTIS-GRANDE |
| Name: | Kristen Actis-Grande | ||
| Title: | Executive Vice President and Chief Financial Officer |
3
Document
| Exhibit 99.1 |
|---|
| NEWS |
MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS
FISCAL 2024 Q4 HIGHLIGHTS
•Net sales of $952.3 million decreased 8.0% YoY and includes a roughly 300 basis point headwind from non-repeating Public Sector orders in the prior year
•Operating income of $90.9 million, or $94.2 million adjusted to exclude acquisition-related and restructuring and other costs1
•Operating margin of 9.5%, or 9.9% excluding the adjustments described above1
•Diluted EPS of $0.99 vs. $1.56 in the prior fiscal year quarter
•Adjusted diluted EPS of $1.03 vs. $1.64 in the prior fiscal year quarter1
FISCAL 2024 HIGHLIGHTS
•Net sales of $3,821.0 million decreased 4.7% YoY and includes a roughly 160 basis point headwind from non-repeating Public Sector orders in the prior year
•Operating income of $390.4 million, or $407.2 million adjusted to exclude share reclassification, acquisition-related and restructuring and other costs1
•Operating margin of 10.2%, or 10.7% excluding the adjustments described above1
•Diluted EPS of $4.58 and adjusted diluted EPS of $4.811
•Generated strong operating cash flows of $410.7 million or 160% of net income
MELVILLE, N.Y. and DAVIDSON, N.C. (OCTOBER 24, 2024) - MSC INDUSTRIAL SUPPLY CO. (NYSE: MSM), (“MSC”, “MSC Industrial”, or the “Company,” “we”, “us”, or “our”) a leading North American distributor of a broad range of metalworking and maintenance, repair and operations (“MRO”) products and services, today reported financial results for its fiscal 2024 fourth quarter and full year ended August 31, 2024.
| Financial Highlights2 | FY24 Q4 | FY23 Q4 | Change | FY24 | FY23 | Change | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Sales | $ | 952.3 | $ | 1,035.4 | (8.0) | % | $ | 3,821.0 | $ | 4,009.3 | (4.7) | % | ||||||||
| Income from Operations | $ | 90.9 | $ | 118.1 | (23.0) | % | $ | 390.4 | $ | 483.7 | (19.3) | % | ||||||||
| Operating Margin | 9.5 | % | 11.4 | % | 10.2 | % | 12.1 | % | ||||||||||||
| Net Income Attributable to MSC | $ | 55.7 | $ | 87.6 | (36.4) | % | $ | 258.6 | $ | 343.2 | (24.7) | % | ||||||||
| Diluted EPS | $ | 0.99 | 3 | $ | 1.56 | 4 | (36.5) | % | $ | 4.58 | 3 | $ | 6.11 | 4 | (25.0) | % | ||||
| Adjusted Financial Highlights2 | FY24 Q4 | FY23 Q4 | Change | FY24 | FY23 | Change | ||||||||||||||
| Net Sales | $ | 952.3 | $ | 1,035.4 | (8.0) | % | $ | 3,821.0 | $ | 4,009.3 | (4.7) | % | ||||||||
| Adjusted Income from Operations 1 | $ | 94.2 | $ | 130.4 | (27.8) | % | $ | 407.2 | $ | 504.5 | (19.3) | % | ||||||||
| Adjusted Operating Margin 1 | 9.9 | % | 12.6 | % | 10.7 | % | 12.6 | % | ||||||||||||
| Adjusted Net Income Attributable to MSC 1 | $ | 58.1 | $ | 92.0 | (36.8) | % | $ | 271.3 | $ | 353.8 | (23.3) | % | ||||||||
| Adjusted Diluted EPS 1 | $ | 1.03 | 3 | $ | 1.64 | 4 | (37.2) | % | $ | 4.81 | 3 | $ | 6.29 | 4 | (23.5) | % | ||||
| 1 Represents a non-GAAP financial measure. An explanation and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure are presented in the schedules accompanying this press release. | ||||||||||||||||||||
| --- | ||||||||||||||||||||
| 2 In millions except percentages and per share data or as otherwise noted. | ||||||||||||||||||||
| 3 Based on 56.2 million and 56.4 million weighted-average diluted shares outstanding for FY24 Q4 and FY24, respectively. | ||||||||||||||||||||
| 4 Based on 56.3 million and 56.2 million weighted-average diluted shares outstanding for FY23 Q4 and FY23, respectively. |
Erik Gershwind, Chief Executive Officer, said, “During our fiscal fourth quarter, we made important progress in our Mission Critical strategy despite a challenging macro environment, particularly in heavy manufacturing. We sustained momentum in our high touch solutions, made solid progress on our web enhancements, restored gross margin stability, added to our productivity pipeline and generated strong free cash flow.”
Kristen Actis-Grande, Executive Vice President and Chief Financial Officer, added, "Ongoing softness in the heavy manufacturing markets where we have significant exposure and headwinds from non-repeating orders in the prior year
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 2 |
|---|
resulted in an average daily sales decline of 4.7% for the fiscal year. Near-term visibility remains limited underpinned by uncertainty stemming from the upcoming election and sluggish customer activity levels entering the holiday season. However, we witnessed various improvements for the fiscal year that are leading indicators for future profitability and growth. For the full year, gross margins came in at the higher end of our latest expectations, National Account customer growth outperformed the Industrial Production index and we generated robust operating cash flow. While we cannot control the external factors impacting our results, we are focused on continued improvement to drive long-term value creation.”
Gershwind concluded, “As we begin fiscal year 2025, we are focused on driving efficiencies across the organization and executing the three pillars that define our new chapter of Mission Critical — maintaining momentum in the first chapter of Mission Critical, reenergizing the core customer base, and optimizing our cost to serve through productivity improvements. While headwinds in our end markets continue for now, we are laser focused on realizing our long-term goals of achieving adjusted operating margin in the mid-teens and driving 400 basis points of growth above the Industrial Production index over the cycle. We are setting a clear path to get MSC back to our historically strong performance.”
| First Quarter Fiscal 2025 Financial Outlook | |
|---|---|
| ADS Growth (YoY) | (5.5)% - (4.5)% |
| Adjusted Operating Margin1 | 7.0% - 7.5% |
Full-Year Fiscal 2025 Outlook for Certain Financial Metrics
•Depreciation and amortization expense of ~$90M-$95M
•Interest and other expense of ~$45M
•Capital expenditures of ~$100M-$110M
•Free cash flow conversion1 of ~100%
•Tax rate of ~24.5%-25.0%
(1) Guidance provided is a non-GAAP figure presented on an adjusted basis. For further details see the Non-GAAP financial measures information presented in the schedules accompanying this press release.
Conference Call Information
MSC will host a conference call today at 8:30 a.m. EDT to review the Company’s fiscal 2024 fourth quarter and full year results. The call, accompanying slides, and other operational statistics may be accessed at: https://investor.mscdirect.com. The conference call may also be accessed at 1-877-443-5575 (U.S.), 1-855-669-9657 (Canada) or 1-412-902-6618 (international).
An online archive of the broadcast will be available until November 7, 2024. The Company’s reporting date for the fiscal 2025 first quarter is scheduled for January 8, 2025.
| Contact Information | |
|---|---|
| Investors: | Media: |
| Ryan Mills, CFA | Zivanai Mutize |
| Head of Investor Relations | Head of Corporate Communications |
| rmills@mscdirect.com | zivanai.mutize@mscdirect.com |
About MSC Industrial Supply Co.
MSC Industrial Supply Co. (NYSE:MSM) is a leading North American distributor of a broad range of metalworking and maintenance, repair and operations (MRO) products and services. We help our customers drive greater productivity, profitability and growth with approximately 2.4 million products, inventory management and other supply chain solutions, and deep expertise from more than 80 years of working with customers across industries. Our experienced team of more than 7,000 associates works with our customers to help drive results for their businesses - from keeping operations running efficiently today to continuously rethinking, retooling and optimizing for a more productive tomorrow. For more information on MSC Industrial, please visit mscdirect.com.
Cautionary Note Regarding Forward-Looking Statements:
Statements in this press release may constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of present or historical fact, that address activities, events or developments that MSC expects, believes or anticipates will or may occur in the future, including statements about results of operations and financial condition, expected future results, expected benefits from our investment and strategic plans and other initiatives, and expected future growth, profitability and return on invested capital, are forward-looking statements. The words “will,” “may,” “believes,” “anticipates,” “thinks,” “expects,” “estimates,” “plans,” “intends” and similar expressions are intended to
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 3 |
|---|
identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. 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. The inclusion of any statement in this press release does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. 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; the credit risk of our customers; our ability to accurately forecast customer demands; customer cancellations or rescheduling of orders; 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; risks associated with opening or expanding our customer fulfillment centers; our ability to estimate the cost of healthcare claims incurred under our self-insurance plan; interruption of operations at our headquarters or customer fulfillment centers; 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; our ability to realize the desired benefits from the Reclassification (as defined below); the significant influence that our principal shareholders will continue to have over our decisions; our ability to execute on our E-commerce strategies and 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. Additional information concerning these and other risks is described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual and Quarterly Reports on Forms 10-K and 10-Q, respectively, and in the other reports and documents that we file with the United States Securities and Exchange Commission. We expressly disclaim any obligation to update any of these forward-looking statements, except to the extent required by applicable law.
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 4 |
|---|
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Balance Sheets
(In thousands)
| August 31, 2024 | September 2, 2023 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current Assets: | ||||
| Cash and cash equivalents | $ | 29,588 | $ | 50,052 |
| Accounts receivable, net of allowance for credit losses | 412,122 | 435,421 | ||
| Inventories | 643,904 | 726,521 | ||
| Prepaid expenses and other current assets | 102,475 | 105,519 | ||
| Total current assets | 1,188,089 | 1,317,513 | ||
| Property, plant and equipment, net | 360,255 | 319,660 | ||
| Goodwill | 723,894 | 718,174 | ||
| Identifiable intangibles, net | 101,147 | 110,641 | ||
| Operating lease assets | 58,649 | 65,909 | ||
| Other assets | 30,279 | 12,237 | ||
| Total assets | $ | 2,462,313 | $ | 2,544,134 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Current Liabilities: | ||||
| Current portion of debt including obligations under finance leases | $ | 229,911 | $ | 229,935 |
| Current portion of operating lease liabilities | 21,941 | 21,168 | ||
| Accounts payable | 205,933 | 226,299 | ||
| Accrued expenses and other current liabilities | 147,642 | 172,034 | ||
| Total current liabilities | 605,427 | 649,436 | ||
| Long-term debt including obligations under finance leases | 278,853 | 224,391 | ||
| Noncurrent operating lease liabilities | 37,468 | 45,924 | ||
| Deferred income taxes and tax uncertainties | 139,283 | 131,801 | ||
| Total liabilities | $ | 1,061,031 | $ | 1,051,552 |
| Commitments and Contingencies | ||||
| Shareholders’ Equity: | ||||
| MSC Industrial Shareholders’ Equity: | ||||
| Preferred Stock | — | — | ||
| Class A Common Stock | 57 | 48 | ||
| Class B Common Stock | — | 9 | ||
| Additional paid-in capital | 1,070,269 | 849,502 | ||
| Retained earnings | 456,850 | 755,007 | ||
| Accumulated other comprehensive loss | (21,144) | (17,725) | ||
| Class A treasury stock, at cost | (114,235) | (107,677) | ||
| Total MSC shareholders’ equity | 1,391,797 | 1,479,164 | ||
| Noncontrolling interest | 9,485 | 13,418 | ||
| Total shareholders’ equity | 1,401,282 | 1,492,582 | ||
| Total liabilities and shareholders’ equity | $ | 2,462,313 | $ | 2,544,134 |
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 5 | |||
| --- | --- |
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Statements of Income
(In thousands, except per share data)
| (Unaudited) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Fiscal Quarters Ended | Fiscal Years Ended | |||||||
| August 31, 2024 | September 2, 2023 | August 31, 2024 | September 2, 2023 | |||||
| Net sales | $ | 952,284 | $ | 1,035,441 | $ | 3,820,951 | $ | 4,009,282 |
| Cost of goods sold | 561,676 | 615,907 | 2,248,168 | 2,366,317 | ||||
| Gross profit | 390,608 | 419,534 | 1,572,783 | 1,642,965 | ||||
| Operating expenses | 297,011 | 299,264 | 1,167,870 | 1,151,295 | ||||
| Restructuring and other costs | 2,739 | 2,215 | 14,526 | 7,937 | ||||
| Income from operations | 90,858 | 118,055 | 390,387 | 483,733 | ||||
| Other income (expense): | ||||||||
| Interest expense | (6,615) | (4,630) | (25,770) | (22,543) | ||||
| Interest income | 110 | 270 | 412 | 1,034 | ||||
| Other income (expense), net | (8,213) | 2,027 | (22,280) | (6,068) | ||||
| Total other expense | (14,718) | (2,333) | (47,638) | (27,577) | ||||
| Income before provision for income taxes | 76,140 | 115,722 | 342,749 | 456,156 | ||||
| Provision for income taxes | 22,188 | 28,281 | 86,792 | 113,049 | ||||
| Net income | 53,952 | 87,441 | 255,957 | 343,107 | ||||
| Less: Net (loss) income attributable to noncontrolling interest | (1,740) | (158) | (2,637) | (126) | ||||
| Net income attributable to MSC Industrial | $ | 55,692 | $ | 87,599 | $ | 258,594 | $ | 343,233 |
| Per share data attributable to MSC Industrial: | ||||||||
| Net income per common share: | ||||||||
| Basic | $ | 0.99 | $ | 1.57 | $ | 4.60 | $ | 6.14 |
| Diluted | $ | 0.99 | $ | 1.56 | $ | 4.58 | $ | 6.11 |
| Weighted average shares used in computing <br> net income per common share: | ||||||||
| Basic | 56,061 | 55,939 | 56,257 | 55,918 | ||||
| Diluted | 56,223 | 56,269 | 56,441 | 56,210 | ||||
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 6 | |||||||
| --- | --- |
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Statements of Comprehensive Income
(In thousands)
| Fiscal Years Ended | ||||
|---|---|---|---|---|
| August 31,<br>2024 | September 2,<br>2023 | |||
| Net income, as reported | $ | 255,957 | $ | 343,107 |
| Other comprehensive income, net of tax: | ||||
| Foreign currency translation adjustments | (4,715) | 7,091 | ||
| Comprehensive income | 251,242 | 350,198 | ||
| Comprehensive income attributable to noncontrolling interest: | ||||
| Net loss | 2,637 | 126 | ||
| Foreign currency translation adjustments | 1,296 | (1,695) | ||
| Comprehensive income attributable to MSC Industrial | $ | 255,175 | $ | 348,629 |
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 7 | |||
| --- | --- |
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Statements of Cash Flows
(In thousands)
| Fiscal Years Ended | ||||
|---|---|---|---|---|
| August 31, 2024 | September 2, 2023 | |||
| Cash Flows from Operating Activities: | ||||
| Net income | $ | 255,957 | $ | 343,107 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 80,886 | 75,129 | ||
| Amortization of cloud computing arrangements | 1,988 | 1,192 | ||
| Non-cash operating lease cost | 22,973 | 20,966 | ||
| Stock-based compensation | 18,848 | 18,639 | ||
| Loss on disposal of property, plant and equipment | 687 | 557 | ||
| Non-cash changes in fair value of estimated contingent consideration | 906 | 104 | ||
| Provision for credit losses | 7,355 | 10,275 | ||
| Expenditures for cloud computing arrangements | (20,282) | (2,748) | ||
| Deferred income taxes and tax uncertainties | 9,706 | 6,697 | ||
| Changes in operating assets and liabilities, net of amounts associated with business acquired: | ||||
| Accounts receivable | 18,846 | 247,653 | ||
| Inventories | 85,098 | (4,860) | ||
| Prepaid expenses and other current assets | 2,027 | (6,605) | ||
| Operating lease liabilities | (23,383) | (21,173) | ||
| Other assets | 3,149 | 628 | ||
| Accounts payable and accrued liabilities | (54,065) | 10,021 | ||
| Total adjustments | 154,739 | 356,475 | ||
| Net cash provided by operating activities | 410,696 | 699,582 | ||
| Cash Flows from Investing Activities: | ||||
| Expenditures for property, plant and equipment | (99,406) | (92,493) | ||
| Cash used in acquisitions, net of cash acquired | (23,990) | (20,182) | ||
| Net cash used in investing activities | (123,396) | (112,675) | ||
| Cash Flows from Financing Activities: | ||||
| Repurchases of Class A Common Stock | (187,695) | (95,779) | ||
| Payments of regular cash dividends | (187,280) | (176,715) | ||
| Proceeds from sale of Class A Common Stock in connection with associate stock purchase plan | 4,426 | 4,415 | ||
| Proceeds from exercise of Class A Common Stock options | 9,587 | 28,677 | ||
| Borrowings under credit facilities | 434,500 | 333,000 | ||
| Payments under credit facilities | (381,000) | (548,000) | ||
| Payments under Shelf Facility Agreements and Private Placement Debt | (50,000) | (125,000) | ||
| Proceeds from other long-term debt | 50,000 | — | ||
| Payments on finance lease and financing obligations | (3,625) | (2,193) | ||
| Other, net | 3,735 | 1,195 | ||
| Net cash used in financing activities | (307,352) | (580,400) | ||
| Effect of foreign exchange rate changes on cash and cash equivalents | (412) | 8 | ||
| Net increase (decrease) in cash and cash equivalents | (20,464) | 6,515 | ||
| Cash and cash equivalents—beginning of period | 50,052 | 43,537 | ||
| Cash and cash equivalents—end of period | $ | 29,588 | $ | 50,052 |
| Supplemental Disclosure of Cash Flow Information: | ||||
| Cash paid for income taxes | $ | 79,088 | $ | 106,962 |
| Cash paid for interest | $ | 24,721 | $ | 22,432 |
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 8 | |||
| --- | --- |
Non-GAAP Financial Measures
To supplement MSC’s unaudited selected financial data presented consistent with accounting principles generally accepted in the United States (“GAAP”), the Company discloses certain non-GAAP financial measures, including return on invested capital (as defined below), non-GAAP income from operations, non-GAAP operating margin, non-GAAP provision for income taxes, non-GAAP net income and non-GAAP diluted earnings per share, that exclude restructuring and other costs, acquisition-related costs, share reclassification costs, and employee retention credit (“ERC”) tax benefit (prior year) and tax effects, as well as free cash flow conversion, which is a measure calculated using free cash flow, which is a non-GAAP measure.
These non-GAAP financial measures are not presented in accordance with GAAP or an alternative for GAAP financial measures and may be different from similar non-GAAP financial measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP financial measure and should only be used to evaluate MSC’s results of operations in conjunction with the corresponding GAAP financial measure.
This press release also includes certain forward-looking information that is not presented in accordance with GAAP. The Company believes that a quantitative reconciliation of such forward-looking information to the most directly comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts because a reconciliation of these non-GAAP financial measures would require the Company to predict the timing and likelihood of potential future events such as restructurings, M&A activity, capital expenditures and other infrequent or unusual gains and losses. Neither the timing or likelihood of these events, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, a reconciliation of such forward-looking information to the most directly comparable GAAP financial measure is not provided.
•Results Excluding Restructuring and Other Costs, Acquisition-Related Costs, Share Reclassification Costs and ERC Tax Benefit (prior year)
In calculating certain non-GAAP financial measures, we exclude restructuring and other costs, acquisition-related costs, share reclassification costs, ERC tax benefit (prior year) and tax effects. Management makes these adjustments to facilitate a review of the Company’s operating performance on a comparable basis between periods, for comparison with forecasts and strategic plans, for identifying and analyzing trends in the Company’s underlying business and for benchmarking performance externally against competitors. We believe that investors benefit from seeing results from the perspective of management in addition to seeing results presented in accordance with GAAP for the same reasons and purposes for which management uses such non-GAAP financial measures.
•Return on Invested Capital (“ROIC”)
ROIC is calculated using a non-GAAP financial measure. We calculate ROIC by dividing non-GAAP net operating profit after tax (“NOPAT”) by average invested capital, a GAAP measure. NOPAT is defined as tax effected income from operations. Average invested capital is defined as net debt plus shareholder’s equity using a trailing 13-month average. We believe that ROIC is useful to investors as a measure of performance and of the effectiveness of the use of capital in our operations. We use ROIC as one measure to monitor and evaluate operating performance. This method of determining non-GAAP ROIC may differ from other companies' methods and therefore may not be comparable to those used by other companies. ROIC should be considered in addition to, rather than as a substitute for, other information provided in accordance with GAAP. The financial measure calculated under GAAP which is most directly comparable to ROIC is considered to be the ratio of Net income to Average invested capital. See below for the calculation of ROIC and the reconciliation to the comparable GAAP measure.
•Free Cash Flow (“FCF”) and Free Cash Flow Conversion (“FCF Conversion”)
FCF is a non-GAAP financial measure which we define as cash flow from operations reduced by “Expenditures for property, plant and equipment”. We believe that FCF, although similar to cash flow from operations, is a useful additional measure since capital expenditures are a necessary component of ongoing operations. FCF Conversion is a percentage calculated by dividing FCF by GAAP net income. We believe FCF Conversion is useful to investors for the same reasons as FCF and as a measure of the rate at which the Company converts its net income reported in accordance with GAAP to cash inflows, which helps investors assess whether the Company is generating sufficient cash flow to provide an adequate return.
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 9 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| MSC INDUSTRIAL DIRECT CO., INC. | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Reconciliation of GAAP and Non-GAAP Financial Information | ||||||||||||
| Fiscal Quarter Ended August 31, 2024 | ||||||||||||
| (In thousands, except percentages and per share data) | ||||||||||||
| GAAP Financial Measure | Items Affecting Comparability | Non-GAAP Financial Measure | ||||||||||
| Total MSC Industrial | Restructuring and Other Costs | Acquisition-related Costs | Adjusted Total MSC Industrial | |||||||||
| Net Sales | $ | 952,284 | $ | — | $ | — | $ | 952,284 | ||||
| Cost of Goods Sold | 561,676 | — | — | 561,676 | ||||||||
| Gross Profit | 390,608 | — | — | 390,608 | ||||||||
| Gross Margin | 41.0 | % | — | % | — | % | 41.0 | % | ||||
| Operating Expenses | 297,011 | — | 614 | 296,397 | ||||||||
| Operating Expenses as % of Sales | 31.2 | % | — | % | (0.1) | % | 31.1 | % | ||||
| Restructuring and Other Costs | 2,739 | 2,739 | — | — | ||||||||
| Income from Operations | 90,858 | (2,739) | (614) | 94,211 | ||||||||
| Operating Margin | 9.5 | % | 0.3 | % | 0.1 | % | 9.9 | % | ||||
| Total Other Expense | (14,718) | — | — | (14,718) | ||||||||
| Income before provision for income taxes | 76,140 | (2,739) | (614) | 79,493 | ||||||||
| Provision for income taxes | 22,188 | (797) | (179) | 23,164 | ||||||||
| Net income | 53,952 | (1,942) | (435) | 56,329 | ||||||||
| Net loss attributable to noncontrolling interest | (1,740) | — | — | (1,740) | ||||||||
| Net income attributable to MSC Industrial | $ | 55,692 | $ | (1,942) | $ | (435) | $ | 58,069 | ||||
| Net income per common share: | ||||||||||||
| Diluted | $ | 0.99 | $ | (0.03) | $ | (0.01) | $ | 1.03 |
*Individual amounts may not agree to the total due to rounding.
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 10 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| MSC INDUSTRIAL DIRECT CO., INC. | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Reconciliation of GAAP and Non-GAAP Financial Information | |||||||||||||||
| Fiscal Year Ended August 31, 2024 | |||||||||||||||
| (In thousands, except percentages and per share data) | |||||||||||||||
| GAAP Financial Measure | Items Affecting Comparability | Non-GAAP Financial Measure | |||||||||||||
| Total MSC Industrial | Restructuring and Other Costs | Acquisition-related Costs | Share Reclassification Costs | Adjusted Total MSC Industrial | |||||||||||
| Net Sales | $ | 3,820,951 | $ | — | $ | — | $ | — | $ | 3,820,951 | |||||
| Cost of Goods Sold | 2,248,168 | — | — | — | 2,248,168 | ||||||||||
| Gross Profit | 1,572,783 | — | — | — | 1,572,783 | ||||||||||
| Gross Margin | 41.2 | % | — | % | — | % | — | % | 41.2 | % | |||||
| Operating Expenses | 1,167,870 | — | 1,079 | 1,187 | 1,165,604 | ||||||||||
| Operating Expenses as % of Sales | 30.6 | % | — | % | 0.0 | % | 0.0 | % | 30.5 | % | |||||
| Restructuring and Other Costs | 14,526 | 14,526 | — | — | — | ||||||||||
| Income from Operations | 390,387 | (14,526) | (1,079) | (1,187) | 407,179 | ||||||||||
| Operating Margin | 10.2 | % | 0.4 | % | 0.0 | % | 0.0 | % | 10.7 | % | |||||
| Total Other Expense | (47,638) | — | — | — | (47,638) | ||||||||||
| Income before provision for income taxes | 342,749 | (14,526) | (1,079) | (1,187) | 359,541 | ||||||||||
| Provision for income taxes | 86,792 | (3,577) | (266) | (293) | 90,928 | ||||||||||
| Net income | 255,957 | (10,949) | (813) | (894) | 268,613 | ||||||||||
| Net loss attributable to noncontrolling interest | (2,637) | — | — | — | (2,637) | ||||||||||
| Net income attributable to MSC Industrial | $ | 258,594 | $ | (10,949) | $ | (813) | $ | (894) | $ | 271,250 | |||||
| Net income per common share: | |||||||||||||||
| Diluted | $ | 4.58 | $ | (0.19) | $ | (0.01) | $ | (0.02) | $ | 4.81 |
*Individual amounts may not agree to the total due to rounding.
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 11 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| MSC INDUSTRIAL DIRECT CO., INC. | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Reconciliation of GAAP and Non-GAAP Financial Information | |||||||||||||||
| Fiscal Quarter Ended September 2, 2023 | |||||||||||||||
| (In thousands, except percentages and per share data) | |||||||||||||||
| GAAP Financial Measure | Items Affecting Comparability | Non-GAAP Financial Measure | |||||||||||||
| Total MSC Industrial | Restructuring and Other Costs | Share Reclassification Costs | ERC Tax Benefit | Adjusted Total MSC Industrial | |||||||||||
| Net Sales | $ | 1,035,441 | $ | — | $ | — | $ | — | $ | 1,035,441 | |||||
| Cost of Goods Sold | 615,907 | — | — | — | 615,907 | ||||||||||
| Gross Profit | 419,534 | — | — | — | 419,534 | ||||||||||
| Gross Margin | 40.5 | % | — | % | — | % | — | % | 40.5 | % | |||||
| Operating Expenses | 299,264 | — | 10,139 | — | 289,125 | ||||||||||
| Operating Expenses as % of Sales | 28.9 | % | — | % | (1.0) | % | — | % | 27.9 | % | |||||
| Restructuring and Other Costs | 2,215 | 2,215 | — | — | — | ||||||||||
| Income from Operations | 118,055 | (2,215) | (10,139) | — | 130,409 | ||||||||||
| Operating Margin | 11.4 | % | 0.2 | % | 1.0 | % | — | % | 12.6 | % | |||||
| Total Other Expense | (2,333) | — | — | 6,566 | (8,899) | ||||||||||
| Income before provision for income taxes | 115,722 | (2,215) | (10,139) | 6,566 | 121,510 | ||||||||||
| Provision for income taxes | 28,281 | (523) | (2,394) | 1,550 | 29,648 | ||||||||||
| Net income | 87,441 | (1,692) | (7,745) | 5,016 | 91,862 | ||||||||||
| Net loss attributable to noncontrolling interest | (158) | — | — | — | (158) | ||||||||||
| Net income attributable to MSC Industrial | $ | 87,599 | $ | (1,692) | $ | (7,745) | $ | 5,016 | $ | 92,020 | |||||
| Net income per common share: | |||||||||||||||
| Diluted | $ | 1.56 | $ | (0.03) | $ | (0.14) | $ | 0.09 | $ | 1.64 |
*Individual amounts may not agree to the total due to rounding.
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 12 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| MSC INDUSTRIAL DIRECT CO., INC. | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Reconciliation of GAAP and Non-GAAP Financial Information | ||||||||||||||||||
| Fiscal Year Ended September 2, 2023 | ||||||||||||||||||
| (In thousands, except percentages and per share data) | ||||||||||||||||||
| GAAP Financial Measure | Items Affecting Comparability | Non-GAAP Financial Measure | ||||||||||||||||
| Total MSC Industrial | Restructuring and Other Costs | Acquisition-related Costs | Share Reclassification Costs | ERC Tax Benefit | Adjusted Total MSC Industrial | |||||||||||||
| Net Sales | $ | 4,009,282 | $ | — | $ | — | $ | — | $ | — | $ | 4,009,282 | ||||||
| Cost of Goods Sold | 2,366,317 | — | — | — | — | 2,366,317 | ||||||||||||
| Gross Profit | 1,642,965 | — | — | — | — | 1,642,965 | ||||||||||||
| Gross Margin | 41.0 | % | — | % | — | % | — | % | — | % | 41.0 | % | ||||||
| Operating Expenses | 1,151,295 | — | 398 | 12,388 | — | 1,138,509 | ||||||||||||
| Operating Expenses as % of Sales | 28.7 | % | — | % | 0.0 | % | (0.3) | % | — | % | 28.4 | % | ||||||
| Restructuring and Other Costs | 7,937 | 7,937 | — | — | — | — | ||||||||||||
| Income from Operations | 483,733 | (7,937) | (398) | (12,388) | — | 504,456 | ||||||||||||
| Operating Margin | 12.1 | % | 0.2 | % | 0.0 | % | 0.3 | % | — | % | 12.6 | % | ||||||
| Total Other Expense | (27,577) | — | — | — | 6,566 | (34,143) | ||||||||||||
| Income before provision for income taxes | 456,156 | (7,937) | (398) | (12,388) | 6,566 | 470,313 | ||||||||||||
| Provision for income taxes | 113,049 | (2,040) | (100) | (3,183) | 1,687 | 116,685 | ||||||||||||
| Net income | 343,107 | (5,897) | (298) | (9,205) | 4,879 | 353,628 | ||||||||||||
| Net income attributable to noncontrolling interest | (126) | — | — | — | — | (126) | ||||||||||||
| Net income attributable to MSC Industrial | $ | 343,233 | $ | (5,897) | $ | (298) | $ | (9,205) | $ | 4,879 | $ | 353,754 | ||||||
| Net income per common share: | ||||||||||||||||||
| Diluted | $ | 6.11 | $ | (0.10) | $ | (0.01) | $ | (0.16) | $ | 0.09 | $ | 6.29 |
*Individual amounts may not agree to the total due to rounding.
| MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2024 FOURTH QUARTER AND FULL YEAR RESULTS | 13 | ||||||
|---|---|---|---|---|---|---|---|
| MSC INDUSTRIAL DIRECT CO., INC. | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Reconciliation of GAAP and Non-GAAP Financial Information | |||||||
| Fiscal Years Ended August 31, 2024 and September 2, 2023 | |||||||
| (In thousands, except percentages) | |||||||
| Fiscal Year Ended | |||||||
| September 2, 2023 | |||||||
| (a) Net income attributable to MSC Industrial (twelve-month trailing) | 258,594 | $ | 343,233 | ||||
| NOPAT | |||||||
| Income from Operations (twelve-month trailing) | 483,733 | ||||||
| Effective tax rate | % | 24.8 | % | ||||
| (b) Non-GAAP NOPAT | 363,850 | ||||||
| (c) Adjusted Non-GAAP NOPAT | 1 | 379,531 | 2 | ||||
| Invested Capital | |||||||
| Total MSC Industrial shareholders' equity | 1,391,797 | $ | 1,479,164 | ||||
| Current portion of debt including obligations under finance leases | 229,935 | ||||||
| Long-term debt including obligations under finance leases | 224,391 | ||||||
| Total Debt | 454,326 | ||||||
| Cash and cash equivalents | 29,588 | $ | 50,052 | ||||
| Net debt | 404,274 | ||||||
| Invested capital | 1,883,438 | ||||||
| (d) Average invested capital (thirteen-month trailing average) | 1,951,818 | ||||||
| (e) Adjusted average invested capital (thirteen-month trailing average) | 1 | 1,953,516 | 2 | ||||
| (a)/(d) Net income to Average invested capital | % | 17.6 | % | ||||
| (b)/(d) Non-GAAP ROIC | % | 18.6 | % | ||||
| (c)/(e) Adjusted Non-GAAP ROIC | % | 19.4 | % | ||||
| 1 Adjusted Non-GAAP NOPAT and invested capital excludes 14.5 million of restructuring and other costs, 1.1 million of acquisition-related charges and 1.2 million of share reclassification costs, net of an associated tax benefit of 4.1 million. | |||||||
| 2 Adjusted Non-GAAP NOPAT and invested capital excludes 7.9 million of restructuring and other costs, 0.4 million of acquisition-related charges and 12.4 million of share reclassification costs, net of an associated tax benefit of 5.3 million. |
All values are in US Dollars.