MSC Industrial Supply Co. reported mixed third-quarter results Tuesday, with earnings beating analyst expectations despite a revenue decline, as the industrial distributor continues its acquisition strategy to strengthen regional market presence.
The Melville-based company posted net sales of $971.1 million for the quarter ended May 31, down 0.8% from the prior year, but slightly above analyst forecasts of $970.15 million. Adjusted earnings per share reached $1.08, surpassing the consensus estimate of $1.03, though down from $1.33 in the same quarter last year.
Operating margins compressed to 8.5% from 10.9% in the prior year quarter, reflecting ongoing industry headwinds1. On an adjusted basis, the operating margin was 9.0%, down from 11.4% a year earlier2.
CEO Erik Gershwind said the company delivered results "in line with our expectations for both average daily sales and operating margins," noting "early signs of progress" in three strategic focus areas: reenergizing core customers, maintaining momentum in high-touch solutions, and optimizing cost structure2.
CFO Kristen Actis-Grande attributed the performance to "benefits from price and improving performance in volumes," with average daily sales declining 0.8% year-over-year, slightly ahead of the company's outlook midpoint2.
MSC completed its acquisition of ApTex Inc. on May 30, adding the Wisconsin-based industrial supplier to strengthen its regional presence1. The deal, which closed during the third quarter, represents part of MSC's broader acquisition strategy that has included Premier Tool Grinding Inc. during fiscal 2024's fourth quarter2.
"We are thrilled to welcome ApTex into the MSC family," Gershwind said, noting the acquisition will combine "ApTex's deep technical expertise with MSC's best-in-class metalworking offering"1.
For the fourth quarter, MSC projects average daily sales growth between -0.5% and 1.5% year-over-year, with adjusted operating margins expected between 8.5% and 9.0%12. The company maintained its full-year fiscal 2025 guidance for key financial metrics, including capital expenditures of $100-110 million and free cash flow conversion of approximately 120%3.
MSC returned $56 million to shareholders through dividends and share repurchases during the quarter, bringing fiscal year-to-date shareholder returns to $181 million13.
Gershwind emphasized the company's commitment to "long-term objectives of growing to 400 basis points or more above the IP Index and expanding operating margins to the mid-teens"1.
