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MSC Industrial Direct Company, Inc. (NYSE: MSM) announced preliminary financial results for the third quarter of fiscal 2024 (ended Jun 1, 2024). The company also updated its fiscal 2024 outlook.
MSM reported net sales of $978-$980 million for the third fiscal quarter, which indicates a year-over-year decline of 7.3-7.1%. MSC Industrial generated revenues of around $935 million in the second quarter of fiscal 2024. Average daily sales increased around 3% sequentially.
Adjusted earnings per share for the third fiscal quarter are expected to be $1.32-$1.34, which suggests a decline from the $1.74 per share reported in the year-ago quarter. It posted second-quarter fiscal 2024 adjusted earnings per share of $1.18.
The year-over-year downside was attributed to the ongoing weakness in heavy manufacturing and a slower than expected ramp at its core customer. The gross margin in the quarter was approximately 60 basis points lower than MSM's projections due to unfavorable product and customer mix headwinds, and unanticipated negative impacts of the company's web pricing realignment initiative.
Backed by these factors, MSC Industrial lowered its 2024 outlook. The company expects full-year average daily sales to decline 4.7-4.3% year over year . This is updated from the previously announced flat to 5% year-over-year growth.
The adjusted operating margin is expected to be 10.5-10.7%, down from the prior mentioned 12-12.8%. Depreciation and Amortization expense guidance has been lowered to around $80 million from the previously stated $85 million.
The company expects interest and other expenses to be $45 million for fiscal 2024, updated from $40-$50 million.
Price Performance MSC Industrial's shares have lost 9.2% in the past year compared with the industry's decline of 8.8%.
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Zacks Rank & Stocks to Consider MSC Industrial currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Industrial Products sector are Intellicheck, Inc. (NASDAQ: IDN), Applied Industrial Technologies (NYSE: AIT) and Cintas Corporation (NASDAQ: CTAS). IDN currently sports a Zacks Rank #1 (Strong Buy), and AIT and CTAS carry a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Intellicheck's 2024 earnings is pegged at 2 cents per share. This indicates solid growth from the loss of 2 cents reported in 2023. The consensus estimate for 2024 earnings has been unchanged in the past 60 days. The company has a trailing four-quarter average earnings surprise of 28.9%. IDN shares have gained 57.8% in a year.
Applied Industrial has an average trailing four-quarter earnings surprise of 8.2%. The Zacks Consensus Estimate for AIT's 2024 earnings is pinned at $9.62 per share, which indicates year-over-year growth of 9.9%. Estimates have moved north by 2% in the past 60 days. The company's shares have gained 36.5% in a year.
The Zacks Consensus Estimate for Cintas Corporation's 2024 earnings is pegged at $14.95 per share, indicating year-over-year growth of 15%. The consensus estimate for 2024 earnings has been unchanged in the past 60 days. The company has a trailing four-quarter average earnings surprise of 4.3%. CTAS shares have gained 43.5% in a year.
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