MSC Industrial Direct Q3 Results Beat View, Provides Weak Q4 Outlook

(RTTNews) - Industrial tools distributor MSC Industrial Direct Co., Inc. (MSM) on Wednesday reported an 11 percent decline in profit for the third quarter from last year, as one-time costs and higher operating expenses more than offset an increase in sales.

However, both revenue and adjusted earnings per share for the quarter beat analysts' expectations. Looking ahead, the company forecast financial results for the fourth quarter below analysts' estimates, citing a continuation of current market conditions. The company's shares are down 2 percent in pre-market trades.

MSC Industrial is a distributor of metalworking and maintenance, repair and operations or MRO supplies to industrial customers.

The Melville, New York-based company's net income for the third quarter was $62.35 million or $0.98 per share, lower than $70.21 million or $1.10 per share in the prior-year quarter.

The latest quarter's results include non-recurring costs of $6.4 million associated with the BDNA acquisition and the co-location of the Company's headquarters.

Adjusted net income for the quarter was $66.7 million or $1.05 per share, compared to $70.2 million or $1.10 per share in the prior-year period. On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.97 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 4 percent to $636.92 million from $611.97 million in the same quarter last year and beat analysts' consensus estimate of $635.18 million.

The recently-acquired Barnes Distribution North America or BDNA business contributed about $34.7 million to net sales, reflecting its contribution to net sales from the acquisition date of April 22, 2013, to the end of the fiscal third quarter.

Jeff Kaczka, Executive Vice President and Chief Financial Officer of MSC Industrial, said, "Our cost reduction and tight working capital management enabled us to exceed our third quarter EPS guidance against the backdrop of a soft demand environment."

Looking ahead to the fourth quarter, MSC Industrial expects adjusted earnings in a range of $0.87 to $0.91 per share. The company also forecasts net sales for the quarter including BDNA between $661 million and $673 million, with average daily sales exclusive of BDNA at the midpoint to be flat.

Analysts expect the company to earn $1.01 per share for the quarter on revenues of $687.73 million.

Kaczka added, "For the fourth quarter, our adjusted EPS at the midpoint of guidance is 89 cents, which is down from $1.09 last year, reflecting primarily the extra week in FY12 and the lack of the mid-year price increase. After those adjustments, the fourth quarter will be very similar to the past couple of quarters."

MSM closed Tuesday's trading at $79.91. In Wednesday's pre-market, the stock is down $1.61 or 2.01 percent to $78.30.