MSC Industrial (MSM) Q2 Earnings Beat Estimates, Revenues Miss

MSC Industrial Direct Company, Inc. MSM reported second-quarter fiscal 2024 (ended on Mar 2, 2024) adjusted earnings per share (EPS) of $1.18, beating the Zacks Consensus Estimate of $1.16. The bottom line decreased 18.6% year over year.

Including one-time items, the company reported EPS of $1.10 compared with the year-ago quarter’s $1.41.

MSC Industrial generated revenues of around $935 million in the quarter under review, down 2.7% from $962 million in the year-ago quarter. The top line missed the Zacks Consensus Estimate of $949 million. Net sales were 290 basis points below the IP Index. Average daily sales fell 2.7% year over year in the quarter.

MSC Industrial Direct Company, Inc. Price, Consensus and EPS Surprise

 

MSC Industrial Direct Company, Inc. Price, Consensus and EPS Surprise

MSC Industrial Direct Company, Inc. price-consensus-eps-surprise-chart | MSC Industrial Direct Company, Inc. Quote

Operational Update

The cost of goods sold decreased 3.2% year over year to $547 million. Gross profit was down 2% to $389 million. The gross margin was 41.5% compared with the year-ago quarter’s 41.3%.

Operating expenses rose 4% year over year to $291 million in the fiscal second quarter. Adjusted operating income amounted to $98 million, down 16.5% from $117 million in the prior-year quarter. The adjusted operating margin was 10.5% in the reported quarter compared with the prior-year quarter’s 12.2%.

Cash & Debt Position

MSC Industrial had cash and cash equivalents of $22.2 million at the end of the fiscal second quarter of 2024 compared with $50 million at the end of fiscal 2023. It generated cash flow from operating activities of $160 million in the first half of fiscal 2024 compared with $416 million in the first half of fiscal 2023.

The company’s long-term debt was $294 million at the end of the reported quarter, up from $224 million at fiscal 2023-end.

Guidance

Backed by lower-than-expected fiscal second-quarter results, MSC Industrial expects its full-year average daily sales outlook to be at the lower end of its previously provided range.  It expected average daily sales to see flat to 5% growth year over year for fiscal 2024 . The adjusted operating margin is expected between 12.0% and 12.8%.

Price Performance

MSC Industrial’s shares have gained 19% in the past year compared with the industry’s growth of 27%.

 

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Image Source: Zacks Investment Research

 

Zacks Rank & Stocks to Consider

MSC Industrial currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Industrial Products sector are Proto Labs, Inc. PRLB, Cadre Holdings, Inc. CDRE and Applied Industrial Technologies (AIT - Research Report). PRLB currently sports a Zacks Rank #1 (Strong Buy), and CDRE and AIT carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Proto Labs’ 2024 earnings is pegged at $1.62 per share. The consensus estimate for 2024 earnings has moved 11% north in the past 60 days and suggests year-over-year growth of 1.9%. The company has a trailing four-quarter average earnings surprise of 42.2%. PRLB shares have gained 15.7% in the past year.

The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.15 per share. The consensus estimate for 2024 earnings has moved 6% north in the past 60 days and suggests year-over-year growth of 16.7%. The company has a trailing four-quarter average earnings surprise of 33%. CDRE shares have gained 72% in the past year.

Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 43.3% in the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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