We expect an in-line quarter with 8% sales growth and EPS at $1.01, up 6%. The buy-side expects in-line results, but is cautious on fiscal 2015 guidance. Organic average daily sales growth was 6.7% in the prior quarter and June growth improved to 7.6%. From our surveys, we are confident that U.S. industrial activity has continued to grind higher. Metalworking trends have firmed more, but nobody is talking about major inflections. Management should be able to speak to further demand improvement and market share gains with large accounts, but we do not expect an overly optimistic near-term outlook. We believe CCSG will deliver low-single-digit growth, as promised. Our sense is that price continues to track at 1%, as growth with national accounts pushes down net realization. Our best guess at this point is that Big Book pricing is 3% (with downside bias) and MSC nets 1% due to mix in fiscal 2015.
Following a multiyear investment cycle, investors are focused on the pace of margin improvement in 2015 and 2016. We expect commentary to remain consistent that 2015 will show “modest” operating margin improvement, but material inflection is not until fiscal 2016. We expect three guidance scenarios (similar to fiscal 2014): low, moderate, and high organic growth. Our guess is that low and moderate organic growth puts EBIT margin at 14.5%-15.0%. High growth would put EBIT margin above 15% and incremental margins could be 22%-23%. Today, growth is moderate and pricing is soft, which suggest incremental margins might not reach 20% in 2015. We believe MSC will guide operating margins up 40-50 basis points at the midpoint. This implies Street numbers could fall $0.10. Unless the macro, price inflation, and CCSG improve, we believe 9%-10% organic growth may be hard to reach in 2015 on harder comparisons.
Fiscal first-quarter consensus and our estimate for EPS of $1.08 seems slightly high. We are anticipating a guidance range of $1.03-$1.07. Gross margin should improve sequentially but operating margins should remain under pressure as infrastructure and sales hire costs continue into the first half of the year. Our model assumes 10% organic sales growth in September, 9% in October, and 6% in November as organic comparisons get 200-250 basis points tougher in October and November.