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Fastenal's Q3 Earnings Meet Estimates, Sales Miss, Stock Up
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Fastenal Company (FAST - Free Report) reported mixed third-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 while the bottom line remained flat.
The quarterly results reflect increased unit sales driven by the growth of larger customers, Onsite locations opened in the last two years, and a stable pricing environment. The uptick was partially offset by Hurricane Helene causing disruptions to operations and logistics within the company’s Southeast and Atlantic Coastal regions, and foreign exchange risks.
The margins were impacted by an unfavorable customer and product mix, higher import duties mainly related to Mexico, and lower supplier rebates as weaker demand resulted in lower product purchases. Furthermore, increases in employee and occupancy-related expenses adversely impacted the bottom-line growth.
FAST stock gained 4.4% in the pre-market trading session on Friday, after the results’ announcement.
Fastenal’s Earnings & Sales in Detail
The company reported earnings per share (EPS) of 52 cents, which met the Zacks Consensus Estimate and remained flat year over year.
Net sales totaled $1.91 billion, marginally missing the consensus mark by 0.3% but increasing 3.5% from the year-ago level.
Fastenal Company Price, Consensus and EPS Surprise
Daily sales of $29.8 million increased 1.9% year over year in the quarter. Fastenal's third-quarter sales, to some extent, were negatively impacted by foreign exchange fluctuations, implying an approximately 10 basis points (bps) reduction, on par with the year-ago quarter’s impact.
Daily sales of Fasteners (mainly used for industrial production and accounted for approximately 30.2% of net sales) declined 4% year over year. Sales of Safety Supplies (22.5%) grew 6.8% on a daily basis. Sales of the Other Product Lines (47.3%) also increased 3.7% 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 (24.9%), comprising Non-Residential Construction, Reseller and Other End-Markets, declined 1.5% year over year. The daily sales of Non-Residential Construction and Reseller declined 3.6% and 11.3%, respectively, compared with the prior-year quarter, while the same for Other End-Markets grew 5.6% in the same time frame.
Daily sales through weighted FMI devices grew 7.6% for the third quarter, representing 43% of net sales.
Daily sales to National Account customers (which represented 63.6% of total net sales) increased 5.6% on a year-over-year basis. Daily sales to Non-National Account customers (which include government customers and represented 36.4% of total quarterly revenues) declined 4.1% from the prior-year quarter.
The company’s Digital Footprint increased to 61.1% of sales from 57.1% in the year-ago period.
Vending Trends & Other Growth Drivers of FAST
Fastenal signed 93 new Onsite locations during the third quarter. As of Sept. 30, 2024, the company had 1,986 active sites, up 11.7% 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.
Margin Discussion of Fastenal
The gross margin was 44.9% in the reported quarter, down 100 bps year over year.
Selling, general, and administrative expenses – as a percentage of net sales – decreased to 24.6% from 25% reported in the year-ago quarter.
Operating margin was 20.3%, down 70 bps from a year ago.
FAST’s Financials
As of Sept. 30, 2024, Fastenal had cash and cash equivalents of $292.2 million, up from $221.3 million as of Dec. 31, 2023. The long-term debt at the third-quarter end was $125 million, down from $200 million at 2023-end. During the quarter, FAST returned $223.4 million to its shareholders in the form of dividends.
As of the nine months ended on Sept. 30, net cash provided by operating activities totaled $890.5 million, down from the year-ago period’s reported value of $1.08 billion.
Fastenal currently carries a Zacks Rank #4 (Sell).
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Fastenal's Q3 Earnings Meet Estimates, Sales Miss, Stock Up
Fastenal Company (FAST - Free Report) reported mixed third-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 while the bottom line remained flat.
The quarterly results reflect increased unit sales driven by the growth of larger customers, Onsite locations opened in the last two years, and a stable pricing environment. The uptick was partially offset by Hurricane Helene causing disruptions to operations and logistics within the company’s Southeast and Atlantic Coastal regions, and foreign exchange risks.
The margins were impacted by an unfavorable customer and product mix, higher import duties mainly related to Mexico, and lower supplier rebates as weaker demand resulted in lower product purchases. Furthermore, increases in employee and occupancy-related expenses adversely impacted the bottom-line growth.
FAST stock gained 4.4% in the pre-market trading session on Friday, after the results’ announcement.
Fastenal’s Earnings & Sales in Detail
The company reported earnings per share (EPS) of 52 cents, which met the Zacks Consensus Estimate and remained flat year over year.
Net sales totaled $1.91 billion, marginally missing the consensus mark by 0.3% but increasing 3.5% 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 $29.8 million increased 1.9% year over year in the quarter. Fastenal's third-quarter sales, to some extent, were negatively impacted by foreign exchange fluctuations, implying an approximately 10 basis points (bps) reduction, on par with the year-ago quarter’s impact.
Daily sales of Fasteners (mainly used for industrial production and accounted for approximately 30.2% of net sales) declined 4% year over year. Sales of Safety Supplies (22.5%) grew 6.8% on a daily basis. Sales of the Other Product Lines (47.3%) also increased 3.7% 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 (24.9%), comprising Non-Residential Construction, Reseller and Other End-Markets, declined 1.5% year over year. The daily sales of Non-Residential Construction and Reseller declined 3.6% and 11.3%, respectively, compared with the prior-year quarter, while the same for Other End-Markets grew 5.6% in the same time frame.
Daily sales through weighted FMI devices grew 7.6% for the third quarter, representing 43% of net sales.
Daily sales to National Account customers (which represented 63.6% of total net sales) increased 5.6% on a year-over-year basis. Daily sales to Non-National Account customers (which include government customers and represented 36.4% of total quarterly revenues) declined 4.1% from the prior-year quarter.
The company’s Digital Footprint increased to 61.1% of sales from 57.1% in the year-ago period.
Vending Trends & Other Growth Drivers of FAST
Fastenal signed 93 new Onsite locations during the third quarter. As of Sept. 30, 2024, the company had 1,986 active sites, up 11.7% 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.
Margin Discussion of Fastenal
The gross margin was 44.9% in the reported quarter, down 100 bps year over year.
Selling, general, and administrative expenses – as a percentage of net sales – decreased to 24.6% from 25% reported in the year-ago quarter.
Operating margin was 20.3%, down 70 bps from a year ago.
FAST’s Financials
As of Sept. 30, 2024, Fastenal had cash and cash equivalents of $292.2 million, up from $221.3 million as of Dec. 31, 2023. The long-term debt at the third-quarter end was $125 million, down from $200 million at 2023-end. During the quarter, FAST returned $223.4 million to its shareholders in the form of dividends.
As of the nine months ended on Sept. 30, net cash provided by operating activities totaled $890.5 million, down from the year-ago period’s reported value of $1.08 billion.
FAST’s Zacks Rank & Recent Retail-Wholesale Releases
Fastenal currently carries a Zacks Rank #4 (Sell).
Here are some recent earnings releases from the Retail-Wholesale sector.
Domino's Pizza, Inc. (DPZ - Free Report) reported mixed third-quarter fiscal 2024 results. While its earnings beat the Zacks Consensus Estimate, revenues missed the same. The top and bottom lines increased from the prior-year quarter’s reported numbers.
Despite the challenges in the global market, DPZ’s third-quarter results highlight the success of its Hungry for MORE strategy. The company's focus on the Renowned Value pillar will be a key priority in the near term, positioning it as an industry leader. With various initiatives in place, Domino's remains confident about its ability to continue expanding its market share globally.
Darden Restaurants, Inc. (DRI - Free Report) reported dismal first-quarter fiscal 2025 results, with earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, the top line increased, but the bottom line declined.
The quarterly earnings fell short of expectations due to a significant drop in traffic during July. However, since then, the company has seen an improvement in sales trends. Considering this recovery and the planned initiatives for the rest of the fiscal year, the company reaffirmed its guidance for fiscal 2025.
Key Picks
Here are some better-ranked stocks from the same sector space.
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 28%, on average. The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and EPS indicates growth of 13% and 63.4%, respectively, from the year-ago period’s levels.