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MSC Industrial sales and earnings rise in its fiscal first quarter

A strong manufacturing sector boosted results, but the company expressed concern about effect of U.S.-China trade tensions and the government shutdown.

MSC Industrial Supply chief executive and president Erik

MSC Industrial Supply chief executive and president Erik Gershwind at his Melville office Tuesday May 17, 2016. Fiscal first-quarter sales and earnings rose at MSC Industrial Supply Co. because of the robust manufacturing sector, the Melville-based distributor of industrial tools and supplies said on Wednesday, Jan. 9, 2019. Photo Credit: Newsday/J. Conrad Williams Jr.

MSC Industrial Supply Co. reported higher fiscal first-quarter sales and earnings because of the country's robust manufacturing sector, the Melville-based distributor of industrial tools and supplies said Wednesday.

Sales rose 8.2 percent from a year earlier to $831.6 million in the quarter ended Dec. 1. Net income shot up 24.6 percent to $74.2 million.

Earnings per share jumped 26.7 percent to $1.33, said the company, which is co-headquartered in Davidson, North Carolina.

Although the strong manufacturing sector helped boost sales and earnings, other economic factors are worrisome to the company.

“The industrial economy remained strong in the fiscal first quarter, although there is currently more uncertainty than a few months ago due to potential economic and trade overhangs and the government shutdown,” company president and chief executive Erik Gershwind said in a news release.

In an earnings call with analysts who follow the company, Gershwind said that, so far, tariffs on goods from China have had no "material impact" on MSC's gross profit margin because the company has been able to increase prices to pass along the costs, according to a transcript of the call.  

But he cautioned, "Of couse, we will, along with everybody else, watch and see what happens come March with respect to the potential step-up to 25 percent [tariffs]." 

As for the shutdown's effects on the company's federal government accounts, he said, "Another area of uncertainty is government, as we're now well into a shutdown with no apparent end in sight. Historically, a shutdown initially softens demand, although it does create some pent-up spending once a budget is approved and the shutdown ends." 

Government accounted for 8 percent of MSC's fiscal first-quarter sales, with federal transactions constituting two-thirds of that amount, the company said.

MSC’s sales exceeded the $830.462 million consensus estimate of a panel of Bloomberg analysts.  

The company’s stock fell 1.4 percent to close at $76.87 on the New York Stock Exchange Wednesday.

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