MSC Industrial Direct Co Inc (NYSE:MSM) stock rose 1.79% (As on April 2, 11:37:08 AM UTC-4, Source: Google Finance) after the company reported fiscal second-quarter results that fell short of Wall Street expectations. Despite the top- and bottom-line miss versus expectations, MSM delivered modest year-over-year growth. Net income rose to $42.5 million, or $0.76 a share, from $39.3 million, or $0.70 a share. Average daily sales (“ADS”) up 2.9% YoY but below the quarterly outlook range despite continued mid-single digit growth in Core Customer ADS. ADS to Core and Other Customers up 6%, National Accounts flat, and Public Sector down 1%. Sales to customers with an In-Plant program up 8%, representing 20% of total sales. Sales through vending machines up 8%, representing 20% of total sales.

MSM in the second quarter of FY 26 has reported the adjusted earnings per share of $0.82, missing the analysts’ estimates for the adjusted earnings per share of $0.84. The company had reported the adjusted revenue growth of 2.9 percent to $917.8 million in the second quarter of FY 26, missing the analysts’ estimates for revenue of $930 million. operating income rose 4.1% to $64.8 million. Operating margin expanded slightly to 7.1%, or 7.5% on an adjusted basis. The company also reported adjusted operating income of $69.1 million, reflecting continued cost controls and margin improvement initiatives. This improvement was supported by gross margin expansion as well as actions that took structural costs out of the business and allowed us to achieve incremental margins of 10% or 21% on an adjusted basis this quarter. Gross margin of 41.1% was above expectations and primarily driven by benefits from price/cost and customer mix.

Additionally, the company generated strong operating cashflow conversion of 224% in fiscal 2Q’26 and partly driven by benefits from amended A/R securitization during the quarter. The company generated free cash flow conversion of 173% in fiscal 2Q’26 and 86% fiscal YTD, on track to achieve target of ~90% for the full fiscal year.

Looking ahead, MSC Industrial Direct (MSM) forecast stronger momentum in the current quarter, projecting average daily sales growth of 5% to 7% and an adjusted operating margin between 9.7% and 10.3%. Management indicated that sales optimization efforts and productivity initiatives are expected to support both growth and profitability in the second half of the fiscal year.

For fiscal 2026, the company expects Capital expenditures to be in the range of ~$100M-$110M and Free cash flow conversion to be of ~90%.