Fastenal reported its 2020 fourth quarter and full-year results on Wednesday, and perhaps the most optimistic statistic out of all the figures the company shared was in its daily sales of fastener products for the month of December.
After initially showing up in its financial results in February 2020, business impacts from the COVID-19 pandemic topped out in May when safety products surged 136.3 percent from a year earlier, while fastener sales plunged 15.3 percent. Those figures have slowly normalized since, and in December, daily fastener sales had year-over-year growth — 0.5 percent — for the first time since February.
It's a positive sign for industrial distributors that saw a sizeable portion of the core sales give way to sales of safety products, predominately PPE and sanitation products. And while product mix among distributors will likely remain skewed that way for much of 2021, Fastenal's latest figures indicate market correction as the pandemic continues to evolve.
Winona, MN-based Fastenal had 2020 fourth quarter total sales of $1.36 billion, up 6.4 percent year-over-year, with daily sales up by that same amount. Gross profit of $619 million grew 3.4 percent at 45.6 percent of sales (46.9 percent in Q4 2019); operating profit of $264 million grew 10.6 percent at 19.5 percent of sales (18.7 percent in Q4 2019) and total profit of $196 million grew 9.7 percent.
Fastenal noted that the increased sales figure was due to higher sales of safety and janitorial products due to demand from the pandemic, along with the resumption of manufacturing and construction activity. Growth of Fastenal's non-safety and janitorial product lines, including fasteners, remained down year-over-year but improved sequentially from Q3 and throughout Q4.
Daily sales of fasteners were down 2.3 percent year-over-year and represented 30.8 percent of net sales (33.6 percent in Q4 2019); daily sales of safety products grew 34.6 percent year-over-year and represented 23.5 percent of net sales (18.7 percent in Q4 2019); and daily sales of other products grew 2.1 percent year-over-year and represented 45.7 percent of net sales (47.7 percent in Q4 2019).
"Margin pressure remains on a subset of COVID-affected safety products, such as masks and face shields, where an amply supplied market is producing lower margins on sales from our inventory," the company noted.
Fastenal said that daily sales from e-commerce were up 38.3 percent year-over-year during Q4, accelerating throughout the period. Large customer EDI was up 43.6 percent, while web sales were up 23.0 percent.
Daily sales to national account customers grew 7.8 percent in Q4 year-over-year, with revenues from national account customers comprising 55.9 percent of the company's total Q4 sales.
Fastenal ended the quarter with 3,268 total in-market locations, up 1.2 percent from the end of 2019. The company closed or converted 32 traditional branches and 29 Onsites in Q4, and opened two branches.
For the full year, Fastenal had 2020 total sales of $5.65 billion, up 5.9 percent over 2019, with daily sales up 5.5 percent. Gross profit margin of 45.5 percent was down from 47.2 percent in 2019. Operating profit of $1.14 billion (20.2 percent of sales) grew 8.0 percent over 2019 (19.8 percent of sales), while total profit of $859 million was up 8.6 percent from 2019.
For the full year, Fastenal opened 12 branches and closed 123, net of conversions. Fastenal activated 257 Onsite locations and closed 106, net of conversions.
Vending & Onsite
Fastenal signed 3,456 devices during Q4, ending the year with an installed base of 95,733 devices, up 6.4 percent compared to the end of 2019. Daily sales growth from vending increased by low-to-mid single-digits in Q4.
The company said 2021 will bring accelerated commercialization of Fast Bin, which complements its vending. As a result, in 2021 Fastenal will report 'weighted FMI device' signings and installations, which expresses combined vending and FAST Bin activity as a machine-equivalent unit (MEU). Fastenal is targeting 23,000-25,000 MEU signings in 2021. The company describes its Fast Bins as a family of smart bins that are based on scale, infrared or RFID technologies.
Fastenal signed 36 Onsites in Q4, finishing the year with 1,265 active sites, up 13.6 percent from the end of 2019. Daily sales grew in the low-single digits. The company is targeting 375-400 Onsite signings in 2021, but noted conditions would need to become more favorable to achieve that range.
Fastenal had December net sales of $429 million, up 14.7 percent year-over-year, with daily sales up 9.3 percent. That compares with daily sales growth of 6.8 percent in November, 4.1 percent in November and 2.2 percent in September.
Other notable December metrics:
- Geographically, Fastenal's December US sales growth was 7.7 percent year-over-year, up from 5.4 percent in November. Sales to Canada/Mexico, which bottomed out at -19.7 percent in April and have grown since, were up 14.4 percent in December, up from 9.7 percent growth in November. Non-North American sales were up 34.4 percent, compared to 28.7 percent in November.
- By product line, Fastenal's December daily fastener sales were up 0.5 percent year-over-year, compared to -1.7 percent in November and -4.7 percent in October. December sales of safety products were up 36.7 percent year-over-year, compared to 35.9 percent in November and 32.0 percent in October. December sales of all other products were up 4.8 percent, compared to 1.7 percent in November and 0.8 percent in October.
- By end market, Fastenal's December daily sales to manufacturing customers grew 4.6 percent, up from 1.4 percent in November and -0.1 percent in October. December sales to non-residential construction customers were down 8.6 percent, compared to -10.2 percent in November and -9.9 percent in October.
- Fastenal ended December with a total headcount of 20,365, essentially identical to November and down 7.2 percent year-over-year. The company's distribution/transportation personnel ended December down 10.5 percent year-over-year; manufacturing personnel were down 9.9 percent; administrative personnel were down 8.7 percent; while total in-market location employee count was down 8.0 percent.