MSC Industrial Supply Co. (NYSE: MSM), a North American distributor of metalworking and maintenance, repair, and operations (MRO) products, reported its fiscal 2025 third-quarter results. The company recorded net sales of $971.1 million, representing a decline of 0.8% compared to $979.4 million in the same quarter of the prior year. Fiscal year-to-date sales also decreased by 2.7% to $2.79 billion.

For the third quarter, MSC reported operating income of $82.7 million, down 22.5% from $106.8 million year-over-year. The operating margin declined to 8.5%, compared to 10.9% in the prior year quarter. Adjusted operating income was $87.2 million, with an adjusted operating margin of 9.0%, down from 11.4% year-over-year.

Diluted earnings per share (EPS) for the quarter were $1.02, a decrease of 19.7% from $1.27 in the previous year. Adjusted diluted EPS fell 18.8% to $1.08 from $1.33.

Average daily sales (ADS) for the third quarter were down 0.8% year-over-year, but improved by 7% compared to the previous quarter. The decline in sales was partly offset by price contributions of 80 basis points and acquisitions accounting for 60 basis points.

In terms of profitability, gross margin was reported at 41.0%, reflecting a year-over-year improvement of 10 basis points but remaining flat compared to the previous quarter. Operating expenses reached approximately $312 million, which translated to 32.2% of total sales. Sequentially, adjusted operating expenses experienced a slight increase of $9 million, driven by higher variable costs aligned with sales growth.

MSC’s balance sheet indicated a net debt of approximately $449 million as of the end of the reporting period. The company’s free cash flow conversion was reported at approximately 134% for the third quarter. MSC returned about $56 million to shareholders through dividends and share repurchases in the latest quarter, totaling $181 million year-to-date.

For the fourth quarter, MSC provided guidance anticipating ADS to decline by 0.5% to rise by 1.5% year-over-year. The company expects adjusted operating margin to range between 8.5% and 9.0%. The upcoming quarter’s outlook reflects anticipated continued benefits from price actions and ongoing momentum from growth initiatives, tempered by macroeconomic uncertainties surrounding demand.

MSC maintained its full-year guidance, expecting depreciation and amortization expense of approximately $90 million to $95 million and capital expenditures to reach about $100 million to $110 million. The anticipated free cash flow conversion for the full year is approximately 120%.