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MSC Hints at More Acquisitions

Purchase of Barnes Distribution North America proves valuable.
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MSC Industrial Direct (NYSE: MSM) ended the fiscal year – its first complete 12-month cycle following the biggest acquisition in company history – on a high note.

The company reported sales for the fiscal year ended August 30 with sales increases for the quarter and the year. The strong performance not only validated MSC's purchase of Barnes Group's North American distribution business (BDNA) in 2013, but it further buoyed MSC's position for additional acquisitions in today's favorable M&A climate.

"Competitive activity in our industry remains fierce," President and CEO Erik Gershwind told analysts during the company's earnings call. "We are, of course, mindful of new entrants into the MRO space and into our core metalworking business. We are paying close attention and are laser-focused on sustaining our leadership position. This is why we will not back off with important growth investments or our actions to enhance our value proposition.

"I feel very good about how MSC is positioned to succeed in the next decade as the consolidation story accelerates."

MSC scripted one of the biggest chapters in the industry's consolidation story last year when it paid $550 million for BDNA – now Class C Solutions Group. CCSG contributed $184 million of incremental net sales in the fiscal year. Gershwind said the acquisition "offers a new strategic avenue for growth in the years to come."

Company executives spent much of the earnings call with analysts detailing the ongoing integration of CCSG, which has provided a blueprint for future acquisitions. And Gershwind later said, in response to a specific question about acquisitions, that M&A is on the company's radar as it looks to fiscal year 2015.

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