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MSC Industrial Direct Co Inc Class A MSM

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Morningstar’s Analysis

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5-Star Price

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Economic Moat

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Capital Allocation

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MSC Returns to Growth During Fiscal Third Quarter; Cost-Saving Initiatives Ahead of Target

Analyst Note

| Brian Bernard, CFA, CPA |

In our view, narrow-moat MSC Industrial's fiscal third-quarter results tell a story of solid management execution amid an economic recovery. The firm reported almost 4% sales growth after six consecutive quarters of year-over-year declines. Considering a difficult prior-year sales comparison and the significant decrease in COVID-19 cases in the United States, we weren't surprised that MSC's safety and janitorial-related product revenue declined 42% year over year. However, the rest of MSC's product portfolio more than made up for the slack, and sales of all other products increased 21% year over year. Management expects double-digit fourth-quarter revenue growth on an easy prior-year comparison (reported fourth-quarter 2020 sales were down 11%). We're modeling 2% full-year sales growth in fiscal 2021 and see mid-single-digit revenue growth thereafter as MSC's growth initiatives take hold amid strengthening end markets.

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Company Profile

Business Description

MSC Industrial Direct is a value-added industrial distributor with a focus on metalworking and maintenance, repair, and operations products and services. The company offers 1.9 million products through a distribution network of almost 100 branches and 12 fulfillment centers. Although MSC has a presence in Canada, Mexico, and the United Kingdom, it primarily operates in the United States. In fiscal 2020, 95% of the firm’s $3.2 billion of sales was generated in the U.S.

Contact
75 Maxess Road
Melville, NY, 11747
T +1 516 812-2000
Sector Industrials
Industry Industrial Distribution
Most Recent Earnings May 31, 2021
Fiscal Year End Aug 31, 2021
Stock Type High Yield
Employees 6,315

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