MSC Industrial Direct Co., Inc. Class A Jefferies Global Industrials Conference 2026
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Welcome everybody to session two for the Jefferies Global Industrials Conference. I am Stephen Volkmann, industrials analyst at Jefferies. We are going to be doing a bit of a fireside chat here today with MSC Industrial, and very pleased to welcome Martina McIsaac, who is the CEO. Ryan Mills, who is SVP of IR, will keep us all in line here. We are going to do sort of a fireside chat format here. If anybody wants to get involved, certainly happy to share the weight. I will come up for air a couple times and queue you guys. But if you do not, I will keep going and we will have an interesting conversation. Martina, welcome. Thank you for coming.
Thank you. Thanks for having us.
Great. You have been at MSC now, I think around four years or coming up on four years. You have been the CEO since- January January.
Since you took over in January, you have been working on some sales force restructuring, and we have seen margins expand. So far so good it seems. Maybe you can talk about sort of your big picture, sort of what your goals are, how you are trying to manage the business, and where you think it can go.
Sure. Thank you. Well, thanks for having us, Steve. I have been at MSC for just about four years. I was able to start as the COO and really get under the covers of the company, and then did a year as President. We were able to lay the groundwork for a turnaround that we are in the middle of executing. We are very happy with our progress. We intend to return the company to a mid-teens operating margin framework. We are in the early innings of the game, but we have made a lot of progress so far. Our sales force restructuring is what we have talked about the most this year.
That is my next question.
Yeah. We have also completely revamped our pricing structure. We have invested a lot in network optimization, so managing the balance of freight versus footprint, optimizing within the four walls of our distribution centers, and there are a lot of early wins to be seen in our numbers already. If you look at what is happening with fuel cost, we have been able to offset most of that because of what we have done already on the network side of things. Whether it is contracts or AI-driven planning and inventory placement, we have built a lot of fundamentals in the first three years that I was at the company, and now we look to accelerate organic growth with the sales restructuring.
Just in case people are not in the weeds here, the goal is mid-teens EBIT margin.
Mid-teens. That is right. Today, we are around 10%, so that is a pretty good hill to climb still.
Yeah. We ended last year at 8.4, so it is a climb, but we will get there.
What are the tools that get you there?
To get us to the mid-teens?
Yeah. There's a couple of things.
I'll dive right into the guts. The first thing that we did was we aggressively benchmarked our cost structure against our competitors. There's no perfect proxy competitor to MSC in industrial distribution, so we looked across the competitive set to hold ourselves accountable to what we think best in class is. We identified that our cost structure, to give you a representation, at the same sales level, we're about 1,000 heads heavy to deliver the same sales result as our competitors. That gave us the North Star of where we want to go. Certainly tackling that, and we have a roadmap to do that, to basically look at ways to take out manual work, to change work, to automate processes, to introduce AI, and we're on the roadmap to do that.
The other side of the equation is, of course, to accelerate organic growth. We have looked hard at our sales structure, which customers we cover, how we cover them, with what resources, and we feel we've now designed a structure that covers the right potential. Now, we look at putting in place the disciplined sales execution to get us there.
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