Attached files
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| 8-K - MSC INDUSTRIAL DIRECT CO INC | v217666_8k.htm |
Exhibit 99.1
Contact:
Shelley Boxer
V.P. Finance
MSC Industrial Direct Co., Inc.
(516) 812-1216
Investors/Media:
Eric Boyriven/Jeannine Dowling
Financial Dynamics
(212) 850-5600
For Immediate Release
MSC INDUSTRIAL DIRECT CO., INC. REPORTS RESULTS
FOR ITS FISCAL 2011 SECOND QUARTER
- Second Quarter Net Sales Rise 22.2% to $483.4 Million -
- Second Quarter Diluted Earnings per Share increased 63% to $0.78 inclusive of $0.016 per share dilution from Rutland -
Melville, NY, April 6, 2011 - MSC INDUSTRIAL DIRECT CO., INC. (NYSE: MSM), “MSC” or the “Company,” one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations (“MRO”) supplies to industrial customers throughout the United States, today reported financial results for its fiscal 2011 second quarter ended February 26, 2011.
For the fiscal 2011 second quarter, net sales rose 22.2% to $483.4 million, compared with $395.5 million in the prior year period. Operating income increased 61.6% in the fiscal 2011 second quarter to $80.6 million, or 16.7% of net sales, from $49.9 million, or 12.6% of net sales, in the second quarter of fiscal 2010. For the second quarter of fiscal 2011, the Company reported net income of $49.7 million, an increase of 62.1% over net income of $30.6 million in the second quarter of fiscal 2010. Diluted earnings per share in the fiscal 2011 second quarter were $0.78 (based on 63.3 million diluted shares outstanding), compared to $0.48 (based on 63.0 million diluted shares outstanding) in the same period a year ago, an increase of 62.5%.
During the quarter, the Company completed the integration of its previously announced acquisition of Rutland Tool & Supply Co. (“Rutland”). The Company’s results for the quarter included $6.6 million in sales from Rutland. Excluding acquisition and integration costs, Rutland broke even for the period. Pre-tax acquisition and integration costs incurred by the Company during the quarter were $1.65 million, resulting in a dilution of $0.016 per share, which was better than prior expectations.
Net sales for the first half of fiscal 2011 were $956.2 million, compared with net sales of $780.3 million in the first half of fiscal 2010. Operating income for the first half of fiscal 2011 was $157.7 million, or 16.5% of net sales, versus $100.9 million, or 12.9% of net sales, in the first half of fiscal 2010. Net income for the first half of fiscal 2011 was $97.2 million, compared with $62.1 million in the prior year period. Diluted earnings per share for the first half of fiscal 2011 were $1.53 (based on 63.1 million diluted shares outstanding), compared to $0.98 (based on 62.9 million diluted shares outstanding) a year ago.
| MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2011 SECOND QUARTER RESULTS | Page -2- |
David Sandler, President and Chief Executive Officer said, “I’m absolutely delighted with our performance and the strong financial results that our team delivered, driven by excellent execution, stronger demand across our customers than originally anticipated and continued gains in market share. We continue to execute against our strategic plan, delivering the growth in sales, earnings, and operating margin percentage that we were confident would result from our investments and model in a recovering market.”
Erik Gershwind, Executive Vice President and Chief Operating Officer, stated, “We achieved strong results in the quarter led by significant growth within our core customer base. Our strong gross margin of 46.8% is primarily a function of improved rebates, excellent realization of the pricing adjustment we made around the holidays, and the growth in our core business. During the quarter, we also successfully completed the Rutland integration ahead of schedule, and that business delivered better results than we originally anticipated.”
Mr. Sandler concluded, “Our results demonstrate the inherent leverage and power of our business model. We have seen significant benefits from our strategic growth programs, and we will continue to invest in these initiatives going forward. We are very encouraged by our progress, the performance of our investments, and recent strong economic trends, all of which bode well for the future.”
For the fiscal 2011 third quarter, the Company expects net sales to be between $524 million and $536 million and expects diluted earnings per share for the third quarter of fiscal 2011 to be between $0.90 and $0.94.
The management of MSC will host a conference call today, at 11:00 a.m. Eastern Time, to review the Company’s results for the fiscal 2011 second quarter, and to comment on current operations. The call may be accessed via the Internet on the home page of MSC’s website located at: www.mscdirect.com. A replay of the conference call will be available on the Company’s website through April 20, 2011.
About MSC Industrial Direct Co., Inc.
MSC Industrial Direct Co., Inc. is one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations (“MRO”) supplies to industrial customers throughout the United States. MSC employs one of the industry’s largest sales forces and distributes approximately 600,000 industrial products from approximately 3,000 suppliers to approximately 317,000 customers. In-stock availability is approximately 99%, with next day standard delivery to the contiguous United States on qualifying orders up until 8:00 p.m. Eastern Time. MSC reaches its customers through a combination of approximately 22 million direct-mail catalogs, 96 branch sales offices, 998 sales people, the Internet and associations with some of the world's most prominent B2B eCommerce portals. For more information, visit the Company's website at http://www.mscdirect.com.
| MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2011 SECOND QUARTER RESULTS | Page -3- |
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Statements in this Press Release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained herein which are not statements of historical facts and that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future shall be deemed to be forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events, actual results and performance, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. Factors that could cause actual results to differ materially from those in forward-looking statements include, without limitation, current economic, political and social conditions, general economic conditions in the markets in which the Company operates, changing customer and product mixes, risks associated with acquisitions, including difficulties with integrating acquired businesses, competition, industry consolidation and other changes in the industrial distribution sector, volatility in commodity and energy prices, the outcome of potential government or regulatory proceedings or future litigation, credit risk of our customers, risk of cancellation or rescheduling of orders, work stoppages or other business interruptions (including those due to extreme weather conditions) at transportation centers or shipping ports, risk of loss of key suppliers, key brands or supply chain disruptions, dependence on the Company’s information systems, and retention of key personnel. Additional information concerning these and other risks is described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company's reports on Forms 10-K, 10-Q and 8-K that the Company files with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release are based on current expectations and the Company assumes no obligation to update these forward-looking statements.
(Tables Follow)
| MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2011 SECOND QUARTER RESULTS | Page -4- |
MSC INDUSTRIAL DIRECT CO., INC.
Condensed Consolidated Balance Sheets
(In thousands)
|
February 26, 2011
|
August 28, 2010
|
|||||||
|
(Unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
Current Assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 75,675 | $ | 121,191 | ||||
|
Accounts receivable, net of allowance for doubtful accounts
|
246,595 | 221,013 | ||||||
|
Inventories
|
305,072 | 285,985 | ||||||
|
Prepaid expenses and other current assets
|
22,372 | 20,498 | ||||||
|
Deferred income taxes
|
25,614 | 27,849 | ||||||
|
Total current assets
|
675,328 | 676,536 | ||||||
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Property, plant and equipment, net
|
147,499 | 143,609 | ||||||
|
Goodwill
|
272,041 | 271,765 | ||||||
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Identifiable intangibles, net
|
46,560 | 48,751 | ||||||
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Other assets
|
7,863 | 12,662 | ||||||
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Total assets
|
$ | 1,149,291 | $ | 1,153,323 | ||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||||||
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Current Liabilities:
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||||||||
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Current maturities of long-term notes payable
|
$ | 87 | $ | 39,361 | ||||
|
Accounts payable
|
78,546 | 81,220 | ||||||
|
Accrued liabilities
|
56,390 | 69,704 | ||||||
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Total current liabilities
|
135,023 | 190,285 | ||||||
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Deferred income taxes and tax uncertainties
|
71,528 | 63,158 | ||||||
|
Total liabilities
|
206,551 | 253,443 | ||||||
|
Commitments and Contingencies
|
||||||||
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Shareholders’ Equity:
|
||||||||
|
Class A common stock
|
50 | 48 | ||||||
|
Class B common stock
|
17 | 18 | ||||||
|
Additional paid-in capital
|
416,408 | 378,315 | ||||||
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Retained earnings
|
681,775 | 675,968 | ||||||
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Accumulated other comprehensive loss
|
(2,219 | ) | (2,660 | ) | ||||
|
Class A treasury stock, at cost
|
(153,291 | ) | (151,809 | ) | ||||
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Total shareholders’ equity
|
942,740 | 899,880 | ||||||
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Total liabilities and shareholders’ equity
|
$ | 1,149,291 | $ | 1,153,323 | ||||
| MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2011 SECOND QUARTER RESULTS | Page -5- |
MSC INDUSTRIAL DIRECT CO., INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
|
Thirteen Weeks Ended
|
Twenty-Six Weeks Ended
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|||||||||||||||
|
February 26,
2011
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February 27,
2010
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February 26,
2011
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February 27,
2010
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|||||||||||||
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Net sales
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$ | 483,362 | $ | 395,482 | $ | 956,189 | $ | 780,299 | ||||||||
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Cost of goods sold
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257,063 | 216,447 | 512,197 | 425,565 | ||||||||||||
|
Gross profit
|
226,299 | 179,035 | 443,992 | 354,734 | ||||||||||||
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Operating expenses
|
145,701 | 129,145 | 286,244 | 253,822 | ||||||||||||
|
Income from operations
|
80,598 | 49,890 | 157,748 | 100,912 | ||||||||||||
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Other (Expense) Income:
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||||||||||||||||
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Interest expense
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(61 | ) | (358 | ) | (160 | ) | (745 | ) | ||||||||
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Interest income
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5 | 34 | 30 | 94 | ||||||||||||
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Other income (expense), net
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28 | 29 | (3 | ) | 12 | |||||||||||
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Total other expense
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(28 | ) | (295 | ) | (133 | ) | (639 | ) | ||||||||
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Income before provision for income taxes
|
80,570 | 49,595 | 157,615 | 100,273 | ||||||||||||
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Provision for income taxes
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30,881 | 18,946 | 60,366 | 38,204 | ||||||||||||
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Net income
|
$ | 49,689 | $ | 30,649 | $ | 97,249 | $ | 62,069 | ||||||||
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Per Share Information:
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Net income per common share:
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Basic
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$ | 0.78 | $ | 0.49 | $ | 1.54 | $ | 0.99 | ||||||||
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Diluted
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$ | 0.78 | $ | 0.48 | $ | 1.53 | $ | 0.98 | ||||||||
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Weighted average shares used in computing net income per common share:
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||||||||||||||||
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Basic
|
62,875 | 62,532 | 62,622 | 62,369 | ||||||||||||
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Diluted
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63,325 | 63,031 | 63,060 | 62,879 | ||||||||||||
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Cash dividend declared per common share
|
$ | 0.22 | $ | 0.20 | $ | 1.44 | $ | 0.40 | ||||||||
| MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2011 SECOND QUARTER RESULTS | Page -6- |
MSC INDUSTRIAL DIRECT CO., INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
Twenty-Six Weeks Ended
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||||||||
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February 26, 2011
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February 27, 2010
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|||||||
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Cash Flows from Operating Activities:
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Net income
|
$ | 97,249 | $ | 62,069 | ||||
|
Adjustments to reconcile net income to net cash
provided by operating activities:
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||||||||
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Depreciation and amortization
|
14,216 | 12,955 | ||||||
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Stock-based compensation
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7,357 | 6,781 | ||||||
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Loss on disposal of property, plant and equipment
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2 | 11 | ||||||
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Provision for doubtful accounts
|
1,519 | 1,367 | ||||||
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Deferred income taxes and tax uncertainties
|
10,606 | 2,835 | ||||||
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Excess tax benefits from stock-based compensation
|
(5,111 | ) | (2,473 | ) | ||||
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Changes in operating assets and liabilities:
|
||||||||
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Accounts receivable
|
(23,950 | ) | (30,977 | ) | ||||
|
Inventories
|
(11,600 | ) | 3,337 | |||||
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Prepaid expenses and other current assets
|
(823 | ) | 122 | |||||
|
Other assets
|
4,618 | 5,239 | ||||||
|
Accounts payable and accrued liabilities
|
(13,759 | ) | 12,997 | |||||
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Total adjustments
|
(16,925 | ) | 12,194 | |||||
|
Net cash provided by operating activities
|
80,324 | 74,263 | ||||||
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Cash Flows from Investing Activities:
|
||||||||
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Expenditures for property, plant and equipment
|
(13,990 | ) | (12,722 | ) | ||||
|
Cash used in business acquisition
|
(11,015 | ) | -- | |||||
|
Net cash used in investing activities
|
(25,005 | ) | (12,722 | ) | ||||
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Cash Flows from Financing Activities:
|
||||||||
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Purchases of treasury stock
|
(2,632 | ) | (2,200 | ) | ||||
|
Payment of cash dividends
|
(91,178 | ) | (25,228 | ) | ||||
|
Excess tax benefits from stock-based compensation
|
5,111 | 2,473 | ||||||
|
Proceeds from sale of Class A common stock in connection with associate stock purchase plan
|
1,589 | 1,254 | ||||||
|
Proceeds from exercise of Class A common stock options
|
25,517 | 8,338 | ||||||
|
Repayments of notes payable under the credit facility and other notes
|
(39,274 | ) | (25,710 | ) | ||||
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Net cash used in financing activities
|
(100,867 | ) | (41,073 | ) | ||||
|
Effect of foreign exchange rate changes on cash and cash equivalents
|
32 | (94 | ) | |||||
|
Net (decrease) increase in cash and cash equivalents
|
(45,516 | ) | 20,374 | |||||
|
Cash and cash equivalents – beginning of period
|
121,191 | 225,572 | ||||||
|
Cash and cash equivalents – end of period
|
$ | 75,675 | $ | 245,946 | ||||
|
Supplemental Disclosure of Cash Flow Information:
|
||||||||
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Cash paid for income taxes
|
$ | 51,243 | $ | 37,094 | ||||
|
Cash paid for interest
|
$ | 92 | $ | 629 | ||||
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