MSC Industrial sales decline 2.4 percent
MSC Industrial Supply reported that its third-quarter net sales of $727.5 million declined 2.4% year-over-year.
Adjusted net income of $64.8 million compared to $63.5 million, a 2.1% improvement from the same period last year.
"The challenging economic environment grew even more difficult through our third quarter and, as a result, sales were at the lower end of our guidance. We did, however, continue to gain share, which, when coupled with strong execution on gross margin countermeasures and cost reduction initiatives, helped to offset economic headwinds," said Erik Gershwind, president and chief executive officer.
Rustom Jilla, executive vice president and chief financial officer, added, "Our diluted EPS for the quarter was $1.05 versus $1.03 in the prior year's third quarter. This was the result of strong execution on the gross margin and expense lines. Gross margins held at 45 percent, the fourth consecutive quarter at this level, despite the challenging price environment and headwinds from customer mix."
Gershwind concluded, "Despite the challenging environment, I remain confident in our future. Should things deteriorate further, this creates opportunities for MSC such as new customer relationships, the hiring of experienced industry salespeople, and stronger supplier relationships. All of these would serve to increase our share gain potential. At the same time, with the work we have done on managing costs, along with our completed infrastructure investments, we are poised for earnings leverage when growth returns. Finally, we are using our strong balance sheet to enhance shareholder returns, while preserving flexibility to capitalize on any further market dislocations that may be ahead of us."
Based on current market conditions, the company expects net sales for the fiscal 2016 fourth quarter to be between $730 million and $742 million. At the midpoint, average daily sales are expected to decline approximately 5%.