Metalworking and MRO supplies distributor MSC Industrial Supply reported its preliminary fiscal 2024 third quarter financial results on June 14, which included a considerable lowering of the company’s full-year outlook amid “softer than expected” results.

For its 3Q that spanned March-May, MSC posted total sales of $978 million-$980 million that were down 7.3%-7.1% year-over-year, which were impacted by one less selling day than a year earlier and a ~300 basis point headwind from non-repeating public sector orders in the prior year.

Sequentially, MSC’s 3Q average daily sales were up about 3% from its 2Q, which had one less selling day.

The company’s GAAP net profit was approximately $71 million to $72 million.

In updating its full-year financial outlook, MSC lowered its average daily sales projection from the 0% to 5% provided post 2Q to -4.7% to -4.3%, and adjusted operating margin from 12.0%-12.8% to 10.5%-10.7%.

“Today, we announced softer than expected preliminary third quarter results and are lowering our full year 2024 outlook, primarily driven by two factors,” MSC President and CEO Eric Gershwind said in a news release.

Gershwind detailed that those two factors are: 

1. While average daily sales improved sequentially, ongoing heavy manufacturing softness and a slower-than-anticipated ramp in MSC’s core customer resulted in a lower sequential revenue than expected; 
2. Gross margins were about 60 bps lower than expectations due to increased product and customer mix headwinds and unexpected dilution from MSC’s web price realignment. Gershwind noted that the latter is tied to complexities that weren’t uncovered during the pilot phase of that web price realignment and the time it took to identify the cause of the unexpected dilution.”

“We are taking decisive actions in response to these results,” Gershwind continued. “We are maintaining focus on the areas of the business that are delivering, such as in plant, vending and other high touch solutions, making changes to accelerate core customer growth initiatives, especially the website rollout, and have taken corrective actions on the web price realignment to improve gross margin trends. We are determined to execute the next chapter of our Mission Critical journey and achieve our long-term goals of growing 400 basis points or more above the Industrial Production Index and achieving adjusted operating margin in the mid-teens.”

MSC will report its full 3Q financial results on July 2.