Metalworking and MRO supplies distributor MSC Industrial Supply reported its 2022 fourth-quarter and full-year financial results Oct. 20, and the results showed continued strong growth for the Melville, New York-based company.
For its 4Q that spanned May 29-Sept. 3, MSC reported total sales of $1.02 billion, up 23% year-over-year, with average daily sales up 14% as the quarter had five more selling days compared with 4Q 2021. MSC noted that its daily sales growth was 10 percentage points above the U.S. Industrial Production Index. Acquisitions accounted for 250 basis points of the 23% year-over-year sales growth.
The company — No. 14 on MDM’s 2022 Top Industrial Distributors List — posted 4Q gross margin of 41.9%, down 10 bps from a year earlier and down 100 bps from 3Q. 4Q operating profit of $144 million topped the $91 million from a year earlier and $137 million of 3Q, while operating margin of 14.1% jumped 310 bps year-over-year and trailed the 14.3% of 3Q.
MSC’s 4Q net profit totaled $104 million, topping the $66 million of a year earlier and $100 million in 3Q.
“In addition to revenue growth, I am encouraged by the profitability of our business in what has been a complex operating environment,” MSC CFO Kristen Actis-Grande said in a news release. “We delivered 140 basis points of adjusted operating margin improvement in fiscal 2022, resulting in an adjusted incremental margin of over 23%.”
Actis-Grande said the strong margin growth was largely driven by productivity improvements through MSC’s Mission Critical program, which is on track to exceed our goal of $100 million in savings by the end of fiscal 2023.
MSC began its 4Q by announcing the acquisition of Engman-Taylor — a metalworking tools and supplies distributor based in Menomonee Falls, Wisconsin — on June 3. Two months later, MSC announced the acquisition of Tower Fasteners, a Holtsville, New York-based distributor of OEM fasteners and components, for an undisclosed amount. It was MSC’s third bolt-on in a 14-month stretch after previously going three years without one.
On Oct. 3, nine-year Hilti Corp. veteran Martina McIsaac joined MSC in the newly-created role of executive vice president and COO, taking responsibility for the day-to-day operations of the company’s U.S. and Canada businesses, including sales, field service/solutions, category management, procurement, pricing and supply chain.
“As we look ahead to next year and build off the momentum of our fourth quarter results, we expect another year of strong topline growth and adjusted operating margin expansion,” Actis-Grande added. “Our expected cash flow conversion will afford us flexibility on capital allocation in fiscal 2023.”
For MSC’s full fiscal 2022 that ended Sept. 3, the company reported total sales of $3.69 billion, up 13.8% over 2021, with average daily sales up 10.7%. Gross margin of 42.2% improved 110 bps year-over-year, which MSC said reflects a robust inflationary environment and resulting strong pricing, which offset annual headwinds from customer and channel mix. MSC’s 2022 operating profit of $469 million topped 2021’s $302 million, with operating margin of 12.7% up 340 bps (roughly 20 bps benefit from 53rd week in 2022).
MSC’s fiscal 2022 net profit totaled $217 million, up 56.7% from 2021.