FISCAL 2023 Q4 HIGHLIGHTS
- Net sales of $1,035.4 million
increased 1.3% YoY (9.3% on an average daily sales basis,
approximately 9 percentage points above the Industrial Production
(IP) index)
- Operating income of $118.1
million, or $130.4 million
adjusted to exclude share reclassification and restructuring and
other costs1
- Operating margin of 11.4%, or 12.6% excluding the adjustments
described above1
- Diluted EPS of $1.56 vs.
$1.86 in the prior year and adjusted
EPS of $1.64 vs. $1.79 in the prior year quarter1
- Agreement to eliminate dual class share structure
overwhelmingly approved by shareholders this month
FISCAL 2023 HIGHLIGHTS
- Net sales of $4,009.3 million
increased 8.6% YoY (11.2% on an average daily sales basis,
approximately 10 percentage points above the IP index)
- Operating income of $483.7
million, or $504.5 million
adjusted to exclude share reclassification, acquisition-related,
restructuring and other costs1
- Operating margin of 12.1%, or 12.6% excluding the adjustments
described above1
- Year-over-year improvement in both Diluted EPS of $6.11 and adjusted diluted EPS of $6.291
- Generated strong operating cash flows of $699.6 million or 204% of net income
- Successfully completed Mission Critical Program by achieving
all publicly stated targets
MELVILLE, N.Y. and DAVIDSON, N.C., Oct. 25,
2023 /PRNewswire/ -- MSC INDUSTRIAL SUPPLY CO.
(NYSE: MSM), "MSC," "MSC Industrial" or the "Company," a
leading North American distributor of a broad range of metalworking
and maintenance, repair and operations (MRO) products and services,
today reported financial results for its fiscal 2023 fourth quarter
and full year ended September 2,
2023.
Financial
Highlights2
|
|
FY23
Q4
|
|
FY22
Q4
|
|
Change
|
|
FY23
|
|
FY22
|
|
Change
|
Net Sales
|
|
$
1,035.4
|
|
$
1,022.2
|
|
1.3 %
|
|
$
4,009.3
|
|
$
3,691.9
|
|
8.6 %
|
Income from
Operations
|
|
$ 118.1
|
|
$ 144.0
|
|
(18.0) %
|
|
$ 483.7
|
|
$ 468.7
|
|
3.2 %
|
Operating
Margin
|
|
11.4 %
|
|
14.1 %
|
|
|
|
12.1 %
|
|
12.7 %
|
|
|
Net Income Attributable
to MSC
|
|
$ 87.6
|
|
$ 104.1
|
|
(15.9) %
|
|
$ 343.2
|
|
$ 339.8
|
|
1.0 %
|
Diluted EPS
|
|
$ 1.56
|
3
|
$ 1.86
|
4
|
(16.1) %
|
|
$ 6.11
|
3
|
$ 6.06
|
4
|
0.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Financial
Highlights2
|
|
FY23
Q4
|
|
FY22
Q4
|
|
Change
|
|
FY23
|
|
FY22
|
|
Change
|
Net Sales
|
|
$
1,035.4
|
|
$
1,022.2
|
|
1.3 %
|
|
$
4,009.3
|
|
$
3,691.9
|
|
8.6 %
|
Adjusted Income from
Operations 1
|
|
$ 130.4
|
|
$ 138.6
|
|
(5.9) %
|
|
$ 504.5
|
|
$ 475.3
|
|
6.1 %
|
Adjusted Operating
Margin 1
|
|
12.6 %
|
|
13.6 %
|
|
|
|
12.6 %
|
|
12.9 %
|
|
|
Adjusted Net Income
Attributable to MSC 1
|
|
$ 92.0
|
|
$ 100.2
|
|
(8.2) %
|
|
$ 353.8
|
|
$ 344.7
|
|
2.6 %
|
Adjusted Diluted EPS
1
|
|
$ 1.64
|
3
|
$ 1.79
|
4
|
(8.4) %
|
|
$ 6.29
|
3
|
$ 6.15
|
4
|
2.3 %
|
|
1 Represents
a non-GAAP financial measure. An explanation and a reconciliation
of each non-GAAP financial measure to the most directly comparable
GAAP financial measure are presented in the schedules accompanying
this press release.
|
2 In
millions except percentages and per share data or as otherwise
noted.
|
3 Based on
56.3 million and 56.2 million diluted shares outstanding for FY23
Q4 and FY23, respectively.
|
4 Based on
56.1 million and 56.0 million diluted shares outstanding for FY22
Q4 and FY22, respectively.
|
Erik Gershwind, President and Chief Executive Officer,
said, "Fiscal 2023 was a monumental year as we exceeded
$4 billion in annual net sales for
the first time in company history. Additionally, we enhanced our
corporate governance into a structure that is more friendly to all
shareholders, built upon our M&A strategy and successfully
completed our three-year Mission Critical program that strengthened
our growth trajectory and operational excellence. We achieved
several notable accomplishments with the completion of the first
chapter of Mission Critical. We grew over 500 basis points
above the Industrial Production Index, brought adjusted operating
expenses to sales down by over 200 basis points, and
brought ROIC into the high teens."
Kristen Actis-Grande, Executive
Vice President and Chief Financial Officer, added, "I am proud of
our team's accomplishments in fiscal 2023. We expanded adjusted
operating income during the fiscal year, despite one less selling
week and near-term margin headwinds, outgrew the IP Index by 1,000
basis points and produced strong cash generation. Looking ahead to
fiscal 2024, this gives us confidence in our ability to continue
outgrowing the market and producing strong cash returns in the face
of challenging conditions. Our strong cash generation will enable
us to offset dilution from the reclassification agreement through
share repurchases and still pursue other capital allocation
priorities."
Gershwind concluded, "Looking ahead, we are excited about the
next chapter in our Mission Critical journey. We are focused on
continuing to outgrow the IP Index by four hundred basis points or
more and producing incremental margins of at least 20% through a
cycle. Doing so allows us to pursue our longer-term aspiration of
mid-teens operating margins and ROIC north of 20%."
Balance Sheet, Liquidity and Capital Allocation
-
-
- Strong balance sheet metrics and ample cash and liquidity
- Strong cash flow generation expected to continue in fiscal
2024
- Near-term priorities include share buybacks to offset
dilution from the share reclassification agreement
- Recently increased the quarterly ordinary dividend per share by
5%
Initial Fiscal 2024
Full Year Financial Outlook
|
ADS Growth
(YoY)
|
0% - 5%
|
Adjusted Operating
Margin1
|
12.0% -
12.8%
|
Depreciation and
Amortization Expense
|
$85M - $95M
|
Interest and Other
Expense
|
$40M - $50M
|
Operating Cash Flow
Conversion2
|
>125%
|
Tax Rate
|
25.0% -
25.5%
|
- Sales outlook assumes 160 basis point headwind from
non-repeating Public Sector sales
- Assumes market headwinds related to the UAW strike alleviate in
early second quarter of fiscal 2024
- Same number of selling days YoY
(1) Guidance provided
is a non-GAAP figure presented on an adjusted basis. For further
details see the Non-GAAP financial measures information presented
in the schedules of this release.
|
(2) The Company defines
Operating Cash Flow Conversion as Net cash provided by operating
activities as a percentage of Net income. The Company's management
uses Operating Cash Flow Conversion to evaluate the Company's
operating performance, in particular how efficiently the Company
turns its sales and profits into cash, and to assess the efficiency
of the Company's use of working capital. The Company believes
Operating Cash Flow Conversion is useful to investors for the
foregoing reasons and as a measure of the rate at which the Company
converts its net income reported in accordance with GAAP to cash
inflows, which helps investors assess whether the Company is
generating sufficient cash flow to provide an adequate
return.
|
Conference Call Information
MSC will host a conference
call today at 8:30 a.m. EDT to review
the Company's fiscal 2023 fourth quarter and full year results. The
call, accompanying slides, and other operational statistics may be
accessed at: https://investor.mscdirect.com. The conference call
may also be accessed at 1-877-443-5575 (U.S.), 1-855-669-9657
(Canada) or 1-412-902-6618
(international).
An online archive of the broadcast will be available until
November 8, 2023. The Company's
reporting date for the fiscal 2024 first quarter is scheduled for
January 9, 2024.
About MSC Industrial Supply Co.
MSC Industrial
Supply Co. (NYSE:MSM) is a leading North American distributor of a
broad range of metalworking and maintenance, repair and operations
(MRO) products and services. We help our customers drive greater
productivity, profitability and growth with approximately 2.4
million products, inventory management and other supply chain
solutions, and deep expertise from more than 80 years of working
with customers across industries. Our experienced team of more than
7,000 associates works with our customers to help drive results for
their businesses - from keeping operations running efficiently
today to continuously rethinking, retooling and optimizing for a
more productive tomorrow. For more information on MSC Industrial,
please visit mscdirect.com.
Cautionary Note Regarding Forward-Looking Statements:
Statements in this press release may constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of
1995. All statements, other than statements of present or
historical fact, that address activities, events or developments
that we expect, believe or anticipate will or may occur in the
future, including statements about results of operations and
financial condition, expected future results, expected benefits
from our investment and strategic plans and other initiatives, and
expected future growth, profitability and return on invested
capital, are forward-looking statements. The words "will," "may,"
"believes," "anticipates," "thinks," "expects," "estimates,"
"plans," "intends," and similar expressions are intended to
identify forward-looking statements. Forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those anticipated by these forward-looking
statements. In addition, statements which refer to expectations,
projections or other characterizations of future events or
circumstances, statements involving a discussion of strategy, plans
or intentions, statements about management's assumptions,
projections or predictions of future events or market outlook and
any other statement other than a statement of present or historical
fact are forward-looking statements. The inclusion of any statement
in this press release does not constitute an admission by MSC or
any other person that the events or circumstances described in such
statement are material. In addition, new risks may emerge from time
to time and it is not possible for management to predict such risks
or to assess the impact of such risks on our business or financial
results. Accordingly, future results may differ materially from
historical results or from those discussed or implied by these
forward-looking statements. Given these risks and uncertainties,
the reader should not place undue reliance on these forward-looking
statements. These risks and uncertainties include, but are not
limited to, the following: general economic conditions in the
markets in which we operate; changing customer and product mixes;
volatility in commodity and energy prices, the impact of prolonged
periods of low, high and rapid inflation, and fluctuations in
interest rates; competition, including the adoption by competitors
of aggressive pricing strategies and sales methods; industry
consolidation and other changes in the industrial distribution
sector; our ability to realize the expected benefits from our
investment and strategic plans, including our transition from being
a spot-buy supplier to a mission-critical partner to our customers;
our ability to realize the expected cost savings and benefits from
our restructuring activities and structural cost reductions; the
retention of key personnel; the credit risk of our customers,
higher inflation and fluctuations in interest rates; the risk of
customer cancellation or rescheduling of orders; difficulties in
calibrating customer demand for our products, which could cause an
inability to sell excess products ordered from manufacturers
resulting in inventory write-downs or could conversely cause
inventory shortages of such products; work stoppages, labor
shortages or other business interruptions (including those due to
extreme weather conditions) at transportation centers, shipping
ports, our headquarters or our customer fulfillment centers;
disruptions or breaches of our information technology systems, or
violations of data privacy laws; the retention of qualified sales
and customer service personnel and metalworking specialists; the
risk of loss of key suppliers or contractors or key brands or
supply chain disruptions, including due to import restrictions or
global geopolitical conditions; changes to governmental trade or
sanctions policies, including the impact from significant import
restrictions or tariffs or moratoriums on economic activity with
certain countries or regions; risks related to opening or expanding
our customer fulfillment centers; our ability to estimate the cost
of healthcare claims incurred under our self-insurance plan;
litigation risk due to the nature of our business; risks associated
with the integration of acquired businesses or other strategic
transactions; financial restrictions on outstanding borrowings; our
ability to maintain our credit facilities or incur additional
borrowings on terms we deem attractive; the failure to comply with
applicable environmental, health and safety laws and regulations,
and other laws applicable to our business; the outcome of
government or regulatory proceedings or future litigation; goodwill
and intangible assets recorded resulting from our acquisitions
could be impaired; our common stock price may be volatile due to
factors outside of our control; the significant influence that our
principal shareholders continue to exercise over us, which may
result in our taking actions or failing to take actions which our
other shareholders do not prefer; the outcome of any legal
proceedings that may be instituted against us or others relating to
the share reclassification; our ability to realize the expected
benefits from the share reclassification; and the effect of the
announcement or the consummation of the share reclassification on
the market price of our common stock. Additional information
concerning these and other risks is described under "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our Annual and Quarterly Reports on
Forms 10-K and 10-Q, respectively, and in the other reports and
documents that we file with the United States Securities and
Exchange Commission. We expressly disclaim any obligation to update
any of these forward-looking statements, except to the extent
required by applicable law.
MSC INDUSTRIAL
DIRECT CO., INC.
Consolidated Balance
Sheets
(In
thousands)
|
|
|
September 2,
2023
|
|
September 3,
2022
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
50,052
|
|
$
43,537
|
Accounts receivable, net of
allowance for credit losses
|
435,421
|
|
687,608
|
Inventories
|
726,521
|
|
715,625
|
Prepaid expenses and other
current assets
|
105,519
|
|
96,853
|
Total current assets
|
1,317,513
|
|
1,543,623
|
Property, plant and
equipment, net
|
319,660
|
|
286,666
|
Goodwill
|
718,174
|
|
710,130
|
Identifiable
intangibles, net
|
110,641
|
|
114,328
|
Operating lease
assets
|
65,909
|
|
64,780
|
Other assets
|
12,237
|
|
9,887
|
Total assets
|
$
2,544,134
|
|
$
2,729,414
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Current portion of debt
including obligations under finance leases
|
$
229,935
|
|
$
325,680
|
Current portion of operating
lease liabilities
|
21,168
|
|
18,560
|
Accounts payable
|
226,299
|
|
217,378
|
Accrued expenses and other
current liabilities
|
172,034
|
|
164,326
|
Total current liabilities
|
649,436
|
|
725,944
|
Long-term debt
including obligations under finance leases
|
224,391
|
|
468,912
|
Noncurrent operating
lease liabilities
|
45,924
|
|
47,616
|
Deferred income taxes
and tax uncertainties
|
131,801
|
|
124,659
|
Total liabilities
|
$
1,051,552
|
|
$
1,367,131
|
Commitments and
Contingencies
|
|
|
|
Shareholders'
Equity:
|
|
|
|
Preferred Stock
|
—
|
|
—
|
Class A Common
Stock
|
48
|
|
48
|
Class B Common
Stock
|
9
|
|
9
|
Additional paid-in
capital
|
849,502
|
|
798,408
|
Retained earnings
|
755,007
|
|
681,292
|
Accumulated other
comprehensive loss
|
(17,725)
|
|
(23,121)
|
Class A treasury stock, at
cost
|
(107,677)
|
|
(106,202)
|
Total MSC shareholders' equity
|
1,479,164
|
|
1,350,434
|
Noncontrolling
interest
|
13,418
|
|
11,849
|
Total shareholders' equity
|
1,492,582
|
|
1,362,283
|
Total liabilities and shareholders' equity
|
$
2,544,134
|
|
$
2,729,414
|
MSC INDUSTRIAL
DIRECT CO., INC.
Consolidated
Statements of Income
(In thousands,
except per share data)
|
|
|
(Unaudited)
|
|
|
|
|
|
Quarters
Ended
|
|
Fiscal Years
Ended
|
|
September 2,
2023
|
|
September 3,
2022
|
|
September 2,
2023
|
|
September 3,
2022
|
Net sales
|
$ 1,035,441
|
|
$ 1,022,245
|
|
$ 4,009,282
|
|
$ 3,691,893
|
Cost of goods
sold
|
615,907
|
|
594,017
|
|
2,366,317
|
|
2,133,645
|
Gross profit
|
419,534
|
|
428,228
|
|
1,642,965
|
|
1,558,248
|
Operating
expenses
|
299,264
|
|
290,262
|
|
1,151,295
|
|
1,083,862
|
Restructuring and other
costs
|
2,215
|
|
4,121
|
|
7,937
|
|
15,805
|
Gain on sale of
property
|
—
|
|
(10,132)
|
|
—
|
|
(10,132)
|
Income from operations
|
118,055
|
|
143,977
|
|
483,733
|
|
468,713
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense
|
(4,630)
|
|
(5,977)
|
|
(22,543)
|
|
(17,599)
|
Interest income
|
270
|
|
93
|
|
1,034
|
|
150
|
Other income (expense), net
|
2,027
|
|
(368)
|
|
(6,068)
|
|
(132)
|
Total other
expense
|
(2,333)
|
|
(6,252)
|
|
(27,577)
|
|
(17,581)
|
Income before provision for income taxes
|
115,722
|
|
137,725
|
|
456,156
|
|
451,132
|
Provision for income
taxes
|
28,281
|
|
33,371
|
|
113,049
|
|
110,650
|
Net income
|
87,441
|
|
104,354
|
|
343,107
|
|
340,482
|
Less: Net (loss) income
attributable to noncontrolling interest
|
(158)
|
|
223
|
|
(126)
|
|
696
|
Net income attributable to MSC Industrial
|
$
87,599
|
|
$
104,131
|
|
$
343,233
|
|
$
339,786
|
Per share data
attributable to MSC Industrial:
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
Basic
|
$
1.57
|
|
$
1.86
|
|
$
6.14
|
|
$
6.09
|
Diluted
|
$
1.56
|
|
$
1.86
|
|
$
6.11
|
|
$
6.06
|
Weighted average shares used
in computing
net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
55,939
|
|
55,858
|
|
55,918
|
|
55,777
|
Diluted
|
56,269
|
|
56,061
|
|
56,210
|
|
56,045
|
MSC INDUSTRIAL
DIRECT CO., INC.
Consolidated
Statements of Comprehensive Income
(In
thousands)
|
|
|
Fiscal Years
Ended
|
|
September 2,
2023
|
|
September 3,
2022
|
Net income, as
reported
|
$
343,107
|
|
$
340,482
|
Other comprehensive
income, net of tax:
|
|
|
|
Foreign currency translation
adjustments
|
7,091
|
|
(4,985)
|
Comprehensive
income
|
350,198
|
|
335,497
|
Comprehensive income
attributable to noncontrolling interest:
|
|
|
|
Net loss (income)
|
126
|
|
(696)
|
Foreign currency translation
adjustments
|
(1,695)
|
|
(152)
|
Comprehensive income
attributable to MSC Industrial
|
$
348,629
|
|
$
334,649
|
MSC INDUSTRIAL
DIRECT CO., INC.
Consolidated
Statements of Cash Flows
(In
thousands)
|
|
|
Fiscal Years
Ended
|
|
September 2,
2023
|
|
September 3,
2022
|
Cash Flows from
Operating Activities:
|
|
|
|
Net income
|
$
343,107
|
|
$
340,482
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
75,129
|
|
70,376
|
Non-cash operating
lease cost
|
20,966
|
|
17,190
|
Stock-based
compensation
|
18,639
|
|
19,264
|
Loss on disposal of
property, plant and equipment
|
557
|
|
921
|
Gain on sale of
property
|
—
|
|
(10,132)
|
Non-cash changes in
fair value of estimated contingent consideration
|
104
|
|
(879)
|
Provision for credit
losses
|
10,275
|
|
9,806
|
Deferred income taxes
and tax uncertainties
|
6,697
|
|
10,761
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
247,653
|
|
(123,571)
|
Inventories
|
(4,860)
|
|
(81,494)
|
Prepaid expenses and
other current assets
|
(6,918)
|
|
(7,429)
|
Operating lease
liabilities
|
(21,173)
|
|
(17,147)
|
Other assets
|
(615)
|
|
(2,258)
|
Accounts payable and
accrued liabilities
|
10,021
|
|
20,293
|
Total
adjustments
|
356,475
|
|
(94,299)
|
Net cash provided by
operating activities
|
699,582
|
|
246,183
|
Cash Flows from
Investing Activities:
|
|
|
|
Expenditures for
property, plant and equipment
|
(92,493)
|
|
(61,373)
|
Cash used in business
acquisitions, net of cash acquired
|
(20,182)
|
|
(57,865)
|
Net proceeds from sale
of property
|
—
|
|
24,745
|
Net cash used in
investing activities
|
(112,675)
|
|
(94,493)
|
Cash Flows from
Financing Activities:
|
|
|
|
Repurchases of Class A
Common Stock
|
(95,779)
|
|
(27,359)
|
Payments of regular
cash dividends
|
(176,715)
|
|
(167,376)
|
Proceeds from sale of
Class A Common Stock in connection with associate stock purchase
plan
|
4,415
|
|
4,296
|
Proceeds from exercise
of Class A Common Stock options
|
28,677
|
|
34,659
|
Borrowings under credit
facilities
|
333,000
|
|
374,000
|
Payments under credit
facilities
|
(548,000)
|
|
(364,500)
|
Payments under Shelf
Facility Agreements and Private Placement Debt
|
(125,000)
|
|
—
|
Payments on finance
lease and financing obligations
|
(2,193)
|
|
(2,466)
|
Other, net
|
1,195
|
|
606
|
Net cash used in
financing activities
|
(580,400)
|
|
(148,140)
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
8
|
|
(549)
|
Net increase (decrease)
in cash and cash equivalents
|
6,515
|
|
3,001
|
Cash and cash
equivalents—beginning of period
|
43,537
|
|
40,536
|
Cash and cash
equivalents—end of period
|
$
50,052
|
|
$
43,537
|
Supplemental Disclosure
of Cash Flow Information:
|
|
|
|
Cash paid for income
taxes
|
$
106,962
|
|
$
117,038
|
Cash paid for
interest
|
$
22,432
|
|
$
16,903
|
Non-GAAP Financial Measures
To supplement MSC's unaudited selected financial data presented
consistent with accounting principles generally accepted in
the United States ("GAAP"), the
Company discloses certain non-GAAP financial measures, including
non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income
from operations, non-GAAP operating margin, non-GAAP provision for
income taxes, non-GAAP net income and non-GAAP diluted earnings per
share, that exclude gain on sale of property (prior year),
acquisition-related costs, share reclassification costs, employee
retention credit ("ERC") tax benefit and restructuring and other
costs and tax effects.
These non-GAAP financial measures are not presented in
accordance with GAAP or an alternative for GAAP financial measures
and may be different from similar non-GAAP financial measures used
by other companies. The presentation of this additional information
is not meant to be considered in isolation or as a substitute for
the most directly comparable GAAP financial measures and should
only be used to evaluate MSC's results of operations in conjunction
with the corresponding GAAP financial measures.
This press release also includes certain forward-looking
information that is not presented in accordance with GAAP. The
Company believes that a quantitative reconciliation of such
forward-looking information to the most directly comparable
financial measure calculated and presented in accordance with GAAP
cannot be made available without unreasonable efforts because a
reconciliation of these non-GAAP financial measures would require
the Company to predict the timing and likelihood of potential
future events such as restructurings, M&A activity and other
infrequent or unusual gains and losses. Neither the timing or
likelihood of these events, nor their probable significance, can be
quantified with a reasonable degree of accuracy. Accordingly, a
reconciliation of such forward-looking information to the most
directly comparable GAAP financial measure is not provided.
- Results Excluding Gain on Sale of Property (prior
year), Acquisition-Related Costs, Share
Reclassification Costs, ERC Tax Benefit and Restructuring and Other
Costs
In calculating non-GAAP financial measures, we exclude gain on
sale of property (prior year), acquisition-related costs, share
reclassification costs, ERC tax benefit and restructuring and other
costs, and tax effects. Management makes these adjustments to
facilitate a review of the Company's operating performance on a
comparable basis between periods, for comparison with forecasts and
strategic plans, for identifying and analyzing trends in the
Company's underlying business and for benchmarking performance
externally against competitors. We believe that investors benefit
from seeing results from the perspective of management in addition
to seeing results presented in accordance with GAAP for the same
reasons and purposes for which management uses such non-GAAP
financial measures.
- Return on Invested Capital ("ROIC")
ROIC is calculated using a non-GAAP financial measure. We
calculate ROIC by dividing non-GAAP net operating profit after tax
("NOPAT") by average invested capital, a GAAP measure. NOPAT is
defined as tax effected income from operations. Average invested
capital is defined as net debt plus shareholder's equity using a
trailing 13-month average. We believe that ROIC is useful to
investors as a measure of performance and of the effectiveness of
the use of capital in our operations. We use ROIC as one measure to
monitor and evaluate operating performance. This method of
determining non-GAAP ROIC may differ from other companies' methods
and therefore may not be comparable to those used by other
companies. ROIC should be considered in addition to, rather than as
a substitute for, other information provided in accordance with
GAAP. The financial measure calculated under GAAP which is most
directly comparable to ROIC is considered to be the ratio of Net
income to Average invested capital. See below for the calculation
of ROIC and the reconciliation to the comparable GAAP measure.
MSC INDUSTRIAL DIRECT
CO., INC.
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
Thirteen Weeks Ended
September 2, 2023
|
(In thousands, except
percentages and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Financial
Measure
|
|
Items Affecting
Comparability
|
|
Non-GAAP
Financial
Measure
|
|
Total MSC
Industrial
|
|
Restructuring
and Other Costs
|
|
Share
Reclassification
Costs
|
|
ERC Tax
Benefit
|
|
Adjusted
Total MSC
Industrial
|
Net Sales
|
$
1,035,441
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1,035,441
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
615,907
|
|
—
|
|
—
|
|
—
|
|
615,907
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
419,534
|
|
—
|
|
—
|
|
—
|
|
419,534
|
Gross Margin
|
40.5 %
|
|
— %
|
|
— %
|
|
— %
|
|
40.5 %
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
299,264
|
|
—
|
|
10,139
|
|
—
|
|
289,125
|
Operating Exp as % of
Sales
|
28.9 %
|
|
— %
|
|
(1.0) %
|
|
— %
|
|
27.9 %
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other
Costs
|
2,215
|
|
2,215
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
118,055
|
|
(2,215)
|
|
(10,139)
|
|
—
|
|
130,409
|
Operating
Margin
|
11.4 %
|
|
0.2 %
|
|
1.0 %
|
|
— %
|
|
12.6 %
|
|
|
|
|
|
|
|
|
|
|
Total Other
Expense
|
(2,333)
|
|
—
|
|
—
|
|
6,566
|
|
(8,899)
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
115,722
|
|
(2,215)
|
|
(10,139)
|
|
6,566
|
|
121,510
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
28,281
|
|
(523)
|
|
(2,394)
|
|
1,550
|
|
29,648
|
Net income
|
87,441
|
|
(1,692)
|
|
(7,745)
|
|
5,016
|
|
91,862
|
Net loss attributable
to noncontrolling interest
|
(158)
|
|
—
|
|
—
|
|
—
|
|
(158)
|
Net income attributable
to MSC Industrial
|
$
87,599
|
|
$
(1,692)
|
|
$
(7,745)
|
|
$
5,016
|
|
$
92,020
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
1.56
|
|
$
(0.03)
|
|
$
(0.14)
|
|
$
0.09
|
|
$
1.64
|
|
*Individual amounts may
not agree to the total due to rounding.
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
Fiscal Year Ended
September 2, 2023
|
(In thousands, except
percentages and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Financial
Measure
|
|
Items Affecting
Comparability
|
|
Non-GAAP
Financial
Measure
|
|
Total MSC
Industrial
|
|
Restructuring
and Other Costs
|
|
Acquisition-
related Costs
|
|
Share
Reclassification
Costs
|
|
ERC Tax
Benefit
|
|
Adjusted
Total MSC
Industrial
|
Net Sales
|
$ 4,009,282
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
4,009,282
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
2,366,317
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,366,317
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
1,642,965
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,642,965
|
Gross Margin
|
41.0 %
|
|
— %
|
|
— %
|
|
— %
|
|
— %
|
|
41.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
1,151,295
|
|
—
|
|
398
|
|
12,388
|
|
—
|
|
1,138,509
|
Operating Exp as % of
Sales
|
28.7 %
|
|
— %
|
|
— %
|
|
(0.3) %
|
|
— %
|
|
28.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other
Costs
|
7,937
|
|
7,937
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
483,733
|
|
(7,937)
|
|
(398)
|
|
(12,388)
|
|
—
|
|
504,456
|
Operating
Margin
|
12.1 %
|
|
0.2 %
|
|
— %
|
|
0.3 %
|
|
— %
|
|
12.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other
Expense
|
(27,577)
|
|
—
|
|
—
|
|
—
|
|
6,566
|
|
(34,143)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
456,156
|
|
(7,937)
|
|
(398)
|
|
(12,388)
|
|
6,566
|
|
470,313
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
113,049
|
|
(2,040)
|
|
(100)
|
|
(3,183)
|
|
1,687
|
|
116,685
|
Net income
|
343,107
|
|
(5,897)
|
|
(298)
|
|
(9,205)
|
|
4,879
|
|
353,628
|
Net loss attributable
to noncontrolling interest
|
(126)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(126)
|
Net income attributable
to MSC Industrial
|
$
343,233
|
|
$ (5,897)
|
|
$
(298)
|
|
$
(9,205)
|
|
$
4,879
|
|
$
353,754
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
6.11
|
|
$
(0.10)
|
|
$
(0.01)
|
|
$
(0.16)
|
|
$
0.09
|
|
$
6.29
|
|
*Individual amounts may
not agree to the total due to rounding.
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
Fourteen Weeks Ended
September 3, 2022
|
(In thousands, except
percentages and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Financial
Measure
|
|
Items Affecting
Comparability
|
|
Non-GAAP
Financial
Measure
|
|
Total MSC
Industrial
|
|
Restructuring
and Other Costs
|
|
Gain on Sale of
Property
|
|
Acquisition-
related Costs
|
|
Adjusted
Total MSC
Industrial
|
Net Sales
|
$
1,022,245
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1,022,245
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
594,017
|
|
—
|
|
—
|
|
—
|
|
594,017
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
428,228
|
|
—
|
|
—
|
|
—
|
|
428,228
|
Gross Margin
|
41.9 %
|
|
— %
|
|
— %
|
|
— %
|
|
41.9 %
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
290,262
|
|
—
|
|
—
|
|
665
|
|
289,597
|
Operating Exp as % of
Sales
|
28.4 %
|
|
— %
|
|
— %
|
|
0.1 %
|
|
28.3 %
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other
Costs
|
4,121
|
|
4,121
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale of
Property
|
(10,132)
|
|
—
|
|
$
(10,132)
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
143,977
|
|
(4,121)
|
|
10,132
|
|
(665)
|
|
138,631
|
Operating
Margin
|
14.1 %
|
|
-0.4 %
|
|
1.0 %
|
|
-0.1 %
|
|
13.6 %
|
|
|
|
|
|
|
|
|
|
|
Total Other
Expense
|
(6,252)
|
|
—
|
|
—
|
|
—
|
|
(6,252)
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
137,725
|
|
(4,121)
|
|
10,132
|
|
(665)
|
|
132,379
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
33,371
|
|
(1,080)
|
|
2,655
|
|
(174)
|
|
31,970
|
Net income
|
104,354
|
|
(3,041)
|
|
7,477
|
|
(491)
|
|
100,409
|
Net income attributable to
noncontrolling interest
|
223
|
|
—
|
|
—
|
|
—
|
|
223
|
Net income attributable to
MSC Industrial
|
$ 104,131
|
|
$
(3,041)
|
|
$
7,477
|
|
$
(491)
|
|
$ 100,186
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
1.86
|
|
$
(0.06)
|
|
$
0.14
|
|
$
(0.01)
|
|
$
1.79
|
|
*Individual amounts may
not agree to the total due to rounding.
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
Fiscal Year Ended
September 3, 2022
|
(In thousands, except
percentages and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
Financial
Measure
|
|
Items Affecting
Comparability
|
|
Non-GAAP
Financial
Measure
|
|
Total MSC
Industrial
|
|
Restructuring
and Other Costs
|
|
Gain on Sale of
Property
|
|
Acquisition-
related Costs
|
|
Adjusted
Total MSC
Industrial
|
Net Sales
|
$
3,691,893
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
3,691,893
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods
Sold
|
2,133,645
|
|
—
|
|
—
|
|
—
|
|
2,133,645
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
1,558,248
|
|
—
|
|
—
|
|
—
|
|
1,558,248
|
Gross Margin
|
42.2 %
|
|
— %
|
|
— %
|
|
— %
|
|
42.2 %
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
1,083,862
|
|
—
|
|
—
|
|
876
|
|
1,082,986
|
Operating Exp as % of
Sales
|
29.4 %
|
|
— %
|
|
— %
|
|
0.0 %
|
|
29.3 %
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other
Costs
|
15,805
|
|
15,805
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale of
Property
|
(10,132)
|
|
—
|
|
$
(10,132)
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Income from
Operations
|
468,713
|
|
(15,805)
|
|
10,132
|
|
(876)
|
|
475,262
|
Operating
Margin
|
12.7 %
|
|
-0.4 %
|
|
0.3 %
|
|
0.0 %
|
|
12.9 %
|
|
|
|
|
|
|
|
|
|
|
Total Other
Expense
|
(17,581)
|
|
—
|
|
—
|
|
—
|
|
(17,581)
|
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
451,132
|
|
(15,805)
|
|
10,132
|
|
(876)
|
|
457,681
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
110,650
|
|
(4,016)
|
|
2,574
|
|
(223)
|
|
112,315
|
Net income
|
340,482
|
|
(11,789)
|
|
7,558
|
|
(653)
|
|
345,366
|
Net income attributable to
noncontrolling interest
|
696
|
|
—
|
|
—
|
|
—
|
|
696
|
Net income attributable to
MSC Industrial
|
$ 339,786
|
|
$
(11,789)
|
|
$
7,558
|
|
$
(653)
|
|
$ 344,670
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
|
|
|
Diluted
|
$
6.06
|
|
$
(0.21)
|
|
$
0.14
|
|
$
(0.01)
|
|
$
6.15
|
|
*Individual amounts may
not agree to the total due to rounding.
|
MSC INDUSTRIAL DIRECT
CO., INC.
|
Reconciliation of GAAP
and Non-GAAP Financial Information
|
Fiscal Years Ended
September 2, 2023 and September 3, 2022
|
(In thousands, except
percentages)
|
|
|
|
|
|
|
Fiscal Year
Ended
|
|
Fiscal Year
Ended
|
|
|
September 2,
2023
|
|
September 3,
2022
|
|
(a) Net income
attributable to MSC Industrial (twelve-month trailing)
|
$
343,233
|
|
$
339,786
|
|
NOPAT
|
|
|
|
|
Income from Operations
(twelve-month trailing)
|
483,733
|
|
468,713
|
|
Effective tax
rate
|
24.8 %
|
|
24.5 %
|
|
(b) Non-GAAP
NOPAT
|
363,850
|
|
353,751
|
|
(c) Adjusted Non-GAAP
NOPAT
|
379,531
|
1
|
358,664
|
2
|
Invested
Capital
|
|
|
|
|
Total MSC Industrial
shareholders' equity
|
$
1,479,164
|
|
$
1,350,434
|
|
Current portion of debt
including obligations under finance leases
|
229,935
|
|
325,680
|
|
Long-term debt
including obligations under finance leases
|
224,391
|
|
468,912
|
|
Total Debt
|
454,326
|
|
794,592
|
|
Cash and cash
equivalents
|
$
50,052
|
|
$
43,537
|
|
Net debt
|
404,274
|
|
751,055
|
|
Invested
capital
|
1,883,438
|
|
2,101,489
|
|
(d) Average invested
capital (thirteen-month trailing average)
|
1,951,818
|
|
1,999,142
|
|
(e) Adjusted average
invested capital (thirteen-month trailing average)
|
1,953,516
|
1
|
1,999,810
|
2
|
|
|
|
|
|
(a)/(d) Net income to
Average invested capital
|
17.6 %
|
|
17.0 %
|
|
(b)/(d) Non-GAAP
ROIC
|
18.6 %
|
|
17.7 %
|
|
(c)/(e) Adjusted
Non-GAAP ROIC
|
19.4 %
|
|
17.9 %
|
|
|
|
|
|
|
1 Adjusted
Non-GAAP NOPAT and invested capital excludes $7.9 million of
restructuring and other costs, $0.4 million of acquisition-related
charges and
$12.4 million of share reclassification costs, net of an
associated tax benefit of $5.3 million.
|
2 Adjusted
Non-GAAP NOPAT and invested capital excludes $15.8 million of
restructuring and other costs, $10.1 million gain on sale of
property and
$0.9 million of acquisition-related charges, net of an
associated tax benefit of $1.7 million.
|
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SOURCE MSC Industrial Supply Co.