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MSC Industrial Supply Q3 diluted EPS $1.05

Staff Writer |
MSC Industrial Supply reported financial results for its fiscal 2016 third quarter ended May 28, 2016. Diluted EPS for the quarter was $1.05 versus $1.03 in the prior year's third quarter.

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Rustom Jilla, executive vice president and chief financial officer, added, "This was the result of strong execution on the gross margin and expense lines.

"Gross margins held at 45 percent, the fourth consecutive quarter at this level, despite the challenging price environment and headwinds from customer mix.

"Operating expenses declined significantly year-over-year due in large part to our productivity efforts and the reversal of incentive accruals. Finally, our year to date operating cash flow less capital expenditure (free cash flow) was $251 million, double last year's $125 million.

"As we move forward, our strong focus on productivity will intensify given the economic backdrop."

"Despite the challenging environment, I remain confident in our future. Should things deteriorate further, this creates opportunities for MSC such as new customer relationships, the hiring of experienced industry salespeople, and stronger supplier relationships. All of these would serve to increase our share gain potential.

"At the same time, with the work we have done on managing costs, along with our completed infrastructure investments, we are poised for earnings leverage when growth returns.

"Finally, we are using our strong balance sheet to enhance shareholder returns, while preserving flexibility to capitalize on any further market dislocations that may be ahead of us."

Based on current market conditions, MSC Industrial Supply expects net sales for the fiscal 2016 fourth quarter to be between $730 million and $742 million.

At the midpoint, average daily sales are expected to decline approximately 5%. MSC Industrial Supply expects diluted earnings per share for the fiscal 2016 fourth quarter to be between $0.96 and $1.00.

Fiscal 2016 is a 53-week year for MSC and the Company's fiscal fourth quarter has an additional week. This guidance reflects the additional week in the fourth quarter, and typical seasonal patterns in sales and margins.

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