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Dec 31, 2019
Fastenal Q4 2019 Earnings Report
Fastenal's fourth quarter earnings increased due to growth drivers, but were impacted by economic slowdown and holiday timing.
Key Takeaways
Fastenal Company reported a 3.7% increase in net sales for the fourth quarter of 2019 compared to the fourth quarter of 2018, driven by higher unit sales from industrial vending and Onsite locations. However, the company experienced a general slowing in economic activity, exacerbated by holiday timing and plant shutdowns, which impacted gross profit and operating income.
Net sales increased by 3.7% compared to Q4 2018, driven by industrial vending and Onsite locations.
Daily sales through vending devices grew at a low double-digit pace.
Daily sales to national account customers grew 8.2% and represented 54.8% of total revenues.
The company signed 5,144 industrial vending devices and 79 new Onsite locations during the quarter.
Fastenal
Fastenal
Forward Guidance
Fastenal anticipates continued growth through vending and Onsite locations with focus on expense control.
Positive Outlook
- Vending device signings goal for 2020 is 22,000 to 24,000 units.
- Onsite signings goal for 2020 is 375 to 400 locations.
- Expects net capital expenditures in 2020 to be within a range of $180.0 to $205.0.
- Continue to invest in the inventory necessary to support our vending and Onsite initiatives.
- 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.
Challenges Ahead
- General slowing in economic activity.
- Holiday timing and longer than usual year-end plant shutdowns.
- These two channels have a lower gross margin, due to customer and product mix, when compared to the company average.
- Weaker business conditions resulted in lower freight revenues, even as the overall cost of our fleet assets is relatively stable.
- 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.