Fastenal Defies Odds with Q2 Sales Growth Amid Supply Chain Challenges and Margin Squeeze: Details

Fastenal Company FAST shares are trading higher after the company reported second-quarter fiscal 2024 sales growth of 1.8% year-over-year to $1.916 billion, matching the consensus of $1.915 billion.

The growth was driven by higher unit sales from larger customers and new Onsite locations despite negative impacts from foreign exchange rates and a decline in product pricing.

Weighted FASTBin/FASTVend signings (MEUs) rose 5.8% Y/Y to 7,188; Weighted FASTBin/FASTVend installations rose 11.4% Y/Y.

FAST’s Digital Footprint represented 59.4% of sales in the quarter, an increase from 55.3% in the second quarter of 2023.

The gross margin contracted to 45.1% from 45.5%, due to an unfavorable customer and product mix, plus short-term supply chain inefficiencies supporting warehousing customers, expected to benefit future growth.

Operating income was $386.9 million (-2.0% Y/Y), and the margin was 20.2%, a decline from 21.0% in the same quarter of 2023. The company’s second-quarter EPS was $0.51, in line with the consensus.

Fastenal’s operating cash flow for the quarter was $258 million, a decrease of 14.6% year over year. This represented 88.1% of the period’s net income versus 101.4% a year ago.

The company held cash and equivalents of $255.5 million as of June-end.

FAST returned $223.3 to shareholders in the form of dividends. The company did not repurchase any common stock in the first half of 2024 or 2023.

Total debt decreased to $235.0 million (6.3% of total capital) at the end of the quarter from $350 million a year ago.

In the second-quarter, the company signed 107 new Onsite locations, resulting in 209 year-to-date signings. Active Onsite locations rose 11.9% to 1,934.

Outlook: For 2024, Fastenal continues to expect Onsite signings of 375 to 400 and weighted FASTBin and FASTVend device signings to be 26,000 to 28,000 MEUs.

Price Action: FAST shares are trading higher by 5.30% at $67.57 premarket at the last check Friday.

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