MSC Industrial Direct Co., Inc. (NYSE:MSM) Q2 2023 Earnings Call Transcript

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Ryan Merkel: Sure. Yes, so your interpretation or what you heard in the remarks, I totally agree with that. It’s sequentially declining, that’s not atypical for us. A couple of the initiatives — maybe let me talk about couple of the initiatives first. So, obviously, we continue to do really well with Mission Critical, that’s going to continue to help us in the second half, probably, not surprisingly, we’re tracking ahead of the $15 million savings target for the year. We’ve been measuring the reinvestment very cautiously, just given some of the uncertainty in the macro environment. So, while we haven’t given a firm number on the reinvestment guidance, I can definitely commit to at least $10 million of net savings on Mission Critical.

And then I think the second thing I’d mentioned Tommy to your question about the initiatives is just the kind of ongoing productivity engine that we’ve been generating inside the company, which is really what you’re seeing is kind of the spirit of the next evolution of Mission Critical, which is deploying things like lean and continuous improvement, getting a lot more organic kind of grounds-up feedback and ideating the projects and the productivity opportunities. We’re really starting to see that momentum accelerate. And of course, we’re talking specifically about the OpEx line, but our intention kind of post 2023 is that, we’re using those same principles to really attack the whole P&L and balance sheet to generate opportunity. But then, in terms of second half dollars, obviously, there is some dependency there, depending on the volume number that you’re modeling, but I would suggest definitely a step up in dollars for the third quarter and then depending where you model Q4, obviously pick-up your volume change, but I think Q4 is where you’ll probably see a bit more productivity benefit from us than maybe what would be historically typical.

Tommy Moll: I appreciate it. And I’ll turn it back. Thank you.

Operator: Thank you. And our next question today comes from David Manthey with Baird. Please go ahead.

David Manthey: Hi, thanks. Good morning, everyone.

Ryan Merkel: Good morning, Dave.

David Manthey: First off, the Buckeye and Tru-Edge acquisitions, that’s 50 basis points combined not each, right?

Ryan Merkel: Correct.

David Manthey: Yeah. And then you mentioned reorientation of category management focus, we talked about some benefits in the second half, could you touch on the efforts and the benefits from that initiative?

Erik Gershwind: Yes. Hi, Dave. Go ahead.

Ryan Merkel: Go ahead, Erik. Go ahead.

Erik Gershwind: Good morning, David. So yes, look, I think we started to see this up on the last — on the last call. But for the last couple of years, our category folks have done a great job in a really difficult environment and the focus has been on getting product and on staying ahead of inflation. And I think, mission accomplished on both fronts. As things are settling in now, we see a great opportunity to reorient through a line review process, which is something that’s sort of typical that we’ll do over time. But I would say with a stepped up emphasis on taking a hard look at product and supplier portfolio optimization and refining our purchase cost position. So we are in the midst — sort of right in the midst of that we’re going to approach this as we’ve done in the past in Wave’s.

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