MELVILLE, N.Y.—MSC Industrial Direct, one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations ("MRO") supplies to industrial customers throughout the United States, recently reported financial results for its fourth quarter and fiscal year ended August 28, 2010.
For the fiscal 2010 fourth quarter, net sales rose 30.3% to $461.4 million, compared with $354.1 million in the prior year period. Operating income increased 68.6% in the fiscal 2010 fourth quarter to $70.5 million, or 15.3% of net sales, compared with $41.8 million, or 11.8% of net sales, in the prior year period. For the fourth quarter of fiscal 2010, the Company reported net income of $44.1 million, an increase of 69.5% over net income of $26.0 million in the fourth quarter of fiscal 2009. Diluted earnings per share in the fiscal 2010 fourth quarter were $0.70 (based on 62.6 million diluted shares outstanding), compared to $0.41 (based on 62.6 million diluted shares outstanding) in the same period a year ago, an increase of 70.7%. The Company noted that the fourth quarter of fiscal 2010 had one less sales day than the fourth quarter of fiscal 2009.
For the fiscal 2010 full-year period, net sales were $1.69 billion, compared with net sales of $1.49 billion in fiscal 2009. Operating income in fiscal 2010 was $241.8 million, or 14.3% of net sales, versus operating income of $204.7 million, or 13.7% of net sales, in fiscal 2009. Net income for fiscal year 2010 was $150.4 million, compared to net income of $125.1 million in fiscal 2009. Diluted earnings per share for the 2010 fiscal year were $2.37 (based on 62.9 million diluted shares outstanding), compared to $1.99 per diluted share (based on 62.4 million diluted shares outstanding) in fiscal year 2009.
David Sandler, President and Chief Executive Officer said, "Fiscal 2010 was a year of strong operational and financial execution. Our team continued to perform at very high levels, taking significant market share and driving sales and earnings growth that culminated in growth in average daily sales in excess of 30% during each month of the fourth quarter. By investing in our Company throughout the downturn, we have taken advantage of a unique opportunity to grow our business at an accelerated pace as market conditions return to more normalized levels. Our investment program has produced a large and growing value gap between MSC and our smaller, less well capitalized competitors that has contributed to our momentum and that we will continue to leverage going forward."
Chuck Boehlke, Executive Vice President and Chief Financial Officer said, "We are very pleased with our financial performance in the fourth quarter. As we look forward, we expect our annual big book pricing cycle to provide for gross margin expansion in excess of 100 basis points in the 2011 first quarter versus fourth quarter levels. We will increase our levels of investment spending to further support market share gains. The end result is expected to be increased operating margins as compared to both the first quarter of fiscal 2010 and our recently completed fourth quarter. The midpoint of our guidance implies that incremental operating margins for the 2011 first quarter should be approximately 28%. Based on the investment program we have targeted for fiscal 2011 we expect similar levels of incremental margin for the balance of the year. However, the potential of a firming pricing environment and accelerating market share gains could drive incremental margins higher."
Mr. Sandler concluded, "Throughout this period of economic uncertainty, MSC's strategy has been to invest in the business to capitalize on the opportunities in the marketplace to gain share and grow profitably. I am pleased to say that our results reflect the benefits of these efforts. While our recent performance is encouraging, we believe it is only the beginning of a long-term growth story. Looking ahead, we expect to leverage our advantages in the marketplace to continue to generate strong results for all of our stakeholders."
For the fiscal 2011 first quarter, the Company expects net sales to be between $464.0 million and $476.0 million, and expects diluted earnings per share to be between $0.71 and $0.75.
