Msc Industrial Direct Company, Inc. · NYSE:MSM
Msc Industrial Direct — Q3 2021 Earnings Presentation
24 slides from Msc Industrial Direct's earnings presentation, Jul 7, 2021
Slide 1: Fiscal Third Quarter 2021 Earnings Presentation
Fiscal Third Quarter 2021 Earnings Presentation JULY 7, 2021
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements Statements in this presentation 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
Slide 3: Fiscal Third Quarter 2021 Overview
Fiscal Third Quarter 2021 Overview Improved sales trends driven by growth initiatives and macro environment Solid underlying gross margins due to price and purchase cost performance Exceeding original Mission Critical* program savings goals for fiscal 2021 Realized $20.8 million loss recovery Repurc
Slide 4: Fiscal Third Quarter 2021 Reported Results
Fiscal Third Quarter 2021 Reported Results Net Sales Gross Profit Operating Profit Earnings (millions) (millions and % of sales) (millions and % of sales) (per diluted share) $366.5 $128.6 $1.68 $354.0 $835.0 $866.3 $109.9 $1.40 14.8% 42.4% 42.3% 13.2% Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021
Slide 5: Fiscal Third Quarter 2021 Adjusted Results
Fiscal Third Quarter 2021 Adjusted Results* Net Sales Gross Profit Adj. Operating Profit Adj. Earnings (millions) (millions and % of sales) (millions and % of sales) (per diluted share) $366.5 $111.2 $109.6 $866.3 $354.0 $1.42 $1.42 $835.0 13.3% 12.6% 42.4% 42.3% Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2
Slide 6: Industrial Production Index vs MSC Total Organic Growth
Industrial Production Index (IP) MSC Total Organic Growth 3‐Month Average 20.0% 15.0% 10.0% Change (Year‐Over‐Year) 5.0% 0.0% ‐5.0% ‐10.0% ‐15.0% ‐20.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 MSC Total Organic Growth (3 Mo Avg) IP Growth (3 Mo Avg) 6
Slide 7: Fiscal Third Quarter 2021 Balance Sheet and Liquidity Position
Fiscal Third Quarter 2021 Balance Sheet and Liquidity Position Free Cash Flow* Net Debt (millions) (millions) $48.9 $731.6 $624.3 $2.8 Q3 2020 Q3 2021 Q3 2020 Q3 2021 • Free cash flow performance reflects increased inventory and seasonal accounts receivable growth • Repurchased $47.1 million of shar
Slide 8: Mission Critical: Strong Progress on Cost Savings
Mission Critical: Strong Progress on Cost Savings Total Gross Savings Target: KEY AREAS $90M – $100M by end of FY23 versus FY19 $100 $80 Sales and service Supply chain General & Administrative • Raised FY21 target to ~$40M gross cost savings $60 • FY21 growth investments ~$25M • Net savings of ~$15M
Slide 9: Fiscal 2021 Framework – Adjusted
Fiscal 2021 Framework – Adjusted* Revenue Growth (YoY) Adjusted Operating Margin Range (%) Low single digits 11.5% - 11.9% Flat 11.2% - 11.6% Low single digits 11.0% - 11.4% * Excludes approximately $30 million of restructuring and other charges, $30.1 million in PPE-related inventory write-downs, $
Slide 10: Fiscal Year 2023 Targets
Fiscal Year 2023 Targets Mission Critical Reaccelerate market share capture Objectives Grow profits faster than sales Sales Growth Return on Invested Capital (ROIC)* ~6%-7% High-Teens At least 400 bps 14.1% of share capture 2%-3% market growth FY2020 FY2023 FY2020 FY2023 -5.1% * Represents a non-GAA
Slide 11: Summary
Summary Focused on executing in an improving environment and remain committed to serving our customers Encouraged by momentum as evidenced by improving results and project execution Implementation of Mission Critical initiatives expected to drive above market growth and improve profits faster than s
Slide 12: Appendix
Appendix MSC
Slide 13: Overview of Mission Critical
Overview of Mission Critical OBJECTIVE: OBJECTIVE: Reaccelerate market Grow profits faster share capture than sales KEY PRIORITIES KEY AREAS Solidify Leverage Expand Grow Diversify Sales & Supply General & Metalworking Portfolio Solutions E-commerce Customers & Services Chain Administrative Strength
Slide 14: Mission Critical: Reaccelerate Market Share Capture
Mission Critical: Reaccelerate Market Share Capture OBJECTIVE: Reaccelerate market INITIATIVES share capture KEY PRIORITIES • Build on talented team of metalworking specialists Solidify Leverage Expand Grow Diversify Metalworking Portfolio Solutions E-commerce Customers & • Leverage exclusive MSC St
Slide 15: Mission Critical: Grow Profits Faster than Sales
Mission Critical: Grow Profits Faster than Sales OBJECTIVE: INITIATIVES Grow profits faster than sales KEY AREAS • Optimize distribution center network • Renegotiated supplier contracts Sales & Supply General & Services Chain Administrative • Redesigned talent acquisition approach • Reduced long-ter
Slide 16: Fiscal 2021 Framework
Fiscal 2021 Framework* Revenue Growth (YoY) Operating Margin Range (%) Low single digits 10.2% - 10.6% Flat 9.9% - 10.3% Low single digits 9.6% - 10.0% * Includes $26.7 million in an asset impairment. 16
Slide 17: Reconciliations
Reconciliations Non-GAAP Financial Measures Free Cash Flow (“FCF”) FCF is a non-GAAP financial measure. FCF is used in addition to and in conjunction with results presented in accordance with accounting principles generally accepted in the United States (“GAAP”), and FCF should not be relied upon
Slide 18: Reconciliations
Reconciliations Results Excluding Impairment Loss (Loss Recovery), Restructuring Costs, Inventory Write-downs, and Other Charges To supplement MSC Industrial’s unaudited selected financial data presented consistent with accounting principles generally accepted in the United States (“GAAP”), the Co
Slide 19: Reconciliations
Reconciliations MSC INDUSTRIAL DIRECT CO., INC. Reconciliation of GAAP and Non-GAAP Information Thirteen and Thirty-Nine Weeks Ended May 29, 2021 and May 30, 2020 (dollars in thousands) GAAP Measure Items Affecting Comparability Non-GAAP Measure Net cash provided by operating activities Expenditures
Slide 20: Reconciliations
Reconciliations MSC INDUSTRIAL DIRECT CO., INC. Reconciliation of GAAP and Non-GAAP Financial Information Thirteen Weeks Ended May 29, 2021 (dollars in thousands, except percentages and per share data) Non-GAAP Financial GAAP Financial Measure Items Affecting Comparability Measure Impairment Loss (L
Slide 21: Reconciliations
Reconciliations MSC INDUSTRIAL DIRECT CO., INC. Reconciliation of GAAP and Non-GAAP Financial Information Thirty-Nine Weeks Ended May 29, 2021 (dollars in thousands, except percentages and per share data) GAAP Financial Non-GAAP Measure Items Affecting Comparability Financial Measure Legal Costs - T
Slide 22: Reconciliations
Reconciliations MSC INDUSTRIAL DIRECT CO., INC. Reconciliation of GAAP and Non-GAAP Financial Information Thirteen and Thirty-Nine Weeks Ended May 30, 2020 (dollars in thousands, except percentages and per share data) GAAP Financial Measure Items Affecting Comparability 1 Non-GAAP Financial Measure
Slide 23: Reconciliations
Reconciliations MSC INDUSTRIAL DIRECT CO., INC. Reconciliation of GAAP and Non-GAAP Information As of August 29, 2020 (dollars in thousands, except percentages) Fiscal Year Ended August 29, 2020 (a) Net income attributable to MSC Industrial (twelve-month trailing) $ 251,117 NOPAT Income from Operati
Slide 24: Slide 24
MSC Industrial Direct — Q3 2021 Earnings Presentation on 6ix