MSC reported financial results for its fiscal 2016 first quarter ended November 28, 2015. Earnings were $55 million, or $0.89 per share.
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This was lower than $59.6 million, or $0.95 per share, in last year's first quarter. Revenue for the quarter fell 3.3% to $706.8 million. This was down from $731.1 million last year.
Erik Gershwind, president and chief executive officer, said, "Our fiscal 2016 first quarter performance reflected continued share gains, sustained gross margin stabilization, and another quarter of strong expense controls in an increasingly challenging market environment.
"Ongoing lower oil prices, the strong US dollar with its negative effect on export demand, and the soft pricing environment driven by low commodity prices all continue to negatively impact broader manufacturing activity."
Rustom Jilla, executive vice president and chief financial officer, added, "Our first quarter EPS was at the top of our guidance range with average daily sales in-line with guidance, gross margins at the top end, and operating expenses at the midpoint.
"The headwind from a soft pricing environment remains significant, but the execution of our gross margin countermeasures helped offset its impact.
"We also continued to reduce our operating expenses and our extremely strong cash flow generation was aided by a reduction in working capital, which is usual in this type of challenging sales environment."
Gershwind concluded, "We have started fiscal 2016 as expected and in-line with our annual operating margin framework. Our fiscal second quarter is nearly always the quarter with the lowest operating margin and we expect a stronger second half. Looking beyond fiscal 2016, I remain confident about our business and its future.
"Economic slowdowns are the times when MSC makes its greatest strides and we are doing so this time as well. Our share gains are notable in the current challenging market, but we also are improving our cost base, which will result in greater leverage when growth returns." ■