MSC Industrial Supply Co. reported a $41.774 million pre-tax impairment in its fiscal fourth quarter tied to Digital Core, as CEO Martina McIsaac described a move toward smaller AI projects.
In its annual filing, MSC said a reassessment found that some capitalized costs for the program no longer fit the company’s business needs and strategy or represented the best return for shareholders. The filing breaks the charge into $23.371 million for capitalized implementation costs and $18.403 million for the net present value of future contractual obligations MSC said would not provide an economic benefit.
MSC expects to settle those obligations over the next four fiscal years. The company said it does not currently expect further material charges stemming from the decision. MSC bears the recorded charge and the remaining contractual payments; the filing identified shareholder returns as part of the rationale for discontinuing the project but named no specific beneficiary.
On the fiscal fourth-quarter earnings call, McIsaac said MSC is moving toward modular technology projects with a stronger focus on AI. She said narrower implementations should lower risk and make returns arrive sooner, according to the company's webcast listing.
MSC's earnings release set average daily sales growth for fiscal 2027's first quarter at 9.5% to 10.5% year over year, and put adjusted operating margin in a 9.5% to 10.1% range. Management said on the call that materials inflation, freight and employee costs would weigh on gross and operating margins. On the same call, management anticipated a modest increase in adjusted operating expenses from the prior quarter; it also forecast a gross-margin decline somewhat greater than the usual roughly 10-basis-point drop between the fourth and first quarters.
MSC scheduled its fiscal 2027 first-quarter results for Jan. 6, 2027.
