Industrial products distributor MSC Industrial Direct Co., Inc. (MSM) Thursday reported a decrease in net profit for the first quarter of fiscal 2010, reflecting a drop in sales. However, earnings per share beat Street view by a penny. The company also provided an earnings guidance for the second quarter, which is below analysts' estimates.
For the first quarter, the Melville, New York-based company's net earnings were $31.42 million or $0.50 per share as compared with $45.10 million or $0.72 per share in the prior-year period.
On an average, 10 analysts polled by Thomson Reuters expected MSC Industrial to earn $0.49 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the period slumped to $384.82 million from $433.02 million in the first quarter of fiscal 2009. Analysts estimated the company to generate revenues of $384.29 million for the quarter.
During the 13-week period, operating expenses were $124.68 million compared to $129.65 million in the same quarter last year.
In the preceding fourth quarter, the company's net income almost halved to $25.99 million or $0.41 per share from $50.53 million or $0.80 per share in the year-ago period. Net sales for the quarter slumped to $354.09 million from $448.56 million in the fourth quarter of the prior fiscal year.
Executive vice president and chief financial officer Chuck Boehlke said, "We posted sequential average daily sales growth of approximately 12% from fiscal 2009 fourth quarter levels, and continue to operate from a position of financial strength and liquidity that gives us a significant competitive advantage."
Commenting on the first quarter results, president and chief executive officer David Sandler said, "While customers continue to watch spending carefully, average daily sales improved during the quarter. Much of the improvement came from our large accounts, where demand has recovered more quickly than our more traditional customer base."
MSC Industrial stated that its margin structure in the near-term will continue to reflect changes in sales and margin mix, cost of its strategic investment initiatives, restoration of associate compensation and effects of a highly competitive marketplace.
Looking ahead to the second quarter, MSC Industrial anticipates earnings to be between $0.43 and $0.47 per share and net sales to be in a range of $384.0 million to $396.0 million. Analysts currently expect the company to report earnings of $0.49 per share on revenues of $380.89 million for the quarter.
MSC Industrial noted that the guidance is based on its financial performance in the first several weeks of the 2010 second quarter.
MSM is currently trading on the New York Stock Exchange at $47.12 per share down $2.27 or 4.60% on a volume of 158,298 shares. In the past 52-week period, the shares have been trading in a range of $26.72 to $50.00.
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