Msc Industrial Direct Company, Inc. · NYSE:MSM
Msc Industrial Direct — Q4 FY2023 Earnings Presentation
25 slides from Msc Industrial Direct's earnings presentation, Oct 25, 2023
Slide 1: Fiscal Fourth Quarter and Full Year 2023 Earnings
FISCAL FOURTH QUARTER AND FULL YEAR 2023 EARNINGS OCTOBER 25, 2023
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 present or historical fact, that address activities, events or develop
Slide 3: Fiscal Fourth Quarter and Full Year 2023 Highlights
FISCAL FOURTH QUARTER AND FULL YEAR 2023 HIGHLIGHTS Average daily sales growth of 9.3% for 4Q’23 and 11.2% for FY’23 outpaced the 1 Industrial Production index by ~900 bps and ~1,000 bps, respectively Reduced operating expenses as a percentage of sales by 70 bps YoY in FY’23 and 2 90 bps on an adjus
Slide 4: Consistently Growing Above Industrial Production Index (IP)
CONSISTENTLY GROWING ABOVE INDUSTRIAL PRODUCTION INDEX (IP) Expansion above IP index driven MSC Total Organic Sales Growth by growth initiatives, price, and 20% 3-Month Average end market exposure MSC Total Growth (3 Mo Avg) IP Growth (3 Mo Avg) 15% 10% 5% 0% -5% -10% -15% -20% 2013 2014 2015 2016 2
Slide 5: Fiscal Year 2023 Reported and Adjusted Results
FISCAL YEAR 2023 REPORTED AND ADJUSTED RESULTS Net Sales Gross Profit Operating Profit Earnings (millions) (millions and % of sales) (millions and % of sales) (per diluted share) Reported Adjusted* Reported Adjusted* $4,009.3 $1,558.2 $1,643.0 $6.06 $6.11 $6.15 $6.29 $3,691.9 $468.7 $483.7 $475.3 $5
Slide 6: Mission Critical Growth Initiatives Were a Primary Contributor to Above Market Growth
MISSION CRITICAL GROWTH INITIATIVES WERE A PRIMARY CONTRIBUTOR TO ABOVE MARKET GROWTH Solidify Leverage Expand Diversify Grow Metalworking Portfolio Solutions Customers E-commerce Strengths & End Markets Class C Sales Through Metric Metalworking Vending Installed E-commerce Public Sector Consumable
Slide 7: Growth and Returns Above Original Mission Critical Targets Driven by Successful Execution
GROWTH AND RETURNS ABOVE ORIGINAL MISSION CRITICAL TARGETS DRIVEN BY SUCCESSFUL EXECUTION Sales Growth Return on Invested Capital Adjusted Operating Expense* Target Target Target Drive sales growth 400 basis Produce return on invested capital Achieve $100M in gross cost points above the in the high-
Slide 8: Extensive Digital Roadmap
…WITH THE NEXT CHAPTER OF MISSION CRITICAL EXPECTED TO GENERATE RESULTS ACROSS THE BUSINESS OVER THE CYCLE Maintaining Momentum Performance Metrics Over the Cycle Extensive Digital Roadmap • Win in Metalworking • Drive Innovative Solutions • Expand Share of Wallet Across • Further Penetrate Attracti
Slide 9: Fiscal Fourth Quarter 2023 Reported and Adjusted Results
FISCAL FOURTH QUARTER 2023 REPORTED AND ADJUSTED RESULTS Net Sales Gross Profit Operating Profit Earnings (millions) (millions and % of sales) (millions and % of sales) (per diluted share) Reported Adjusted* Reported Adjusted* $1,035.4 $428.2 $419.5 $144.0 $1.79 $1,022.2 $138.6 $130.4 $1.86 $1.64 $1
Slide 10: Fiscal Fourth Quarter and Full Year 2023 Balance Sheet and Cash Flow
FISCAL FOURTH QUARTER AND FULL YEAR 2023 BALANCE SHEET AND CASH FLOW Free Cash Flow* (millions) Quarterly Annually $104.1 $607.1 • Free cash flow* improved 10% YoY to $104M $94.5 during the quarter primarily driven by working capital improvement • FY’23 free cash flow* improved ~230% YoY or $184.8 a
Slide 11: Clear Capital Allocation Priorities
CLEAR CAPITAL ALLOCATION PRIORITIES Long-Term Priorities Significant capital allocation optionality after deprioritizing Dividends and Share Repurchases Strategic special dividends Deprioritizing Optionality Potential uses include organic growth investments, strategic Special Dividend M&A, debt payd
Slide 12: Well Positioned to Pursue Disciplined Capital Allocation and Near-Term Repurchases
WELL POSITIONED TO PURSUE DISCIPLINED AND STRATEGIC CAPITAL ALLOCATION PRIORITIES AND NEAR-TERM REPURCHASES • 3.5M* shares remain on current share repurchase Additional Shares For authorization* ~2.4M Repurchase on • Reclassification agreement resulted in dilution of Current Authorization* ~1.9M sha
Slide 13: Initial Fiscal 2024 Outlook and Assumptions
INITIAL FISCAL 2024 OUTLOOK AND ASSUMPTIONS ADS Growth (YoY) • ~160 bps headwind from non-repeating Public Sector small capital purchase sales Additional Guidance • Assumes more normalized pricing benefits YoY 0% - 5% • Assumes market headwinds from UAW strike • Depreciation and amortization expense
Slide 14: Summary
SUMMARY Average daily sales growth of 9.3% for 4Q’23 and 11.2% for FY’23 outpaced the 1 Industrial Production index by ~900 bps and ~1,000 bps, respectively Reduced operating expenses as a percentage of sales by 70 bps YoY in FY’23 and 2 90 bps on an adjusted* basis including a reduction of 40 bps i
Slide 15: Appendix
APPENDIX MSC
Slide 16: Reconciliations
RECONCILIATIONS Non-GAAP Financial Measures To supplement MSC’s unaudited selected financial data presented consistent with accounting principles generally accepted in the United States (“GAAP”), the Company discloses certain non-GAAP financial measures, including non-GAAP gross profit, non-GAAP ope
Slide 17: Reconciliations
RECONCILIATIONS Non-GAAP Financial Measures Results Excluding Gain on Sale of Property (prior year), Acquisition-Related Costs, Share Reclassification Costs, Restructuring and Other Costs, and ERC tax benefit In calculating non-GAAP financial measures, we exclude gain on sale of property (prior year
Slide 18: Reconciliations
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Slide 19: Reconciliations
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Slide 20: Reconciliations
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Slide 21: Reconciliations
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Slide 22: Reconciliations
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Slide 23: Reconciliations
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Slide 24: Reconciliations
RECONCILIATIONS investor.mscdirect.com 24
Slide 25: Thank You
THANK YOU MSC
MSC Industrial Direct — Q4 FY2023 Earnings Presentation on 6ix