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Post Earnings Coverage as Fastenal's Earnings Surpassed Market Expectations

Upcoming AWS Coverage on W.W. Grainger

LONDON, UK / ACCESSWIRE / January 24, 2017 / Active Wall St. announces its post-earnings coverage on Fastenal Co. (NASDAQ: FAST). The Company posted its fourth quarter and fiscal 2016 results on January 18, 2017. The maker of industrial and construction fasteners posted revenue growth of 2.7%, while earnings improved 2.6%. Register with us now for your free membership at:


One of Fastenal's competitors within the Industrial Equipment Wholesale space, W.W. Grainger, Inc. (NYSE: GWW), is expected to report its fiscal Quarter ending December 2016 earnings results on January 25, 2017 before market open. AWS will be initiating a research report on W.W. Grainger following the release of its next earnings results.

Today, AWS is promoting its earnings coverage on FAST; touching on GWW. Get our free coverage by signing up to:



Earnings Reviewed

For the three months ended December 31, 2016, Fastenal's net sales of $947.95 million increased 2.7% compared to net sales of $922.79 million in the year ago same quarter. The Company's reported numbers missed analysts' forecast of $951.35 million. In FY16, Fastenal generated $3.96 billion in sales, up 2.4% sales from FY15. The Company did have an extra day in the year, adjusting for that sales were up about 2%.

During Q4 2016, Fastenal's daily sales of $15,047 increased 2.7%, higher than daily sales of $14,648 in Q4 2015. The Company stated that Foreign exchange impacted daily sales by 0.2% while acquisitions contributed 0.2% to sales.

For Q4 2016, Fastenal recorded gross margin of 49.8%, down 10 basis points versus the prior year, but up 50 basis points against Q3 2016. The Company's gross margin finished FY16 at 49.6%, down 80 basis points, which is primarily from mix and pressure on product margins. The Company's operating margin finished FY16 at 20.1%, down approximately 130 basis points.

For Q4 2016, Fastenal reported net income of $114.80 million, or $0.40 per share, up 2.6% from net income of $111.90 million, or $0.39 per share in the year earlier same quarter. The Company's earnings numbers surpassed Wall Street's expectations of $0.38 per share.

Vending Trends

As of December 31, 2016, Fastenal operated 62,822 vending machines, up 7,300 units, or 13% over FY15. The Company stated that 46.1% of its sales now go to customers that use vending. During the reported quarter, the Company signed 3,760 machine contracts, down 6.4% on a y-o-y basis.

For Onsites, Fastenal signed 176 new agreements in FY16, a little shy of its goal of 200, but substantially above 80 signing for FY15. For FY17, Fastenal is targeting 275 to 300 signings. With respect to national accounts, Fastenal signed 190 new agreements in FY16, up 14% from 2015, with the signings contributing to the Company's total national accounts revenues being up by around more than 4% on the year.

Cash Flow & Balance Sheet

Fastenal generated $133 million in operating cash in Q4 2016, down by 8.5% versus last year. It also represents 116% of the quarter's net income, which is below last year. The Company generated free cash flow after dividends of $18.5 million. Fastenal's capital expenditures were down 23% y-o-y, and down 63% sequentially as the Company winds up the roll-out of its lease locker program. Fastenal reduced its net debt by roughly $21 million, and retained flexible leverage of net debt being 12.5% of total capital. The Company expects cash generation to be improved and free cash flow after dividends to be positive in 2017 and expects capital spending to come in around $120 million.

Stock Performance

On January 23rd, 2017, Fastenal's share price finished yesterday's trading session at $50.98, marginally down 0.51%. A total volume of 2.44 million shares exchanged hands. The stock has surged 32.38% and 21.98% in the last three months and past six months, respectively. Furthermore, since the start of the year, shares of the Company have gained 8.51%. The stock is trading at a PE ratio of 29.52 and has a dividend yield of 2.51%.

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SOURCE: Active Wall Street