MSC Industrial Reports 7.8 Percent Q4 Sales Increase

MSC, No. 14 on Industrial Distribution's 2014 Big 50 List, has seen year-to-date net sales increase 13.4 percent from last year.

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MELVILLE, N.Y. — MSC INDUSTRIAL DIRECT CO., INC., a distributor of metalworking and maintenance, repair and operations supplies to industrial customers throughout North America, on Tuesday reported financial results for its fiscal 2014 year and fourth quarter ended Aug. 30. MSC was No. 14 on Industrial Distribution's 2014 Big 50 List.

Net sales for the fourth quarter of fiscal 2014 were $726.6 million, an increase of 7.8 percent over the same quarter a year ago. Excluding non-recurring costs, adjusted operating income for the fiscal fourth quarter 2014 was $100.9 million, or 13.9 percent of net sales, compared to 14.7 percent a year ago. GAAP operating income for the fiscal fourth quarter 2014 was $99.8 million, or 13.7 percent of net sales, compared to 13.7 percent a year ago.

Excluding the after tax effects of non-recurring costs, adjusted net income for the fiscal fourth quarter 2014 was $63.5 million, or $1.02 per diluted share (based on 62.0 million diluted shares outstanding), compared to $60.3 million, or $0.95 per diluted share, in the same quarter a year ago (based on 63.2 million diluted shares outstanding). GAAP net income for the fiscal fourth quarter 2014 was $62.8 million, or $1.01 per diluted share, compared to $56.4 million, or $0.89 per diluted share, in the same quarter a year ago.

For the 2014 fiscal year, net sales increased 13.4 percent to $2.8 billion from $2.5 billion in fiscal year 2013. Class C Solutions Group ("CCSG") contributed $184 million of incremental net sales in the fiscal year 2014. Excluding non-recurring costs, adjusted operating income for fiscal 2014 was $400.5 million, or 14.4 percent of net sales compared to 16.3 percent in fiscal 2013. GAAP operating income for fiscal 2014 was $383.2 million, or 13.7 percent of net sales, compared to 15.7 percent a year ago. Excluding the after tax effects of the non-recurring costs, adjusted net income for the 2014 fiscal year declined 0.5 percent to $246.9 million, or $3.93 per diluted share, compared to $3.91 a year ago. GAAP net income for fiscal 2014 was $236.1 million, or $3.76 per diluted share, compared to $238.0 million, or $3.75 per diluted share, in fiscal 2013.

Erik Gershwind, President and Chief Executive Officer, stated, "Our organic growth rate accelerated above industry rates as fiscal 2014 progressed and our share gains continued despite the headwinds of the abnormally soft pricing environment. Our growth and infrastructure investments progressed as planned and began contributing to our improved growth as the year progressed. We also delivered successfully against the framework we provided a year ago, as well as on the primary goals for the integration of CCSG, including our accretion targets."

Jeff Kaczka, Executive Vice President and Chief Financial Officer, commented, "Our fiscal fourth quarter 2014 continued the trend of improving average daily sales with growth at the top end of our guidance, momentum that continued into the fiscal first quarter 2015. Despite the pressure on gross margin from mix and the soft pricing environment, we achieved the top end of our earnings guidance. Our confidence in continued cash generation is reflected in our increased ordinary dividend and the announced special dividend. This maintains flexibility for opportunistic share repurchases and strategic investments, while preserving our appropriately conservative balance sheet."

The company expects net sales for the fiscal first quarter 2015 to be between $727 million and $739 million. Excluding non-recurring integration costs associated with CCSG, the company expects adjusted diluted earnings per share for the fiscal first quarter 2015 to be between $0.95 and $0.99.

The company expects the non-recurring costs related to the CCSG acquisition to have approximately a $0.01 impact on its GAAP diluted earnings per share in the fiscal first quarter 2015.

An explanation and reconciliation of the non-GAAP financial measures contained in this press release to the most directly comparable GAAP financial measures are included in the attached tables.

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