Why MSC Industrial Direct Co Inc (NYSE: MSM) stock is rising

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MSC Industrial Direct Co Inc (NYSE: MSM) stock rose over 2.4% on 10th January, 2019 (Source:Google finance) after the company posted better than expected results for the first quarter of FY 19. Net cash provided by operating activities in the first quarter was $77 million versus $82 million last year. The capital expenditures in the first quarter were $10 million and after subtracting capital expenditures from net cash provided by operating activities the free cash flow was $67 million as compared to $73 million in last year’s Q1

MSM in the first quarter of FY 19 has reported the adjusted earnings per share of $1.33, beating the analysts’ estimates for the adjusted earnings per share of $1.32. The company had reported the adjusted revenue growth of 8.2 percent to $831.60 million in the first quarter of FY 19, beating the analysts’ estimates for revenue of $830.6 billion. The first quarter total average daily sales were $13.4 million, an increase of 8.2% versus the same quarter last year and above the 7.8% midpoint of the guidance. AIS contributed 230 basis points of growth while base business growth was 5.9% also about a 5.5% midpoint of the guidance. The reported fiscal first quarter operating margin was 12.4% down roughly 50 basis points from the prior year with approximately half of the decrease due to AIS. The base business operating margin was 12.6% that’s down about 30 basis points from the same quarter a year ago

Moreover, the inventory also increased during the quarter to 528 million up 9 million from Q4, as the company continued to buy ahead of likely supplier price increases and also to take advantage of calendar year end rebate opportunities. Total company inventory turns decreased slightly to 3.6 times. Looking ahead to the second quarter, the company expect inventory to again increase as the company protect against possible supply chain disruptions and continue to buy ahead of further price increases.

The Company expects net sales for the second quarter of fiscal 2019 to be between $817 million and $833 million. At the midpoint, average daily sales are expected to increase roughly 9.0% compared to last year’s second quarter. The Company expects diluted earnings per share for the second quarter of fiscal 2019 to be between $1.22and $1.28.

Excluding the AIS acquisition, the Company expects net sales for the second quarter of fiscal 2019 to be between $798 million and $814 million, with average daily sales at the midpoint expected to increase roughly 6.5% compared to last year’s second quarter. The Company expects the AIS acquisition to have a roughly breakeven impact on diluted earnings per share for the second quarter of fiscal 2019.

 

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