The month of March was a wild ride for the multibillion-dollar distributor of industrial supplies, as sales rose “nicely” and then and then “dropped off significantly,” MSC CEO Erik Gershwind said today. Fiscal second-quarter ecommerce sales were down 3.1% from a year ago, as total sales declined 4.5% and the company stepped up safety procedures to keep orders flowing to customers, MSC said.

When MSC Industrial Supply Co. began its 2020 fiscal year third quarter in March, it didn’t take long for it to experience the strong impact of the coronavirus.

“Our revenues were up nicely over the prior year over the first three weeks” of March, CEO Erik Gershwind said on a conference call with investment analysts today. “But then sales dropped off significantly over the last two weeks as customer shutdowns spread rapidly across the nation.” (Because of its fiscal year schedules, those last two weeks allotted to March included the first few days of April.)

The multibillion-dollar distributor of metalworking and other industrial products, meanwhile, is taking extra steps to maintain fulfillment center operations during the virus pandemic, while working with suppliers to maintain the flow of orders to business and government customers, Gershwind said.

Ecommerce sales for the fiscal second quarter, which ended Feb. 29, declined by 3.1% to $478.7 million, as total sales decreased 4.5% to $786.1 million, MSC said.

Ecommerce sales, including sales through MSCDirect.com, internet-connected vending machines, vendor-managed inventory services and electronic data interchange, hit an annualized run rate of $1.97 billion during the fiscal second quarter, down 1.5% from a year-earlier annualized figure of $2.0 billion, according to figures provided by MSC.

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The company compiles those run-rate figures by taking average daily sales during the quarter and multiplying them by the number of business days in each fiscal year (with 251 business days in fiscal years 2019 and 2020).

Also in March, MSC implemented a price increase of 1% to 2%, which was smaller than the last year’s mid-year increase, MSC said.

Gershwind said MSC is taking extra steps to serve as a “mission-critical” supplier to corporate and government customers, and sourcing and shipping extra volumes of safety and sanitation products. MSC also supplies a wide range of maintenance, repair and operations (MRO) products that businesses and government agencies use to operate their facilities.

“We have instituted enhanced safety procedures, including use of additional protective equipment, frequent cleanings of our facilities, and stay at home policies for associates who can work from home,” he said. “Given we are providing essential services to many organizations on the front lines, we do not plan to shut down our customer fulfillment centers. We will, of course, follow the guidance of health officials, and we are in close contact with them across our operating footprint.”

Greg Clark, vice president and interim chief financial officer, added: “As March progressed and we began to see the impact of COVID-19, our focus quickly shifted to ensuring business continuity. We reduced spending across the company and took actions to further improve our liquidity position, including drawing down $300 million from our revolving credit facility,” he said. “We are monitoring our inventory levels closely, but we also intend to use inventory as a competitive differentiator. Should the environment weaken further, we can and will adjust inventory levels quickly.”

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Clark said that MSC continues to “have ample liquidity to run the business and fund our dividend. Revenues would have to decline year over year in the range of 40% to 50% for operating cash flow to turn negative.”

MSC’s formal corporate name is MSC Industrial Direct Co. Inc., but it generally goes by the name of its largest unit, MSC Industrial Supply Co.

For the fiscal second quarter ended Feb. 29, MSC reported:

  • Ecommerce as a percentage of total sales reached 60.9%, up from 59.1% a year earlier;
  • Net income decreased year over year by 18.9% to $55.5 million;
  • Gross profit decreased by 5.9% to $331.05 million, resulting in a gross profit margin of 42.1%, down from 42.7%;

For the fiscal first half, MSC reported:

  • Ecommerce sales decreased by 1.5% year over year to $978.6 million, as total sales fell by 2.7% to $1.61 billion;
  • Net income declined by 15.2% to $121.0 million.

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