Upcoming AWS Coverage on Fastenal Post-Earnings Results

LONDON, UK / ACCESSWIRE / April 17, 2017 / Active Wall St. announces its post-earnings coverage on MSC Industrial Direct Co., Inc. (NYSE: MSM). The Company posted its second quarter fiscal 2017 financial results on April 06, 2017. The industrial tools and supplies distributor surpassed sales and earnings expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of MSC Industrial Direct's competitors within the Industrial Equipment Wholesale space, Fastenal Co. (NASDAQ: FAST), reported its Q1 2017 as well as current operations results on Wednesday, April 12, 2017. AWS will be initiating a research report on Fastenal in the coming days.

Today, AWS is promoting its earnings coverage on MSM; touching on FAST. Get our free coverage by signing up to: http://www.activewallst.com/register/.

Earnings Reviewed

For the three months ended March 04, 2017, MSC reported net sales of $703.8 million, an increase of 2.9% compared to net sales of $684.1 million in Q2 FY16. The Company's revenue numbers surpassed analysts' consensus of $696.8 million.

For Q2 FY17, MSC's average daily sales increased by 2.9% versus last year, with sales to manufacturers up 2.6% and to non-manufacturers 4.5%. The Company's overall average daily sales growth came in slightly above the high-end of its guidance range of 2.5%. MSC's Q2 FY17 gross margin of 44.7%, a 40-basis point decline on a y-o-y basis, but slightly better than the midpoint of the Company's guidance.

During Q2 FY17, MSC reported operating income of $86.6 million, up 7.6% on a y-o-y basis and operating margin of 12.3%, a 50-basis point increase compared to the year ago same period and slightly better than the guidance midpoint guidance midpoint of 12.2%. The Company's operating margin improvement versus guidance came in on the back of higher sales volume and gross margin performance, while the improvement versus last year came in from expense leverage.

For Q2 FY17, MSC reported diluted EPS of $0.93, up 16% from last year's Q2 of $0.80 and $0.03 above the high-end of the Company's guidance range. About $0.03 of EPS was attributable to the Company's lower effective tax rate, which came in at 36.1%, well below MSM's guidance of 38.2% and this was due to the early adoption of the new accounting standard on stock compensation. The Company's earnings numbers surpassed market expectations of $0.90 per share.

Balance Sheet

During Q2 FY17, MSC's DSO's were 51.5 days, up over the prior year and slightly down from the last quarter. The Company's inventory turns were at 3.4, up from last year and also up slightly from last quarter's 3.3.

For Q2 FY17, MSC's free cash flow was $8 million compared to roughly $50 million for the same quarter last year. The major drivers of this change were higher inventories and accounts receivable, offset partially by higher accrued liabilities. The Company's capital expenditures were $13.2 million in the reported quarter, up $2 million from the year ago corresponding period. For FY17, MSC is expecting CapEx to be around $55 million to $60 million.

As of March 04, 2017, MSC had approximately $549 million in debt, mainly comprised of $184 million revolving credit facility balance; $163 million on term loan; and $175 million of private placement debt. The Company had $36 million in cash and cash equivalent and its leverage ratio remains at 1.1x.

Outlook

For Q3 FY17, MSC is forecasting sales to be in the range of $734 million to $748 million, up from the prior quarter's $727 million despite one less work day in the upcoming quarter. The Company's guidance assumes average daily sales of $11.6 million in Q3 FY17. MSC expects gross margin to be 44.6% plus or minus 20 basis points in Q3 FY17.

Stock Performance

On Thursday, April 13, 2017, MSC Industrial Direct's share price finished the trading session at $89.23, dropping 2.19%. A total volume of 917.66 thousand shares exchanged hands, which was higher than the 3 months average volume of 553.56 thousand shares. The stock has surged 22.43% and 21.40% in the last six months and past twelve months, respectively. The stock is trading at a PE ratio of 22.54 and has a dividend yield of 2.02%.

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SOURCE: Active Wall Street