Melville, NY - MSC Industrial Direct, Inc. reported financial results for its fiscal 2013 fourth quarter ended August 31, 2013.
Net sales for the fourth quarter of fiscal 2013 were $673.8 million, an increase of 6.1% (12.7% on an average daily sales basis) over net sales of $635.3 million in the fourth quarter of fiscal 2012. The recently acquired Barnes Distribution North America ("BDNA") business contributed approximately $73.6 million to net sales in the fiscal 2013 fourth quarter. The fiscal 2012 fourth quarter contained fourteen weeks.
Excluding non-recurring costs of $6.4 million associated with the BDNA acquisition and the co-location of the Company's headquarters, adjusted operating income for the fiscal 2013 fourth quarter was $98.7 million, or 14.7% of net sales, compared to $109.2 million, or 17.2% of net sales in the same quarter a year ago. GAAP operating income for the fiscal 2013 fourth quarter was $92.4 million.
Excluding the after tax effects of non-recurring costs, adjusted net income for the fourth quarter of fiscal 2013 was $60.3 million, or $0.95 per diluted share (based on 63.2 million diluted shares outstanding), compared to $69.7 million, or $1.11 per diluted share, a year ago (based on 62.5 million diluted shares outstanding). The BDNA operations contributed approximately $0.04 to the fiscal fourth quarter EPS and GAAP net income for the fourth quarter of fiscal 2013 was $56.4 million, or $0.89 per diluted share.
Erik Gershwind, President and Chief Executive Officer, stated, "Consistent with our outlook, a soft market environment persisted in the fiscal fourth quarter, particularly in metalworking where spending remained at depressed levels. However, the success of our share gain programs and customer penetration initiatives such as E-commerce and vending continued despite this weakness. Since the fiscal fourth quarter ended, sequential improvement in average daily sales growth rates in September and October are encouraging. Looking ahead, I would characterize the indicators as mixed, with some signs of possible improvement on the horizon."
Jeff Kaczka, Executive Vice President and Chief Financial Officer, commented, "Overall, despite the soft environment, we were able to exceed our EPS guidance through a lift in our gross margin and effective management of our expenses. The BDNA integration is progressing well and the contribution of BDNA to our results was better than expected. For the fiscal first quarter of 2014, our guidance reflects a slight acceleration in revenue growth rates, combined with increased spending on infrastructure and growth initiatives to support our strategic plan. Finally, we were pleased to announce a 10 percent increase to our quarterly dividend last week."
Mr. Gershwind concluded, "We are in the midst of building a foundation that will support the next leg of our growth story. Our actions will ensure that we not only continue to outgrow the market as we have in the current low growth environment, but accelerate our growth through share gains no matter the market conditions. As we implement our infrastructure and growth initiatives, we see fiscal 2014 as the low point for the operating margins for the base business, inclusive of MSC and BDNA, and anticipate improvement beginning in fiscal 2015. As we execute on our growth roadmap, we see the base business operating comfortably at operating margins in the high-teens."
Outlook
The Company expects net sales for the fiscal first quarter 2014 to be between $662 million and $674 million. At the midpoint, average daily sales growth, exclusive of BDNA, is expected to be approximately 3 percent. Excluding non-recurring costs related to the co-location of the Company's headquarters and non-recurring integration costs associated with BDNA, the Company expects adjusted diluted earnings per share for the fiscal first quarter 2014 to be between $0.92 and $0.96.
The Company expects the non-recurring costs related to the co-location of the Company's headquarters to have a $0.02 impact and the integration costs related to the BDNA acquisition to have approximately a $0.04 impact on its GAAP diluted earnings per share in the fiscal first quarter 2014.
The management of MSC will host a conference call today, at 11:00 a.m. Eastern Time, to review the Company's results for fiscal 2013 fourth quarter. The call and accompanying slides may be accessed via the Internet on MSC's website located at: https://investor.mscdirect.com/. A replay of the conference call will be available on the Company's website until Friday, November 29, 2013.
Alternatively, the conference call can be accessed by dialing 1-877-270-2148 (U.S.) or 1-412-902-6510 (international). A replay will be available within one hour of the conclusion of the call and will remain available until Friday, November 29, 2013. The replay is accessible by dialing 1-877-344-7529 (U.S.) or 1-412-317-0088 (international) and entering passcode 10034454.
The Company's reporting date for fiscal 2014 first quarter results will be January 8, 2014.
