MSC Industrial fourth-quarter EPS falls to $0.85 while adjusted EPS rises to $1.45

MSC Industrial Direct Co., Inc. (MSM) said Thursday in a regulatory filing that fourth-quarter net sales rose 10.3% from a year earlier to $1,079.2 million, while diluted earnings per share fell to $0.85.

The distributor of metalworking and maintenance, repair and operations (MRO) products reported results for the fiscal 2026 fourth quarter and full year ended Aug. 29, 2026.

Adjusted diluted earnings per share rose 33.0% to $1.45 from $1.09. The company's adjusted figures exclude restructuring and other costs, asset impairments and related charges, and share reclassification litigation costs.

Here's how the company did:

• Net sales: $1,079.2 million vs. $978.2 million a year earlier
• Income from operations: $72.8 million vs. $84.3 million a year earlier
• Adjusted income from operations: $117.8 million vs. $90.3 million a year earlier
• Operating margin: 6.7% vs. 8.6%
• Adjusted operating margin: 10.9% vs. 9.2%
• Diluted EPS: $0.85 vs. $1.01
• Adjusted diluted EPS: $1.45 vs. $1.09

On an average daily sales basis, which the company uses as its growth measure in its outlook, sales rose 8.6% in the quarter.

Gross margin was 40.6%, up from 40.4% a year earlier.

Operating income fell 13.6% to $72.8 million. The quarter included $41.8 million of asset impairment and related charges and $1.4 million of restructuring and other costs.

Adjusted operating income rose 30.5% to $117.8 million, and adjusted operating margin rose to 10.9% from 9.2%.

Net income attributable to MSC Industrial fell 15.2% to $47.9 million from $56.5 million. Adjusted net income attributable to the company rose 33.8% to $81.5 million from $60.9 million.

For the full fiscal year, net sales rose 6.4% to $4,009.7 million from $3,769.5 million. Average daily sales rose 6.0%.

Full-year income from operations rose 6.3% to $320.6 million, and the operating margin was 8.0% in both years. Adjusted income from operations rose 20.1% to $379.3 million from $315.8 million, and the adjusted operating margin rose to 9.5% from 8.4%.

Full-year net income attributable to MSC Industrial rose 11.7% to $222.6 million from $199.3 million. Diluted EPS rose 11.5% to $3.98 from $3.57, and adjusted diluted EPS rose 24.7% to $4.69 from $3.76.

Operating cash flow was $306.5 million for the year, equal to 139% of net income. Free cash flow was $225.2 million, or 102% of net income, compared with $240.9 million a year earlier. The company defines free cash flow as operating cash flow reduced by expenditures for property, plant and equipment.

President and Chief Executive Officer Martina McIsaac said, "We had a strong finish to fiscal 2026, with fourth quarter results exceeding our expectations and sales achieving record quarterly levels. Underpinning this performance was core customer growth of approximately 10%"

McIsaac also cited growth in National Accounts. In the same statement she said the results were further evidence that the changes the company has made to drive profitable growth are taking hold.

Executive Vice President and Chief Financial Officer Rob Kuhns said in the release that average daily sales exceeded the high end of the company's guided range.

For the first quarter of fiscal 2027, the company expects ADS growth of 9.5% to 10.5% and an adjusted operating margin of 9.5% to 10.1%.

For full-year fiscal 2027, the company expects depreciation and amortization expense of $100 million to $105 million, interest and other expense of $40 million to $45 million, and capital expenditures of $90 million to $100 million.

The company also expects free cash flow conversion of 80% to 90% and an effective tax rate of 24.5% to 25.5%. It said the full-year figures are presented on an adjusted, non-GAAP basis.

McIsaac said the company remains mindful of inflationary headwinds and tougher comparisons ahead. "Our strategic execution is building momentum as our end markets continue to improve. This positions MSC well entering fiscal 2027, as demonstrated by first-quarter sales trends showing low double-digit growth to date."

The company will host a conference call on Thursday at 8:30 a.m. EDT. An online archive of the broadcast will be available until Nov. 5, 2026. The company's next reporting date, for the fiscal 2027 first quarter, is Jan. 6, 2027.