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LI CEO cites ‘industrial recession’ for sales, income drop

Erik Gershwind, president and CEO of MSC Industrial

Erik Gershwind, president and CEO of MSC Industrial Supply Co. at the company's customer support center in Melville on Sept. 19, 2016. Credit: Barry Sloan

MSC Industrial Direct Co.’s sales and net income dropped in its fiscal first quarter because of “a prolonged industrial recession,” the Melville-based company said Wednesday.

The distributor of industrial tools and supplies said sales in the quarter ended Dec. 3 fell 2.9 percent from the year-earlier period to $686.3 million. That number beat the $685.6 million consensus estimate of securities analysts surveyed by Bloomberg.

Net income declined 1.7 percent to $54.1 million. Meanwhile, earnings per share rose to 95 cents from 89 cents a year earlier. Rustom Jilla, executive vice president and chief financial officer, attributed the per-share increase to lower operating expenses and last August’s share buyback.

MSC, which is co-headquartered in Davidson, North Carolina, derives about 70 percent of its sales from North American manufacturing companies. But a continued slowdown in the industry has dampened demand for industrial tools and supplies.

Erik Gershwind, president and chief executive, indicated what the company, one of the largest worldwide in its industry, was up against.

“We have operated in the midst of a prolonged industrial recession, one that was particularly acute in our primary end markets of metalworking manufacturing,” he said in a statement.

But he also believes the tide may be turning.

“We are, however, seeing signs of greater optimism,” he said. “At present, it appears that there is a leveling in manufacturing occurring and, in December, we saw greater spending on categories that are indicative of customer optimism. We are certainly more positive than even a few short months ago.”

But he added, “Even so, we would need to see sustained increases in order activity before we declare that the environment has turned.”

MSC’s stock closed at $99.44, up $7.27, or 7.89 percent, in New York Stock Exchange trading Wednesday.


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