MSC Industrial Direct (MSM) Guidance summary

Opening remarks and agenda

• Preliminary fiscal third quarter 2024 results and an updated full-year outlook were presented, with performance below expectations and corrective actions underway.

• Management acknowledged disappointment with fiscal 2024 performance but reaffirmed commitment to long-term growth and margin goals.

• Conference call scheduled for June 14, 2024, with final Q3 results to be released July 2, 2024.

Guidance on key objectives

• Fiscal 2024 full-year ADS growth now expected at (4.7)% to (4.3)% YoY, with flat sequential ADS in Q4.

• Adjusted operating margin guidance lowered to 10.5%-10.7% for the year, down from prior 12.0%-12.8%.

• Gross margin is expected to remain below prior expectations due to mix and web pricing realignment headwinds.

• Capex projected at $120M–$130M; operating cash flow conversion above 125%.

• Tax rate expected between 24.0%–24.5%.

Market trends and strategic opportunities

• Heavy manufacturing and metalworking end markets remain soft, driving YoY sales declines and impacting sequential revenue improvement.

• Only 43 of the top 100 national accounts showed year-over-year growth in Q3.

• Public sector and OEM fastener business showed sequential improvement and new wins, though YoY comparisons were impacted by prior-year non-recurring orders.

• In-Plant program count and installed vending machines increased YoY and QoQ.

• Focus remains on high-touch solutions such as In Plant, Vending, and other service offerings.