MSM reports 4-cent beat, guides next Q above estimates

“We are very pleased with our financial performance in the fiscal 2008 second quarter, which reflects the effectiveness of our efforts to grow the business,” said Chuck Boehlke, Executive Vice President and Chief Financial Officer. “We once again met or exceeded our financial targets, as we effectively executed our business model while continuing to make investments in our future growth. In addition, we generated excellent cash flows during the fiscal 2008 second quarter as we executed on our stated goal of reducing inventories to more normalized levels from those seen in the first quarter of fiscal 2008. We took advantage of the opportunity to buy our stock at attractive prices. We purchased approximately 2.5 million shares for $96.0 million in the quarter. We increased our maximum borrowing line under our revolving credit agreement to $150.0 million, a portion of which was used to finance the repurchase of these shares. Going forward we will continue to invest in MSC’s future growth and we expect cash flows to remain strong as we execute on our model.”

Mr. Sandler concluded, “As we enter the third quarter, our customers continue to face a number of issues, including rising raw material and transportation costs, and are seeking to reduce their MRO inventory levels in response, as is typical in a challenging economy. We have seen this cycle many times, and MSC’s financial strength, broad and deep product offerings, 99% fill rate and same day delivery capability allow us to continue to take share and grow in this environment as we effectively meet and support our customers’ needs. In short, we are ideally positioned to further enhance our position as a leader in the marketplace, and will benefit from our efforts even more strongly when the economy begins to recover.”

Based on current market factors, the Company expects net sales for the third quarter of fiscal 2008 to be between $457 million and $463 million. The Company expects diluted earnings per share for the fiscal 2008 third quarter to be between $0.77 and $0.79. The Company also noted that there will be 64 business days in the third quarter of fiscal 2008 compared to 65 business days in the third quarter of fiscal 2007.

Analysts are looking for 75 cents in Q3.