8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 8, 2020

_________________________________________________

MSC Industrial Direct Co., Inc.

(Exact Name of Registrant as Specified in Its Charter)

New York	1-14130	11-3289165
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

75 Maxess Road, Melville, New York			11747
(Address of principal executive offices)			(Zip Code)
Registrant’s telephone number, including area code: (516) 812-2000
		Not Applicable
	(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $.001	MSM	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On April 8, 2020, MSC Industrial Direct Co., Inc. issued a press release announcing financial results for its fiscal 2020 second quarter ended February 29, 2020. A copy of the press release is furnished with this report as Exhibit 99.1.

The information in this Current Report on Form 8 K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits:
99.1	Press Release, dated April 8, 2020, issued by MSC Industrial Direct Co., Inc.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

‎

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MSC INDUSTRIAL DIRECT CO., INC.
Date: April 8, 2020	By:	/s/ Steve Armstrong
	Name:	Steve Armstrong
	Title:	Senior Vice President, General Counsel and Corporate Secretary

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EX-99.1

Exhibit 99.1

NEWS

MSC REPORTS FISCAL 2020 SECOND QUARTER RESULTS

FISCAL Q2 2020 HIGHLIGHTS

· Net sales of $786.1 million, a 4.5% YoY decrease

· Operating income of $77.7 million, compared to $96.0 million in the prior year

· Operating margin of 9.9%, 20 basis points above the midpoint of the guidance range

· Diluted EPS of $1.00; at the midpoint of the guidance range

MELVILLE, NY and DAVIDSON, NC, APRIL 8, 2020 - MSC INDUSTRIAL SUPPLY CO. (NYSE: MSM),  "MSC" or the "Company", a premier distributor of Metalworking and Maintenance, Repair and Operations ("MRO") products and services to industrial customers throughout North America,  today reported financial results for its fiscal 2020 second quarter ended February29, 2020.

Financial Highlights1	FY20 Q2		FY19 Q2		Change	FY20 YTD		FY19 YTD		Change
Net Sales	$786.1		$823.0		-4.5%	$1,609.7		$1,654.6		-2.7%
Operating Income	77.7		96.0		-19.1%	168.0		199.0		-15.6%
% of Net Sales	9.9%		11.7%			10.4%		12.0%
Net Income attributable to MSC Industrial	55.5		68.4		-18.9%	120.9		142.7		-15.3%
Diluted EPS	$1.00	.2	$1.24	.3	-19.4%	$2.18	.2	$2.56	3	-14.8%

1In millions except per share data or as otherwise noted. 2Based on 55.6 million and 55.5 million diluted shares outstanding for FY20 Q2 and FY20 YTD, respectively.  3Based on 55.4Million and 55.6 million diluted shares outstanding for FY19 Q2 and FY19 YTD.  

Erik Gershwind, president and chief executive officer, said, “We continue to progress on our journey to reposition MSC as a mission critical partner on the plant floor. In the near-term, however, our focus is on navigating the Company through the COVID-19 crisis, and we have launched a company-wide business continuity effort to do so. Our number one priority is the health and safety of our associates and their families, our customers, and our other partners. 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. 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, “Our overall fiscal second quarter results reflected solid execution in a relatively soft environment, and all metrics were within our guidance range. At the beginning of March, the first month of our fiscal third quarter, we took a mid-year price increase and realization has been quite good. 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. 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. We continue 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 percent to 50 percent for operating cash flow to turn negative. At these levels, we would have taken additional significant cost down actions and could sustain multiple quarters given our liquidity position.”

Gershwind continued, “The first month of our fiscal third quarter, March, reflected several important trends as the impact of COVID-19 accelerated. First, there was a large discrepancy between the first three weeks and the last two. Our revenues were up nicely over prior year over the first three weeks, but then sales dropped off significantly over the last two weeks as customer shutdowns spread rapidly across the nation. Second, as the month progressed, large orders and sales of safety and janitorial products surged, particularly to government customers, while sales of other product lines dropped significantly. Third, an unusually large gap between our orders, or bookings, and invoicing developed. While bookings for March were up high single digits over the prior year and even up over prior year during the last two weeks of the month, sales were down mid-single digits. The gap was a function of the surge in safety and janitorial orders, scarcity of product, longer lead times and a larger-than-normal backlog in our own warehouses. We anticipate the majority of these bookings will invoice during the months of April, May, and June, which would provide a growth tailwind to buffer additional softness that may be yet to come.”

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MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2020 SECOND QUARTER RESULTS

“I am proud of how our associates have stepped up during this time of unprecedented uncertainty,” said Mr. Gershwind. “Our warehouse associates are getting mission critical product to our customers. The sales and service team remains on the front lines with customers. And the category management team is successfully sourcing scarce safety and janitorial products badly needed by our customers. These are just a few examples of our associates rising to meet the challenge. While the impact of COVID-19 will likely get worse before it gets better, the environment will ultimately improve. MSC has been through difficult periods before, and we will lean on our time-tested playbook, anchoring ourselves in our mission statement and values. We will continue supporting customers and suppliers, while advancing our strategy to become mission critical on the plant floor. Lastly, our balance sheet, culture, and resolve mean MSC will not only survive, but will ultimately emerge from this as a stronger company.”

Outlook

Gershwind concluded, “Given the unprecedented uncertainly that we are all facing right now, the lack of visibility we have going forward, and how fast things are changing, we do not think quarterly guidance would provide much value. We do, however, understand the need for transparency right now. Therefore, until we get through this period of heightened uncertainty, we will be providing monthly updates on average daily sales developments following our month-end close, as well as comments on the business trends that we have seen over the course of the month.”

Conference Call Information

MSC will host a conference call today at 8:30 a.m. EST to review the Company’s fiscal 2020 second quarter results. The call, accompanying slides, and other operational statistics may be accessed at: http://investor.mscdirect.com. The conference call may also be accessed at 1-877-443-5575 (U.S.), 1-855-669-9657 (Canada), or 1-412-902-6618 (international).

An online archive of the broadcast will be available until April 15, 2020.

The Company’s reporting date for fiscal 2020 third quarter results is scheduled for July 8, 2020.

Contact Information

Investors:	Media:
John G. Chironna	Paul Mason
Vice President, Investor Relations and Treasurer	Director, Corporate Communications
(704) 987-5231	(704) 987-5313

About MSC Industrial Supply Co. MSC Industrial Supply Co. (NYSE:MSM) is a leading North American distributor of metalworking and maintenance, repair and operations (MRO) products and services. We help our customers drive greater productivity, profitability and growth with more than 1.7 million products, inventory management and other supply chain solutions, and deep expertise from over 75 years of working with customers across industries. Our experienced team of over 6,500 associates is dedicated to working side by side with our customers to help drive results for their businesses - from keeping operations running efficiently today to continuously rethinking, retooling, and optimizing for a more productive tomorrow. For more information on MSC, please visitmscdirect.com.

Note Regarding Forward-Looking Statements:

Statements in this Press Release may constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including statements about the impact of COVID-19 on our business operations, results of operations and financial condition, expected future results, expected benefits from our investment and strategic plans and other initiatives, and expected future margins, are forward- looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this release does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. Factors that could cause actual results to differ materially from those in forward-looking statements include the following, many of which are and will be amplified by the COVID-19 pandemic: the effects of the COVID-19 pandemic on our business operations, results of operations and financial condition; general economic conditions in the markets in which we operate; changing customer and product mixes; competition, including the adoption by competitors of aggressive pricing strategies and sales methods; industry consolidation and other changes in the industrial distribution sector; retention of key personnel; volatility in commodity and energy prices; the outcome of government or regulatory proceedings or future litigation; credit risk of our customers; risk of customer cancellation or rescheduling of orders; work stoppages or other business interruptions (including those due to extreme weather conditions) at transportation centers, shipping ports, our headquarters or our customer fulfillment centers; disruptions or breaches of our information systems, or violations of data privacy laws; retention of qualified sales and customer service personnel and metalworking specialists; risk of loss of key suppliers, key brands or supply chain disruptions; changes to trade policies, including the impact from significant restrictions or tariffs; risks associated with opening or expanding our customer fulfillment centers; litigation risk due to the nature of our business; risks associated with the integration of acquired businesses or other strategic transactions; financial restrictions on outstanding borrowings; interest rate uncertainty due to LIBOR reform; failure to comply with applicable environmental, health and safety laws and

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MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2020 SECOND QUARTER RESULTS

regulations; goodwill and intangible assets recorded as a result of our acquisitions could be impaired; risks associated with the volatility of our common stock; and our principal shareholders exercise significant control over us. Additional information concerning these and other risks is described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the reports on Forms 10-K and 10-Q that we file with the U.S. Securities and Exchange Commission. We assume no obligation to update any of these forward-looking statements.

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MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2020 SECOND QUARTER RESULTS

MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

	February 29,		August 31,
	2020		2019
ASSETS		(unaudited)
Current Assets:
Cash and cash equivalents	$	44,867	$	32,286
Accounts receivable, net of allowance for doubtful accounts		536,902		541,091
Inventories		556,402		559,136
Prepaid expenses and other current assets		74,376		67,099
Total current assets		1,212,547		1,199,612
Property, plant and equipment, net		311,267		310,854
Goodwill		677,039		677,266
Identifiable intangibles, net		110,644		116,668
Operating lease assets		60,064		—
Other assets		5,472		6,837
Total assets	$	2,377,033	$	2,311,237
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt including obligations under finance leases	$	410,360	$	175,453
Current portion of operating lease liabilities		21,587		—
Accounts payable		155,304		160,110
Accrued expenses and other current liabilities		107,307		111,353
Total current liabilities		694,558		446,916
Long-term debt including obligations under finance leases		267,533		266,431
Noncurrent operating lease liabilities		38,119		—
Deferred income taxes and tax uncertainties		114,010		114,011
Total liabilities		1,114,220		827,358
Commitments and Contingencies
Shareholders’ Equity:
Preferred Stock		—		—
Class A common stock		47		46
Class B common stock		10		10
Additional paid-in capital		681,657		659,226
Retained earnings		703,396		946,651
Accumulated other comprehensive loss		(22,053)		(22,776)
Class A treasury stock, at cost		(105,758)		(104,607)
Total MSC Industrial shareholders’ equity		1,257,299		1,478,550
Noncontrolling interest	$	5,514	$	5,329
Total shareholders’ equity		1,262,813		1,483,879
Total liabilities and shareholders’ equity	$	2,377,033	$	2,311,237

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MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2020 SECOND QUARTER RESULTS

MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	February 29,		March 2,		February 29,		March 2,
	2020		2019		2020		2019
Net sales	$	786,094	$	823,004	$	1,609,695	$	1,654,601
Cost of goods sold		455,042		471,190		931,447		944,802
Gross profit		331,052		351,814		678,248		709,799
Operating expenses		253,382		255,833		510,280		510,818
Income from operations		77,670		95,981		167,968		198,981
Other income (expense):
Interest expense		(3,495)		(4,539)		(6,666)		(8,595)
Interest income		68		164		78		326
Other (expense) income, net		(70)		(237)		51		(235)
Total other expense		(3,497)		(4,612)		(6,537)		(8,504)
Income before provision for income taxes		74,173		91,369		161,431		190,477
Provision for income taxes		18,617		22,939		40,423		47,815
Net income		55,556		68,430		121,008		142,662
Less: Net income attributable to noncontrolling interest		56		6		90		6
Net income attributable to MSC Industrial	$	55,500	$	68,424	$	120,918	$	142,656
Per share data attributable to MSC Industrial:
Net income per common share:
Basic	$	1.00	$	1.24	$	2.18	$	2.58
Diluted	$	1.00	$	1.24	$	2.18	$	2.56
Weighted average shares used in computing    net income per common share:
Basic		55,467		55,139		55,371		55,320
Diluted		55,587		55,362		55,545		55,619

MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	February 29,		March 2,		February 29,		March 2,
	2020		2019		2020		2019
Net income, as reported	$	55,556	$	68,430	$	121,008	$	142,662
Other comprehensive income, net of tax:
Foreign currency translation adjustments		(788)		675		818		(666)
Comprehensive income		54,768		69,105		121,826		141,996
Comprehensive income attributable to noncontrolling interest:
Net income		(56)		(6)		(90)		(6)
Foreign currency translation adjustments		45		63		(95)		63
Comprehensive income attributable to MSC Industrial	$	54,757	$	69,162	$	121,641	$	142,053

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MSC INDUSTRIAL SUPPLY CO. REPORTS FISCAL 2020 SECOND QUARTER RESULTS

MSC INDUSTRIAL SUPPLY CO. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Twenty-Six Weeks Ended
	February 29,		March 2,
	2020		2019
Cash Flows from Operating Activities:
Net income	$	121,008	$	142,662
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		34,313		32,076
Non-cash operating lease cost		11,061		—
Stock-based compensation		8,178		8,078
Loss on disposal of property, plant, and equipment		227		343
Provision for doubtful accounts		4,704		6,050
Changes in operating assets and liabilities:
Accounts receivable		(2,105)		(20,510)
Inventories		3,449		(44,642)
Prepaid expenses and other current assets		(7,953)		(13,359)
Operating lease liabilities		(10,931)		—
Other assets		1,375		(1,545)
Accounts payable and accrued liabilities		(7,511)		(10,575)
Total adjustments		34,807		(44,084)
Net cash provided by operating activities		155,815		98,578
Cash Flows from Investing Activities:
Expenditures for property, plant and equipment		(25,737)		(23,156)
Cash used in business acquisitions, net of cash received		(2,286)		(11,625)
Net cash used in investing activities		(28,023)		(34,781)
Cash Flows from Financing Activities:
Repurchases of common stock		(3,208)		(84,425)
Payments of regular cash dividends		(83,181)		(69,551)
Payments of special cash dividends		(277,634)		—
Proceeds from sale of Class A common stock in connection with associate stock purchase plan		2,202		2,429
Proceeds from exercise of Class A common stock options		13,390		14,518
Borrowings under the revolving credit facilities		389,600		326,000
Contributions from non-controlling interest		105		918
Payments under the revolving credit facilities		(156,000)		(269,000)
Other, net		(696)		241
Net cash used in financing activities		(115,422)		(78,870)
Effect of foreign exchange rate changes on cash and cash equivalents		211		23
Net increase (decrease) in cash and cash equivalents		12,581		(15,050)
Cash and cash equivalents – beginning of period		32,286		46,217
Cash and cash equivalents – end of period	$	44,867	$	31,167
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	37,286	$	47,834
Cash paid for interest	$	5,636	$	8,316

XML

Document And Entity Information	Apr. 08, 2020
Cover [Abstract]
Document Type	8-K
Document Period End Date	Apr. 08, 2020
Entity Registrant Name	MSC Industrial Direct Co., Inc.
Entity Incorporation, State or Country Code	NY
Entity File Number	1-14130
Entity Tax Identification Number	11-3289165
Entity Address, Address Line One	75 Maxess Road
Entity Address, City or Town	Melville
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11747
City Area Code	516
Local Phone Number	812-2000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock, par value $.001
Trading Symbol	MSM
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0001003078