MSC Industrial Supply Co.
Jeff Kaczka, Chief Financial Officer
Raymond James
Institutional Investor Conference
Orlando, March 4, 2014
Safe Harbor Statement
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
Statements in this Presentation may constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any
statements contained herein which are not statements of historical facts and that address activities, events or
developments that the Company expects, believes or anticipates will or may occur in the future shall be deemed to be
forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which
cannot be predicted with accuracy and some of which might not even be anticipated. Future events, actual results and
performance, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking
statements herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to release publicly any revisions to these forwardlooking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence
of unanticipated events. The inclusion of any statement in this release does not constitute an admission by MSC or any
other person that the events or circumstances described in such statement are material. Factors that could cause actual
results to differ materially from those in forward-looking statements include, without limitation, the Company’s ability to
timely and efficiently integrate the J&L business acquired in June 2006 and realize the anticipated synergies from this
transaction, changing customer and product mixes, changing market conditions, industry consolidations, competition,
general economic conditions in the markets in which the Company operates, rising commodity and energy prices, risk of
cancellation or rescheduling of orders, work stoppages or other business interruptions (including those due to extreme
weather conditions) at transportation centers or shipping ports, the risk of war, terrorism and similar hostilities,
dependence on the Company’s information systems and on key personnel, the outcome of potential government or
regulatory proceedings or future litigation relating to pending or future claims, inquiries or audits, and various other risk
factors listed from time to time in the Company's SEC reports.
Company Overview
MSC is a value added distributor of services, solutions & products
that helps customers reduce their MRO supply chain costs
Founded in 1941 by Sid Jacobson
> 6,000 associates
$2.6 Billion
Pro-Forma
Revenue*
13%
3-Year Sales CAGR
> 100 branches and 4 major distribution centers
16.3%
> 3,000 suppliers
Adjusted Operating
Margin*
> 700,000 SKUs with 99% fill rates
* Unaudited data for fiscal year ended August 31, 2013.
17%
3-Year EPS CAGR
Key Investment Highlights
 Uniquely positioned to gain share in a large, fragmented market
 Scalable and very profitable business model with repeatable growth
formula
 Track record of capitalizing on growth opportunities
– Product category expansion yields deeper wallet share
– Scalable infrastructure supports organic growth
– Industry consolidation presents significant M&A opportunity
 High free cash flow generation (+$600 million in past 3 fiscal years)
Industry Overview
MSC
The top 50 companies represent
less than 30% of the market
 $140B MRO Market in the US
 Highly Fragmented
 150,000 Distributors in the US
Competitive Position
MSC
Industry Average
Products
725,000
15,000
Fill Rate
99%
58%
# of Orders/Yr.
6 million
N/A
Customers
325,000
2,000
Unique Buyers
550,000
N/A
Gross Margin
46%
23%
(amounts are approximate)
Fulfillment Center Network
Next Day Delivery
Scalable & Repeatable
Customer Fulfillment Centers (CFCs)
BDNA CFCs
CFC under construction
Broad Product Offering
>700,000
99%
Items in Stock
Fill Rate
Significant competitive advantage
Customer Landscape
Company Size
(# employees)
Large
(>250)
Customer Count
2%
Revenue Potential
42%
Medium
(50-249)
10%
34%
Small
(10-49)
31%
19%
Very small
(10-49)
57%
Complex
Solutions
5%
Simple
Transactions
Top Customers Demand Value-added Services
Smaller Customers Require Efficient Cost-to-Serve Model
Source: D&B; Infogroup
Customer Challenges
Too Many
Suppliers
Too Many
SKUs
Too Many
Purchase
Orders
Difficult to
Drive
Compliance
Operationally
Expensive
Time
Consuming to
Manage
Service and
Delivery
Issues
Data
Collection and
Management
Challenges
Non-Core
Activities
Excess
Inventory
Disruption
of Supply
Freight and
Handling
Costs
MSC Value Proposition
Save
Time
Save
Money
MSC Value Proposition
Over 1 Million Items in
40 Major Categories
mscdirect.com &
eProcurement
Same-Day Shipping
with Service
Guarantee
Next Day Delivery
when ordered by
8 p.m. ET
Save
Time
Save
Money
MSC Value Proposition
Over 1 Million Items in
40 Major Categories
Product Supermarket
mscdirect.com &
eProcurement
Private Brands
Same-Day Shipping
with Service
Guarantee
Next Day Delivery
when ordered by
8 p.m. ET
Save
Time
Save
Money
Inventory Management
& Supply Chain
Solutions
Technical Team
Repeatable Growth Formula
Logistics
Sales Force
Products
Solutions
Technology
e-commerce
Scalable Foundation
Repeatable Growth Formula
Metalworking
Strategic M&A
Customized Supply
Chain Solutions
Expertly Trained Sales
Organization
Metalworking Specialists
Technical Service &
Support
Private Brands
Logistics
Sales Force
Products
Solutions
Technology
e-commerce
Scalable Foundation
Repeatable Growth Formula
Metalworking
Product Growth
Segments
Strategic M&A
Material Handling
Customized Supply
Chain Solutions
Safety
Hand and Power Tools
Expertly Trained Sales
Organization
Fasteners
Metalworking Specialists
Power Transmission
Technical Service &
Support
Electrical and Lighting
Private Brands
…and more
Logistics
Sales Force
Motion Control
Products
Solutions
Technology
e-commerce
Scalable Foundation
Repeatable Growth Formula
Metalworking
Product Growth
Segments
End-market Growth
Segments
Strategic M&A
Material Handling
Aerospace
Customized Supply
Chain Solutions
Safety
Automotive
Hand and Power Tools
Processing
Expertly Trained Sales
Organization
Fasteners
Government
Metalworking Specialists
Power Transmission
Education
Technical Service &
Support
Electrical and Lighting
Healthcare
Motion Control
Energy
Private Brands
…and more
…and more
Logistics
Sales Force
Products
Solutions
Technology
Strategic Investment
and Focus on
Adjacent Growth
Segments
e-commerce
Scalable Foundation
Repeatable Growth Formula
U.S.
Metalworking
The Americas
Europe
Product Growth
Segments
End-market Growth
Segments
Strategic M&A
Material Handling
Aerospace
Customized Supply
Chain Solutions
Safety
Automotive
Hand and Power Tools
Processing
Expertly Trained Sales
Organization
Fasteners
Government
Metalworking Specialists
Power Transmission
Education
Technical Service &
Support
Electrical and Lighting
Healthcare
Motion Control
Energy
Private Brands
…and more
…and more
Logistics
Sales Force
Products
Geographically
Scalable
Opportunities
Asia
Technology/Solutions
Strategic Investment
and Focus on
Adjacent Growth
Segments
e-commerce
Scalable Foundation
Growth Drivers
National Accounts
Salesforce Expansion
Vending
SKU Expansion
e-Commerce
M&A
Organic Growth Strategies
M&A
(11% historical)
(2% historical)
Update on Growth and Infrastructure
Investments
Davidson HQ Relocation
Salesforce Expansion
(Complete)
(On-Track)
5th CFC Expansion
Vending
(On-Track)
(On-Track)
Data Center
SKU Expansion
(On-Track)
(On-Track)
BDNA Integration
e-Commerce
(On-Track)
(On-Track)
Strict Acquisition Evaluation Criteria
 Strategic Fit with our growth plan
 Synergy Potential on both the cost
and revenue sides of the equation
 Enhance MSC’s value proposition
and go-to-market product
 Cultural fit between MSC and the
acquisition target
Recent Acquisitions
•
Barnes Distribution North America (2013)
•
ATS Industrial Supply, Inc. (2012)
•
American Tool Supply (2011)
•
American Specialty Grinding (2011)
•
Rutland Tool & Supply Co. (2010)
•
J&L Industrial Supply (2006)
Example: BDNA Overview
Strong strategic fit and significant synergy potential.
 Leading North American VMI platform
supplying a comprehensive range of high
margin “C” class MRO products and
tailored customer solutions
 Industry leading sales force
including over 800 field sales
professionals, supported by dedicated
inside sales professionals and
technical product experts
 Broad, balanced geographic coverage
serving all 50 U.S. states and 10
Canadian provinces
 Broad, high margin product offering
including a robust private label offering
 Diverse customer base and
longstanding customer relationships
with roughly 31,000 active accounts
 Strong financial performance –
2012F unaudited sales of roughly $300
million
Financial Review
Billions
Track Record of Growth*
$2.5
50%
$2.0
40%
$1.5
30%
$1.0
20%
$0.5
10%
$0.0
0%
2004
2005
Revenue
2006
2007
2008
Adj. Operating Income
2009
2010
2011
Adj. Operating Margin
2012
2013
Gross Margin
* An explanation and reconciliation of the non-GAAP financial measures contained in this presentation to the most directly comparable
GAAP financial measures can be found on www.mscdirect.com.
Financial Strengths
 Strong balance sheet supports growth
– Cash of $48M*
– Debt of $322M*
– Shareholders equity = $1.3B*
 Total free cash flow in excess of $640M* over last 3
years
 Re-purchased approx. $235M* of MSC stock and paid
approx. $200M* in dividends over last 3 years
* As of November 30, 2013.