Msc Industrial Direct Company, Inc. · NYSE:MSM
Msc Industrial Direct — Q4 2020 Earnings Presentation
23 slides from Msc Industrial Direct's earnings presentation, Oct 27, 2020
Slide 1: Fiscal Fourth Quarter and Full Year 2020 Earnings Presentation
Fiscal Fourth Quarter and Full Year 2020 Earnings Presentation OCTOBER 27, 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 we expect, believe or anticipat
Slide 3: Fourth Quarter Overview
Fourth Quarter Overview Executed well in an uncertain environment with sales down for the quarter, but with trend improving each month Safety and janitorial product sales improved year-over-year due to pandemic related demand, while sales for the rest of business improved sequentially each month COV
Slide 4: Fiscal Fourth Quarter and Full Year 2020 Reported Results
Fiscal Fourth Quarter and Full Year 2020 Reported Results Sales Operating Profit Earnings (millions) (millions and % of sales) (per diluted share) $842.7 $747.7 $100.00 $90.5 20.00% $90.00 18.00% $80.00 $72.9 16.00% $70.00 14.00% $60.00 10.7% 12.00% $50.00 10.00% $40.00 9.8% 8.00% $30.00 6.00% $20.0
Slide 5: Fiscal Fourth Quarter 2020 Adjusted Results
Fiscal Fourth Quarter 2020 Adjusted Results* Sales Adjusted Operating Profit Adjusted Earnings (millions) (millions and % of sales) (per diluted share) $842.7 $100.00 25.00% $97.2 $747.7 $95.00 20.00% $90.00 $85.00 $84.1 15.00% $80.00 11.5% 10.00% $75.00 11.2% $70.00 5.00% $65.00 $60.00 0.00% Q4 201
Slide 6: Fiscal 2020 Adjusted Results
Fiscal 2020 Adjusted Results* Sales Adjusted Operating Profit Adjusted Earnings (millions) (millions and % of sales) (per diluted share) $430.00 20.00% $3,363.8 $406.7 18.00% $410.00 16.00% $3,192.4 $390.00 $367.8 12.1% 14.00% $370.00 12.00% $350.00 $330.00 11.5% 10.00% 8.00% $310.00 6.00% $290.00 4
Slide 7: Fiscal Fourth Quarter Balance Sheet and Liquidity Position
Fiscal Fourth Quarter Balance Sheet and Liquidity Position Free Cash Flow* Net Debt (millions) (millions) $494 $410 Q4 2019 Q4 2020 • Strong free cash flow generation on reduction in inventories and receivables • Net debt reflects both revolver paydown and payment of maturing private placement debt
Slide 8: 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 9: Mission Critical: Reaccelerate Market Share
Mission Critical: Reaccelerate Market Share 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 Strength E
Slide 10: Industrial Production Index vs MSC Organic Growth
Industrial Production Index (IP) 40% 30% Surge in Safety and Janitorial 20% Product Sales Change (year-over-year) 10% 0% -10% -20% -30% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 MSC Organic Growth IP Growth 10
Slide 11: 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 12: 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% At least 400 bps of share capture 2%-3% market growth 2020 2023 -5.1% * See appendix for non-GAAP reconciliations. 12
Slide 13: Fiscal 2021 Framework
Fiscal 2021 Framework Revenue Growth (YoY) Operating Margin Range (%) Low single digits 11.0%- 11.4% Flat 10.7%- 11.1% Low single digits 10.5%- 10.9% Current MSC expectations based on IP forecasts and PPE headwinds 13
Slide 14: 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% Current MSC expectations based on IP forecasts and PPE headwinds * Excludes approximately $15-20 million of restructuring and oth
Slide 15: Summary
Summary Executed well in an uncertain environment and focused on serving our customers and driving efficiency in our business Expect ongoing uncertainty in the industry environment and continued customer caution related to COVID-19 Implementation of our Mission Critical initiatives will drive above
Slide 16: Appendix
Appendix MSC
Slide 17: Reconciliations
Reconciliations Non-GAAP Financial Measures • Free Cash Flow (“FCF”) Our measure of “FCF” meets the definition of a non-GAAP financial measure. FCF is used in addition to and in conjunction with results presented in accordance with Generally Accepted Accounting Principles (“GAAP”) and FCF should not
Slide 18: Reconciliations
Reconciliations • Return on Invested Capital (“ROIC”) ROIC is calculated using a non-GAAP financial measure. We calculate ROIC by dividing non-GAAP net operating profit after tax (“NOPAT”) by average invested capital, a GAAP measure. NOPAT is defined as tax effected income from operations. Average i
Slide 19: Reconciliations
Reconciliations MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Information Quarters and Years Ended August 29, 2020 and August 31, 2019 (dollars in thousands) GAAP Measure Items Affecting Comparability Non-GAAP Measure Net cash provided by operating activities Expendi
Slide 20: Reconciliations
Reconciliations MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Information Thirteen Weeks and Year Ended August 29, 2020 (dollars in thousands, except per share data) GAAP Measure Items Affecting Comparability Non-GAAP Measure Restructuring and Other Related Excluding
Slide 21: Reconciliations
Reconciliations MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Information Thirteen Weeks and Year Ended August 31, 2019 (dollars in thousands, except per share data) GAAP Measure Items Affecting Comparability Non-GAAP Measure Restructuring and Other Related Excluding
Slide 22: Reconciliations
Reconciliations MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES Reconciliation of GAAP and Non-GAAP Information Year Ended August 29, 2020 (dollars in thousands) Fiscal Year Ended August 29, 2020 (a) Net income attributable to MSC Industrial $ 251,117 NOPAT Income from Operations 350,740 Effective tax ra
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