Event Brief of Q4 2004 MSC Industrial Direct Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Christine Morman, MSC Industrial Direct Co., Inc. . Mitchell Jacobson, MSC Industrial Direct Co., Inc., CEO, Chairman . David Sandler, MSC Industrial Direct Co., Inc., President, COO, Director . Charles Boehlke, MSC Industrial Direct Co., Inc., CFO, EVP . Shelley Boxer, MSC Industrial Direct Co., Inc., VP - Finance

OVERVIEW

MSM announced that 4Q04 revenues were up 20%, adjusted for one less sales day than the previous year. Overall sales growth rates increased. For 1Q05, MSM expects sales of $260-265m and diluted EPS of $0.35-0.37. Q&A Focus: Hurricanes, cost-saving, process improvements

FINANCIAL DATA

A. Key Data From Call 1. 4Q04 read-through: 37.8%. 2. Operating income: 14.6% of sales. 3. Diluted EPS: $0.32. 4. 4Q04 Average Transaction Size: $244. 5. 4Q04 Fill Rates: approx. 99%. 6. 4Q04 GM: 45%. 7. 4Q04 free cash flow: $19.7m. 8. Full year 2004 free cash flow: $58m.

PRESENTATION SUMMARY

S1. 4Q04 Financial Overview (M.J.) 1. 4Q04 Overview: 1. Revenues were up 20% adjusted for one less sales day than the previous year. 2. Overall sales growth rates increased. 3. Manufacturing and non-manufacturing growth rates increased. 4. Gained market share and realized financial and operating leverage. 5. Maintained pricing discipline. 6. Met GM target. 7. Executed on process improvements and stayed focused on cost control.

2. 4Q04 Financial Results: 1. Read-through was 37.8%. 2. Operating income was up 66% vs. 4Q03. 3. Operating income was 14.6% of sales, vs. 10.3% in 4Q03. 4. Remains committed to returning business to mid-teens operating margins on an annual basis.

5. Overall net income was up 62.6% vs. 4Q03. 6. Diluted EPS was $0.32, up 60% vs. $0.20 in 4Q03. 3. 1Q05 Outlook: 1. Sales - $260-265m. 2. Diluted EPS - $0.35-0.37. 3. Outlook is solid, but customers remain uncertain.

S2. Fulfillment Model (D.S.) 1. What Customers Are Saying: 1. Values have translated well to customers. 2. One customer gives MSM his business because of improvements to his productivity and reduced costs. 3. Another prefers MSM because of service and in-stock levels. 4. A third is consolidating vendor base and lowering overall cost. 5. Customers are demanding cost reductions and shorter cycle times. 6. MSM model is based on overall cost reduction and just-in-time delivery. 7. Customers are busy; concerned about energy cost increases, raw material prices, interest rates, and the election. 8. Customers report a general lack of visibility. 9. Generally broad based strength now; summer was better than most expected. 2. 4Q04 Sales Growth Rates:

1. June - 18.4%. 2. July - 20.3%. 3. Aug. - 21.9%. 4. Sept. - 17.1%. 5. Oct. - through last Tuesday, 19.2%. 6. Sales Growth By Region: 7. West - 22.9%. 8. Southeast - 22.7%.

9. Midwest - 20.4%. 10. Northeast - 19.1%. 11. 4Q04 Average Transaction Size: 12. $244 vs. $236 in 3Q04. 3. 4Q04 Sales Growth by Sector: 1. Manufacturing - 21%. 2. Non-manufacturing - 16%.

3. Sales to manufacturing sector represented 73% of business. 4. 4Q04 Fill Rates: 1. Overall fill rates - approx. 99%. 2. DCs all hit or exceeded first fast fill rate goals. 3. Accuracy levels - error rate of less than one per 1,000. 4. Call center abandonment rate was less than 1%. 5. Avg. 61 calls per associate per day. 5. Headcount: 1. Field sales associates - 453, down vs. 3Q04, and less than projected goal of 460. 2. Sales force - 463. 3. Continues to expand the field team. 4. Expects 475-480 by the end of 2Q05. 6. Mail: 1. 4Q04 - mailed 6.5m pieces, …