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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.
MSC Industrial Direct Company, Inc. Price, Consensus and EPS Surprise
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%.
Image Source: Zacks Investment Research
Zacks Rank & Other Stocks to Consider
MSC Industrial currently carries a Zacks Rank #3 (Hold).
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 (MSM) Q2 Earnings & Revenues Beat, Rise Y/Y
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.
MSC Industrial Direct Company, Inc. Price, Consensus and EPS Surprise
MSC Industrial Direct Company, Inc. price-consensus-eps-surprise-chart | MSC Industrial Direct Company, Inc. Quote
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%.
Image Source: Zacks Investment Research
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.