Metalworking and MRO supplies distributor MSC Industrial Supply reported its 2025 first quarter results on Jan. 7, showing a continued decline in sales for the September-November period, though much less sharp than in its 4Q24 (June-August).

For the three months ended Nov. 30, MSC posted total sales of $928.5 million that were down 2.7% year-over-year. Sequentially, that was better than 4Q24’s 8.0% slide.

Take MDM’s 2025 Trends Survey: Help shape our editorial content and be entered to win a $100 gift card

MSC said the 1Q sales decline was driven by lower volumes, partially offset by acquisition benefits. However, this was above the prior guidance of down 4.5% to 5.5%, driven largely by a stronger than expected November.

The company’s 1Q gross margin of 40.7% was down 50 basis-points year-over-year and down 30 bps sequentially — attributed to higher cost inventories working through the P&L.

In the Store: MDM’s U.S. MRO Market Trends Report

MSC’s 1Q operating profit of $72.3 million was down 28.8% year-over-year, with operating margin of 7.8% likewise down 280 bps year-over-year. Net profit of $45.6 million was down 33.8% year-over-year. On an adjusted basis, operating profit of $74.6 million was down 28% year-over-year.

“Our first quarter results reflect solid performance in a challenging operating environment,” MSC CEO Erik Gershwind said in the company’s financial release. “During the quarter, we returned to growth in the Public Sector and continued expanding our solutions footprint. While this is an encouraging start to the fiscal year, there is room for improvement, which we are addressing through the three pillars of our Mission Critical strategy.”

Sales Breakdown

The 1Q25 report showed that average daily sales (ADS) growth improved throughout the quarter. They decreased 4.2% year-over-year in September and 3.9% in October despite a positive acquisitions impact of 0.9% and 1.0%, respectively. MSC then experienced a 0.8% ADS increase for November, with a 1.1% boost from acquisitions. However, MSC's preliminary estimate for December showed an 8.0% ADS decline that was significantly impacted by the timing of holidays on its fiscal calendar.

MSC's November ADS was its best monthly mark since September 2023 (+1.3%).

For the first quarter of 2025, MSC’s national account customers — accounting for 37% of sales — reported a 1.6% drop in average daily sales. Similarly, core and other customers — 54% of sales — saw a 5.3% decline. Meanwhile, public sector customers — 9% of sales — experienced a 9.8% year-over-year increase.

The report also showed a 4.9% year-over-year decrease in ADS within MSC’s manufacturing end-market, while its non-manufacturing sector posted a 2.0% growth.

eCommerce and Headcount

In 1Q25, 63.7% ($591.5 million) of MSC’s total sales came via eCommerce (including website, EDIT, VMI, vending and more), down sequentially from the 64.6% in 4Q24, but up from 63.3% a year earlier.

MSC ended its fiscal 1Q25 with a total headcount of 7,494, up 1.0% sequentially and up 1.2% year-over-year. Recent headcount increases include 30 associated from the company’s 4Q24 acquisition of ApTex, 27 associates from the Premier acquisition and 43 associates from the KAR acquisition in 2Q24.

Full-Year Outlook

MSC released its updated financial outlook, forecasting ADS decline of 5.0% to 3.0% for the second quarter of 2025 (December 2024-February 2025), along with an adjusted operating margin of 6.5% to 7.5%.

“Looking ahead, macro conditions remain soft in the near term as reflected by our December growth rate, which was significantly weighed down by holiday and fiscal calendar timing, particularly during the last week of our fiscal month ending Jan. 4,” MSC Executive VP and CFO Kristen Acis-Grande added. “However, we remain bullish on our long-term growth trajectory. Our self-help initiatives, such as the execution of our productivity pipeline and Mission Critical strategy, will bolster results as the end markets with our greatest exposure return to more normalized demand levels.”