Posted January 9, 2019

MSC posts 8.2 percent sales gain

MSC Industrial Supply reported sales of nearly $832 million for the first quarter of fiscal 2019, an 8.2 percent gain from $769 million in the same period last year.

The acquisition of All Integrated Solutions (AIS) in May 2018, the Franklin, Wisconsin-based distributor of industrial fasteners and components, accounted for 2.3 percent of the increase in sales.

Net income of $74.2 million, or $1.33 per share, was up from net income of $59.6 million, or $1.05, in last year's first quarter.

"The industrial economy remained strong in the fiscal first quarter, although there is currently more uncertainty than a few months ago due to potential economic and trade overhangs and the government shut-down. Our net sales in the first quarter were slightly above the mid-point of our guidance, with core customers and national accounts achieving high single-digit growth, tempered by the expected weakness in government," said Erik Gershwind, president and chief executive officer. 

Rustom Jilla, executive vice president and chief financial officer, added, "Our gross margin was in-line with our expectations. Price contribution remained positive, while product cost increases and mix were headwinds"

Jilla added that operating margin was down roughly 50 basis points from the prior year, reflecting primarily the impact of AIS and the year-over-year decline in gross margin. 

Gershwind concluded, "Looking forward, given the significant supplier price increase activity that we have seen, we anticipate implementing a meaningful price increase later in our fiscal second quarter. Given the timing of the increase, we expect the impact to be fully reflected in our fiscal third and fourth quarters. This price increase, coupled with increasing traction from our sales transformation efforts, drives our expectation of significantly higher operating margins in the second half of the fiscal year."