MSC Industrial Direct Co. (NYSE:MSM) delivered a strong finish to the year, reporting fourth-quarter results on Thursday before the market opened that surpassed analyst expectations for both earnings and revenue.
The company reported quarterly adjusted earnings of $1.09 per share, exceeding the analyst consensus estimate of $1.02 and marking a 5.8% increase from $1.03 per share a year ago.
Net sales for the quarter hit $978.2 million, topping expectations of $964.3 million and reflecting a 2.7% year-over-year increase from $952.3 million in the same period last year.
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The fourth quarter adjusted operating margin declined to 9.2% from 9.9% in the prior year.
The company reported cash and cash equivalents of $56.23 million for the fourth quarter.
Fiscal Year 2025
For fiscal 2025, MSC Industrial Direct reported net sales of $3.77 billion, down 1.3% year over year.
The adjusted operating income for the fiscal year came in at $315.8 million, resulting in an operating margin of 8.4% on an adjusted basis.
The company reported adjusted diluted EPS of $3.76 for the fiscal year, down from $4.81 a year ago.
Outlook
For the first quarter of fiscal 2026, MSC Industrial Direct expects average daily sales to grow between 3.5% and 4.5% year over year, with an adjusted operating margin forecast in the range of 8.0% to 8.6%.
For full-year fiscal 2026, the company expects depreciation and amortization expenses between $95 million and $100 million and interest and other expenses of about $35 million.
The company plans capital expenditures of $100 million to $110 million while targeting a strong free cash flow conversion of around 90% and an effective tax rate between 24.5% and 25.5%.
Management Commentary
“We finished the year on a positive note with average daily sales improving 2.7% compared to the prior year and adjusted operating margin of 9.2% both of which exceeded our outlook. Cash generation remained favorable during the quarter resulting in free cash flow conversion of 122% for the fiscal year, ahead of our annual target. We leveraged this strong cash flow performance and our healthy balance sheet to return approximately $229 million to shareholders in the form of dividends and share repurchases,” stated Greg Clark, Interim CFO.
Martina McIsaac, president and Chief Operating Officer, concluded, “Looking out, I am encouraged by our performance exiting the fiscal year. As momentum builds, I gain increased confidence in our position to deliver profitable growth in fiscal 2026.”
CEO Transition
In a separate announcement, MSC Industrial Direct announced that Martina McIsaac, the company’s current president and Chief Operating Officer, will succeed Erik Gershwind as Chief Executive Officer, effective January 1, 2026, while continuing in her role as president.
Following his planned retirement as CEO, Gershwind will transition to the role of non-executive Vice Chair of the Board of Directors, with Mitchell Jacobson continuing as the non-executive chairman of the Board. McIsaac will also join the MSC Board of Directors upon assuming her new position as president and CEO.
Price Action: MSM shares were trading higher by 3.21% to $89.84 at last check Thursday.
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