MSM - Weakening Manufacturing Activity Is Hitting MSC Industrial Hard
2024-07-16 14:15:18 ET
Summary
- MSC Industrial saw a meaningful downturn in core manufacturing end-markets during fiscal Q3 results, driving a 7% decline in average daily sales.
- The company isn't alone here; Fastenal had a sluggish quarter with fastener sales down year over year and Lincoln Electric already revised its full-year results into the red for FY'24.
- MSC Industrial's model makes it difficult to uphold margins during downturns, but execution issues with web-based pricing added to the margin pressure.
- Without a reason to be more bullish on manufacturing end-markets, it's hard to be all that bullish on MSC shares today, though the business will see a cyclical recovery at some point.
Time will tell whether the U.S. sees the second half recovery that the Street has been counting on, but recent results and warnings from the more industrial side of things are not encouraging. Manufacturing PMI is back below 50, industrial production is contracting, metalworking and machine tool indices are not strong, and companies like Lincoln Electric (LECO) have guided to noticeably weaker volumes for the remainder of the year....
Weakening Manufacturing Activity Is Hitting MSC Industrial Hard