MSC Industrial Direct Co., Inc. Reports Results for Its Fiscal 2013 First Quarter

  MSC Industrial Direct Co., Inc. Reports Results for Its Fiscal 2013 First
                                   Quarter

- Net Sales of $577.5 Million in Fiscal 2013 First Quarter -

- Adjusted Diluted Earnings per Share Increase 6.3% to $1.01, GAAP Diluted
Earnings per Share Increase 5.3% to $1.00 in Fiscal 2013 First Quarter -

PR Newswire

MELVILLE, N.Y., Jan. 10, 2013

MELVILLE, N.Y., Jan. 10, 2013 /PRNewswire/ --MSC INDUSTRIAL DIRECT CO., INC.
(NYSE: MSM), "MSC" or the "Company," the premier distributor of Metalworking
and Maintenance, Repair and Operations ("MRO") supplies to industrial
customers throughout the United States, today reported financial results for
its fiscal first quarter ended December 1, 2012.

Net sales for the first quarter of fiscal 2013 were $577.5 million, an
increase of 5.8% over net sales of $545.7 million in the first quarter of
fiscal 2012. Excluding non-recurring costs of $1.3 million associated with
the previously announced co-location of the Company's headquarters in
Davidson, North Carolina, adjusted operating income for the fiscal 2013 first
quarter was $103.7 million, or 18.0% of net sales, compared to $96.8 million,
or 17.7% of net sales in the same quarter a year ago. GAAP operating income
for the fiscal 2013 first quarter was $102.4 million.

Excluding the after tax effects of these non-recurring costs, adjusted net
income for the first quarter of fiscal 2013 rose 7.0% to $64.0 million, or
$1.01 per diluted share (based on 62.7 million diluted shares outstanding),
compared to $59.8 million, or $0.95 per diluted share, a year ago (based on
62.6 million diluted shares outstanding). GAAP net income for the first
quarter of fiscal 2013 was $63.2 million, or $1.00 per diluted share.

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.

Erik Gershwind, President and Chief Executive Officer, stated, "I am pleased
with our performance this quarter and our continued success in executing our
strategy. We produced revenue growth of nearly 6% in an eroding demand
environment impacted by uncertainty and caution over the fiscal cliff. Our
team demonstrated exceptional cost control, as reflected in adjusted
incremental margin of over 20%, and strong execution of our share gain
initiatives, such as vending and e-commerce."

Jeff Kaczka, Executive Vice President and Chief Financial Officer, commented,
"We aggressively and carefully managed our expenses in our fiscal first
quarter to produce strong incremental margin, while our focus on working
capital management reduced inventories and receivables and nearly doubled our
cash flow from operations from the year ago quarter. Our financial position
remains strong and affords us the ability to continue investing in the future
of our business and to pursue an opportunistic growth strategy throughout
market cycles."

Mr. Gershwind concluded, "As I assume the role of CEO, I remain excited about
the future of our company and our long-term strategic vision. In the
near-term, both the demand and pricing environments have softened since we
last reported and fiscal cliff issues have yet to be fully resolved and
digested by our customers. We have very limited visibility heading into the
second quarter and as such are planning for a continuation of the current
environment. We do see some signs for cautious optimism on the horizon, such
as an uptick in December's ISM report, that would bode well should the trend
continue. Regardless of environment, we expect to take share, to continue
investing in key programs and to balance that with strong expense control like
we demonstrated in the first quarter. We remain committed to executing on our
time-tested strategy and expect to drive strong growth as the market
improves."

Outlook
Based on a continuation of current market conditions, for the fiscal 2013
second quarter the Company expects net sales to be between $563 million and
$575 million reflecting projected average daily sales growth of 1.0% at the
midpoint. Excluding non-recurring costs related to the co-location of the
Company's headquarters in Davidson, North Carolina, the Company expects
adjusted diluted earnings per share for the second quarter of fiscal 2013 to
be between $0.86 and $0.90. Guidance reflects the soft demand environment and
the lack of a mid-year price adjustment.

The Company expects these non-recurring costs to have a minimal impact on its
GAAP diluted earnings per share in the fiscal second quarter. The Company
expects to spend a total of approximately $7 million in non-recurring
relocation costs in the remainder of fiscal year 2013 and fiscal 2014.

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 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 until Thursday,
February 7, 2013.

Alternatively, the conference call can be accessed by dialing 1-800-860-2442
(U.S.) or 1-412-858-4600 (international). A replay will be available within
one hour of the conclusion of the call and will remain available until
Thursday, February 7, 2013. The replay is accessible by dialing 1-877-344-7529
(U.S.) or 1-412-317-0088 (international) and entering passcode 10022853.

The Company's next reporting date for its fiscal 2013 second quarter will be
Wednesday, April 10, 2013.

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. 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. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets



(In thousands)


                                                     December 1,  September 1,

                                                     2012         2012
                                                     (unaudited)
ASSETS
Current Assets:
 Cash and cash equivalents                       $ 233,506    $ 168,453
 Accounts receivable, net of allowance for       288,288      297,215
doubtful accounts
 Inventories                                     387,615      393,412
 Prepaid expenses and other current assets       33,480       29,313
 Deferred income taxes                           31,718       31,718
 Total current assets                       974,607      920,111
Property, plant and equipment, net                   187,615      174,597
Goodwill                                             289,124      289,124
Identifiable intangibles, net                        48,546       51,212
Other assets                                         8,061        9,832
Total assets                                         $ 1,507,953  $ 1,444,876
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
 Current maturities of capital lease and         $ 1,082      $ 1,007
financing obligations
 Accounts payable                                84,119       96,640
 Accrued liabilities                             87,834       72,868
 Total current liabilities                  173,035      170,515
Capital lease obligations, net of current maturities 2,243        2,189
Deferred income taxes and tax uncertainties          85,061       85,061
 Total liabilities                          260,339      257,765
Commitments and Contingencies
Shareholders' Equity:
 Preferred Stock                                 --           --
 Class A common stock                            53           53
 Class B common stock                            15           16
 Additional paid-in capital                      502,713      483,682
 Retained earnings                               1,015,187    970,965
 Accumulated other comprehensive loss            (2,174)      (2,443)
 Class A treasury stock, at cost                 (268,180)    (265,162)
 Total shareholders' equity                 1,247,614    1,187,111
Total liabilities and shareholders' equity           $ 1,507,953  $ 1,444,876





MSC INDUSTRIAL DIRECT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income



(In thousands, except net income per share data)




                                          (unaudited)
                                          Thirteen Weeks Ended
                                          December 1,          November 26,
                                          2012                 2011
Net sales                                 $    577,491     $    545,703
Cost of goods sold                        312,402              293,570
Gross profit                              265,089              252,133
Operating expenses                        162,737              155,309
Income from operations                    102,352              96,824
Other (Expense) Income:
Interest expense                          (52)                 (46)
Interest income                           43                   50
Other expense, net                        (16)                 (4)
Total other expense                       (25)                 —
 Income before provision for     102,327              96,824
income taxes
Provision for income taxes                39,140               36,987
Net income                                $     63,187    $    59,837
Per Share Information:
Net income per common share:
 Basic                                   $       1.01  $ 0.95
 Diluted                                 $       1.00  $ 0.95
Weighted average shares used in computing
net income per common share:
 Basic                                   62,378               62,285
 Diluted                                 62,701               62,627
Cash dividend declared per common share   $       0.30  $     0.25





MSC INDUSTRIAL DIRECT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income



(In thousands)




                                                   (unaudited)

                                                   Thirteen Weeks Ended
                                                   December 1, November 26,
                                                               2011
                                                   2012
Net income, as reported                            $63,187     $59,837
Cumulative foreign currency translation adjustment 269         (692)
Comprehensive income                               63,456      59,145



MSC INDUSTRIAL DIRECT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows



(In thousands)


                                           (unaudited)

                                           Thirteen Weeks Ended
                                           December 1, 2012  November 26, 2011
Cash Flows from Operating Activities:
Net income                                 $ 63,187          $ 59,837
Adjustments to reconcile net income to net
cash

 provided by operating activities:
 Depreciation and amortization         10,021            7,823
 Stock-based compensation              4,253             3,828
 Loss on disposal of property, plant,  60                1
and equipment
 Provision for doubtful accounts       1,116             1,541
 Deferred income taxes                 —                 4,195
 Excess tax benefits from            (3,451)           (2,784)
stock-based compensation
 Changes in operating assets and
liabilities, net of amounts

 associated with business acquired:
 Accounts receivable              7,931             (5,442)
 Inventories                      5,915             (16,131)
 Prepaid expenses and other       (4,161)           (3,775)
current assets
 Other assets                     1,073             1,942
 Accounts payable and accrued     3,425             (4,843)
liabilities
 Total adjustments                     26,182            (13,645)
Net cash provided by   89,369            46,192
operating activities
Cash Flows from Investing Activities:
 Expenditures for property, plant and  (16,993)          (8,271)
equipment
 Cash used in business acquisition,    —                 (1,246)
net of cash received
 Net cash used in       (16,993)          (9,517)
investing activities
Cash Flows from Financing Activities:
 Purchases of treasury stock           (3,506)           (3,331)
 Payment of cash dividend              (18,907)          (15,746)
 Payments on capital lease and         (279)             (136)
financing obligations
 Excess tax benefits from stock-based  3,451             2,784
compensation
 Proceeds from sale of Class A common
stock in connection with                   863               739

 associate stock purchase plan
 Proceeds from exercise of Class A     11,024            10,567
common stock options
 Borrowings under financing            —                 814
obligations
 Net cash used in       (7,354)           (4,309)
financing activities
Effect of foreign exchange rate changes on 31                (91)
cash and cash equivalents
Net increase in cash and cash equivalents  65,053            32,275
Cash and cash equivalents – beginning of   168,453           95,959
period
Cash and cash equivalents – end of period  $ 233,506         $ 128,234
Supplemental Disclosure of Cash Flow
Information:
Cash paid for income taxes                 $ 5,999           $ 6,602
Cash paid for interest                     $ 5               $ --





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. These
supplemental measures exclude non-recurring costs associated with the
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:

  othe ability to make more meaningful period-to-period comparisons of the
    Company's on-going operating results;
  othe ability to better identify trends in the Company's underlying business
    and perform related trend analyses; and
  oa 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:

                                             Three Months Ended

                                             December 1, 2012
(in thousands)                               $             Margin
GAAP Operating income                        $   102,352 17.7%
Headquarters non-recurring co-location costs 1,327
Adjusted Operating income                    $   103,679 18.0%



                        Three Months Three Months Ended
                        Ended
                        December 1,  November 26, 2011
                        2012
(in thousands)          $            $                             Incremental
                                                                   Margin
Net sales               $ 577,491    $ 545,703
Cost of goods sold      312,402      293,570
Gross profit            265,089      252,133
Operating expenses      162,737      155,309
Income from operations  102,352      96,824                        17.4%
Headquarters
non-recurring           1,327         _
co-location costs
Adjusted Operating      $ 103,679    $ 96,824                      21.6%
income



                                     Three Months Ended

                                     December 1, 2012
(in thousands, except per share                            Diluted
amounts)                             $(after tax)
                                                           EPS
GAAP net income                      $           $         
                                     63,187                1.00
Headquarters non-recurring           820                   0.01
co-location costs*
Adjusted net income                  $           $         
                                     64,007                1.01



* On a pre-tax basis includes charges of $1,327,000 reported within Operating
Expenses for the three months ended December 1, 2012 associated with the
Co-Location of the Company's headquarters in Davidson, North Carolina.



SOURCE MSC Industrial Direct Co., Inc.

Website: http://www.mscdirect.com
Contact: John G. Chironna, VP Investor Relations & Treasurer, MSC Industrial
Direct Co., Inc., +1-516-812-1216; Media: Rachel Rosenblatt, FTI Consulting -
Strategic Communications, +1-212-850-5600