Friday, July 13, 2007

Strong Profts continue for MRO suppliers

During the last two and half weeks MSC and Fastenal have reported strong quarterly earnings numbers indicating continued strength in the MRO market. MSC's net sales increased 30.7% with approximately 74% of the growth stemming from the 2006 acquisition of J&L. Comments from MSC CEO David Sandler indicate a sense of optimism in the industry noting that "We are especially pleased with our financial performance, despite the prevalent softness of the industry reflected in seven months of weak ISM index reports. Although market conditions have not changed, the two most recent ISM index reports show more optimism in the market. We are not currently seeing that optimism reflected in our ordering rates from customers, however, history shows that if the trend in the ISM continues, we should see improving business conditions in the upcoming months."

The ISM manufacturing report for the last two months stood at 55% and 56% respectively. Figures greater than 50% indicate market expansion.

MSC's gross profit margin of 53% during the most recent quarter also reflects the company's ability to pass along increased prices to customers.

Fastenal was able to grow sales by 13% and profit by 15% in the most recent quarter according to their quarterly report which was released Thursday.

No comments: