MSC Industrial Supply Co. reported record fiscal third-quarter revenue for the period ended May 28. A 13.8% year-over-year increase in ecommerce sales helped drive 10.7% growth in total net sales to $959 million, the metalworking and industrial products distributor said yesterday.
Third-quarter ecommerce sales of $594 million accounted for 62% of total sales, up from 60.2% a year ago.
Helping customers’ productivity
Erik Gershwind, president and CEO, said on an earnings call with investment analysts yesterday that MSC was still facing challenges related to price inflation, supply chain disruption and labor shortages, according to transcript of the call from Seeking Alpha.
But he noted that MSC was mitigating the effects of these headwinds for customers by advising them on how to improve their productivity. For example, he said, an MSC metalworking expert recently recommended changes in milling and drilling operations for a customer that cut metalworking cycle times from nearly three minutes to 10 seconds per part, “yielding $700,000 in annual profit improvement for the customer.”
Gershwind added that MSC expanded its metalworking resources by acquiring metalworking and industrial products distributor Engman-Taylor Co. Inc. after the end of its fiscal third quarter. MSC did not say what it paid for the company. Menomonee Falls, Wisconsin-based Engman-Taylor has facilities in Wisconsin, Illinois and North Carolina. It operates an ecommerce site at Engman-Taylor.com.
More ‘solutions-oriented’ business
In addition to metalworking products and services, Gershwind said, MSC is focusing growth strategies on digital operations, diversifying its customer base with a focus on government customers, and selling across its portfolio of metalworking and maintenance, repair and operations (MRO) products.
Kristen Actis-Grande, MSC’s executive vice president and chief financial officer, said MSC expects the third quarter’s financial performance to extend in the months ahead.
“Looking to the fiscal fourth quarter, we expect double-digit average daily sales growth to continue,” she said.
Actis-Grande added that MSC is moving to operate as “a more technical and solutions-oriented business” that helps customers operate more productively, as opposed to just selling basic products. That includes through vendor-managed inventory and on-site internet-connected vending machines.
“Moving to more technical and solutions-oriented business remains an integral part of our Mission Critical strategy,” she said, adding: “Sales to customers with solutions now represent roughly 55% of the total company sales.”
MSC’s financial figures
For the fiscal third quarter ended May 28, MSC reported:
- Ecommerce sales increased 13.8% year over year to $958.6 million. They accounting for 62.0% of total net sales, which grew 10.7% to $958.6 million.
- Gross profit of $411.15 million resulted in a gross margin of 42.9%, up from 42.3%.
- Net income increased 5.0% to $99.72 million.
For the 39 weeks ended May 28, MSC reported:
- Ecommerce sales increased 12.5% year over year to $1.63 billion. They accounted for 61% of total sales, which increased 10.7% to $2.67 billion.
- Net income increased 55.3%% to $236.13 million.
MSC’s ecommerce sales include commerce transactions through:
- Its ecommerce site, MSCDirect.com,
- internet-connected vending machines,
- vendor-managed inventory systems,
- XML-based ordering systems,
- electronic data interchange,
- and other electronic portals.
MSC’s formal corporate name is MSC Industrial Direct Co. Inc., but it often goes by the name of its primary unit, MSC Industrial Supply Co.
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