MSC Industrial's Fourth-Quarter Sales Growth Accelerates

The Tip Desk · October 22, 2026 · 3 min read

Net sales reached a record $1.08 billion, up 10.3% from a year earlier, as core-customer growth hit about 10% and adjusted operating margin reached 10.9%.

MSC Industrial Supply Co. (MSM) posted record fourth-quarter net sales of $1,079.2 million, up 10.3% from a year earlier, or 8.6% on an average daily sales basis, as year-over-year growth accelerated from 7.8% in the third quarter and 2.9% two quarters earlier.

The North American distributor of metalworking and maintenance, repair and operations products said the pace marked a stronger finish to fiscal 2026. President and Chief Executive Officer Martina McIsaac said fourth-quarter results exceeded the company’s expectations and that core customer growth of approximately 10% was the strongest in more than three years, with accelerating growth in National Accounts.

Chief Financial Officer Rob Kuhns said average daily sales exceeded the high end of the guided range, driven by price benefits and stronger volumes. He said further progress on the cost structure, combined with the better-than-expected growth, produced an adjusted operating margin of 10.9%, above the high end of the outlook, and an adjusted incremental operating margin of roughly 27%.

Adjusted operating income was $117.8 million, up 30.5% from $90.3 million a year earlier. Adjusted diluted earnings were $1.45 a share, versus $1.09.

GAAP results told a different story. Operating income fell to $72.8 million from $84.3 million a year earlier, and the operating margin compressed to 6.7% from 8.6%. Diluted earnings were $0.85 a share, down from $1.01. The company recorded a $41.8 million asset impairment and related charge in the quarter, versus none a year earlier, plus $1.4 million of restructuring and other costs and $1.8 million of share reclassification litigation costs. Those items accounted for the gap between GAAP and adjusted operating income.

Gross profit was $438.6 million, for a 40.6% gross margin. Operating expenses were $322.7 million.

For the full year ended August 29, 2026, net sales were $4,009.7 million, up 6.4% from $3,769.5 million. GAAP operating margin held at 8.0%. Adjusted operating margin expanded to 9.5% from 8.4%. Diluted earnings were $3.98 a share, versus $3.57. Adjusted diluted earnings were $4.69 a share, versus $3.76. The year included $43.7 million of asset impairment and related charges and $8.7 million of restructuring and other costs. Operating cash flow conversion was 139% of net income and free cash flow conversion was 102%.

Cash and cash equivalents were $65.0 million at year-end, up from $56.2 million a year earlier. Inventories were $688.7 million. Current portion of debt including finance leases was $317.2 million; long-term debt including finance leases was $159.8 million.

McIsaac said the company remains mindful of inflationary headwinds and tougher comparisons looking ahead, and that it is confident profitable growth will remain the trend. She said first-quarter sales trends showed low double-digit growth to date.

For the first quarter of fiscal 2027, the company guides to average daily sales growth of 9.5% to 10.5% and an adjusted operating margin of 9.5% to 10.1%. Full-year fiscal 2027 outlook includes depreciation and amortization of about $100 million to $105 million, interest and other expense of about $40 million to $45 million, capital expenditures of about $90 million to $100 million, free cash flow conversion of about 80% to 90%, and an effective tax rate of about 24.5% to 25.5%. The fiscal 2027 first-quarter report is scheduled for January 6, 2027.