MSC Industrial (MSM) Q2 Earnings Beat Estimates, Up Y/Y

MSC Industrial Direct Company, Inc. MSM reported earnings per share of $1.03 in second-quarter fiscal 2021 (ended as of Feb 27, 2021), beating the Zacks Consensus Estimate $1.01. The bottom-line figure improved 1% year over year. The company’s Mission Critical program delivered $9 million of savings in the quarter, leading to earnings improvement despite lower revenues.

Including one-time items, the company reported earnings per share of 32 cents in second-quarter fiscal 2021 compared with $1.00 in the year-ago quarter.

MSC Industrial generated revenues of $774 million, down 1.5% from $786 million reported in the year-ago quarter. The top-line figure missed the Zacks Consensus Estimate of $779.7 million. Improvement in sales levels of non-safety and non-janitorial product lines continued through the quarter. Sales of safety and janitorial products grew in the mid-teens. Average daily sales were $12.7 million for the quarter.

MSC Industrial Direct Company, Inc. Price, Consensus and EPS Surprise

MSC Industrial Direct Company, Inc. price-consensus-eps-surprise-chart | MSC Industrial Direct Company, Inc. Quote

Operational Update

Adjusted cost of goods sold decreased 1% year on year to $449 million. Gross profit slipped 2% to $325 million from the year-earlier quarter. Gross margin came in at 42%, flat compared with the year-ago quarter.

Adjusted operating expenses declined 3% year over year to $244 million during the fiscal second quarter. Adjusted operating income in the reported quarter amounted to $80.5 million, reflecting year-over-year growth of 1%. Operating margin came in at 10.4% in the reported quarter compared with the 10.1% in the prior-year quarter.

Financial Position

MSC Industrial had cash and cash equivalents of $20.2 million at the end of the fiscal second quarter compared with the $125 million at the end of fiscal 2020. The company’s long-term debt stood at $462 million at the end of the fiscal second quarter, down from $497 million at the end of fiscal 2020. The company generated cash flow from operating activities of $119 million in the first half of fiscal 2021 compared with $156 million in the prior-year period.

The company’s Mission Critical program has resulted in cumulative savings of $17 million so far in fiscal 2021 and it is on track to meet its goal of $25 million by the end of this year. It has invested around $5 million in growth programs. The company maintains its goal of achieving $90 million to $100 million of gross cost savings through fiscal 2023.

Price Performance

MSC Industrial’s shares have appreciated 41.6% over the past year compared with the industry’s rally of 95.4%.

Zacks Rank & Stocks to Consider

MSC Industrial currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Industrial Products sector are Deere & Company DE, AGCO Corporation AGCO and Crown Holdings, Inc. CCK. While Deere sports a Zacks Rank #1 (Strong Buy), AGCO and Crown Holdings carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere has a projected earnings growth rate of 82.5% for fiscal 2021. Over the past year, the company’s shares have soared 155%.

AGCO has an estimated earnings growth rate of 29.9% for the ongoing year. The company’s shares have surged 182% in the past year.

Crown Holdings has an expected earnings growth rate of 16.2% for 2021. The stock has appreciated 69% in a year’s time.

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