News

Fastenal reports 14.8% net sales jump in fourth quarter, driven by customer demand

February 1, 2018

Fastenal, a supplier of industrial supply kiosks, reported net sales increased $140.5 million, or 14.8 percent, from the fourth quarter of 2016 to the fourth quarter of 2017, according to a press release. The March 31, 2017 acquisition of Manufacturers Supply Company, known as Mansco, increased Fastenal's sales growth by 1.4 percentage points. The remaining portion of the increase was driven primarily by higher unit sales.

"A return to double-digit sales and pre-tax earnings growth in 2017 was a great way to celebrate our 50th year in business," Dan Florness, president and CEO, said in the press release. "Our customers' demand improved; this demand lifted our business. “

The higher unit sales resulted primarily from improvement in underlying market demand and contribution from growth drivers, most notably industrial vending and onsite locations. Fastener products represented 35 percent of sales in the fourth quarter of 2017. Daily sales of fastener products grew 13.4 percent in total, of which 3.9 percentage points were attributable to the recently acquired Mansco business. The sales of non-fastener products represented 65 percent of sales in the fourth quarter of 2017 and grew 16.1 percent on a daily basis.

Gross profit, as a percentage of net sales, declined 97 basis points to 48.8 percent in the fourth quarter of 2017 from 49.8 percent in the fourth quarter of 2016. Gross profit in the fourth quarter of 2016 was unusually strong, creating a difficult comparison to the current period. Specific components that adversely affected gross profit percentage included changes in product and customer mix, the inclusion of Mansco, which has a lower gross profit product mix, higher freight expenses from higher payments to third party shippers and investments in hub assets, and, to a lesser degree, commodity inflation.

Operating income, as a percentage of net sales, declined 57 basis points to 18.7 percent in the fourth quarter of 2017 from 19.3 percent in the fourth quarter of 2016. This was the result of a 40 basis point improvement in operating and administrative expenses, including a gain on the sale of property and equipment, which was offset by the 97 basis point decline in gross profit.

Operating and administrative expenses, as a percentage of net sales, were 30.1 percent in the fourth quarter of 2017 compared to 30.6 percent in the fourth quarter of 2016. The primary reason for this improvement was the ability to leverage occupancy expenses.