UPDATE 2-MSC Industrial sees Q1 above estimates, shares rise

* Q4 EPS $0.41 vs est $0.36

* Revenue $354.1 mln vs est $343.4 mln

* Sees Q1 results above Street

* Shares rise 9 pct to year-high (Adds details, analyst comments, updates share movement)

BANGALORE, Oct 21 (Reuters) - Tools and industrial services provider MSC Industrial Direct Co Inc (MSM.N) posted better-than-expected quarterly results, helped by lower operating expenses, and forecast first-quarter results above market expectations, sending its shares up to a year-high.

MSC Industrial, which competes with industrial distributors W.W. Grainger (GWW.N) and Applied Industrial Technologies Inc (AIT.N), expects first-quarter earnings of 46 cents to 50 cents a share.

It sees net sales of $378.0 million to $390.0 million.

Analysts on average were expecting earnings of 42 cents a share, on revenue of $355.6 million for the period, according to Thomson Reuters I/B/E/S.

Analyst Yvonne Varano of Jefferies & Co said margin expansion as a result of improved market conditions, as well as market share gains, should benefit earnings into fiscal 2010.

"We would remain buyers as we anticipate MSC Industrial being an early beneficiary of an economic turnaround," Varano wrote in a note to clients.

However, the company, which distributes industrial supplies such as fasteners, measuring instruments and plumbing supplies, expects expenses to rise sequentially and still sees a highly competitive pricing environment.

"We expect that expense levels will grow in the first quarter from the fourth-quarter levels, reflecting higher sales volumes, increased investment spending and some reversal of the cuts and associate compensation that we made last year," a company executive said on a conference call.

MSC Industrial, which distributes metalworking and maintenance, repair and operations (MRO) supplies to industrial customers throughout the United States, also said it is looking at acquisition opportunities.

Q4 TOPS STREET

For the fourth quarter ended Aug. 29, net income was $26.0 million, or 41 cents a share, compared with $50.5 million, or 80 cents a share, a year ago. Analysts on average were expecting earnings of 36 cents a share.

Revenue for the company fell 21 percent to $354.1 million, but came in above analysts' average expectation of $343.4 million.