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8-K - FORM 8-K - MSC INDUSTRIAL DIRECT CO INCv358618_8k.htm
EX-99.1 - EXHIBIT 99.1 - MSC INDUSTRIAL DIRECT CO INCv358618_ex99-1.htm

 

 

Exhibit 99.2

 

 

1

Fiscal 4Q’13 Earnings Presentation

October 30, 2013

 

 

 
 

 

 

 

2 Risks and Non-GAAP Disclosures This presentation contains forward-looking statements within the meaning of U.S. securities laws, including guidance about expected future results, expectations regarding our ability to gain market share, expected benefits from our investment and strategic plans, including the Barnes Distribution North America acquisition and expectations regarding future revenue and margin growth. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these statements; are based on our current expectations; and we assume no obligation to update them. These risks include the Company’s ability to timely and efficiently integrate its recent acquisition of the business of Barnes Distribution North America (“BDNA”) and realize the anticipated synergies from the transaction; current economic, political, and social conditions; general economic conditions in the markets in which the Company operates; changing customer and product mixes; 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 customer 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 our information systems; retention of key personnel; and risk of delays in opening or expanding our customer fulfillment centers or customer service centers. Information about these risks is noted in the earnings press release and in the Risk Factors and MD&A sections of our latest annual and quarterly reports filed with the SEC, as well as in our other SEC filings. Investors are cautioned not to place undue reliance on these forward-looking statements. Throughout this conference call we will reference both GAAP and adjusted financial results, which are non-GAAP financial measures. Please refer to the reconciliation tables at the end of this presentation for a reconciliation of the adjusted financial measures to the most directly comparable GAAP measures.

 

 
 

 

 

 

 

3 F4Q’13 Guidance Comparison 4Q 2013 Guidance Adjusted 4Q 2013 Results(1) Sales $661M - $673M $674M Gross Margin 44.8% - 45.2% 45.6% Adjusted EPS $0.87 - $0.91 $0.95 Adjusted Operating Expenses $209M $209M Tax Rate 37.4% 38.3% (1) Reconciliations are provided on slides 7-9.

 

 
 

 

 

 

4 F4Q’13 EPS Walk(1) $0.95 ($0.04) $0.89 ($0.02) Adjusted EPS Davidson Relocation Costs BDNA Transaction & Integration Costs GAAP EPS (1) Previously provided guidance for F4Q 2013 included the impact from BDNA operating results, but consistent with prior quarters excluded non-recurring relocation costs associated with our Davidson facility, as well as the non-recurring transaction and integration costs associated with the BDNA acquisition. Reconciliations are provided on slides 7-9.

 

 
 

 

 

 

5 F1Q’14 Guidance Sales $662M – $674M Gross Margin 46.5% +/- 20 bps Adjusted EPS $0.92 – $0.96 Tax Rate 38.2% Assumptions: ● Includes BDNA accretion to EPS of 4 cents ● Excludes non-recurring integration costs associated with the BDNA acquisition and relocation costs associated with our Davidson facility which are expected to have an impact to GAAP diluted EPS of $0.04 and $0.02, respectively.

 

 
 

 

 

 

2 Risks and Non-GAAP Disclosures This presentation contains forward-looking statements within the meaning of U.S. securities laws, including guidance about expected future results, expectations regarding our ability to gain market share, expected benefits from our investment and strategic plans, including the Barnes Distribution North America acquisition and expectations regarding future revenue and margin growth. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these statements; are based on our current expectations; and we assume no obligation to update them. These risks include the Company’s ability to timely and efficiently integrate its recent acquisition of the business of Barnes Distribution North America (“BDNA”) and realize the anticipated synergies from the transaction; current economic, political, and social conditions; general economic conditions in the markets in which the Company operates; changing customer and product mixes; 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 customer 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 our information systems; retention of key personnel; and risk of delays in opening or expanding our customer fulfillment centers or customer service centers. Information about these risks is noted in the earnings press release and in the Risk Factors and MD&A sections of our latest annual and quarterly reports filed with the SEC, as well as in our other SEC filings. Investors are cautioned not to place undue reliance on these forward-looking statements. Throughout this conference call we will reference both GAAP and adjusted financial results, which are non-GAAP financial measures. Please refer to the reconciliation tables at the end of this presentation for a reconciliation of the adjusted financial measures to the most directly comparable GAAP measures.

 

 
 

 

 

 

7 Reconciliations Non-GAAP Financial Measures To supplement MSC’s unaudited selected financial data presented on a basis consistent with Generally Accepted Accounting Principles (“GAAP”), the Company discloses certain non-GAAP financial measures, including adjusted operating income, adjusted net income, and adjusted net income per diluted share, The adjusted supplemental measures exclude non-recurring costs associated with the Barnes Distribution North America (“BDNA”) and co-location of our corporate headquarters in Davidson, North Carolina and the related tax effects. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with MSC’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate MSC’s results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non- GAAP financial measures by relying upon GAAP results to gain a complete picture of Company performance. In calculating “adjusted” non-GAAP financial measures, we exclude the non-recurring costs described above to facilitate a review of the comparability of the Company’s operating performance on a period-to-period basis because such costs are not, in our view, related to the Company’s ongoing operational performance. We use the “adjusted” non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. In addition, we use the “adjusted” non-GAAP financial measures as performance metrics for management incentive programs. Since we find these measures to be useful, we believe that investors benefit from seeing results “through the eyes” of management in addition to seeing GAAP results. We believe that the “adjusted” non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provide useful information to investors by offering: ● the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results; ● the ability to better identify trends in the Company’s underlying business and perform related trend analyses; and ● a better understanding of how management plans and measures the Company’s underlying business. The following tables reconcile GAAP operating income, GAAP net income and GAAP net income per diluted share (“EPS”) to non-GAAP adjusted operating income, adjusted net income, and adjusted net income per diluted share.

 

 
 

 

 

 

8 Reconciliations Thirteen Weeks Ended 31-Aug-13 (dollars in thousands) Margin GAAP Operating income $92,352 13.7% Non-recurring costs 6,392 Adjusted Operating income $98,744 14.7% Thirteen Weeks Ended Fourteen Weeks Ended 31-Aug-13 1-Sep-12 (dollars in thousands) Sales $673,773 $635,271 Cost of Sales 366,228 348,244 Gross Margin 307,545 287,027 Operating Expenses 215,193 179,021 Income from Operations 92,352 108,006 Non-recurring costs 6,392 1,232 Adjusted Operating income $98,744 $109,238

 

 
 

 

 

 

9 Reconciliations Thirteen Weeks Ended 31-Aug-13 (in thousands, except per share amounts) $(after tax) Diluted EPS GAAP net income $56,375 $0.89 Non-recurring costs* 3,945 0.06 Adjusted net income $60,320 $0.95 * On a pre-tax basis includes approximately $1,900 of non-recurring relocation costs associated with the Co-Location of the Company’s headquarters in Davidson, North Carolina and approximately $4,492 of non-recurring transaction costs associated with the BDNA acquisition for the thirteen weeks ended August 31, 2013. The non-recurring costs were calculated using an effective tax rate of 38.3%.