Why MSC Industrial Shares Are Sinking Today

MSC Industrial Direct Co Inc MSM shares are trading lower after it reported Q1 FY24 results.

Revenue fell 0.4% Y/Y to $954.0 million, missing the analyst consensus estimate of $971.3 million, with average daily sales declining due to softening demand. 

Adjusted operating income declined 12.3% to $103.7 million, with the operating margin compressing to 10.9% from 12.3% a year ago.

Adjusted EPS of $1.25 missed the analyst consensus of $1.31.

As of December 2, 2023, the company held $25.8 million in cash and equivalents. Operating cash flow for the quarter totaled $81.2 million.

Outlook: MSC reiterated the outlook for FY24 ADS growth of 0%-5%, adjusted operating margin of 12% - 12.8%, and an operating cash flow conversion of more than 125%.

Erik Gershwind, President and CEO, said, "Looking ahead, despite a slower start to the fiscal year, I am encouraged as we continue building our market position, introducing strategic investments centered on reaccelerating our core customer base and implementing operational initiatives to drive productivity and expand margins. Together, this positions us to achieve our annual revenue growth and adjusted operating margin ranges in fiscal 2024."

Price Action: MSM shares are down 6.40% at $89.50 premarket on the last check Tuesday.

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