Fastenal Sales, Profit & Onsite Growth Accelerate In Q1

Fastenal had sales growth across the board in Q1, with March being the company's best daily sales growth month since February 2015. The company continued to reduce its overall store count, but ramped up its Onsite locations and further grew its installed vending machines count.

Winona, MN-based Fastenal — No. 10 on Industrial Distribution's Big 50 List — reported its 2017 first quarter results on Wednesday, highlighted by considerable growth figures across the board.

The company posted Q1 total sales of $1.05 billion, up 6.2 percent year-over-year (YoY), with daily sales up by that same amount. Q1 total profit of $134.2 million increased 6.3 percent, gross profit increased 5.4 percent and operating profit increased 5.6 percent.

Overall, the quarter showed solid sequential improvement from Q4, in which sales rose 2.7 percent and profit rose 2.6 percent. Before that, Q3 2016 had a 1.8 percent sales decrease and a 7.0 percent profit decrease.

Fastenal's strong Q1 2017 is the latest sign of major improvement in the overall industrial products economy over the last six months.

"We are pleased with the improving pace of business growth in the first quarter of 2017," said Dan Florness, Fastenal president and CEO. "This is a welcome sign of improving customer business activity and of the traction we are gaining in our growth drivers."

Fastenal's March U.S. sales grew by 7.6 percent YoY and total North America sales grew by 8.1 percent.

Fastenal had March sales of $387 million, up 8.4 percent YoY, with daily sales up by that same amount. That marks the company's best daily sales growth month since February 2015 (8.6 percent).

Here's how the past 13 months of Fastenal's daily sales growth has been:

  • March 2017: +8.4 percent
  • February 2017: +6.1 percent
  • January 2017: +3.8 percent
  • 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

The company's Fastener products — which comprised 35.6 percent of total sales — made a return to growth in Q1 with a 0.8 percent YoY increase. Previously, fastener sales had declined YoY in the previous six recorded fiscal quarters, including 2.7 percent in Q4 2016.

Fastenal's non-fastener sales grew 9.4 percent YoY in Q1, following growth of 5.9 percent in Q4.

Fastenal ended Q1 with a total store and Onsite employee headcount of 11,197, down 1.6 percent YoY, but up 3.7 percent since Q4. The company's selling personnel headcount increased 3.3 percent since Q4. The company's total overall headcount of 19,822 was down 3.3 percent YoY and up 1.0 percent from Q4.

"During the last twelve months, we have reduced our headcount by 489 people in our stores and 687 people in total," the company said in its Q1 earnings release. "These reductions can be primarily attributed to natural attrition rather than an active headcount reduction program. We continue to add headcount where necessary to support our growth initiatives, notably our Onsite business. However, the softness of the North American industrial economy during 2016 has caused us to more intensively scrutinize our full- and part-time staffing levels outside of these initiatives."

Fastenal's acquisition of Hudsonville, MI-based Manufacturer's Supply Company, announced March 3, was finalized on March 31.

Fastenal opened five stores in Q1 and closed 26, bringing its current total to 2,480. That count includes 2,182 stores in the U.S., 196 in Canada and 102 in the rest of the world.

"Our store network forms the foundation of our business strategy, and we will continue to open or close stores in 2017 as is deemed necessary to sustain and improve our network and support our growth drivers," Fastenal said.

Meanwhile, the company ramped up its number of active Onsite locations to 437, up 9.0 percent from Q4 and up a whopping 51.2 percent YoY. Beyond that, the company's installed vending machines now numbers 64,430 as of March 31, up 2.6 percent from Q4 and up 13.3 percent YoY.

Other notable figures:

  • Fastenal signed 5,337 vending machines during Q1, up 17.0 percent YoY
  • Fastenal signed 64 new Onsite locations during Q1, up 33.3 percent YoY
  • Fastenal said sales from national account customers grew 9.2 percent YoY in Q1
  • Fastenal said of its top 100 customers, 64 percent of them grew sales in Q1, with 44 of those customers growing by at least 10 percent. That compares to only 51 percent of customers reporting growth in Q4, when 20 of them declined by 10 percent or more.
  • March daily sales to manufacturing customers grew 8.2 percent YoY
  • March daily sales to non-residential construction customers grew 6.1 percent YoY
  • March fastener sales grew 2.6 percent YoY
  • March non-fastener sales grew 11.8 percent YoY
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