Fastenal — No. 5 on Industrial Distribution's 2019 Big 50 List — reported its 2019 fourth quarter and full-year financial results on Friday, showing that sales slowed over the last three months of the year, while 2019 was overall a solid year for the company.
Fastenal posted Q4 total sales of $1.28 billion, up 3.7 percent year-over-year (YoY) and down from Q3's $1.38 billion. Q4 daily sales were up an identical 3.7 percent. Q4 total profit of $179 million was up 5.9 percent YoY, while gross profit of $598 million increased 1.8 percent and operating profit of $239 million grew 2.4 percent.
For the full year, Fastenal had total 2019 sales of $5.33 billion, up 7.4 percent over 2018. Total profit of $791 million increased 5.2 percent, gross profit was up 4.9 percent and operating profit of $1.06 billion grew 5.8 percent.
The Winona, MN-based company said Q4's 3.7 percent sales increase was driven by higher unit sales related to its growth drivers, most notably coming from industrial vending and Onsite locations, while also citing an overall weakened industrial economy as of late.
"The general slowing in economic activity that we experienced in the second and third quarters of 2019 continued in the fourth quarter of 2019," Fastenal said in its Q4 earnings release. "This general softness was exacerbated in December by holiday timing and longer than usual year-end plant shutdowns."
Fastenal's Q4 fastener product sales grew 1.8 percent YoY on a daily basis and represented 33.6 percent of overall Q4 sales, while non-fastener product sales grew 5.1 percent and represented 66.4 percent of total sales.
Fastenal didn't state its total e-commerce sales figures or percent of its overall sales, but said its Q4 sales via e-commerce were up 25 percent YoY, while total 2019 e-commerce sales jumped 32 percent, including 35 percent from its national account customers.
Vending, Onsite & Branch Count
Fastenal signed 21,857 industrial vending devices during 2019, including 5,144 in Q4. The company's installed device count as of Dec. 31, 2019 was 89,937 — up 10.8 percent YoY. The company said it has a 2020 goal of 22,000 to 24,000 signed vending devices.
Fastenal signed 362 new Onsite locations during 2019, including 79 during Q4. It had 1,114 active sites as of Dec. 31 — up 24.6 percent YoY. The company has a 2020 goal of signing 375 to 400 Onsite locations in 2020.
Fastenal opened four branches during Q4 and closed 36, while activating 64 Onsite locations and closing 26. For the full year, Fastenal opened 12 branches in 2019 and closed 125, while activating 312 Onsite locations and closing 92.
Fastenal ended Q4/2019 with 2,114 public branch locations — including 1,814 in the US, 183 in Canada and 117 in the rest of the world. That total figure was down 32 from the end of Q3 and down 113, or 5.1 percent from the end of 2018. But combined with its Onsite locations, Fastenal ended 2019 with 3,228 total in-market locations — up six from the end of Q3 and and up 3.4 percent from the end of 2018.
"The number of closings reflects both normal churn in our business, whether due to exiting customer relationships, the shutting or relocation of a customer facility, or a customer decision, as well as a review of certain underperforming locations," Fastenal said. "Our in-market network forms the foundation of our business strategy, and we will continue to open or close locations as is deemed necessary to sustain and improve our network, support our growth drivers, and manage our operating expenses."
Fastenal said daily sales to its national account customers grew 8.2 percent in Q4, with national customers representing 54.8 percent of total Q4 revenue.
Manufacturing vs. Non-Manufacturing sales
Fastenal said Q4 daily sales to manufacturing customers were up 5.1 percent, noting that slower activity was broad-based, with heavy equipment, metals and transportation notably weaker than Q3. Q4 daily sales to non-residential constructionon customers were up 3.1 percent YoY, generally stable compared to Q3.
Fastenal ended Q4/2019 with a total absolute headcount of 21,948 — essentially identical to the end of Q3 and up 1.4 percent from the end of 2018.
End market profile
Fastenal broke down its customer end-market profile as follows:
- Manufacturing - 41.6%
- Manufacturing - Heavy Equipment - 26.0%
- Construction - 12.9%
- Reseller - 9.2%
- Government/Education - 3.7%
- Transportation - 2.6%
- Other - 4.0%
Fastenal reported December total sales of $373.7 million, up 6.3 percent YoY, with daily sales up 1.0 percent. US daily sales were flat (0.0 percent), while sales to Canada/Mexico customers grew 5.8 percent and sales to 'Rest of World' grew 12.8 percent. By end market, daily sales to manufacturing customers grew 1.9 percent and grew 0.2 percent with non-residential construction customers. Daily sales of fastener products decreased 0.5 percent YoY, while daily sales of all other products grew 2.4 percent.