MSC Industrial Direct Company, Inc. (NYSE:MSM) shares are trading lower on Thursday after the company reported fourth-quarter results.

Net sales declined 8.0% year-over-year to $952.3 million, missing the consensus of $959.7 million.

Average daily sales fell 4.7% for the fiscal year due to continued softness in the heavy manufacturing markets, where the company has significant exposure and headwinds from non-repeating orders in the prior year.

Adjusted operating income for the quarter declined 27.8% to $94.2 million, with the operating margin compressing to 9.9% from 12.6% a year ago.

Adjusted EPS of $1.03, down 37.2% from the prior year, missed the consensus of $1.08.

As of August 31, the company held $29.6 million in cash and cash equivalents. 

On October 10, MSC Industrial raised the cash dividend per share to $0.85 from $0.83. The dividend will be payable on November 27 to shareholders on record as of November 13.

Outlook: MSC Industrial expects first-quarter ADS to decline 5.5% – 4.5% and anticipates an adjusted operating margin of 7.0% – 7.5%.

For FY25, the company expects free cash flow conversion of ~100% and capital expenditures of ~$100 million – $110 million.

Kristen Actis-Grande, Executive Vice President and Chief Financial Officer, said, “Near-term visibility remains limited underpinned by uncertainty stemming from the upcoming election and sluggish customer activity levels entering the holiday season. However, we witnessed various improvements for the fiscal year that are leading indicators for future profitability and growth.”

Investors can gain exposure to the stock via First Trust RBA American Industrial Renaissance ETF (NASDAQ:AIRR) and ALPS O’Shares U.S. Small-Cap Quality Dividend ETF (BATS:OUSM).

Price Action: MSM shares are down 4.49% at $77.21 at the last check Thursday.

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