Cahaba Research
Value, growth at reasonable price, long-term horizon

MSC Industrial Direct: Owner-Operators Consolidating The Attractive MRO Distribution Market

MSC Industrial Direct (NYSE:MSM) is a leading U.S.-based industrial distributor, focused on distributing and marketing maintenance, repair, and operations ("MRO") products to customers in North America. MSM's strategy is to save its customers time and money by simplifying their procurement process for MRO products and taking costs out of their MRO supply chain. The North American MRO market is massive and highly fragmented. Even after a decade of consolidation, the top 50 companies still only account for less than 30% of the $140 billion MRO market. However, the industrial distribution business benefits considerably from economies of scale. The long-term winners in this industry will be larger players that effectively consolidate market share. While one of the...

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