Fiscal Fourth Quarter and

Full Year 2021 Earnings

Presentation

OCTOBER 20, 2021

Cautionary Note Regarding Forward-Looking Statements

Statements in this presentation may constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including statements about the future impact of COVID-19 on our business operations, results of operations and financial condition, expected future results, expected benefits from our investment and strategic plans and other initiatives, and expected future growth, profitability and return on invested capital, are forward-looking statements. The words "will," "may," "believes," "anticipates," "thinks," "expects," "estimates," "plans," "intends," and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The inclusion of any statement in this presentation does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. Factors that could cause actual results to differ materially from those in forward-looking statements include the following, many of which are and will be amplified by the COVID-19 pandemic: the impact of the COVID-19 pandemic on our sales, operations and supply chain; general economic conditions in the markets in which we operate, including conditions resulting from the COVID-19 pandemic; changing customer and product mixes; competition, including the adoption by competitors of aggressive pricing strategies and sales methods; industry consolidation and other changes in the industrial distribution sector; our ability to realize the expected benefits from our investment and strategic plans, including our transition from being a spot-buy supplier to a mission-critical partner to our customers; our ability to realize the expected cost savings and benefits from our restructuring activities and structural cost reductions; the retention of key personnel; volatility in commodity and energy prices; the credit risk of our customers, including changes in credit risk as a result of the COVID-19 pandemic; the risk of customer cancellation or rescheduling of orders; difficulties in calibrating customer demand for our products, in particular personal protective equipment or "PPE" products, which could cause an inability to sell excess products ordered from manufacturers resulting in inventory write-downs or could conversely cause inventory shortages of such products; work stoppages, labor shortages or other business interruptions (including those due to extreme weather conditions or as a result of the COVID-19 pandemic) at transportation centers, shipping ports, our headquarters or our customer fulfillment centers; disruptions or breaches of our information technology systems, or violations of data privacy laws; the retention of qualified sales and customer service personnel and metalworking specialists; the risk of loss of key suppliers or contractors or key brands or supply chain disruptions, including due to import restrictions resulting from the COVID-19 pandemic; changes to governmental trade policies, including the impact from significant import restrictions or tariffs; risks related to opening or expanding our customer fulfillment centers; our ability to estimate the cost of healthcare claims incurred under our self- insurance plan; litigation risk due to the nature of our business; risks associated with the integration of acquired businesses or other strategic transactions; financial restrictions on outstanding borrowings; our ability to maintain our credit facilities; the interest rate uncertainty due to the London InterBank Offered Rate ("LIBOR") reform; the failure to comply with applicable environmental, health and safety laws and regulations, including government action in response to the COVID-19 pandemic, and other laws applicable to our business; the outcome of government or regulatory proceedings or future litigation; goodwill and intangible assets recorded resulting from our acquisitions could be impaired; our common stock price may be volatile due to factors outside of our control; and our principal shareholders exercise significant control over us, which may result in our taking actions or failing to take actions which our other shareholders do not prefer. Additional information concerning these and other risks is described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual and Quarterly Reports on Forms 10-K and 10-Q, respectively, and in the other reports and documents that we file with the U.S. Securities and Exchange Commission. We expressly disclaim any obligation to update any of these forward-looking statements, except to the extent required by applicable law.

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Fiscal Fourth Quarter 2021 Overview

Growth initiatives and macro environment drove double-digit sales growth

Solid underlying gross margins reflected strong execution on price realization and purchase cost performance in robust inflationary environment

Achieve full year fiscal 2021 Mission Critical* savings of $40 million and increased expected total program savings to at least $100 million by fiscal 2023

Both GAAP and Adjusted EPS achieved strong double-digit growth

Company announces fiscal 2022 annual operating margin framework and reaffirms fiscal 2022 incremental margin target of 20 percent

* See Appendix for more information about Mission Critical.

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Fiscal Fourth Quarter 2021 Reported Results

Net Sales

Gross Profit

Operating Profit

Earnings

(millions)

(millions and % of sales)

(millions and % of sales)

(per diluted share)

$831.0

$349.0

$91.2

$1.18

$747.7

$311.1

$72.9

$0.94

41.6%

42.0%

9.8%

11.0%

Q4 2020

Q4 2021

  • Average Daily Sales (ADS) increased 12.9%
  • Safety and janitorial product sales declined 14% YoY
  • Sales for the rest of the business improved 20% YoY

Q4 2020

Q4 2021

  • 40 bps improvement reflects strong execution on price and cost initiatives to offset inflation

Q4 2020

Q4 2021

  • Operating profit includes $4.5 million of restructuring and other costs and $1.2 million of nonrecurring legal and acquisition related costs
  • Operating margin up 120 bps due to higher gross profit and operating cost containment

Q4 2020

Q4 2021

  • Reflects effective tax rate of 23.5% in Q4 2020 and 24.0% in Q4 2021
  • Q4 2021 EPS includes approximately $0.06 impact from restructuring and other charges and $0.02 impact from nonrecurring legal and acquisition related costs

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Fiscal Fourth Quarter 2021 Adjusted Results*

Net Sales

Gross Profit

Adj. Operating Profit

Adj. Earnings

(millions)

(millions and % of sales)

(millions and % of sales)

(per diluted share)

$831.0

$349.0

$1.26

$747.7

$311.1

$96.9

$1.09

$84.1

41.6%

42.0%

11.2%

11.7%

Q4 2020

Q4 2021

  • Average Daily Sales (ADS) increased 12.9%
  • Safety and janitorial product sales declined 14% YoY
  • Sales for the rest of the business improved 20% YoY

Q4 2020

Q4 2021

  • 40 bps improvement reflects strong execution on price and cost initiatives to offset inflation

Q4 2020

Q4 2021

  • Adjusted operating profit in Q4 2021 excludes $4.5 million of restructuring costs and $1.2 million of nonrecurring legal and acquisition related costs
  • Adjusted operating profit in Q4 2020 excludes $11.2 million in restructuring costs

Q4 2020

Q4 2021

  • Reflects adjusted effective tax rate of 23.5% in Q4 2020 and 24.0% in Q4 2021
  • Q4 2021 adjusted EPS excludes $0.06 impact from restructuring and $0.02 impact from nonrecurring legal & acquisition related costs
  • Q4 2020 adjusted EPS excludes $0.15 impact from restructuring costs

* Represents a non-GAAP financial measure. See appendix for non-GAAP reconciliations. Individual amounts may not agree to the total due to rounding.

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MSC Industrial Direct Co. Inc. published this content on 20 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 October 2021 11:00:05 UTC.