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MSC Industrial Direct Company, Inc. MSM reported first-quarter fiscal 2025 (ended on Nov. 30, 2024) adjusted earnings per share (EPS) of 86 cents, beating the Zacks Consensus Estimate of 73 cents.
The bottom line marked a 31% plunge from earnings of $1.25 in the year-ago quarter. The downfall was attributed to lower sales, higher operating expenses and elevated interest costs.
Including one-time items, MSC Industrial reported EPS of 83 cents compared with the year-ago quarter’s $1.22.
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MSM Stock Price, Consensus and EPS Surprise
MSC Industrial Direct Company, Inc. price-consensus-eps-surprise-chart | MSC Industrial Direct Company, Inc. Quote
MSC Industrial’s Revenues Hurt by Weak Demand
MSM generated revenues of $928.5 million in the quarter under review, down 2.7% from the year-ago quarter. Revenues were impacted by weak demand, unfavorable foreign exchange impacts and negative impacts of pricing. The top line, however, surpassed the Zacks Consensus Estimate of $905 million.
Average daily sales fell 2.7% year over year in the quarter, led by lower volumes, somewhat offset by acquisition benefits. However, this came in higher than MSC Industrial’s guidance of a 4.5-5.5% decline.
Low Volumes & Higher Expenses Dent MSM’s Margins
The cost of goods sold decreased 1.9% year over year to $550 million. Gross profit moved down 4% to $378 million. The gross margin in the first quarter of fiscal 2025 was 40.7% compared with the year-ago quarter’s 41.2%. The gross margin contracted 50 basis points due to lower volumes, and acquisitions created a 20-basis-point headwind.
Operating expenses rose 4% year over year to around $304 million in the fiscal first quarter. The year-over-year increase was driven by higher payroll costs due to higher associate headcount to support MSM’s strategic growth investments and annual merit increases, and investments made to supporting digital initiatives and solutions growth.
MSC Industrial reported an operating income of $72.3 million compared with $101.6 million in the year-ago quarter.
Excluding restructuring and other costs, MSM’s adjusted operating income amounted to $74.6 million, down 28% from $104 million in the prior-year quarter. The adjusted operating margin was 8% in the reported quarter compared with the prior-year quarter’s 10.9% due to higher operating expenses on lower revenues.
MSC Industrial’s Cash & Debt Position
MSM had cash and cash equivalents of $57.3 million at the end of the fiscal first quarter of 2025 compared with $29.6 million at the end of fiscal 2024. The company generated cash flow from operating activities of $102 million in the first quarter of fiscal 2025 compared with $81 million in the first quarter of fiscal 2024.