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MSC Industrial Direct results rise on manufacturing strength

MSC Industrial Direct Co. president and CEO Erik

MSC Industrial Direct Co. president and CEO Erik Gershwind in Melville on Sept. 19, 2016. Credit: Barry Sloan

Melville-based MSC Industrial Direct Co., one of Long Island’s largest public companies, said Thursday that revenue and net income rose in its fiscal second quarter because of a strengthening manufacturing sector.

Company officials said the gains also reflected efforts to grow market share and hold down expenses during a tough period for customers of the distributor of industrial tools and supplies.

Despite the higher results, the company’s stock closed lower, which an analyst attributed in part to extremely high expectations by investors.

Sales in the quarter ended March 4 climbed 2.9 percent from a year earlier to $703.8 million. That beat the consensus estimate of analysts tracked by Bloomberg who expected $696.7 million.

Net income increased 8.1 percent to $53.6 million. Per-share earnings jumped 16.3 percent to 93 cents.

“The environment continued to improve during our fiscal second quarter, and the momentum sustained into March, the start of our fiscal third quarter,” said Erik Gershwind, president and chief executive of the company, which is co-headquartered in Davidson, North Carolina. “Most of our customers continue to express an improving outlook, particularly those in our core metalworking market.”

MSC, one of the largest industrial-tool and supply distributors in the world, derives an estimated 70 percent of its sales from North American manufacturing.

Rustom Jilla, executive vice president and chief financial officer, noted that the sales increase “was very welcomed after five quarters of declines in average daily sales.”

Gershwind said the company’s efforts to position itself for growth have paid off.

“We have used the last several years to capitalize on the opportunities presented by the prolonged downturn, and to focus on strengthening our business,” he said.

MSC’s stock fell $6.34, or 6.2 percent, to close at $96.33 in New York Stock Exchange trading Thursday.

The decline was prompted by a “combination of very high investor expectations” and higher company estimates for fiscal third-quarter expenses, said Chris Dankert, senior research analyst covering industrial distribution and industrial technology at Longbow Research, an Ohio-based securities firm.

MSC’s compensation expenses “have turned on a bit faster and in a bigger way than some investors were expecting.”

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