MSC Sets Annual Sales Record

But the company’s operating income slipped during the final quarter of its fiscal year.

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Metalworking and MRO distributor MSC Industrial Supply on Wednesday reported a new annual sales record after crossing the $4 billion mark for the first time.

Net sales growth, however, was much more modest in the fourth quarter of the company’s fiscal year, and the company saw year-over-year declines in operating income, operating margin and diluted earnings in the most recent quarter.

MSC’s full-year net sales climbed from $3.7 billion to just over $4 billion, an increase of 8.6%. The company’s annual operating income rose 3.2%, from $469 million to $484 million, while its operating margin slid from 12.7% in the 2022 fiscal year to 12.1% in the latest 12-month window. Diluted earnings per share were up 0.8% for the year.

MSC President and CEO Erik Gershwind noted that the company outperformed the industrial production index as a whole while achieving multiple goals during the latest year, including an overhaul of its governance structure, its mergers and acquisitions strategy, and a three-year “Mission Critical” initiative designed to capture more market share.

“We achieved several notable accomplishments with the completion of the first chapter of ‘Mission Critical,’” Gershwind said in a statement. “We grew over 500 basis points above the industrial production Index, brought adjusted operating expenses to sales down by over 200 basis points, and brought ROIC into the high teens."  

MSC — no. 9 on ID’s recently released Big 50 — reported just over $1 billion in fourth-quarter sales, a 1.3% increase compared to the previous fourth quarter, but other metrics fell sharply: operating income was down 18%, the operating margin fell from more than 14% to 11.4%, and diluted earnings per share slipped by more than 16%.

Company officials nonetheless express confidence that its performance and cash generation amid “challenging conditions” would allow it to continue to pursue its priorities, including share buybacks to offset the recent corporate restructuring. The company’s initial forecast for the new fiscal year anticipates sales growth ranging from flat to 5%, and an adjusted operating margin of between 12% and 12.8%.

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