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When MSC Industrial Supply, Melville, NY, announced its plan to reach $4 billion in annual sales by 2016, executives expected its compound annual growth rate to continue along its historical trajectory of 14 percent. The fiscal year 2013 had different plans, with annual sales growing only 4.3 percent over fiscal 2012.
The distributor reported sales for the fiscal year ended Aug. 31 of $2.5 billion.
"Our organic growth rate since fiscal 2011 … has been lower than anticipated, due to the impact of softness in the metalworking sector this past year," said Erik Gershwind, president and CEO, in the conference call to discuss the fiscal 2013 results. "Clearly we've not been operating in a moderate growth environment."
But, Gershwind said, that doesn't mean that MSC is changing its goal. To reach $4 billion by 2016, the company would have to achieve a CAGR of just under 15 percent in the next three years. "We remain on track," he said, "although we will need to see an improvement in our organic growth rates to achieve that goal."
The company expects to see that improvement, "assuming the metalworking and manufacturing environments return to growth,” even though fiscal 2014 is expected to start slow, as well. The company expects sales for the fiscal first quarter 2014 to be between $662 million and $674 million. At the midpoint, average daily sales growth, excluding Barnes Distribution North America, is expected to be around 3 percent.
The company will focus its growth in three key areas: continued share gains, accelerated industry consolidation and "the prospects of a renewed manufacturing renaissance in North America," Gershwind said.
MSC reported profit for fiscal 2013 of $238 million, down 8.1 percent from fiscal 2012.
Sales for the fourth quarter were $673.8 million, an increase of 6.1 percent compared to the same period a year ago. Profit decreased 18.2 percent to $56.4 million.