MSC Industrial Direct Company, Inc. (MSM - Free Report) reported second-quarter fiscal 2023 (ended on Mar 4, 2023) adjusted earnings per share (EPS) of $1.45, beating the Zacks Consensus Estimate of $1.35. The bottom line improved 12% year over year on the back of double-digit average daily sales growth and benefits from its Mission Critical initiative.
Including one-time items, the company reported EPS of $1.41 compared with the year-ago quarter’s $1.25.
MSC Industrial generated revenues of around $962 million in the quarter under review, up 11.5% from $863 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $936 million. Average daily sales growth was approximately 11 percentage points higher than the IP Index. MSM has been witnessing double-digit average daily sales growth for the fourth consecutive quarter.
Operational Update
The cost of goods sold increased 14% year over year to $565 million. Gross profit was up 8% to $397 million. The gross margin was 41.3% compared with the year-ago quarter’s 42.5%.
Operating expenses rose 5% year over year to $280.6 million in the fiscal second quarter. Adjusted operating income amounted to $117 million, up 17% from $100 million in the prior-year quarter . Adjusted operating margin was 12.2% in the reported quarter compared with the prior-year quarter’s 11.6%.
Improved productivity led to the operating margin expansion, as benefits from MSM’s Mission Critical initiatives helped mitigate ongoing cost headwinds.
Financial Position
MSC Industrial had cash and cash equivalents of $49.6 million at the end of the fiscal second quarter of 2023 compared with $43.5 million at the end of fiscal 2022. The company generated cash flow from operating activities of $416 million in the first half of fiscal 2023, reflecting a solid improvement from $57.4 million in the first half of fiscal 2022.
The company’s long-term debt was $274 million at the end of the reported quarter, down from $469 million at fiscal 2022-end.
Guidance
MSC Industrial expects average daily sales growth of 5% to 9% for fiscal 2023. The adjusted operating margin is expected between 12.7% and 13.3%. The company expects additional savings of $15 million from the Mission Critical initiative in fiscal 2023.
Price Performance
MSC Industrial’s shares have gained 0.3% in the past year compared with the industry’s fall of 0.7%.
Zacks Rank & Other Stocks to Consider
MSC Industrial currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are OI Glass (OI - Free Report) , Encore Wire (WIRE - Free Report) , and Illinois Tool Works (ITW - Free Report) . OI and WIRE flaunt a Zacks Rank #1 (Strong Buy) at present, and ITW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 74.1% in the last year.
Encore Wire has an average trailing four-quarter earnings surprise of 146.8%. The Zacks Consensus Estimate for WIRE’s 2023 earnings is pegged at $19.76 per share. The consensus estimate for 2023 earnings has moved north by 1.7% in the past 60 days. Its shares gained 61.3% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings rose 4% in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 16.9% in the last year.
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MSC Industrial Direct Company, Inc. (MSM - Free Report) reported second-quarter fiscal 2023 (ended on Mar 4, 2023) adjusted earnings per share (EPS) of $1.45, beating the Zacks Consensus Estimate of $1.35. The bottom line improved 12% year over year on the back of double-digit average daily sales growth and benefits from its Mission Critical initiative.
Including one-time items, the company reported EPS of $1.41 compared with the year-ago quarter’s $1.25.
MSC Industrial generated revenues of around $962 million in the quarter under review, up 11.5% from $863 million reported in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $936 million. Average daily sales growth was approximately 11 percentage points higher than the IP Index. MSM has been witnessing double-digit average daily sales growth for the fourth consecutive quarter.
Operational Update
The cost of goods sold increased 14% year over year to $565 million. Gross profit was up 8% to $397 million. The gross margin was 41.3% compared with the year-ago quarter’s 42.5%.
Operating expenses rose 5% year over year to $280.6 million in the fiscal second quarter. Adjusted operating income amounted to $117 million, up 17% from $100 million in the prior-year quarter . Adjusted operating margin was 12.2% in the reported quarter compared with the prior-year quarter’s 11.6%.
Improved productivity led to the operating margin expansion, as benefits from MSM’s Mission Critical initiatives helped mitigate ongoing cost headwinds.
Financial Position
MSC Industrial had cash and cash equivalents of $49.6 million at the end of the fiscal second quarter of 2023 compared with $43.5 million at the end of fiscal 2022. The company generated cash flow from operating activities of $416 million in the first half of fiscal 2023, reflecting a solid improvement from $57.4 million in the first half of fiscal 2022.
The company’s long-term debt was $274 million at the end of the reported quarter, down from $469 million at fiscal 2022-end.
Guidance
MSC Industrial expects average daily sales growth of 5% to 9% for fiscal 2023. The adjusted operating margin is expected between 12.7% and 13.3%. The company expects additional savings of $15 million from the Mission Critical initiative in fiscal 2023.
Price Performance
MSC Industrial’s shares have gained 0.3% in the past year compared with the industry’s fall of 0.7%.
Zacks Rank & Other Stocks to Consider
MSC Industrial currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are OI Glass (OI - Free Report) , Encore Wire (WIRE - Free Report) , and Illinois Tool Works (ITW - Free Report) . OI and WIRE flaunt a Zacks Rank #1 (Strong Buy) at present, and ITW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 74.1% in the last year.
Encore Wire has an average trailing four-quarter earnings surprise of 146.8%. The Zacks Consensus Estimate for WIRE’s 2023 earnings is pegged at $19.76 per share. The consensus estimate for 2023 earnings has moved north by 1.7% in the past 60 days. Its shares gained 61.3% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings rose 4% in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 16.9% in the last year.
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A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
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