MSC Industrial Direct (MSM) investor relations material

Executive summary

• Fiscal Q3 2026 net sales rose 7.8% year-over-year to $1,047.1 million, driven by favorable pricing and modest volume growth, with price contributing 720 basis points and volume 50 basis points to growth.

• Diluted EPS was $1.44, up 41.4% year-over-year, and adjusted EPS was $1.43, up 32%–32.7% year-over-year.

• Operating margin expanded to 10.2% (GAAP) and 10.6% (adjusted), up 170 and 160 basis points year-over-year, respectively, with incremental margin at 32%.

• Sales per rep per day improved by high teens year-over-year, reflecting successful sales force optimization and a leaner field organization.

• Core customer and national account sales outperformed, with vending and implant programs showing strong double-digit growth.

Financial highlights

• Gross margin was 41.1%, up 10 basis points year-over-year, with gross profit at $430.4 million.

• Adjusted operating expenses were $319 million, up $9 million year-over-year, but down 150 basis points as a percent of sales; operating expenses as a percent of sales were 30.9% (GAAP) and 30.5% (adjusted).

• Free cash flow conversion was above 100% for the quarter and 94% year-to-date, with a target of 95% for the fiscal year.

• Net debt stood at $433 million, about 1x EBITDA, with net debt to EBITDA improved to 1.01x from 1.14x year-over-year.

• Return on invested capital (ROIC) reached 14.3% (adjusted, trailing twelve months).

Outlook and guidance

• Q4 average daily sales expected to improve 6.5%–8.5% year-over-year, with price contributing 6.5%–7% and volume improvement implied at the midpoint.

• Adjusted operating margin guidance for Q4 is 10%–10.8%, with incremental margins in the mid-20% range.

• Gross margin expected to decline 40–50 basis points sequentially, following historical trends.

• Depreciation and amortization for the year expected at ~$100 million; CapEx projected at ~$90–100 million.

• Free cash flow conversion target raised to 95% for the year.