You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: Erik Gershwind, our chief executive officer; and Kristen Actis-Grande, our chief financial officer, are both on the call with me.
As on our last call, we are all remote, so bear with us if we encounter any technical difficulties.
These risk factors include our comments on the potential impact of COVID-19.
I'll begin by wishing each of you a happy, a healthy, and especially a safe new year.
I'll then review first-quarter results and take a deeper dive into our growth initiatives.
From there, Kristen will review the financials in more detail and provide color on our structural cost program.
As we enter the middle of fiscal 2021, momentum on our initiative is building.
This is evidenced in part by improving numbers.
More importantly, by progress against our key initiatives and by the increasing pace with which we're operating the business.
As a reminder, several years ago, we decided to reposition MSC from a spot-buy a supplier to a mission-critical partner.
We capture this in our new brand promise built to make you better.
And we did so in order to secure the next decade-plus of MSC's success and to deepen the mode around our business.
Since that time, we have recreated MSC's value proposition, remodeled our supply chain with an elevated presence on the plant floor, reshaped MSC's sales force, built new platforms for growth such as CCSG, and we've accelerated the pace of innovation with advancements like MSC MillMax.
We've built new digital capabilities like e-commerce to improve customer retention and loyalty and a new pricing function to improve price execution and realization.
And finally, we've taken steps to create a more agile culture in order to drive change faster.
On our last call, we outlined mission critical or our pathway to translate these changes into improved performance.
We share two three-year targets: and those were accelerated market share capture, and improving ROIC.
We shared five growth levers that will deliver at least 400 basis points of outgrowth above IP by our fiscal 2023.
We also shared a structural cost initiative that we yield at least 200 basis points in operating expense to sales ratio improvements by fiscal 2023 powering ROIC back into the high teens during that time.
While we're encouraged by progress, we have our sights set high and we're just getting started.
We're making inroads on the five growth levers and we're moving aggressively on the structural cost front to achieve our one-year and three-year targets with a robust project pipeline and a steady drumbeat of changes being implemented across the company.
Looking outside of our company, all of this is happening against the backdrop that remains challenging but is showing some positive indicators.
The good news on the vaccine front and the recently passed stimulus package will likely improve the outlook over the coming quarters.
I'll now turn to our fiscal first-quarter financial results which you can see on Slide 4.
Overall sales were down 6.3%, and gross margin was down 30 basis points versus the prior-year period.
Our operating margin on a GAAP basis was 7% and was significantly influenced by a nonrecurring asset impairment charge which I'll describe in greater detail shortly.
As you can see on Slide 5, excluding this impairment charge and adjustments related to severance and cost associated with mission critical, our adjusted operating margin was 11%, down 30 basis points from the prior year despite lower sales and supported by mission critical.
All of this resulted in earnings per share of $0.69 for the quarter, or $1.10 on an adjusted basis.
We're seeing continued sequential improvement in our sales levels.
Most notably, our nonsafety and nonjanitorial product lines improved through the quarter and declined low double digits.
Tales of safety and janitorial products anchored by our PPE program continued growing at over 20% for the quarter.
The improving trends extended into December with total company sales growth estimated at 2.4%.
While aided by some large PPE orders, December is nonetheless encouraging as the rest of the business excluding safety and janitorial was down in the low single digits year over year.
Looking at our performance by customer type, government sales continue to grow significantly year over year due to the surge in large safety and janitorial orders.
National accounts declined in the low teens while our core customers declined low double digits, and CCSG was down mid-single digits.
As you can see on Slide 6, industrial production remained in the negative single digits range but did improve over the prior quarter.
Most manufacturing end markets behaved consistent with this trend.
Although metalworking-centric end markets did continue to lag the broader IP index.
More importantly, we have seen the GAAP between IP in our growth rate begin to compress as expected.
We plan to build on that momentum and as a reminder, we target exiting fiscal 2021 with at least the 200-basis-point positive GAAP above IP for our fourth quarter.
I'll now turn to our growth initiatives.
On the last call, I outlined five levers that will drive our improved growth over the next three years.
And those are metalworking, solutions, selling our portfolio, digital, and diversified end markets.
Today I'll discuss and focus on a couple of them.
We're investing heavily in our core business in order to widen our lead.
One way we do so is by capturing new customers from local distributors who are under tremendous pressure in the current environment.
We track our funnel of opportunities and win rate by market, and both are progressing according to plan.
We expect that price to progress to build as the locals come under more and more pressure with each passing month.
MSC MillMax is aiding our efforts to capture market share.
Milling is one of the most significant cutting tool applications.
Cutting tools represent roughly 30% to 40% of the $12 billion to $15 billion metalworking market.
MSC MillMax not only provides opportunities to capture share within cutting tools but it opens up access to our customers broader MRO purchases which are multiple times the size of their cutting tool spent.
We're seeing strong early reception to the new technology.
Our funnel of opportunities is building quickly and is starting to produce new wins.
As we do with vending, we're offering MSC MillMax as a service in exchange for incremental share of wallet.
The second initiative I'll feature is government, which is right now our largest diversification play.
We've been working hard over the past two years to turn our government business from an underperformer to an outperformer.
And while we're benefiting from a PPE tailwind, we are nonetheless pleased with our progress in the fiscal first quarter as the business grew over 35%.
Beyond the current momentum, we're investing in this area to build for the future including adding hunter roles dedicated to creating new opportunities for us.
Third, I'll highlight our sales force build-out.
Growing and reshaping our sales force is an important enabler that powers each of the five initiatives.
In recent years, we've taken sales headcount down in order to reshape the sales force consistent with our new strategy.
For the first time in several years, we're now poised to expand the sales force.
We had a delay due to the pandemic but we've now restarted those efforts.
In our fiscal first quarter, we increased our sales headcount by 50, including roles such as business development or hunting, metalworking specialists, and government.
This effort has been aided by the redesign and outsourcing of our talent acquisition function which was one of the mission critical projects that Kristen mentioned on the last call.
We are hiring faster and at a lower cost.
Before turning things over to Kristen, I'll now discuss our PPE program and the related impairment charge for the nitrile gloves.
From the outset of the pandemic, we have worked hard to source critical PPE supplies to support our customers in need and to keep the front lines of industry and government workers safe.
Despite the widespread scarcity of certain products and well-documented supply chain issues, we've been successful in this effort across a wide range of items.
Nitrile gloves have proven to be more challenging.
Over the past several months, a number of our large customers approached us in dire need of the scarce product.
Our normal channels of supply could not produce sufficient quantities as the nitrile glove global supply chain is under extreme pressure right now.
As a result, in September, our team turned to new sources of supply.
We used prepayments to secure priority status which has been a standard market practice through the pandemic and has been an effective tool for us in securing scarce products during this time.
As of today, we've not yet received the gloves.
And in light of the growing uncertainty over our ability to secure deliveries, we recorded an impairment charge for the full amount of the prepayments.
We are of course pursuing all possible paths to either secure the gloves or a refund of our prepayments.
Pulling back from this specific issue, we're quite pleased with our PPE program which has consisted of hundreds of global supply transactions leading to substantial revenues and most importantly the ability to keep our customers safe.
I'll now pass it over to Kristen.
Let me start with the review of our fiscal first quarter and then I'll update you on the progress of our mission critical initiatives.
Our first-quarter sales were $772 million, or $12.5 million on an average daily sales basis.
Both a decline of 6.3% versus the same quarter last year.
Moving to gross margins, our first-quarter gross margin was 41.9%, a decline of 30 basis points compared to the first quarter of last year.
Sequentially, gross margin improved 30 basis points, compared to the fourth quarter 2020.
Despite the headwind from some large PPE sales that we mentioned on our last call, we continue to see solid performance due to the traction of our initiatives.
Our execution on both the pricing and purchasing fronts has been strong with solid realization from our annual price increase as well as improvements to our supplier programs.
December gross margins continued the trend of solid execution on the price and cost fronts.
We could, however, see increased headwinds in gross margins due to PPE-related SKUs over the next couple of quarters.
Total operating expenses in the first quarter were $243 million, or 31.4% of sales, versus $257 million, or 31.2% of sales in the prior year.
This includes about $4 million of costs related to severance and the review of our operating model both related to mission critical.
The severance made up about one-third of that amount.
Excluding these costs, operating expenses as a percent of sales were 30.9% in the prior year, excluding $2.6 million of costs related to severance.
Operating expenses were also 30.9% of sales.
We were able to keep the adjusted opex to sales ratio flat despite the decline in sales as our mission critical initiatives continued to deliver savings.
I'll go into more details on the progress of our mission critical initiatives in a minute.
Including the asset impairment charge that Erik mentioned earlier, all of this resulted in GAAP operating margin of 7%, compared to 11% in the same period last year.
Excluding the impairment charge, severance, and other related costs, our adjusted margin was 11%, versus an adjusted 11.3% in the prior year.
GAAP earnings per share were $0.69 adjusted for the impairment charge as well as severance and other related costs.
Adjusted earnings per share were $1.10.
Turning to the balance sheet and moving ahead to Slide 7.
We achieve a free cash flow of $95 million in the first quarter, as compared to $72 million in the prior year.
This improvement was driven by our accounts payable management and the deferral of payroll taxes under the CARES Act.
As of the end of fiscal Q1, we were carrying $521 million of inventory down $22 million from last quarter.
Roughly $60 million of that is related to PPE products and over half of that is specific to disposable masks.
This is ample supply should the virus surge continue.
During the quarter, we continued to manage our liquidity very closely and we paid down $130 million of our revolving credit facility in Q1.
Our total debt as of the end of the first quarter was $490 million, comprised primarily of $120 million balance on our revolving credit facility; $20 million of short-term, fixed-rate borrowings; and $345 million of long-term, fixed-rate borrowings.
Cash and cash equivalents were $53 million resulting in net debt of $437 million at the end of the quarter.
Since then in December, we paid a special dividend of approximately $195 million which we funded primarily from our revolver.
The special dividend reflects our long-standing commitment to returning capital to our shareholders as part of our balanced capital allocation philosophy while maintaining a conservative balance sheet.
On Slide 8, you can see our original program goals of $90 million to $100 million of cost takeout through fiscal 2023 and as versus fiscal 2019.
On our last call, we shared that we had taken out $20 million of cost in fiscal 2020 and that our goal for fiscal '21 was to take out another $25 million to achieve cumulative savings of $45 million by the end of fiscal '21.
I'm pleased to report that we achieved an additional $8 million of savings in the first quarter, bringing our cumulative savings to $28 million against our goal of $45 million by the end of this year.
This is growth savings and does not reflect investments of roughly $2 million to $3 million in the first quarter, and $15 million expected in fiscal '21.
While one quarter does not make a year, and we did capitalize on some low hanging fruit, I'm encouraged by our fast start to the year and our continued momentum in executing our mission critical productivity programs.
In addition to some of the initiatives I mentioned last quarter, which are proceeding as planned, we also have signed an agreement to sell our Melville, New York facility.
This 170,000-square-foot facility on 17 acres served as one of our co-headquarters.
We will be relocating late this spring to a smaller 26,000-square-foot space nearby, which will accommodate our new hybrid working model.
Once the sale of our current location is complete, we will save roughly $3 million annually in operating expenses.
We will continue to review our real estate footprint for additional opportunities.
Last quarter, we outlined our mission critical initiative that aimed at turning the hard work we've performed over the past several years into improved financial performance.
Our company's sights are firmly set on two goals referenced on Slide 12 to be achieved by the end of our fiscal '23: first, growing at least 400 basis points above IP, and second, returning ROIC back into the high teens.
We have five growth initiatives powering our market share aspirations and we are executing significant structural cost reductions that we expect to improve operating expenses as a percentage of sales by at least 200 basis points.
As we move into the middle of our fiscal year, we're encouraged by the momentum that is building inside the company.
This is evidenced by improving numbers and by improving the execution of the projects behind them.
Most significantly, there is an energy building inside the four walls of MSC and with each passing quarter, we expect that energy to grow.
We will not rest until we've achieved our mission of being the best industrial distributor in the world as measured by all four of our stakeholders.

user
compname reports q1 adjusted earnings per share $1.10.
q1 adjusted earnings per share $1.10.
q1 earnings per share $0.69.

assistant