Exhibit 99.1

 

MSC REPORTS FISCAL 2018 FIRST QUARTER RESULTS



MSC BOARD APPROVES ADDITIONAL 2 MILLION SHARE REPURCHASE AUTHORIZATION





FISCAL Q1 2018 HIGHLIGHTS





MELVILLE, NY and DAVIDSON, NC, January 10, 2018 - MSC INDUSTRIAL SUPPLY CO. (NYSE: MSM),  "MSC" or the "Company," a premier distributor of Metalworking and Maintenance, Repair and Operations ("MRO") products and services to industrial customers throughout North America,  today reported financial results for its fiscal 2018 first quarter ended December 2, 2017. The Company also announced that its Board of Directors approved an additional 2 million share repurchase authorization, bringing the total current authorization to approximately 2.8 million shares.

 



1In millions unless noted. 2Based on 56.5 million diluted shares outstanding for FY18  Q1.  3 Based on 56.6 million diluted shares outstanding for FY17  Q1. 



Erik Gershwind, president and chief executive officer, said, "The environment remained solid in the first fiscal quarter, and our own business reflected this momentum, with growth rates improving or holding steady across all customer types. We delivered low double-digit sales growth on an ADS basis, and another quarter of sequential gross margin stability and productivity improvements, with operating expenses as a percentage of revenue declining once again."



Rustom Jilla, executive vice president and chief financial officer, added, "Our reported average daily sales rose 12%, operating margin was 12.9%, and EPS rose by 9.4% over the prior year’s fiscal first quarter. Excluding our recently acquired DECO business, our quarterly average daily sales rose 7.7% over the same period a year ago, our gross margin was down slightly, our operating expenses to sales improved, and our operating margin expanded by 20 basis points to 13.4%.* We also had a strong quarter in terms of cash generation, with net cash provided by operating activities up 8% to $82 million. Finally, the recently announced 21% quarterly dividend increase and the additional share repurchase authorization are reflective of the significant positive impact of tax reform on our earnings and cash flow, as well as our ongoing commitment to allocating capital to enhance total shareholder returns."



Gershwind concluded, "Looking forward, it is an exciting time for U.S. manufacturing and MSC on multiple fronts. First, after several years of a weak pricing environment, many suppliers have now raised list prices, and we expect to follow suit in the near-term. Second, customer sentiment and industry indices are positive, pointing to continued U.S. manufacturing growth prospects. And third, we see the recent tax reform as a significant tailwind not just for our own EPS, but also for our customers and the broader manufacturing economy in the coming years. We are well positioned to take advantage of this better environment, particularly given the improvements that we have made to our business in recent years."



The Company has increased its buyback authorization by 2 million shares. The timing and actual number of shares repurchased will depend on a variety of factors, including price, market conditions, and applicable legal and regulatory requirements. The share repurchase program does not obligate the Company to repurchase any specific number of shares and may be suspended or terminated at any time without prior notice.

---

 

Outlook



Based on current market conditions, the Company expects net sales for the second quarter of fiscal 2018 to be between $761 million and $775 million. At the midpoint, average daily sales are expected to increase roughly 9.1% compared to last year’s second quarter. The Company’s guidance for diluted earnings per share for the second quarter of fiscal 2018 is $1.93 to $2.03, which includes the following components:









Conference Call Information



MSC will host a conference call today at 8:30 a.m. EST to review the Company’s fiscal 2018 first quarter results. The call, accompanying slides, and other operational statistics may be accessed at: http://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 January 17, 2018.



The Company’s reporting date for fiscal 2018 second quarter results is scheduled for April 10, 2018.



Contact Information

 

About MSC Industrial Supply Co. MSC Industrial Supply Co. (NYSE:MSM) is a leading North American distributor of metalworking and maintenance, repair, and operations (MRO) products and services. We help our customers drive greater productivity, profitability and growth with more than 1 million products, inventory management and other supply chain solutions, and deep expertise from over 75 years of working with customers across industries.

Our experienced team of more than 6,500 associates is dedicated to working side by side 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, please visit 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, expected benefits from our investment and strategic plans, and expected future margins, 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: general economic conditions in the markets in which we operate, changing customer and product mixes, competition,

---

 

including the adoption by competitors of aggressive pricing strategies and sales methods, industry consolidation, volatility in commodity and energy prices, the outcome of government or regulatory proceedings or future litigation, 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, shipping ports, our headquarters or our customer fulfillment centers, dependence on our information systems and the risk of business disruptions arising from changes to our information systems, disruptions due to computer system or network failures, computer viruses, physical or electronics break-ins and cyber-attacks, retention of key personnel, the loss of key suppliers or supply chain disruptions, risks associated with changes to trade policies pertaining to sourcing products, failure to comply with applicable environmental, health and safety laws and regulations, goodwill and intangible assets recorded as a result of our acquisitions could be impaired, risks associated with the integration of acquired businesses or other strategic transactions, and financial restrictions on outstanding borrowings. 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. 



---

 

MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)























---

 

MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

 



















































MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)



































































---

 

MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)





























---

 

Non-GAAP Financial Measures



MSC Reported excluding DECO Tool Supply Co



To supplement MSC’s unaudited selected financial data presented consistent with Generally Accepted Accounting Principles (“GAAP”), the Company discloses certain non-GAAP financial measures that exclude the results of our acquisition of DECO Tool Supply Co. (“DECO”) on July 31, 2017, including non-GAAP net sales, non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income and non-GAAP diluted earnings per share.  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 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 the Company’s performance.

 

In calculating non-GAAP financial measures, we exclude the results of DECO to facilitate a review of the comparability of the Company’s operating performance on a period-to-period basis. We use non-GAAP measures to evaluate the operating performance of our business (excluding DECO), for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. 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:













---