MSC INDUSTRIAL DIRECT CO., INC., “MSC” or the “Company,” a premier distributor of metalworking and maintenance, repair and operations (“MRO”) supplies to industrial customers throughout the United States and Canada, reported financial results for its fiscal third quarter ended June 1, 2013.

Net sales for the third quarter of fiscal 2013 were $636.9 million, an increase of 4.1% (5.7% on an average daily sales basis) over net sales of $612.0 million in the third quarter of fiscal 2012. 

The recently acquired Barnes Distribution North America (“BDNA”) business contributed approximately $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.

Excluding non-recurring costs of $6.4 million associated with the BDNA acquisition and the co-location of the company’s headquarters, adjusted operating income for the fiscal 2013 third quarter was $106.6 million, or 16.7% of net sales, compared to GAAP operating income of $110.9 million, or 18.1% of net sales in the same quarter a year ago. GAAP operating income for the fiscal 2013 third quarter was $100.2 million.

Excluding the after tax effects of non-recurring costs, adjusted net income for the third quarter of fiscal 2013 was $66.7 million, or $1.05 per diluted share (based on 63.1 million diluted shares outstanding), compared to GAAP net income of $70.2 million, or $1.10 per diluted share, a year ago (based on 63.1 million diluted shares outstanding). The BDNA operations contributed approximately $0.02 to the fiscal third quarter EPS and GAAP net income for the third quarter of fiscal 2013 was $62.4 million, or $0.98 per diluted share. 

Erik Gershwind, president and chief executive officer, said, “We continue to fuel share gains in our targeted markets despite a sluggish manufacturing sector, particularly in metalworking-related end markets.  The organic growth investments we have made in E-commerce, vending and other areas are offsetting a weak demand environment.”

Jeff Kaczka, executive vice president and chief financial officer, 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.  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.”

Gershwind concluded, “I remain confident about our future prospects for revenue and earnings growth, as we execute on our strategic investments and gain traction with the new, high margin growth platform in BDNA.  We are excited about our early returns on BDNA and are beginning to execute our integration plans including distribution network and headquarter consolidations with MSC.  We are on track to achieving our long-term growth goal of $4 billion in revenue by FY2016.”

Outlook

Based on a continuation of current market conditions, for the fiscal 2013 fourth quarter the company expects net sales including BDNA to be between $661 million and $673 million. At the midpoint, average daily sales exclusive of BDNA are expected to be flat. Excluding non-recurring costs related to the co-location of the company’s headquarters and non-recurring transaction and integration costs associated with BDNA, the company expects adjusted diluted earnings per share for the fourth quarter of fiscal 2013 to be between $0.87 and $0.91.

The company expects the non-recurring costs related to the co-location of the company’s headquarters to have a $0.03 impact and the integration costs related to the BDNA acquisition to have approximately a $0.03 impact on its GAAP diluted earnings per share in the fiscal fourth quarter.