Fastenal (FAST) Q1 Earnings & Net Sales Top, Gross Margin Down
Fastenal Company FAST plunged 3.2% in the pre-market trading session on Apr 13 after it reported first-quarter 2023 results.
Both earnings and net sales surpassed the Zacks Consensus Estimate. The company’s top and bottom lines also improved on a year-over-year basis, given daily sales growth, good expense control and incremental margins and a lower share base.
The company reported tepid margin performance, owing to softness in certain markets and high costs.
Earnings & Sales in Detail
The company reported earnings of 52 cents per share, which beat the consensus mark of 49 cents by 6.1% and rose 10.4% from the year-ago period.
Fastenal Company Price, Consensus and EPS Surprise
Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company Quote
Net sales totaled $1,859.1 million, beating the consensus mark of $1,842 million by 0.9% and increasing 9.1% from the year-ago figure of $1,704.1 million.
Daily sales of $29 million increased 9.1% year over year in the reported quarter. The upside was mainly due to higher unit sales, thanks to solid demand for industrial capital goods and commodities, offsetting a modest contraction for construction supplies. The foreign exchange and inclement weather adversely impacted sales by 70 and 20-40 basis points (bps).
On a monthly basis, daily sales improved 6.8%, 9.6% and 11.2% in March, February and January 2023, respectively, year over year.
Daily sales of Fastener products (mainly used for industrial production and accounting for approximately 33.6% of first-quarter sales) rose 7% year over year. Sales of safety products (20.4%) grew 5.7% on a daily basis. Sales of the remaining products (46%) grew 12.4% year over year.
On the end-market basis, daily sales of Manufacturing (accounting for approximately 74.6% of first-quarter sales) rose 14.4% year over year. Sales of Non-residential construction (9.3%) fell 2.4% on a daily basis. Sales of Other (16.1%) declined 4.4% year over year.
Daily sales through weighted FMI devices grew 21.3% for the first quarter and represented 39.4% of net sales.
Daily sales to national account customers (representing 59.2% of total first-quarter net sales) increased 13.6% on a year-over-year basis. Daily sales to non-national account customers (which include government customers and represent 40.8% of total quarterly revenues) rose 3.4% from the prior-year quarter.
Vending Trends & Other Growth Drivers
Fastenal signed 89 new Onsite locations during the quarter. As of Mar 31, 2023, the company had 1,674 active sites, up 16.3% from the year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsite’s) increased nearly 20% year over year. This was backed by strong contributions from Onsite locations, activated and implemented over the last 12 months and continued growth from older Onsite locations.
For 2023, the company continues to expect 375-400 annual Onsite signings.
Margins
A gross margin of 45.7% for the reported quarter was down from 46.6% a year ago. This was due to customer and product mix, increased growth in the lower margin Onsite and non-fastener products and lower product margins in certain other product categories. Also, higher organizational/overhead costs as well as supply chain headwinds added to the negatives.
Operating margin came in at 21.2%, which was 20 basis points up from a year ago, backed by improved operating expense leverage.
Financials
As of Mar 31, 2023, cash and cash equivalents were $239.8 million, up from $230.1 million on Dec 31, 2022. The long-term debt at the first quarter-end was $200 million, up from $353.2 million at 2022-end. During first-quarter, FAST returned $199.8 million to its shareholders in the form of dividends.
For the first three months of 2023, cash provided by operating activities totaled $388.5 million, up from $230 million in a year-ago period.
Zacks Rank
Fastenal currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks in Broader Sector
Some better-ranked stocks in the Zacks Retail-Wholesale sector are:
Tecnoglass Inc. TGLS sports a Zacks Rank #1 at present. TGLS delivered a trailing four-quarter earnings surprise of 21.5%, on average.
The Zacks Consensus Estimate for TGLS’s 2023 sales and EPS suggests growth of 13.4% and 15.4%, respectively, from the year-ago period’s reported levels.
Chuy's Holdings, Inc. CHUY currently has a Zacks Rank #1. CHUY delivered a trailing four-quarter earnings surprise of 19.1%, on average.
The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the year-ago period’s reported levels.
The Kroger Co. KR currently sports a Zacks Rank #1. KR delivered a trailing four-quarter earnings surprise of 9.8%, on average.
The Zacks Consensus Estimate for KR’s fiscal 2024 sales and EPS suggests growth of 2.5% and 6.6%, respectively, from the year-ago period’s reported levels.
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Fastenal Company (FAST) : Free Stock Analysis Report
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