MSC Industrial Direct Co., Inc. (NYSE:MSM) shares are trading lower after the reported second-quarter FY24 net sales decline of 2.7% Y/Y to $935.3 million, missing the consensus of $946.5 million.

Average daily sales fell 2.7% Y/Y on continued softness in heavy manufacturing verticals.

Adjusted operating income declined 16.5% to $97.8 million, with the operating margin compressing to 10.5% from 12.2% a year ago.

Adjusted EPS of $1.18, down 18.6%, beating the consensus of $1.16.

As of March 2, 2024, the company held $22.2 million in cash and equivalents. 

Kristen Actis-Grande, Executive Vice President and Chief Financial Officer, stated, “However, due to our lower than expected performance in the first half combined with current market conditions, it is likely that we will be at the lower end of our outlook for the full year.”

MSC Industrial’s cash dividend of $0.83 per share is payable on April 23, 2024, to shareholders of record at the close of business on April 9, 2024.

Outlook: MSC Industrial reiterated the outlook for FY24 ADS growth of 0%-5%, adjusted operating margin of 12% – 12.8%, and an operating cash flow conversion of more than 125%.

The company completed the acquisition of intellectual property (IP) assets from Schmitz Manufacturing Research & Technology LLC (SMRT) related to its technology solutions for the U.S. manufacturing industry.

Investors can gain exposure to the stock via USCF ETF Trust USCF Dividend Income Fund (NYSE:UDI) and KraneShares Value Line Dynamic Dividend Equity Index ETF (NYSE:KVLE).

Price Action: MSM shares are trading lower by 1.45% at $98.08 on the last check Thursday.

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