Even though some of its industrial customers are feeling a bit of a pinch, MSC Industrial Direct (NYSE:MSM) was able to post strong results.

MSC distributes maintenance, repair, and operation supplies. It currently stocks more than 500,000 items for more than 346,000 customers and competes with fellow industrial supply distributors like Applied Industrial Technologies (NYSE:AIT), Fastenal (NASDAQ:FAST), and W.W. Grainger (NYSE:GWW). Last March, the company acquired Kennametal (NYSE:KMT) subsidiary J&L Industrial Supply, which serves the metalworking industry.

When you need to get hundreds of thousands of products to hundreds of thousands of customers at the right place at the right time, efficiency and logistics are the name of the game. Thus, despite the slowdown in the industrial sector, MSC was able to achieve strong growth. For the quarter, sales grew 32.2%; about 70% of this growth was due to the J&L acquisition, which leaves around 10% growth from the company's core operations. Management believes of this roughly 9% organic growth, 40% came from pricing, 40% came from volume gains to large customers, and the rest was from miscellaneous items.

MSC believes that downturns, when its customers pay more attention to the bottom line, are when it can really push its cost-saving abilities. MSC's selling point is its ability to help customers save money by making their supply chain, inventory management, and head count more efficient. Management believes that the "flawless performance and service" has contributed to the company's growth in market share. While I'll go along with the large part played by execution and such, I think President and CEO David Sandler was laying it on a little thick with that one.

MSC's management reiterated that the company is still on track for $20 million of margin improvement related to the J&L integration. I wouldn't bet against them -- this is a company that runs an extremely tight ship, and it shows up in the results. I calculate the 2006 return on invested capital at 16%. If I exclude goodwill and intangible assets, I calculate the 2006 return on invested tangible capital at a whopping 27%. At around 24 times trailing-12-month earnings, MSC does not strike me as a bargain, but it could be worth the trouble for investors willing to pay a slight premium for growth.

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Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.