Industrial Giant Fastenal Records Impressive Q4 Growth - Signs Of A Healthy Economy?

Fastenal Company FAST reported fourth-quarter fiscal 2023 sales growth of 3.7% Y/Y to $1.759 billion, beating the consensus of $1.752 billion.

The company’s net daily sales growth increased 3.7% YoY. The company experienced higher unit sales in the fourth quarter of 2023 primarily due to growth at Onsite locations, particularly those newly opened in 2023 and 2022, and with large customers.

The impact of product pricing on net sales in the quarter was modestly positive, consistent with historical trends, as compared to the impact of product pricing on net sales in the fourth quarter of 2022 of 350 to 380 basis points.

The company’s fourth-quarter EPS was $0.46, beating the consensus of $0.45.

The gross margin expanded 20 bps to 45.5% as product margins improved in fasteners and, to a lesser degree, safety.

Operating income was $353.9 million (+6.3% Y/Y), and the margin was 20.1%, an increase from 19.6% in the same quarter of 2022.

Q4 Weighted FASTBin/FASTVend signings (MEUs) rose 15.5% Y/Y to 5,462; Weighted FASTBin/FASTVend installations rose 10.8% Y/Y.

FAST’s Digital Footprint represented 58.1% of sales in the quarter, an increase from 52.6% in the fourth quarter of 2022.

Fastenal’s operating cash flow for the quarter was $354 million, compared to $301.9 million a year ago, and for the fiscal year 2023, it was $1.432 billion, compared to $941 million a year ago.

FAST held cash and equivalents of $221.3 million as of December 31, 2023.

Dividend: The company declared a dividend per share of $0.39, payable February 29, 2024, to shareholders of record at the close of business on February 1, 2024.

The company signed 58 new Onsite locations in the quarter, resulting in 326 new Onsite location signings for the entire year.

The number of signings was below the company’s expectations, reflecting a lengthening of the sales cycle due to softer business conditions and the ongoing training of a pipeline of managers to staff future signings.

Fastenal expects Onsite signings in 2024 of 375 to 400. For 2024, the company expects weighted FASTBin and FASTVend device signings to be 26,000 to 28,000 MEUs.

Price Action: FAST shares are trading higher by 7.13% at $67.90 on the last check Thursday.

Photo via Wikimedia Commons