MELVILLE, N.Y. — MSC Industrial Supply Co., a distributor of metalworking and maintenance, repair and operations supplies to industrial customers throughout North America and No. 14 on Industrial Distribution's 2014 Big 50 List, on Wednesday reported results for its fiscal first quarter ended Nov. 29, 2014.
Net sales for the fiscal first quarter 2015 were $731.1 million, an increase of 7.8 percent on an average daily sales basis year-over-year. Adjusted operating income for the fiscal first quarter 2015 was $97.5 million, or 13.3 percent of net sales, compared to 15.1 percent of net sales, in Q1 2014. GAAP operating income for the fiscal first quarter 2015 was $94.0 million, or 12.9 percent of net sales, compared to 14.3 percent of net sales in Q1 2014.
Excluding the after tax effects of non-recurring costs, adjusted net income for the fiscal first quarter 2015 was $59.6 million, compared to $62.6 million, in the same quarter a year ago. GAAP net income for the fiscal first quarter 2015 was $57.4 million.
Erik Gershwind, President and Chief Executive Officer, stated, "A slightly improved environment along with our increasing share gains resulted in improving growth for the fiscal first quarter. This includes stronger growth in the base business, as well as sequential improvement in our growth rate through the quarter for our base business and for CCSG, which grew in the mid-single-digits in November. National Accounts and Government continued their strong momentum by posting growth rates well into the double digits."
Jeff Kaczka, Executive Vice President and Chief Financial Officer, commented, "Our sales and gross margin were slightly below the midpoint of guidance and operating expenses were roughly in-line with our expectations. These factors, combined with the one cent impact of the special dividend under the two class method of calculating EPS, resulted in EPS at the lower end of our guidance. As we look forward, despite pressure from mix and the soft pricing environment, we are seeing solid average daily sales growth and sequential stabilization in gross margin due to a combination of a modest mid-year price adjustment, gross margin counter measures, and improving growth rates for our core customers and CCSG. As the year goes on, the headwind resulting from our growth and infrastructure investments should begin to abate and drive growing earnings leverage on a larger sales base."
Mr. Gershwind concluded, "As we look forward, I remain extremely confident in our direction. We are executing on the infrastructure investments needed to support future growth and seeing the returns of our growth investments in the form of strong share gains and improving growth rates. We are continuing to move our portfolio to high retention and value-added businesses like Metalworking, Class C, inventory management and e-commerce. We are also aligning our organization to support our plan. These steps are giving us increasing confidence in our prospects for the back half of fiscal 2015 and thereafter."
MSC expects net sales for fiscal second quarter 2015 to be between $717 million and $729 million. At the midpoint, average daily sales growth is expected to be 9.3 percent, which includes CCSG sales that are expected to be growing at a lower rate than the MSC base business.