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Fastenal (FAST) Q2 Earnings Meet Estimates, Net Sales Miss
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Fastenal Company (FAST - Free Report) reported mixed second-quarter 2024 results, with earnings meeting the Zacks Consensus Estimate and net sales missing the same. On a year-over-year basis, the top line rose but the bottom line declined.
The quarterly results reflect higher unit sales attributable to growth with larger customers and Onsite locations opened in the last two years. The uptrend was partially offset by lower product pricing showcasing lower fastener pricing, which is a by-product of lower transportation costs, as well as lower pricing in certain safety and other product categories. Also, foreign exchange rates negatively impacted the quarter’s sales to some extent.
The margins were impacted by unfavorable customer and product mix, and short-term inefficiencies incurred in its supply chain to support certain warehousing customers. The headwinds were partially offset by favorable leverage of organizational/overhead costs. Also, increases in employee base pay and occupancy-related expenses affected the bottom-line growth.
Shares of the company gained 5.6% in the pre-market trading session on Jul 12, 2024, after the announcement of the results.
Earnings & Sales in Detail
The company reported earnings per share (EPS) of 51 cents, which met the Zacks Consensus Estimate and declined 2% from the year-ago period.
Net sales totaled $1.92 billion, marginally missing the consensus mark by 0.3% but increasing 1.8% from the year-ago level.
Fastenal Company Price, Consensus and EPS Surprise
Daily sales of $29.9 million increased 1.8% year over year in the reported quarter. Fastenal's second-quarter sales, to some extent, were negatively by foreign exchange fluctuations, implying an approximately 20 basis points (bps) reduction compared with 40 bps in the year-ago quarter.
Daily sales of Fasteners (mainly used for industrial production and accounting for approximately 31% of net sales) declined 3% year over year. Sales of Safety Supplies (21.8%) grew 7.1% on a daily basis. Sales of the Other Product Lines (47.2%) grew 3% year over year.
On an end-market basis, the daily sales rate of Heavy Manufacturing (which accounted for approximately 43.3% of net sales) rose 1.8% year over year. The daily sales rate of Other Manufacturing (32.2%) grew 4% compared with the prior year. Furthermore, the daily sales rate of All Other End-Markets (24.5%), comprising Non-Residential Construction, Reseller and Other End-Markets, declined 1% year over year. On a daily basis, the sales of Non-Residential Construction and Reseller declined 5.5% and 6.4%, respectively, compared with the prior year, while the same for Other End-Markets grew 6% in the same time frame.
Daily sales through weighted FMI devices grew 7% for the second quarter, representing 41.8% of net sales.
Daily sales to National Account customers (which represented 62.4% of total net sales) increased 5.8% on a year-over-year basis. Daily sales to Non-National Account customers (which include government customers and represented 37.6% of total quarterly revenues) declined 4.3% from the prior-year quarter.
The company’s Digital Footprint increased to 59.4% of sales from 55.3% of sales in the year-ago period.
Vending Trends & Other Growth Drivers
Fastenal signed 107 new Onsite locations during the second quarter. As of Jun 30, 2024, the company had 1,934 active sites, up 11.9% from the year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsite) increased at a low-single-digit rate year over year. This was backed by strong contributions from Onsite locations, activated and implemented in 2024 and 2023, which more than offset the impact of closures and a decline in revenues from the Onsite locations activated before 2023.
For 2024, the company still expects annual Onsite signings in the range of 375-400.
Margins
The gross margin was 45.1% in the reported quarter, down 40 bps year over year.
Selling, general, and administrative expenses – as a percentage of net sales – increased to 24.9% from 24.6% reported in the year-ago quarter.
Operating margin was 20.2%, down 80 bps from a year ago.
Financials
As of Jun 30, 2024, Fastenal had cash and cash equivalents of $255.5 million, up from $221.3 million as of Dec 31, 2023. The long-term debt at the second-quarter end was $125 million, down from $200 million in 2023-end. During the quarter, FAST returned $223.3 million to its shareholders in the form of dividends.
As of the six months ended on Jun 30, net cash provided by operating activities totaled $593.6 million, down 14% from the year-ago period’s reported value of $690.6 million.
Zacks Rank & Key Picks
Fastenal currently carries a Zacks Rank #4 (Sell).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
ANF has a trailing four-quarter earnings surprise of 210.3%, on average. The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and EPS indicates growth of 10.4% and 47.3%, respectively, from the year-ago period’s levels.
Walmart Inc. (WMT - Free Report) currently sports a Zacks Rank of 1. WMT has a trailing four-quarter earnings surprise of 8.3%, on average.
The consensus estimate for WMT’s fiscal 2024 sales and EPS indicates growth of 4.3% and 9.5%, respectively, from the year-ago period’s levels.
The Gap, Inc. (GPS - Free Report) currently sports a Zacks Rank of 1. GPS has a trailing four-quarter earnings surprise of 202.7%, on average.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS indicates a rise of 0.2% and 21.7%, respectively, from the year-ago period’s levels.
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Fastenal (FAST) Q2 Earnings Meet Estimates, Net Sales Miss
Fastenal Company (FAST - Free Report) reported mixed second-quarter 2024 results, with earnings meeting the Zacks Consensus Estimate and net sales missing the same. On a year-over-year basis, the top line rose but the bottom line declined.
The quarterly results reflect higher unit sales attributable to growth with larger customers and Onsite locations opened in the last two years. The uptrend was partially offset by lower product pricing showcasing lower fastener pricing, which is a by-product of lower transportation costs, as well as lower pricing in certain safety and other product categories. Also, foreign exchange rates negatively impacted the quarter’s sales to some extent.
The margins were impacted by unfavorable customer and product mix, and short-term inefficiencies incurred in its supply chain to support certain warehousing customers. The headwinds were partially offset by favorable leverage of organizational/overhead costs. Also, increases in employee base pay and occupancy-related expenses affected the bottom-line growth.
Shares of the company gained 5.6% in the pre-market trading session on Jul 12, 2024, after the announcement of the results.
Earnings & Sales in Detail
The company reported earnings per share (EPS) of 51 cents, which met the Zacks Consensus Estimate and declined 2% from the year-ago period.
Net sales totaled $1.92 billion, marginally missing the consensus mark by 0.3% but increasing 1.8% from the year-ago level.
Fastenal Company Price, Consensus and EPS Surprise
Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company Quote
Daily sales of $29.9 million increased 1.8% year over year in the reported quarter. Fastenal's second-quarter sales, to some extent, were negatively by foreign exchange fluctuations, implying an approximately 20 basis points (bps) reduction compared with 40 bps in the year-ago quarter.
Daily sales of Fasteners (mainly used for industrial production and accounting for approximately 31% of net sales) declined 3% year over year. Sales of Safety Supplies (21.8%) grew 7.1% on a daily basis. Sales of the Other Product Lines (47.2%) grew 3% year over year.
On an end-market basis, the daily sales rate of Heavy Manufacturing (which accounted for approximately 43.3% of net sales) rose 1.8% year over year. The daily sales rate of Other Manufacturing (32.2%) grew 4% compared with the prior year. Furthermore, the daily sales rate of All Other End-Markets (24.5%), comprising Non-Residential Construction, Reseller and Other End-Markets, declined 1% year over year. On a daily basis, the sales of Non-Residential Construction and Reseller declined 5.5% and 6.4%, respectively, compared with the prior year, while the same for Other End-Markets grew 6% in the same time frame.
Daily sales through weighted FMI devices grew 7% for the second quarter, representing 41.8% of net sales.
Daily sales to National Account customers (which represented 62.4% of total net sales) increased 5.8% on a year-over-year basis. Daily sales to Non-National Account customers (which include government customers and represented 37.6% of total quarterly revenues) declined 4.3% from the prior-year quarter.
The company’s Digital Footprint increased to 59.4% of sales from 55.3% of sales in the year-ago period.
Vending Trends & Other Growth Drivers
Fastenal signed 107 new Onsite locations during the second quarter. As of Jun 30, 2024, the company had 1,934 active sites, up 11.9% from the year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsite) increased at a low-single-digit rate year over year. This was backed by strong contributions from Onsite locations, activated and implemented in 2024 and 2023, which more than offset the impact of closures and a decline in revenues from the Onsite locations activated before 2023.
For 2024, the company still expects annual Onsite signings in the range of 375-400.
Margins
The gross margin was 45.1% in the reported quarter, down 40 bps year over year.
Selling, general, and administrative expenses – as a percentage of net sales – increased to 24.9% from 24.6% reported in the year-ago quarter.
Operating margin was 20.2%, down 80 bps from a year ago.
Financials
As of Jun 30, 2024, Fastenal had cash and cash equivalents of $255.5 million, up from $221.3 million as of Dec 31, 2023. The long-term debt at the second-quarter end was $125 million, down from $200 million in 2023-end. During the quarter, FAST returned $223.3 million to its shareholders in the form of dividends.
As of the six months ended on Jun 30, net cash provided by operating activities totaled $593.6 million, down 14% from the year-ago period’s reported value of $690.6 million.
Zacks Rank & Key Picks
Fastenal currently carries a Zacks Rank #4 (Sell).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
Abercrombie & Fitch Co. (ANF - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ANF has a trailing four-quarter earnings surprise of 210.3%, on average. The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and EPS indicates growth of 10.4% and 47.3%, respectively, from the year-ago period’s levels.
Walmart Inc. (WMT - Free Report) currently sports a Zacks Rank of 1. WMT has a trailing four-quarter earnings surprise of 8.3%, on average.
The consensus estimate for WMT’s fiscal 2024 sales and EPS indicates growth of 4.3% and 9.5%, respectively, from the year-ago period’s levels.
The Gap, Inc. (GPS - Free Report) currently sports a Zacks Rank of 1. GPS has a trailing four-quarter earnings surprise of 202.7%, on average.
The Zacks Consensus Estimate for GPS’ fiscal 2024 sales and EPS indicates a rise of 0.2% and 21.7%, respectively, from the year-ago period’s levels.