Fastenal — No. 10 on Industrial Distribution's Big 50 List — entered 2016 with uncertainty. On the first day of the year, the company made its second CEO change in an 11-month span, as former longtime CFO Dan Florness took over the role of president and CEO on Jan. 1. The company had just appointed an interim CFO as well.
It was also an uncertain time in the market, as a persisting industrial recession plagued product demand for many large distributors throughout 2016, resulting in a second straight year of sales and profit declines for many of them.
But Fastenal perservered in 2016. churning out another year of sales and profit growth, showing consistency throughout the year. As I noted Wednesday when sharing details of the company's Q4 earnings report, Fastenal achieved monthly year-over-year daily sales growth in 11 of 12 months last year, with one flat month. This is particularly impressive given that the company ended 2015 with four straight months of year-over-year daily sales decline.
Here's how Fastenal's year-over-year daily sales performed in 2016:
- December 2016: +3.2 percent
- November 2016: +1.2 percent
- October 2016: +3.9 percent
- September 2016: +2.8 percent
- August 2016: +0.3 percent
- July 2016: +2.1 percent
- June 2016: 0.0 percent
- May 2016: +1.1 percent
- April 2016: +3.8 percent
- March 2016: 0.0 percent
- February 2016: +2.6 percent
- January 2016: +3.3 percent
For the full year 2016, Fastenal had total sales of $3.96 billion, up 2.4 percent over 2015, while daily sales increased 2.0 percent. While total profit of $499.5 million was down 3.3 percent from 2015, shares of Fastenal spiked nearly 6 percent on Wednesday to a one-year high as the company posted a better-than-expected 2.6 percent Q4 profit gain from a year earlier.
"In regards to the upbeat finish our sales trends and our gross profit stabilized and/or improved depending on if you look at that in comparison to Q3 or comparison to Q4 of a year ago and we grew our earnings," Florness said Wednesday in Fastenal's post-earnings conference call with analysts. "For a new CEO, you can appreciate the importance that comes with having a release that doesn’t have some either parenthesis or dashes in front of a number or two after we've come through quite frankly a pretty tough 2015 and 2016 period."
While the Fastenal's sales continued to grow throughout 2016, it downsized physically. The company ended the year with a total headcount of 19.624, down 5.4 percent from a year earlier. That included a store employee headcount reduction of 7.1 percent. Meanwhile, the company closed or consolidated 144 stores in 2016 and opened 40, ending the year with a total store count of 2,505 (-4.5 percent YoY).
The company's stores and headcount figures may have declined in 2016, but its vending business continued to post exceptional growth. The company installed more than 7,300 industrial vending machines last year, with its total count of 62,822 up 13.2 percent than it ended 2015 with. Fastenal's number of Onsite locations had even bigger growth. Its active Onsite location count of 401 is up 51.9 percent from 2015. It signed 176 Onsite customers last year.
Fastenal's fastener sales have declined in nearly every quarter since the start of 2009 when fastener sales comprised 50 percent of the company's total, but it's made up for it with vending growth. Non-fastener sales comprised 64.4 percent percent of Q4 sales. The company said that 46.1 percent of its total sales now go to customers that use vending.
Fastenal CFO Holden Lewis said Wednesday that despite signing more than 18,000 vending machines in 2016, the company didn't quite reach its vending goals, even though signings were at a three-year high. He said the company is targeting more than 20,000 signings in 2017.
On Dec. 28, I posted a blog featuring my interview with Fastenal FAST Solutions executive president Gary Polipnick and vice president Kevin Fitzgerald, where I discussed the company's new P.O.D.s offering that is sure to turn heads throughout 2017. The P.O.D. looks like a blue shipping container, but it's essentially a mini Fastenal store. Inside the container are the company's vending machines stocked with industrial products. The P.O.D.s can be placed at a job site, manufacturing or rural location where the company doesn't already have a store location.