MSC reports Q1 results
January 25, 2002
'As expected, our revenue growth in the first quarter continued to be impacted
by economic conditions and, specifically, softness in the manufacturing sector,' said Mitchell Jacobson, chairman & CEO. 'However,
the quarter also represented another period of market share growth, as we added 4,000 new customers. This progress demonstrates
our competitive strength and ability to ...
'As expected, our revenue growth in the first quarter continued to be impacted
by economic conditions and, specifically, softness in the manufacturing sector,' said Mitchell Jacobson, chairman & CEO. 'However,
the quarter also represented another period of market share growth, as we added 4,000 new customers. This progress demonstrates
our competitive strength and ability to capitalize on opportunities while smaller distributors weaken during these challenging
economic times.
'I am pleased to report that our gross margin increased to 43.7% this quarter, an improvement of 170
basis points from 42.0 % in last year's first quarter. We remain focused on identifying leverage opportunities in our cost
of sales, and anticipate further modest gross margin improvement next quarter. Furthermore, we improved our cost structure
as we reduced total operating expenses in the first quarter both sequentially and year-over-year, despite increased spending
on sales and marketing. This is partially a result of process re-engineering and our success in removing structural costs
from operations.'
MSC reported that its receivables declined $8 million, and inventories were down $5.4 million from
the fourth quarter of fiscal 2001. Additionally, the company generated $23 million in cash flow from operations, and free
cash reserves were $37 million at the end of the quarter.
'Since December 1, order flows have remained inconsistent,
and therefore, at this point, no discernible sales trends have emerged for the second quarter,' Jacobson said. 'Sales levels
through the first six weeks of the second quarter are 16% lower than the comparable period last year. Assuming this trend
continues, we anticipate revenue and earnings per share for the second quarter to be in line with our first quarter financial
performance.
'MSC continues to execute its strategic and growth objectives. Our expanded market share, strengthened
balance sheet and enhanced infrastructure are testament to the company's operational and financial strength, and we anticipate
further progress in these areas. As a result, when market conditions improve, we will be firmly positioned to drive top- and
bottom-line growth and realize significant returns on our investments and initiatives.'
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