MELVILLE, N.Y., Jan. 6, 2011 /PRNewswire/ -- MSC INDUSTRIAL DIRECT CO., INC. (NYSE: MSM), "MSC" or the "Company," one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations ("MRO") supplies to industrial customers throughout the United States, today reported financial results for its first quarter ended November 27, 2010.
For the fiscal 2011 first quarter, net sales rose 22.9% to $472.8 million, compared with $384.8 million in the prior year period. Operating income increased 51.2% in the fiscal 2011 first quarter to $77.2 million, or 16.3% of net sales, compared with $51.0 million, or 13.3% of net sales, in the prior year period. For the first quarter of fiscal 2011, the Company reported net income of $47.6 million, an increase of 51.4% over net income of $31.4 million in the first quarter of fiscal 2010. Diluted earnings per share in the fiscal 2011 first quarter were $0.75 (based on 62.8 million diluted shares outstanding), compared to $0.50 (based on 62.7 million diluted shares outstanding) in the same period a year ago, an increase of 50.0%.
David Sandler, President and Chief Executive Officer said, "Our first quarter results reflect strong performance in a highly competitive environment. We made solid progress executing on our strategic investment program designed to capitalize on the unique opportunity we see to leverage our model and fuel further market share gains. In addition, we recently completed the acquisition of Rutland Tool & Supply Co. ("Rutland") which supports our growth strategy by further strengthening our presence in metalworking while also building out our presence in the Western U.S."
Erik Gershwind, Executive Vice President and Chief Operating Officer, stated, "We saw excellent revenue growth in the first quarter against more challenging comparables, driven by strong market share gains, the resurgence of the U.S. manufacturing base and strong performance within our core customer base. These factors more than offset some slowing in demand from government customers, who are feeling more financial restraints as their budgets remain under pressure. Overall, we are encouraged by improving customer sentiment and the macro indicators in the market."
Mr. Sandler concluded, "We are pleased with our progress in delivering on our strategic objectives of disproportionate revenue growth, generating significant operating leverage and investing for the future. We have never been more confident in our position to capitalize on the opportunities ahead of us."
For the fiscal 2011 second quarter, the Company expects net sales to be between $466.0 million and $478.0 million, which includes approximately $6.0 million in sales from the recently completed acquisition of Rutland, and expects diluted earnings per share for the second quarter of fiscal 2011 to be between $0.66 and $0.70, which includes dilution of $0.03 from the Rutland acquisition, primarily arising from acquisition and integration costs.
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 2011 first quarter, and to comment on current operations. The call may be accessed via the Internet on the home page of MSC's website located at: www.mscdirect.com. A replay of the conference call will be available on the Company's website through January 20, 2011.
About MSC Industrial Direct Co., Inc.
MSC Industrial Direct Co., Inc. is one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations ("MRO") supplies to industrial customers throughout the United States. MSC employs one of the industry's largest sales forces and distributes approximately 600,000 industrial products from approximately 3,000 suppliers to approximately 317,000 customers. In-stock availability is approximately 99%, with next day standard delivery to the contiguous United States on qualifying orders up until 8:00 p.m. Eastern Time. MSC reaches its customers through a combination of approximately 22 million direct-mail catalogs, 96 branch sales offices, 986 sales people, the Internet and associations with some of the world's most prominent B2B eCommerce portals. For more information, visit the Company's website at http://www.mscdirect.com.
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Statements in this Press Release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained herein which are not statements of historical facts and that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including statements about the expected benefits of the acquisition shall be deemed to be forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events, actual results and performance, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. 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, without limitation, problems with successfully integrating acquired operations, current economic, political and social conditions, changing customer and product mixes, financial restrictions on outstanding borrowings, industry consolidation, competition, general economic conditions in the markets in which the Company operates, 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 the Company's 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 Company's reports on Forms 10-K, 10-Q and 8-K that the Company files with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release are based on current expectations and the Company assumes no obligation to update these forward-looking statements.
(Tables Follow)
MSC INDUSTRIAL DIRECT CO., INC. Condensed Consolidated Balance Sheets (In thousands) | ||||
November 27, (Unaudited) | August 28, | |||
ASSETS | ||||
Current Assets: | ||||
Cash and cash equivalents | $ 80,545 | $ 121,191 | ||
Accounts receivable, net of allowance for doubtful accounts | 225,488 | 221,013 | ||
Inventories | 299,069 | 285,985 | ||
Prepaid expenses and other current assets | 21,450 | 20,498 | ||
Deferred income taxes | 25,854 | 27,849 | ||
Total current assets | 652,406 | 676,536 | ||
Property, plant and equipment, net | 142,878 | 143,609 | ||
Goodwill | 271,765 | 271,765 | ||
Identifiable intangibles, net | 46,992 | 48,751 | ||
Other assets | 9,418 | 12,662 | ||
Total assets | $ 1,123,459 | $ 1,153,323 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current Liabilities: | ||||
Current maturities of long-term notes payable | $ 18,818 | $ 39,361 | ||
Accounts payable | 79,066 | 81,220 | ||
Accrued liabilities | 67,748 | 69,704 | ||
Total current liabilities | 165,632 | 190,285 | ||
Deferred income taxes and tax uncertainties | 64,796 | 63,158 | ||
Total liabilities | 230,428 | 253,443 | ||
Commitments and Contingencies | ||||
Shareholders' Equity: | ||||
Class A common stock | 50 | 48 | ||
Class B common stock | 17 | 18 | ||
Additional paid-in capital | 402,594 | 378,315 | ||
Retained earnings | 646,076 | 675,968 | ||
Accumulated other comprehensive loss | (2,547) | (2,660) | ||
Class A treasury stock, at cost | (153,159) | (151,809) | ||
Total shareholders' equity | 893,031 | 899,880 | ||
Total liabilities and shareholders' equity | $ 1,123,459 | $ 1,153,323 | ||
MSC INDUSTRIAL DIRECT CO., INC. Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) | |||
Thirteen Weeks Ended | |||
November 27, | November 28, | ||
Net sales | $ 472,827 | $ 384,817 | |
Cost of goods sold | 255,134 | 209,118 | |
Gross profit | 217,693 | 175,699 | |
Operating expenses | 140,543 | 124,677 | |
Income from operations | 77,150 | 51,022 | |
Other (Expense) Income: | |||
Interest expense | (99) | (387) | |
Interest income | 25 | 60 | |
Other expense, net | (31) | (17) | |
Total other expense | (105) | (344) | |
Income before provision for income taxes | 77,045 | 50,678 | |
Provision for income taxes | 29,485 | 19,258 | |
Net income | $ 47,560 | $ 31,420 | |
Per Share Information: | |||
Net income per common share: | |||
Basic | $ 0.75 | $ 0.50 | |
Diluted | $ 0.75 | $ 0.50 | |
Weighted average shares used in computing net income per common share: | |||
Basic | 62,370 | 62,206 | |
Diluted | 62,795 | 62,727 | |
Cash dividend declared per common share | $ 1.22 | $ 0.20 | |
MSC INDUSTRIAL DIRECT CO., INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) | ||||
Thirteen Weeks Ended | ||||
November 27, | November 28, | |||
Cash Flows from Operating Activities: | ||||
Net income | $ 47,560 | $ 31,420 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 7,073 | 6,577 | ||
Stock-based compensation | 3,613 | 3,098 | ||
Loss on disposal of property, plant and equipment | 1 | -- | ||
Provision for doubtful accounts | 698 | 799 | ||
Deferred income taxes and tax uncertainties | 3,635 | 2,253 | ||
Excess tax benefits from stock-based compensation | (3,651) | (1,749) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (5,097) | (13,220) | ||
Inventories | (13,012) | 3,393 | ||
Prepaid expenses and other current assets | (947) | 2,471 | ||
Other assets | 3,223 | 2,656 | ||
Accounts payable and accrued liabilities | (1,170) | 9,129 | ||
Total adjustments | (5,634) | 15,407 | ||
Net cash provided by operating activities | 41,926 | 46,827 | ||
Cash Flows from Investing Activities: | ||||
Expenditures for property, plant and equipment | (4,455) | (5,135) | ||
Net cash used in investing activities | (4,455) | (5,135) | ||
Cash Flows from Financing Activities: | ||||
Purchases of treasury stock | (1,865) | (1,064) | ||
Payment of cash dividends | (77,229) | (12,595) | ||
Excess tax benefits from stock-based compensation | 3,651 | 1,749 | ||
Proceeds from sale of Class A common stock in connection with associate stock purchase plan | 694 | 632 | ||
Proceeds from exercise of Class A common stock options | 17,161 | 7,491 | ||
Repayments of notes payable under the credit facility and other notes | (20,543) | (12,855) | ||
Net cash used in financing activities | (78,131) | (16,642) | ||
Effect of foreign exchange rate changes on cash and cash equivalents | 14 | (2) | ||
Net (decrease) increase in cash and cash equivalents | (40,646) | 25,048 | ||
Cash and cash equivalents – beginning of period | 121,191 | 225,572 | ||
Cash and cash equivalents – end of period | $ 80,545 | $ 250,620 | ||
Supplemental Disclosure of Cash Flow Information: | ||||
Cash paid for income taxes | $ 2,994 | $ 3,153 | ||
Cash paid for interest | $ 68 | $ 344 | ||
SOURCE MSC Industrial Direct Co., Inc.