MSC Industrial Supply Co. Inc. is betting on a major sales reorganization and expanded use of digital and artificial intelligence (AI) tools to drive momentum following a quarter of modest growth.

For its fiscal Q2 ended Feb. 28, the industrial distributor reported net sales of $917.8 million, up 2.9% year over year, but below the company’s 4.5% outlook midpoint. Net income attributable to the company rose 8.1% to $42.5 million, compared with $39.3 million a year earlier.

Executives said AI and data-driven tools are playing a growing role across the business as MSC Industrial works to scale operations more efficiently. That shift is also tied to broader cost-reduction efforts.

During the company’s Q2 earnings call, president and CEO Martina McIsaac said MSC Industrial has reduced headcount by more than 400 positions over the past 12 months. The distributor is “deploying AI across the business, which is letting us not replace attritted head count for the moment,” she said.

MSC Industrial ecommerce and digital strategy in Q2 2026

MSC Industrial Supply did not disclose specific ecommerce sales for its fiscal Q2 2026.

However, the company continues expanding technology-driven services designed to automate how manufacturers track inventory and reorder supplies.

During Q2, the number of vending machines installed at customer sites rose 8% year over year to about 30,400, Greg Clark, vice president and interim chief financial officer, said on the earnings call. The machines function as automated supply cabinets placed on factory floors, tracking product usage in real time and automatically triggering replenishment orders.

Meanwhile, the number of customers using MSC’s In-Plant Solutions increased 9% to 423, Clark said. These programs place MSC personnel inside customer facilities to help manage inventory, purchasing and supply levels using digital tracking systems.

Together, the programs now represent a significant portion of MSC’s business. Clark said average daily sales through vending machines increased 8% year over year and accounted for about 20% of total company sales. Sales tied to In-Plant programs grew at a similar pace and represented another 20% of revenue. 

Operational improvements and margins

Beyond the factory floor, several operational changes are beginning to show up in MSC’s financial results.

Gross margin reached 41.1% during the quarter, up 10 basis points from a year earlier. McIsaac said the improvement was driven largely by price increases implemented earlier in the fiscal year as the company responded to inflation and tightened its pricing strategy.

Clark said total operating expenses in Q2 increased year over year, driven largely by higher personnel costs. Depreciation and amortization rose by about $2 million in Q2, reflecting investments in MSC Industrial’s digital and ecommerce initiatives, including enhancements to the company’s website.

At the same time, McIsaac said teams across the organization are incorporating AI into everyday processes. Planning and procurement teams are using the technology to improve inventory forecasting and purchasing decisions, she said, while operations teams are streamlining processes inside distribution centers.

Together, those efforts helped lift adjusted operating margin to 7.5% during the quarter, a 40-basis-point improvement from a year earlier, McIsaac said.

“Both cases are perfect examples of the results a data-driven focus on continuous improvement could have, and I’m looking forward to the greater impact it will have on MSC as this mentality takes shape across the company,” she said.

MSC Industrial Supply is also using AI to identify new sales opportunities. During a recent supplier growth forum, the company used AI to identify joint growth opportunities and “white space” overlaps between supplier offerings and customer demand, McIsaac said. Conversations at the forum generated nearly 10,000 potential sales opportunities worth about $500 million in combined near- and long-term potential, she said.

Looking ahead, McIsaac said MSC plans to continue using AI to improve efficiency across the business as it works toward restoring operating margins to the mid-teens.

MSC Industrial sales restructuring and outlook

McIsaac said Q2 results were also affected by modest headwinds from weather and the partial federal government shutdown.

During the quarter, MSC completed the final phase of its sales reorganization, aimed at simplifying its sales structure and reducing overlapping account coverage.

The changes recently eliminated about 130 customer-facing roles and reorganized sales teams into a more geographically aligned structure, she said. Previously, some customers were supported by several MSC representatives at once, which created inefficiencies.

“Following these changes, growth acceleration is our primary objective,” McIsaac said.

Still, the broader industrial environment remains mixed, she said. On one hand, several indicators point to a potential recovery in manufacturing activity, and customer sentiment has begun to improve.

At the same time, geopolitical tensions and rising fuel costs continue to create uncertainty, she said.

Even so, McIsaac said MSC has not seen “meaningful disruptions” to demand so far and is staying in close contact with customers while monitoring supply conditions.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s article on MSC Industrial ecommerce sales.

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