MSC Industrial Direct (MSM) Q4 2025 earnings summary

Executive summary

• Q4 2025 average daily sales grew 2.7% year-over-year, reversing earlier declines, driven by core customer and public sector strength.

• Core customer daily sales grew 4.1% in Q4, while national accounts declined 0.7% and public sector grew 8.5%–9%.

• Leadership transition announced: Martina McIsaac to become CEO, with new SVP of Sales and SVP of Customer Experience appointed.

• Strong cash generation enabled $229 million in shareholder returns via dividends and buybacks.

• Full-year 2025 net sales declined 1.3% to $3.77 billion, with adjusted operating margin at 8.4% and adjusted diluted EPS down 21.8% to $3.76.

Financial highlights

• Q4 net sales were $978.2M, gross margin was 40.4%, and adjusted operating margin was 9.2%.

• Q4 adjusted EPS was $1.09, up nearly 6% year-over-year; GAAP EPS was $1.01.

• Full-year gross margin was 40.8%, down 40 basis points year-over-year.

• Free cash flow for the year was $240.9M, representing 122% of net income.

• Q4 operating income was $84.3M (GAAP) and $90.3M (adjusted); full-year operating income was $301.6M (GAAP) and $315.8M (adjusted).

Outlook and guidance

• Q1 FY26 average daily sales expected to grow 3.5%–4.5% year-over-year, with adjusted operating margin of 8.0%–8.6%.

• Q1 gross margin projected at ~40.7%; incremental increases in operating expenses expected.

• FY26 guidance: depreciation/amortization $95M–$100M, capex $100M–$110M, tax rate 24.5%–25.5%, free cash flow conversion ~90%.

• Free cash flow expected at ~90% of net income, lower than prior year due to working capital needs.

• Long-term objectives: grow 400+ basis points above IP Index and expand adjusted operating margins to mid-teens.