Msc Industrial Direct Company, Inc. · NYSE:MSM
Msc Industrial Direct — Q2 2024 Earnings Presentation
25 slides from Msc Industrial Direct's earnings presentation, Mar 28, 2024
Slide 1: Fiscal Second Quarter 2024 Earnings
FISCAL SECOND QUARTER 2024 EARNINGS MARCH 28, 2024
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 Second Quarter 2024 Highlights
FISCAL SECOND QUARTER 2024 HIGHLIGHTS Average daily sales down 2.7% compared to the Industrial Production Index up 0.2% driven by 1 extended holiday shutdowns in early Q2 and heavy manufacturing softness throughout Q2 2 Gross margin of 41.5% was up 20 bps YoY and 30 bps sequentially Operating expens
Slide 4: Consistent Growth Above Industrial Production Index Over the Cycle
CONSISTENT GROWTH ABOVE INDUSTRIAL PRODUCTION INDEX (IP) OVER THE CYCLE MSC Total Organic Sales Growth 3-Month Average 20% MSC Total Growth (3 Mo Avg) IP Growth (3 Mo Avg) 15% 10% 5% 0% -5% -10% -15% -20% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 * Data as of March 15, 2024 investor.msc
Slide 5: Maintaining Momentum in Our High Touch Solution Drivers
MAINTAINING MOMENTUM IN OUR HIGH TOUCH SOLUTION DRIVERS SOLUTIONS IN-PLANT PROGRAM COUNT NATIONAL ACCOUNTS • Modest growth supported by ongoing solutions footprint 287 312 246 265 expansion 208 224 +1.1% • Largely offset by continued softness in heavy manufacturing YoY and extended holiday shutdowns
Slide 6: Strengthening Metalworking Leadership Position Through Strategic M&A
STRENGTHENING METALWORKING LEADERSHIP POSITION THROUGH STRATEGIC M&A KAR Industrial Inc. Intellectual Property Assets from SMRT Strategic M&A Criteria Under-Served Adjacent Technology & High-Growth Under-Served Adjacent Technology & High-Growth Regions Products Innovation End Markets Regions Product
Slide 7: Core Customer Reacceleration on the Horizon
CORE CUSTOMER REACCELERATION ON THE HORIZON CORE CUSTOMERS -5.7% • Continued to experience softness in Q2 driven by continued softness in heavy YoY manufacturing verticals weighing on metalworking demand • Web price realignment and web enhancements expected to contribute to growth in 2nd half • Digi
Slide 8: Shaping Our Network to Optimize Cost and Service
SHAPING OUR NETWORK TO OPTIMIZE COST AND SERVICE AUTOMATION INVESTMENTS STRUCTURAL BENEFITS Maintaining Service Levels Through a Reduced Footprint with the Planned Closure of Our Columbus CFC Improvement in Performance Metrics Expected closure date to occur in summer Post Automation Investments of 2
Slide 9: Fiscal Second Quarter 2024 Reported and Adjusted Results
FISCAL SECOND QUARTER 2024 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* $396.7 $388.6 $1.45 $961.6 $935.3 $114.3 $117.2 $1.41 $97.8 $1.18 $91.2 $
Slide 10: Fiscal Second Quarter 2024 Balance Sheet and Cash Flow
FISCAL SECOND QUARTER 2024 BALANCE SHEET AND CASH FLOW Free Cash Flow* Quarterly (millions) Year to Date $325.3 $375.9 • Strong operating cash flow during the quarter primarily driven by working capital improvement resulting in operating cash flow conversion of 128%** • Despite higher capital expend
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: Fiscal 2024 Outlook Likely at the Low End of the Range
FISCAL 2024 OUTLOOK LIKELY AT THE LOW END OF THE RANGE ADS Growth (YoY) • ~160 bps YoY headwind from non-repeating Public Sector small capital purchase sales Additional Guidance • Expect more normalized pricing benefits YoY 0% - 5% • Assumes improvement in industrial activity and benefits • Deprecia
Slide 13: Summary
SUMMARY Average daily sales down 2.7% compared to the Industrial Production Index up 0.2% driven by 1 extended holiday shutdowns in early Q2 and heavy manufacturing softness throughout Q2 2 Gross margin of 41.5% was up 20 bps YoY and 30 bps sequentially Operating expenses as a percentage of sales up
Slide 14: Appendix
APPENDIX MSC
Slide 15: Next Chapter of Mission Critical Expected to Generate Favorable Results
THE NEXT CHAPTER OF MISSION CRITICAL IS EXPECTED TO GENERATE FAVORABLE 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 A
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 Restructuring and Other Costs, Acquisition-Related Costs, and Share Reclassification Costs In calculating non-GAAP financial measures, we exclude restructuring and other costs, acquisition-related costs and share reclassification costs, a
Slide 18: Reconciliations
RECONCILIATIONS investor.mscdirect.com 18
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 Company — Q2 2024 Earnings Presentation on 6ix