MSC INDUSTRIAL DIRECT CO INC

General

MSC is a leading North American distributor of a broad range of metalworking, maintenance, repair and operations (“MRO”) and production fastener and hardware products and services. With more than 80 years of experience, we help customers improve productivity, profitability, and operational performance. We serve individual machine shops, Fortune 1000 companies and manufacturers of all sizes. We also maintain a robust public sector customer base including governments and their instrumentalities such as federal agencies, state governments and public sector healthcare providers. We position ourselves as a mission-critical partner to our customers, offering highly technical and high-touch solutions to solve their most complex challenges.

Products and Suppliers

We offer approximately 2.5 million active, saleable stock-keeping units (“SKUs”). The expansive number of SKUs makes us an increasingly valuable partner to our customers as they look to rationalize their supplier base. Our broad range of metalworking and MRO products includes cutting tools, abrasives, machining fluids, measuring instruments, machinery and accessories, tooling components, fasteners, flat stock, raw materials, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components and electrical supplies. Over time, we have expanded our product offerings organically and through selective acquisitions, including expansion into Class C Consumables and OEM product offerings, and have also scaled our tooling, regrinding and tool manufacturing business. The variety and availability of our product base, competitive pricing and dependable product quality levels enable our customers to select from “good-better-best” options on nearly all purchases.

Our extensive network of supplier partnerships provides us with access to technical applications, safety training certifications and many other value-added services for our customers. The majority of the products we sell are third-party manufactured products which we source directly from more than 3,000 suppliers. No single supplier accounted for more than 5% of our total purchases in fiscal year 2026. Additionally, MSC’s robust sourcing capabilities and vast supplier base allow us to further satisfy our customers’ needs outside of our current product offerings. Our selection of MSC exclusive brands and value-oriented generic branded products distinguishes us from competitors. SKUs sold under MSC exclusive brands represented approximately 15% of net sales in fiscal year 2026.

Industry and Competitive Environment

MSC operates in a large, fragmented industrial distribution market serving customers’ metalworking, MRO, production fastener and hardware product needs. Nearly every industrial business has an ongoing need for these products to support operations and maintain productivity. The market includes national, regional and local distributors, retail outlets, small distributorships, online distributors, direct mail suppliers, large warehouse stores and manufacturers’ direct sales organizations. Some of our competitors challenge us with a greater variety of product offerings, greater financial resources, additional services, or a combination of these factors. Our industry has seen consolidation in recent years. The trend of our industry toward consolidation could cause the industry to become more competitive (i) as greater economies of scale are achieved by competitors, or (ii) as competitors with new lower-cost business models are able to operate with lower prices and gross profit on products.

In the industrial products market, customer purchasing decisions are based primarily on one or more of the following criteria: price, product selection, product availability, technical support relationship, level of service and convenience. We believe we compete effectively on all such criteria. Many customers seek to reduce procurement complexity, improve inventory management and lower the total cost of managing indirect supplies. These challenges represent an opportunity for distributors like MSC that offer more than traditional transaction-focused distributors, including a broad product portfolio, product availability, technical expertise and inventory management solutions. We improve purchasing efficiency and reduce costs for our customers because our offerings enable our customers to consolidate suppliers, purchase orders and invoices, and reduce time spent tracking inventory and making stocking decisions.

Key Differentiators

MSC differentiates itself in the industry through its industry-leading metalworking expertise and technical support, robust inventory management solutions and superior customer experience.

Technical Expertise and Support. MSC provides technical support and personalized service through our team of field sales specialists and centralized technical representatives. With a dedicated team of over 160 metalworking, safety and fluid connector technical specialists, we work closely with our customers to optimize their manufacturing processes and improve efficiency. Our experts share their deep expertise and knowledge of metalworking processes, perform in-depth onsite needs analyses and leverage proprietary tools and services such as Application Optimization (“Ap Op”), MSC MillMax® and advanced data analysis capabilities to identify opportunities for productivity improvements and deliver tailored solutions across a range of machining processes. This combination of technical expertise and cutting-edge tools positions MSC as a trusted partner in driving productivity and profitability.

Inventory Management Solutions. We are committed to investing in our robust inventory management solutions, including eProcurement, VMI, CMI, vending, tool crib control and in-plant solutions. Our integrated approach to the shop floor provides broad flexibility in our solutions configurations, satisfying both simple and complex customer needs. Our solutions enable customers to gain full visibility into their on-hand inventory, streamline procurement, access a wide range of products and improve accountability, regardless of which solution is utilized. These solutions allow our customers to focus on their core business, while MSC manages their inventory ordering, fulfillment and replenishment.

Our vending machines use network or web-based software to enable customers to optimize the shop floor and gain inventory visibility, which in turn saves time and drives profitability. Our vending solutions used by customers in manufacturing plants are customizable and scalable, making them ideal for diverse industrial environments. Vending solutions include different kinds of machines, such as storage lockers or carousels, which can stand alone or be combined with other machines. These solutions are supported by our world-class sourcing capabilities, logistics infrastructure and the latest innovations in E-commerce and cloud-based computing technologies, ensuring consistent, reliable service across all touchpoints.

Superior Customer Experience. A core tenet of MSC’s success that enables us to stand apart in the market is our focus on customers’ needs. Our dedicated customer experience organization is focused on enhancing customer engagement, strengthening customer loyalty and retention, identifying opportunities to improve customer interactions and supporting the delivery of a more seamless and personalized experience across all customer touchpoints.

The efficient handling of orders is a critical aspect of our business, and one of our goals is to make purchasing our products as convenient and effortless as possible, whether the order is submitted digitally through our E-commerce platforms (the MSC website, vending machines and eProcurement) or via telephone or email. Our customer care centers are supported via telephony, case management and workforce optimization platforms. We continue to evolve and invest in technology and implement additional functionality to streamline the customer experience organization and create a more connected experience for our customers regardless of the contact method chosen and across onboarding, customer care, field service and retention.

MSC consistently receives top quartile customer satisfaction ratings, according to customer surveys. We provide extensive training to empower our associates to better support our customers and utilize feedback from customer comment cards, surveys and other customer outreach tools to improve the overall customer experience. By working to anticipate our customers’ needs, we strive to exceed our customers’ expectations.

Distribution Network

We operate a sophisticated network of five customer fulfillment centers, eight regional inventory centers, 37 warehouses (35 in North America and two in other foreign countries) and five manufacturing locations. We manage our primary customer fulfillment centers via computer-based SKU tracking systems and radio frequency devices that locate specific stock items to make the selection process more efficient. We carry many of the products we sell in our inventory, so that orders for these in-stock products are processed and fulfilled the day the order is received. We guarantee same-day shipping of our core metalworking and MRO products and offer next-day delivery nationwide in the United States for qualifying orders placed by 8 p.m. Eastern Time. Some specialty or custom items and very large orders are shipped directly from the manufacturer. We continue to invest in the improvement of our distribution efficiency and capabilities. In response to shifts in the labor market, we introduced a robotic packing solution and deployed advanced robotic picking technology at several customer fulfillment centers to improve productivity and associate safety while reducing energy consumption and saving space.

Marketing and Sales

Our marketing programs are designed to reach prospective and existing customers and are tailored to the needs of key decision-makers and frontline users across customer types, end markets and business sizes, with a particular focus on markets where we believe we have the strongest opportunities for growth.

Through an integrated marketing approach, we build brand awareness, support sales effectiveness and engage targeted audiences across digital and traditional channels. We execute omnichannel marketing campaigns across search, email, social media, digital advertising and other channels to engage customers and drive measurable outcomes. Traditional marketing channels, such as catalogs, brochures and direct mail, are used strategically to complement digital efforts to support targeted outreach in key verticals. We leverage analytics, artificial intelligence ("AI"), proprietary data and market intelligence to enhance marketing effectiveness, personalize customer engagement and support customer acquisition and retention. In addition, we invest in initiatives intended to increase brand awareness, strengthen differentiation and reinforce MSC's value proposition among targeted industrial audiences.

Our go-to-market approach combines these data-driven marketing programs with the expertise of our sales representatives to strengthen customer relationships and support growth. Our sales representatives are highly trained and experienced individuals who build and maintain relationships with customers, identify optimization opportunities, assist customers in reducing costs, provide and coordinate technical support, coordinate special orders and shipments with vendors and update customer account profiles in our information systems. Our sales representatives are equipped with proprietary mobile technology and analytics that provide access to customer, industry and inventory insights, enabling cross-selling across our broad product portfolio.

Recently, we have invested resources to maximize seller potential through an enhanced data-driven territory model to optimize field seller portfolios. We have also implemented enhanced analytics to enable additional cross-selling opportunities across MSC’s product portfolio. Building upon the refreshed territory model, during fiscal year 2026 we completed our sales force optimization initiative, which included workforce realignment actions intended to streamline our sales organization, a refreshed sales management process, a redesigned sales commission plan and a structured onboarding and development program designed to accelerate readiness and support long-term success for our sales organization. These investments aim to maximize seller potential, drive seller effectiveness, increase face-to-face customer interactions and accelerate revenue realization.

Information Systems

MSC’s information systems are an integral part of driving growth and delivering our full value proposition to our customers. Our extensive E-commerce capabilities provide sophisticated search and transaction capabilities, access to real-time inventory, customer-specific pricing, workflow management tools, customized reporting and other features. Our systems allow our customers to conduct business with us securely across multiple channels in the way they want. We offer advanced tools that integrate our solutions with customer purchasing platforms and workflows, providing customers visibility into product availability and allowing customers to evaluate alternative products and pricing. We also maintain an electronic data interchange and XML purchasing program with our vendors and interface directly with many metalworking applications, marketplaces and purchasing portals.

The MSC website is a business-to-business oriented online storefront that is a key component of our strategy to reduce our customers’ transaction costs and delivery times. The MSC website contains a searchable online catalog which allows customers to find SKUs by keyword, part description, competitive part number, vendor number or brand. The website also provides electronic ordering capabilities, online bill payment, delivery tracking status and personalized real-time inventory availability. Information can also be found detailing MSC’s in-plant and other inventory management solutions. We focus on the continued improvement of our E-commerce capabilities, including the MSC website, and invest in our proprietary search engine and enrichment of product data to ensure it remains a premier website in our industry.

We utilize disaster recovery techniques and procedures, which are consistent with industry practices in enterprise IT. Our E-commerce environment is continually being upgraded and in recent years we have migrated many of our systems to take advantage of the flexibility and controls offered by cloud computing platforms while downsizing our on-premise data center footprint.

MSC is actively leveraging AI in various areas to improve customer experiences and drive efficiencies in areas such as recommendations for our customer experience team, order error processing, natural language processing to automate product taxonomy classification and chatbots for our associates to quickly find relevant information. We continue to take steps to understand and utilize this technology in additional areas within the Company. We believe our strategic alignment with leading vendors in this space will position MSC well for a future where AI technology will be integrated into many aspects of MSC’s business and is an important component of MSC’s long-term growth strategy.

Reclassification

In the first quarter of fiscal year 2024, we completed our reclassification (the “Reclassification”) of our common stock to eliminate our Class B Common Stock, par value $0.001 per share (“Class B Common Stock” and, together with our Class A Common Stock, par value $0.001 per share (“Class A Common Stock”), collectively “Common Stock”). Pursuant to the Reclassification, each issued and outstanding share of Class B Common Stock was reclassified, exchanged and converted into 1.225 shares of Class A Common Stock. See Note 13, “Shareholders’ Equity” in the Notes to Consolidated Financial Statements for additional information.

Intellectual Property

We conduct business under various trademarks and service marks. We protect these trademarks by maintaining registrations in the United States, Canada and elsewhere. We also file for and obtain patents and use confidentiality and other agreements with customers, associates, consultants and others in order to protect our proprietary information. Although we do not believe our operations are substantially dependent upon any of our intellectual property, we consider our intellectual property to be valuable to our business.

Seasonality

At any given time, we may be impacted by our industrial customers’ plant shutdowns, particularly during the summer months (our fiscal fourth quarter), as well as the winter months for the Christmas and New Year holiday period (our fiscal second quarter). In addition, we may be impacted by weather-related disruptions.

Compliance with Health and Safety and Environmental Laws and Regulations

Our operations are subject to a variety of federal, state, local and non-U.S. health and safety and environmental laws and regulations relating to the discharge, treatment, storage, disposal, investigation and remediation of certain materials, substances and wastes. We continually assess our compliance status and management of environmental matters to ensure that our operations are compliant with all applicable environmental laws and regulations.

Operating and maintenance costs associated with environmental compliance and management of sites are a normal and recurring part of our operations. With respect to matters that may be pending, based on our analysis of relevant facts and circumstances, compliance with applicable environmental laws and regulations is not likely to have a material adverse effect upon our capital expenditures, earnings or competitive position.

Human Capital Resources

At MSC, we refer to our workforce as our team of “associates,” rather than employees, because we believe that our associates have a stake in our success. We rely on each other to be as dedicated to MSC as MSC is dedicated to each associate. This is a critical part of our expectations of our associates and a unique part of our culture.

As of August 29, 2026, we employed 7,028 associates worldwide, of which 6,845 were full-time and 183 were part-time. No associate is represented by a labor union. Approximately 88% of our workforce is based in the United States. MSC has not experienced work stoppages and considers associate relations to be good.

Our goal is to attract, develop and retain a talented team of associates inspired by our greater purpose of fueling the potential of our stakeholders. We believe a career at MSC includes:

•Purpose – MSC helps to fuel the industrial economy, propel our stakeholders’ success, and contribute to our customers’ growth.

•People and Respect – MSC cares about people. We strive to offer a positive work environment, with people you like and leaders you can respect.

•Health and Well-being – MSC offers many available options for our associates and their families to be healthy and plan for the future.

•Rewards and Recognition – Appreciation for our associates’ contributions and the opportunity to share financially and intrinsically in MSC’s success.

•Growth – The opportunity to learn, take risks and develop a career.

Health and Safety

MSC’s safety vision is to strive for zero injuries and build a culture in which safety is a top value across all levels of the organization, and every associate has the right and responsibility to continually seek to prevent injuries. Our safety team and associates are highly engaged in identifying trends in our incidents throughout the network and working collaboratively with our leadership to effectively reduce incidents and to make MSC one of the safest places to work.

In the 2025 calendar year, the Company’s Occupational Safety and Health Administration (“OSHA”) Total Recordable Incident Rate was 0.90 and the Company’s OSHA Lost Time Incident Rate was 0.42 based upon the number of incidents per 100 associates (or per 200,000 work hours). The Company’s rates fall below the Total Recordable Incident Rate and the Lost Time Incident Rate of the North American Industry Classification System.

Talent Acquisition and Development

MSC focuses on creating opportunities for associate growth, development, training and education, offering a comprehensive talent program that continues throughout an associate’s career. MSC believes that its future success is highly dependent upon the Company’s continued ability to attract, retain and motivate associates. As part of its efforts in these areas, the Company offers competitive compensation and benefits to meet the diverse needs of team members and support their health and well-being, financial future and work-life balance. Associates are given access to health plan resources, disease management, tobacco cessation, parental support, and stress management programs. In addition, MSC provides to its associates retirement savings, paid holidays and time off, educational assistance, disability and life insurance benefits as well as a variety of other programs.

MSC also offers through MSC University various learning and development opportunities in support of associate career growth and success through a variety of offerings, including virtual classrooms and webinars, instructor-led courses, informal work groups, e-learning, books and articles, and more. These opportunities can drive improvement, facilitate career development, provide coaching and mentoring opportunities, and enhance communication skills. The average number of training hours completed by each MSC associate in fiscal year 2026 was approximately 21 hours. Additionally, MSC’s tuition assistance program covers educational costs and provides eligible associates the financial assistance to obtain a graduate or undergraduate degree while working.

Available Information

We make available, free of charge, on or through the investor relations portion of our website, https://investor.mscdirect.com, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to these reports, as well as proxy statements and other information, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC. We also make available, on our website, the charters of the committees of the Board of Directors of the Company (our “Board of Directors”), the Code of Ethics, the Code of Business Conduct and the Corporate Governance Guidelines pursuant to SEC requirements and New York Stock Exchange (“NYSE”) listing standards. The information on our website, or linked to or from our website, is not incorporated by reference into, and does not constitute a part of, this Report or any other documents we file with, or furnish to, the SEC.

We use the investor relations portion of our website to distribute information, including as a means of disclosing material, non-public information, and for complying with our disclosure obligations under Regulation FD. We routinely post and make accessible financial and other information regarding the Company on our website (https://investor.mscdirect.com). Accordingly, investors should monitor the investor relations portion of our website in addition to our press releases, SEC filings and other public communications.