MSC Industrial Direct Co., Inc. Reports Fiscal 2013 Third Quarter Results

  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 -

PR Newswire

MELVILLE, N.Y., July 10, 2013

MELVILLE, N.Y., July 10, 2013 /PRNewswire/ --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."

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. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)


                                       June 1,             September 1,
                                                           2012
                                       2013
                                       (Unaudited)
ASSETS
Current Assets:
 Cash and cash equivalents          $      58,017  $    168,453
 Accounts receivable, net of        337,779             297,215
allowance for doubtful accounts
 Inventories                        414,268             393,412
 Prepaid expenses and other current 43,584              29,313
assets
 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    10,527              1,007
debt
 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         242,353             2,189
maturities
Deferred income taxes and tax          85,180              85,061
uncertainties
 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    (3,608)             (2,443)
loss
 Class A treasury stock, at cost    (267,246)           (265,162)
 Total shareholders' equity     1,347,110           1,187,111
Total liabilities and shareholders'    $   1,919,492    $   1,444,876
equity





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,     May 26,      June 1,       May 26,

                          2013        2012         2013          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),   (5)         15           66            (5)
net
Total other income        (1,115)     (6)          (1,087)       (24)
(expense)
 Income before
provision for             99,131      110,853      292,087       304,186

 income taxes
Provision for income      36,777      40,642       110,467       114,070
taxes
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







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



MSC INDUSTRIAL DIRECT CO., INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


                                         Thirty-Nine Weeks Ended
                                         June 1,            May 26,
                                                            2012
                                         2013
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,      791                876
plant, and equipment
 Provision for doubtful accounts    2,111              2,520
 Deferred income taxes              —                  3,025
 Excess tax benefits from           (5,563)            (4,844)
stock-based compensation
 Write-off of deferred financing    594                —
costs on previous credit facility
 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   (11,136)           (11,837)
current assets
 Other assets                 2,162              4,388
 Accounts payable and accrued 7,574              (1,076)
liabilities
 Total adjustments                  63,809             (44,908)
 Net cash provided by   245,429            145,208
operating activities
Cash Flows from Investing Activities:
 Expenditures for property, plant   (62,305)           (28,753)
and equipment
 Cash used in business acquisition, (548,769)          (33,451)
net of cash received
 Net cash used in       (611,074)          (62,204)
investing activities
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      (981)              (721)
financing obligations
 Excess tax benefits from           5,563              4,844
stock-based compensation
 Proceeds from sale of Class A
common stock in connection with          2,891              2,630

 associate stock purchase plan
 Proceeds from exercise of Class A  19,986             19,566
common stock options
 Borrowings under financing         257                1,050
obligation
 Borrowings under Credit Facility   370,000            —
 Credit facility financing costs    (1,904)            —
 Pay down revolving loans from      (80,000)           —
credit facility
 Net cash provided      255,313            (67,958)
(used) in financing activities
Effect of foreign exchange rate changes  (104)              (56)
on cash and cash equivalents
Net (decrease) increase in cash and cash (110,436)          14,990
equivalents
Cash and cash equivalents – beginning of 168,453            95,959
period
Cash and cash equivalents – end of       $    58,017    $   110,949
period
Supplemental Disclosure of Cash Flow
Information:
Cash paid for income taxes               $   102,107     $   113,299
Cash paid for interest                   $       367  $        34

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:

  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:

                          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%

                          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
(in thousands, except per share amounts) $(after tax)       Diluted
                                                            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%.



SOURCE MSC Industrial Direct Co., Inc.

Website: http://www.mscdirect.com
Contact: 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
 
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