MSC Industrial Direct Co., Inc. Reports Results for its Fiscal 2011 Second Quarter

MELVILLE, N.Y., April 6, 2011 /PRNewswire/ -- MSC INDUSTRIAL DIRECT CO., INC. (NYSE: MSM), "MSC" or the "Company," one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations ("MRO") supplies to industrial customers throughout the United States, today reported financial results for its fiscal 2011 second quarter ended February 26, 2011.

For the fiscal 2011 second quarter, net sales rose 22.2% to $483.4 million, compared with $395.5 million in the prior year period.  Operating income increased 61.6% in the fiscal 2011 second quarter to $80.6 million, or 16.7% of net sales, from $49.9 million, or 12.6% of net sales, in the second quarter of fiscal 2010. For the second quarter of fiscal 2011, the Company reported net income of $49.7 million, an increase of 62.1% over net income of $30.6 million in the second quarter of fiscal 2010. Diluted earnings per share in the fiscal 2011 second quarter were $0.78 (based on 63.3 million diluted shares outstanding), compared to $0.48 (based on 63.0 million diluted shares outstanding) in the same period a year ago, an increase of 62.5%.

During the quarter, the Company completed the integration of its previously announced acquisition of Rutland Tool & Supply Co. ("Rutland").  The Company's results for the quarter included $6.6 million in sales from Rutland.  Excluding acquisition and integration costs, Rutland broke even for the period.  Pre-tax acquisition and integration costs incurred by the Company during the quarter were $1.65 million, resulting in a dilution of $0.016 per share, which was better than prior expectations.  

Net sales for the first half of fiscal 2011 were $956.2 million, compared with net sales of $780.3 million in the first half of fiscal 2010.  Operating income for the first half of fiscal 2011 was $157.7 million, or 16.5% of net sales, versus $100.9 million, or 12.9% of net sales, in the first half of fiscal 2010.  Net income for the first half of fiscal 2011 was $97.2 million, compared with $62.1 million in the prior year period.  Diluted earnings per share for the first half of fiscal 2011 were $1.53 (based on 63.1 million diluted shares outstanding), compared to $0.98 (based on 62.9 million diluted shares outstanding) a year ago.

David Sandler, President and Chief Executive Officer said, "I'm absolutely delighted with our performance and the strong financial results that our team delivered, driven by excellent execution, stronger demand across our customers than originally anticipated and continued gains in market share. We continue to execute against our strategic plan, delivering the growth in sales, earnings, and operating margin percentage that we were confident would result from our investments and model in a recovering market."

Erik Gershwind, Executive Vice President and Chief Operating Officer, stated, "We achieved strong results in the quarter led by significant growth within our core customer base.  Our strong gross margin of 46.8% is primarily a function of improved rebates, excellent realization of the pricing adjustment we made around the holidays, and the growth in our core business. During the quarter, we also successfully completed the Rutland integration ahead of schedule, and that business delivered better results than we originally anticipated."

Mr. Sandler concluded, "Our results demonstrate the inherent leverage and power of our business model. We have seen significant benefits from our strategic growth programs, and we will continue to invest in these initiatives going forward. We are very encouraged by our progress, the performance of our investments, and recent strong economic trends, all of which bode well for the future."

For the fiscal 2011 third quarter, the Company expects net sales to be between $524 million and $536 million and expects diluted earnings per share for the third quarter of fiscal 2011 to be between $0.90 and $0.94.

The management of MSC will host a conference call today, at 11:00 a.m. Eastern Time, to review the Company's results for the fiscal 2011 second quarter, and to comment on current operations.  The call may be accessed via the Internet on the home page of MSC's website located at: www.mscdirect.com.  A replay of the conference call will be available on the Company's website through April 20, 2011.

About MSC Industrial Direct Co., Inc.

MSC Industrial Direct Co., Inc. is one of the largest direct marketers and premier distributors of Metalworking and Maintenance, Repair and Operations ("MRO") supplies to industrial customers throughout the United States. MSC employs one of the industry's largest sales forces and distributes approximately 600,000 industrial products from approximately 3,000 suppliers to approximately 317,000 customers.  In-stock availability is approximately 99%, with next day standard delivery to the contiguous United States on qualifying orders up until 8:00 p.m. Eastern Time.  MSC reaches its customers through a combination of approximately 22 million direct-mail catalogs, 96 branch sales offices, 998 sales people, the Internet and associations with some of the world's most prominent B2B eCommerce portals. For more information, visit the Company's website at http://www.mscdirect.com.

CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Statements in this Press Release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained herein which are not statements of historical facts and that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future shall be deemed to be forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events, actual results and performance, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. Factors that could cause actual results to differ materially from those in forward-looking statements include, without limitation, current economic, political and social conditions, general economic conditions in the markets in which the Company operates, changing customer and product mixes,  risks associated with acquisitions, including difficulties with integrating acquired businesses, competition, industry consolidation and other changes in the industrial distribution sector, volatility in commodity and energy prices, the outcome of potential government or regulatory proceedings or future litigation, credit risk of our customers, risk of cancellation or rescheduling of orders, work stoppages or other business interruptions (including those due to extreme weather conditions) at transportation centers or shipping ports, risk of loss of key suppliers, key brands or supply chain disruptions, dependence on the Company's information systems,  and retention of key personnel.  Additional information concerning these and other risks is described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's reports on Forms 10-K, 10-Q and 8-K that the Company files with the U.S. Securities and Exchange Commission.  The forward-looking statements in this press release are based on current expectations and the Company assumes no obligation to update these forward-looking statements.

SOURCE MSC Industrial Direct Co., Inc.