10-KPeriod: FY2013

FASTENAL CO Annual Report, Year Ended Dec 31, 2013

Filed February 6, 2014For Securities:FAST

Summary

Fastenal Company's 2013 Form 10-K highlights a period of moderate sales growth, with net sales increasing by 6.1% to $3.33 billion. This growth was primarily driven by higher unit sales, with a notable contribution from established store locations rather than new openings. The company continues to expand its product lines beyond its core fastener business, with non-fastener products now representing over 50% of sales. Key strategic initiatives like FAST Solutions® (industrial vending) show strong adoption, with over 33,000 machines installed by year-end and a significant increase in sales to customers utilizing vending solutions. Despite economic headwinds affecting certain end markets, particularly heavy machinery manufacturing and non-residential construction, Fastenal maintained a healthy gross profit margin and demonstrated effective management of operating expenses, leading to a 6.7% increase in net earnings. The company also continued to invest in its infrastructure, including automation in distribution centers and the FAST Solutions® platform, while managing its capital resources effectively and returning value to shareholders through dividends.

Financial Highlights

49 data points
Beta

Revenue

$3.33B

51.7% Gross Margin

Net Income

$448.64M

13.5% Net Margin

EPS (Diluted)

$0.38

Total Assets

$2.08B

Cash & Equivalents

$58.51M

Free Cash Flow

$209.58M

Financial Statements
Beta
Revenue$3.33B
Cost of Revenue$1.61B
Gross Profit$1.72B
SG&A Expenses$1.01B
Operating Income$712.66M
Interest Expense$113K
Net Income$448.64M
EPS (Basic)$0.38
EPS (Diluted)$0.38
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net sales increased by 6.1% to $3.33 billion in 2013, driven primarily by higher unit sales from existing store locations.
  • 2The FAST Solutions® (industrial vending) initiative saw significant growth, with over 33,000 machines installed by year-end 2013.
  • 3Sales from non-fastener product lines now constitute over 50% of total net sales, indicating successful product diversification.
  • 4The company experienced sales slowdowns in specific end markets like heavy machinery manufacturing and non-residential construction, partly due to economic and weather-related factors.
  • 5Fastenal reported a net earnings increase of 6.7% to $448.6 million, outperforming sales growth due to gross profit expansion and expense management.
  • 6Capital expenditures increased by approximately 50% compared to 2012, largely due to investments in industrial vending equipment and distribution center automation.
  • 7The company maintained a consistent dividend payout, with $0.80 per share distributed in 2013.

Frequently Asked Questions

Fastenal's primary growth drivers in 2013 were increased unit sales from existing store locations and the expansion of its FAST Solutions® (industrial vending) program. The company also continued to diversify its revenue streams through the growth of non-fastener product lines.

Economic conditions presented mixed results. While overall sales grew, certain end markets, particularly heavy machinery manufacturing and non-residential construction, experienced weakness. This was attributed to global economic uncertainty, US economic policy uncertainty, and unfavorable weather conditions. Fastenal's industrial production business, especially its fastener segment, was more heavily impacted than its maintenance or non-fastener product lines.

The FAST Solutions® program is a key strategic initiative for Fastenal, aimed at transforming industrial distribution. It offers customers benefits like reduced consumption and 24-hour product availability, while strengthening customer relationships and streamlining supply chains for Fastenal. The program showed strong adoption in 2013, with a significant increase in installed machines and a corresponding rise in sales to customers using vending solutions.

Fastenal focused on managing operating and administrative expenses effectively, which, as a percentage of sales, remained stable compared to the prior year. The company also saw an expansion in its gross profit, contributing to net earnings growth that outpaced sales growth. Investments in automation and the FAST Solutions® platform were significant capital expenditures but were managed alongside operational efficiency.