MSC Industrial Supply Co. Raymond James Conference Orlando, FL March 8-9, 2016
Safe Harbor Statement CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This presentation contains forward-looking statements within the meaning of U.S. securities laws, including guidance about expected future results, expectations regarding our ability to gain market share, expected benefits from our investment and strategic plans, and expected future margins. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these statements; are based on our current expectations; and we assume no obligation to update them. These risks include problems with successfully integrating acquired operations; current economic, political, and social conditions; general economic conditions in the markets in which the Company operates; changing customer and product mixes; competition; industry consolidation and other changes in the industrial distribution sector; volatility in commodity and energy prices; the outcome of potential government or regulatory proceedings or future litigation; credit risk of our customers; risk of cancellation or rescheduling of customer orders; work stoppages or other business interruptions (including those due to extreme weather conditions) at transportation centers or shipping ports; risk of loss of key suppliers, key brands or supply chain disruptions; dependence on our information systems and the risk of business disruptions arising from changes to our information systems, disruptions due to computer system or network failures, computer viruses, physical or electronics break-ins and cyber-attacks; dependence on key personnel; risk of delays in expanding our customer fulfillment centers; goodwill and intangible assets recorded as a result of our acquisitions could be impaired; and disclosing our use of “conflict minerals” in certain of the products we distribute could raise certain reputational and other risks. Information about these risks is noted in the earnings press release and in the Risk Factors and MD&A sections of our latest annual and quarterly reports filed with the SEC, as well as in our other SEC filings. Investors are cautioned not to place undue reliance on these forward-looking statements. Throughout this presentation we will reference both GAAP and adjusted financial results, which are non-GAAP financial measures. Please refer to the reconciliation tables at the end of this presentation and at the end of our earnings release for a reconciliation of the adjusted financial measures to the most directly comparable GAAP measures.
Company Overview MSC is a value added distributor of services, solutions & products that helps customers reduce their MRO supply chain costs Founded in 1941 by Sid Jacobson 13% $2.9 Billion 20-Year Sales Revenue > 6,500 associates CAGR > 95 branches and 5 major distribution centers 13% 12% > 3,000 suppliers Operating Margin* 20-Year EPS CAGR > 1 Million SKUs, many with 99% fill rates * Unaudited data for fiscal year ended August 29, 2015.
Industry Overview MSC The top 50 companies represent less than 30% of the market $500B US MRO Market ($160B fully addressable by MSC) Highly Fragmented 150,000 Distributors in the US Source: MDM and company estimates
Broad Product Offering >1 Million 99% Items Fill Rate* Significant competitive advantage * Fill rate pertains to many products
Fulfillment Center Network Next Day Delivery Scalable & Repeatable Major Customer Fulfillment Centers (CFCs) Class C Solutions Group CFCs
Track Record of Sales Growth and Sustained Profitability $3.5 50% Billions $3.0 40% $2.5 30% $2.0 $1.5 20% $1.0 10% $0.5 $0.0 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenue Operating Income Operating Margin Gross Margin
Fiscal 2016 Operating Margin Framework* MSC Growth Level 13.2% 13.7% Low Price Environment (+/- 50 bp) (+/- 50 bp) 12.6% 13.2% Flat (+/- 50 bp) (+/- 50 bp) Slightly Negative Low * Based on a 52-week fiscal year; fiscal 2016 has 53 weeks; the 53 rd week adds approximately 15 to 20 basis points to each operating margin scenario in the above matrix.
Strong Cash Flows Fuel Shareholder Returns Return to Shareholders ($M) Free Cash Flow ($M) 350 350 Free Cash Flow* 300 Operating Cash Flow 250 CapEx 200 300 150 100 250 50 0 2006 2009 2012 2015 200 Net Share Repurchases Special Dividends Common Dividends 75 150 40% 70 30% 65 100 20% 60 10% 55 50 50 0% 2006 2009 2012 2015 0 Diluted Shares Outstanding (MM) 2006 2009 2012 2015 Dividend Payout Ratio** * Non-GAAP measure. Free cash flow equals operating cash flow minus capital expenditures. ** Dividend Payout Ratio calculated as common dividends per share / non-GAAP EPS.
APPENDIX .
PPI: Processed Goods for Intermediate Demand 20 15 10 12-Month Percent Change 5 0 -5 -10 -15 -20 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 * 12-Month Percent Change: January 1985 – October 2015. Sourced from the Bureau of Labor Statistics (Series Id: WPUID61). 11
Recommend
More recommend
