Exhibit 99.1

 

	MSC Industrial Direct Co., Inc. 75 Maxess Road Melville, New York 11747-3151 Tel. 800.645.7270 Fax. 800.255.5067 www.mscdirect.com
	news

 

 

Investor Contact:

John G. Chironna

VP Investor Relations & Treasurer

MSC Industrial Direct Co., Inc.

(516) 812-1216

 

Media Contact:

Rachel Rosenblatt

FTI Consulting – Strategic Communications

(212) 850-5600

 

FOR RELEASE

 

MSC INDUSTRIAL DIRECT CO., INC. REPORTS

FISCAL 2013 THIRD QUARTER RESULTS

 

- Net Sales of $636.9 Million in Fiscal 2013 Third Quarter -

 

- Adjusted Diluted Earnings per Share of $1.05, GAAP Diluted Earnings per Share of $0.98 in Fiscal 2013 Third Quarter -

  

Melville, NY, July 10, 2013 - MSC INDUSTRIAL DIRECT CO., INC. (NYSE: MSM), “MSC” or the “Company,” a premier distributor of Metalworking and Maintenance, Repair and Operations (“MRO”) supplies to industrial customers throughout the United States and Canada, today reported financial results for its fiscal third quarter ended June 1, 2013.

 

Net sales for the third quarter of fiscal 2013 were $636.9 million, an increase of 4.1% (5.7% on an average daily sales basis) over net sales of $612.0 million in the third quarter of fiscal 2012. The recently acquired Barnes Distribution North America (“BDNA”) business contributed approximately $34.7 million to net sales, reflecting its contribution to net sales from the acquisition date of April 22, 2013, to the end of the fiscal third quarter. Excluding non-recurring costs of $6.4 million associated with the BDNA acquisition and the co-location of the Company’s headquarters, adjusted operating income for the fiscal 2013 third quarter was $106.6 million, or 16.7% of net sales, compared to GAAP operating income of $110.9 million, or 18.1% of net sales in the same quarter a year ago. GAAP operating income for the fiscal 2013 third quarter was $100.2 million.

 

Excluding the after tax effects of non-recurring costs, adjusted net income for the third quarter of fiscal 2013 was $66.7 million, or $1.05 per diluted share (based on 63.1 million diluted shares outstanding), compared to GAAP net income of $70.2 million, or $1.10 per diluted share, a year ago (based on 63.1 million diluted shares outstanding). The BDNA operations contributed approximately $0.02 to the fiscal third quarter EPS and GAAP net income for the third quarter of fiscal 2013 was $62.4 million, or $0.98 per diluted share.

 

Erik Gershwind, President and Chief Executive Officer, stated, “We continue to fuel share gains in our targeted markets despite a sluggish manufacturing sector, particularly in metalworking-related end markets.  The organic growth investments we have made in E-commerce, vending and other areas are offsetting a weak demand environment.”

 

Jeff Kaczka, Executive Vice President and Chief Financial Officer, commented, "Our cost reduction and tight working capital management enabled us to exceed our third quarter EPS guidance against the backdrop of a soft demand environment. For the fourth quarter, our adjusted EPS at the midpoint of guidance is 89 cents, which is down from $1.09 last year, reflecting primarily the extra week in FY12 and the lack of the mid-year price increase. After those adjustments, the fourth quarter will be very similar to the past couple of quarters.”

 

 

MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2013 THIRD QUARTER RESULTS          Page - 2 -

 

Mr. Gershwind concluded, “I remain confident about our future prospects for revenue and earnings growth, as we execute on our strategic investments and gain traction with the new, high margin growth platform in BDNA.  We are excited about our early returns on BDNA and are beginning to execute our integration plans including distribution network and headquarter consolidations with MSC.  We are on track to achieving our long-term growth goal of $4 billion in revenue by FY2016.”

  

Outlook

Based on a continuation of current market conditions, for the fiscal 2013 fourth quarter the Company expects net sales including BDNA to be between $661 million and $673 million. At the midpoint, average daily sales exclusive of BDNA are expected to be flat. Excluding non-recurring costs related to the co-location of the Company’s headquarters and non-recurring transaction and integration costs associated with BDNA, the Company expects adjusted diluted earnings per share for the fourth quarter of fiscal 2013 to be between $0.87 and $0.91.

 

The Company expects the non-recurring costs related to the co-location of the Company’s headquarters to have a $0.03 impact and the integration costs related to the BDNA acquisition to have approximately a $0.03 impact on its GAAP diluted earnings per share in the fiscal fourth quarter.

 

The management of MSC will host a conference call today, at 11:00 a.m. Eastern Time, to review the Company’s results for the fiscal 2013 third quarter. The call and accompanying slides may be accessed via the Internet on MSC’s website located at: http://investor.mscdirect.com. A replay of the conference call will be available on the Company’s website until Friday, August 9, 2013.

 

Alternatively, the conference call can be accessed by dialing 1-877-270-2148 (U.S.) or 1-412-902-6510 (international). A replay will be available within one hour of the conclusion of the call and will remain available until Friday, August 9, 2013. The replay is accessible by dialing 1-877-344-7529 (U.S.) or 1-412-317-0088 (international) and entering passcode 10030820.

 

The Company’s next reporting date for its fiscal 2013 fourth quarter will be October 30, 2013.

 

An explanation and reconciliation of the non-GAAP financial measures contained in this press release to the most directly comparable GAAP financial measures are included in the attached tables.

 

About MSC Industrial Direct Co., Inc.

MSC Industrial Direct Co., Inc. is one of the largest distributors of Metalworking and Maintenance, Repair and Operations ("MRO") supplies to industrial customers throughout the United States and Canada. MSC employs one of the industry's largest sales forces and distributes approximately 600,000 industrial products from approximately 3,000 suppliers. In-stock availability is approximately 99%, with next day standard delivery to the contiguous United States on qualifying orders up until 8 p.m. Eastern Time. For more information, visit MSC's website at http://www.mscdirect.com.

 

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 historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including statements about expected future results, are 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. Factors that could cause actual results to differ materially from those in forward-looking statements include: problems with successfully integrating acquired operations, unanticipated delays or costs associated with opening or expanding our customer fulfillment centers or customer service centers, current economic, political and social conditions, changing customer and product mixes, financial restrictions on outstanding borrowings, industry consolidation, the loss of key suppliers or supply chain disruptions, competition, general economic conditions in the markets in which we operate, volatility in commodity and energy prices, credit risk of our customers, risk of cancellation or rescheduling of orders, work stoppages or other business interruptions (including those due to extreme weather conditions) at transportation centers or shipping ports, the risk of war, terrorism and similar hostilities, dependence on our information systems and on key personnel, and the outcome of potential government or regulatory proceedings or future litigation relating to pending or future claims, inquiries or audits. 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 the reports on Forms 10-K and 10-Q that we file with the U.S. Securities and Exchange Commission. We assume no obligation to update any of these forward-looking statements.

 

(Tables Follow)

 

 

MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2013 THIRD QUARTER RESULTS          Page - 3 -

 

MSC INDUSTRIAL DIRECT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

 

 

		June 1, 2013				September 1, 2012
		(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	58,017			$	168,453
Accounts receivable, net of allowance for doubtful accounts			337,779				297,215
Inventories			414,268				393,412
Prepaid expenses and other current assets			43,584				29,313
Deferred income taxes			31,718				31,718
Total current assets			885,366				920,111
Property, plant and equipment, net			234,643				174,597
Goodwill			632,801				289,124
Identifiable intangibles, net			159,807				51,212
Other assets			6,875				9,832
Total assets		$	1,919,492			$	1,444,876
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Revolving credit note		$	40,000			$	--
Current maturities of long-term debt			10,527				1,007
Accounts payable			106,082				96,640
Accrued liabilities			88,240				72,868
Total current liabilities			244,849				170,515
Long-term debt, net of current maturities			242,353				2,189
Deferred income taxes and tax uncertainties			85,180				85,061
Total liabilities			572,382				257,765
Commitments and Contingencies
Shareholders’ Equity:
Preferred Stock			--				--
Class A common stock			55				53
Class B common stock			14				16
Additional paid-in capital			522,327				483,682
Retained earnings			1,095,568				970,965
Accumulated other comprehensive loss			(3,608	)			(2,443	)
Class A treasury stock, at cost			(267,246	)			(265,162	)
Total shareholders’ equity			1,347,110				1,187,111
Total liabilities and shareholders’ equity		$	1,919,492			$	1,444,876

 

 

MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2013 THIRD QUARTER RESULTS          Page - 4 -

 

MSC INDUSTRIAL DIRECT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(In thousands, except net income per share data)

(Unaudited)

 

 

 

		Thirteen Weeks Ended								Thirty-Nine Weeks Ended
		June 1, 2013				May 26, 2012				June 1, 2013				May 26, 2012
Net sales		$	636,923			$	611,970			$	1,783,876			$	1,720,647
Cost of goods sold			347,410				332,387				972,905				929,471
Gross profit			289,513				279,583				810,971				791,176
Operating expenses			189,267				168,724				517,797				486,966
Income from operations			100,246				110,859				293,174				304,210
Other income (expense):
Interest expense			(1,141	)			(63	)			(1,266	)			(179	)
Interest income			31				42				113				160
Other income (expense), net			(5	)			15				66				(5	)
Total other income (expense)			(1,115	)			(6	)			(1,087	)			(24	)
Income before provision for income taxes			99,131				110,853				292,087				304,186
Provision for income taxes			36,777				40,642				110,467				114,070
Net income		$	62,354			$	70,211			$	181,620			$	190,116
Per Share Information:
Net income per common share:
Basic		$	0.99			$	1.11			$	2.88			$	3.02
Diluted		$	0.98			$	1.10			$	2.86			$	3.00
Weighted average shares used in computing net income per common share:
Basic			62,808				62,651				62,628				62,517
Diluted			63,134				63,055				62,947				62,896
Cash dividend declared per common share		$	0.30			$	0.25			$	0.90			$	0.75

  

 

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MSC INDUSTRIAL DIRECT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

 

		Thirteen Weeks Ended								Thirty-Nine Weeks Ended
		June 1, 2013				May 26, 2012				June 1, 2013				May 26, 2012
Net income, as reported		$	62,354			$	70,211			$	181,620			$	190,116
Cumulative foreign currency translation adjustment			(388	)			(132	)			(1,165	)			(505	)
Comprehensive income		$	61,966			$	70,079			$	180,455			$	189,611

 

 

 

 

MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2013 THIRD QUARTER RESULTS          Page - 6 -

 

MSC INDUSTRIAL DIRECT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

		Thirty-Nine Weeks Ended
		June 1, 2013				May 26, 2012
Cash Flows from Operating Activities:
Net income		$	181,620			$	190,116
Adjustments to reconcile net income to net cash      provided by operating activities:
Depreciation and amortization			33,994				25,279
Stock-based compensation			11,989				11,410
Loss on disposal of property, plant, and equipment			791				876
Provision for doubtful accounts			2,111				2,520
Deferred income taxes			—				3,025
Excess tax benefits from stock-based compensation			(5,563	)			(4,844	)
Write-off of deferred financing costs on previous credit facility			594				—
Changes in operating assets and liabilities, net of amounts associated with business acquired:
Accounts receivable			(6,791	)			(30,150	)
Inventories			28,084				(44,499	)
Prepaid expenses and other current assets			(11,136	)			(11,837	)
Other assets			2,162				4,388
Accounts payable and accrued liabilities			7,574				(1,076	)
Total adjustments			63,809				(44,908	)
Net cash provided by operating activities			245,429				145,208
Cash Flows from Investing Activities:
Expenditures for property, plant and equipment			(62,305	)			(28,753	)
Cash used in business acquisition, net of cash received			(548,769	)			(33,451	)
Net cash used in investing activities			(611,074	)			(62,204	)
Cash Flows from Financing Activities:
Purchases of treasury stock			(3,656	)			(47,986	)
Payment of cash dividends			(56,843	)			(47,341	)
Payments on capital lease and financing obligations			(981	)			(721	)
Excess tax benefits from stock-based compensation			5,563				4,844
Proceeds from sale of Class A common stock in connection with associate stock purchase plan			2,891				2,630
Proceeds from exercise of Class A common stock options			19,986				19,566
Borrowings under financing obligation			257				1,050
Borrowings under Credit Facility			370,000				—
Credit facility financing costs			(1,904	)			—
Pay down revolving loans from credit facility			(80,000	)			—
Net cash provided (used) in financing activities			255,313				(67,958	)
Effect of foreign exchange rate changes on cash and cash equivalents			(104	)			(56	)
Net (decrease) increase in cash and cash equivalents			(110,436	)			14,990
Cash and cash equivalents – beginning of period			168,453				95,959
Cash and cash equivalents – end of period		$	58,017			$	110,949
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes		$	102,107			$	113,299
Cash paid for interest		$	367			$	34

 

 

 

 

# # #

 

 

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Non-GAAP Financial Measures

 

To supplement MSC’s unaudited selected financial data presented on a basis consistent with Generally Accepted Accounting Principles (“GAAP”), the Company discloses certain non-GAAP financial measures, including adjusted operating income, adjusted net income, and adjusted net income per diluted share. The adjusted supplemental measures exclude non-recurring costs associated with the Barnes Distribution North America (“BDNA”) and co-location of our corporate headquarters in Davidson, North Carolina and the related tax effects. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with MSC's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate MSC’s results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of Company performance.

 

In calculating non-GAAP financial measures, we exclude these non-recurring costs to facilitate a review of the comparability of the Company's operating performance on a period-to-period basis because such costs are not, in our view, related to the Company's ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. In addition, we use non-GAAP financial measures as performance metrics for management incentive programs. Since we find these measures to be useful, we believe that investors benefit from seeing results "through the eyes" of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financials, provide useful information to investors by offering:

 

	·	the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;
	·	the ability to better identify trends in the Company’s underlying business and perform related trend analyses; and
	·	a better understanding of how management plans and measures the Company’s underlying business.

 

The following tables reconcile GAAP operating income, GAAP net income and GAAP net income per diluted share ("EPS") to non-GAAP adjusted operating income, adjusted net income, and adjusted net income per diluted share:

 

		Thirteen Weeks Ended
		June 1, 2013
(in thousands)		$				Margin
GAAP Operating income		$	100,246				15.7	%
Non-recurring costs			6,385
Adjusted Operating income		$	106,631				16.7	%

 

 

 

MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2013 THIRD QUARTER RESULTS          Page - 8 -

 

 

		Thirteen Weeks Ended
		June 1, 2013				May 26, 2012
(in thousands)		$				$
Sales		$	636,923			$	611,970
Cost of Sales			347,410				332,387
Gross Margin			289,513				279,583
Operating Expenses			189,267				168,724
Income from Operations			100,246				110,859
Non-recurring costs			6,385				-
Adjusted Operating income		$	106,631			$	110,859

 

 

		Thirteen Weeks Ended
		June 1, 2013
						Diluted
(in thousands, except per share amounts)		$(after tax)				EPS
GAAP net income		$	62,354			$	0.98
Non-recurring costs*			4,390				0.07
Adjusted net income		$	66,744			$	1.05

 

 

 

* On a pre-tax basis includes approximately $930 of non-recurring relocation costs associated with the Co-Location of the Company’s headquarters in Davidson, North Carolina and approximately $6,049 of non-recurring transaction costs associated with the BDNA acquisition for the thirteen weeks ended June 1, 2013. The non-recurring costs were calculated using an effective tax rate of 37.1%.