MSC reports fiscal 2016 fourth quarter and full year result
For fiscal 2016, MSC had net sales of $2.9 billion, a decrease of 1.6 percent over the prior year (3.5 percent on an Average Daily Sales basis).
For fiscal Q4 2016, net sales of $745.1 million increased 2.4 percent year-over-year (3.6 percent decline on an Average Daily Sales basis).
MSC’s gross margin in fiscal Q4 of 44.8 percent reflected continued stabilization in an ongoing difficult environment, according to the company.
MSC’s operating margin of 13.3 percent resulted from cost containment and ongoing monitoring of discretionary spend, according to the company.
Erik Gershwind, president and chief executive officer, said, “Conditions remained very difficult throughout the fourth quarter, much as they have for the past few quarters. Low oil prices and the strong U.S. dollar continued to depress demand, particularly in metalworking and heavy manufacturing. Despite these headwinds, our execution remains strong, including continued share gains, sustained gross margin stabilization and strong expense controls.”
Rustom Jilla, executive vice president and chief financial officer, added, “Our diluted EPS for the quarter was $1.02, 4 cents above the mid-point of our guidance range. We continued executing on our gross margin and cost reduction initiatives, but the fourth fiscal quarter’s higher EPS was mostly attributable to sales being above guidance. For the full year, we succeeded in delivering an operating margin roughly in line with prior year levels despite lower sales. Finally, our cash flow generation was particularly strong in fiscal 2016, and we returned $500 million to our shareholders through dividends and share buybacks.”
Gershwind concluded, “As we look to fiscal 2017, MSC is well positioned regardless of what happens in the industrial economy. Should conditions improve or even just stabilize, the company is poised for a tremendous growth and leverage story. On the other hand, if difficult conditions persist, we will continue to capitalize on the opportunities a challenging environment creates for MSC, making the future growth and leverage story even more compelling.”