I have been a big fan of MSC Industrial Direct (NYSE: MSM) for years, and the company just does not let me down. Last night's earnings report and special dividend announcement are just the latest entries in that pattern.
MSM announced that sales jumped more than 30% for the fiscal fourth quarter, which is a very solid result.
Margins were also good. Gross margin was slightly soft, but that seems to be a mix issue as well as the product of some large drop-ship orders. I think it is quite significant, though, that the company saw just $2M in incremental operating expenses from the prior quarter. That ultimately led to operating income growth of almost 69%, and a 3.5% improvement in operating margin from the year-ago level.
Guidance for the next quarter was not too bad - more or less in line with expectations, I think, and this company does have a history of delivering more than management promises.
I also like the timing of the special dividend - putting a little extra cash in shareholders' hands before the presumed change in dividend taxes in 2011. I am not generally enamored of special dividends (at least if the company has growth/expansion possibilities), but I will give management the benefit of the doubt here.
Disclosure - I own shares of MSM
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