10-KPeriod: FY2014

FASTENAL CO Annual Report, Year Ended Dec 31, 2014

Filed February 5, 2015For Securities:FAST

Summary

Fastenal Company's 2014 10-K report highlights a year of significant sales growth, with net sales increasing by 12.2% to $3.73 billion. This growth was primarily driven by higher unit sales, particularly from existing store locations, and a slight recovery in the industrial production and non-residential construction sectors. The company continued to invest in its growth drivers, including expanding its store employee base and introducing new technology like FAST Solutions® (industrial vending). Financially, the company demonstrated robust operating income and net earnings growth. While gross profit percentage saw a slight dip due to product and customer mix shifts, operating and administrative expenses improved as a percentage of sales. Fastenal also maintained strong cash flow from operations and managed its working capital effectively. The company continued its commitment to shareholder returns through dividends and stock repurchases, indicating a focus on both operational expansion and shareholder value.

Financial Highlights

53 data points
Beta

Revenue

$3.73B

50.8% Gross Margin

Net Income

$494.15M

13.2% Net Margin

EPS (Diluted)

$0.41

Total Assets

$2.36B

Cash & Equivalents

$114.40M

Free Cash Flow

$309.92M

Financial Statements
Beta
Revenue$3.73B
Cost of Revenue$1.84B
Gross Profit$1.90B
SG&A Expenses$1.11B
Operating Income$787.59M
Interest Expense$915K
Net Income$494.15M
EPS (Basic)$0.42
EPS (Diluted)$0.41
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net sales grew by 12.2% to $3.73 billion in 2014, driven by increased unit sales, primarily from established stores.
  • 2Operating income increased to $787.6 million, reflecting strong sales performance and improved operational efficiencies.
  • 3Net earnings rose by 10.1% to $494.2 million, with diluted EPS at $1.66.
  • 4The company's FAST Solutions® (industrial vending) initiative continues to be a significant growth driver, with the percentage of total sales to customers using vending solutions increasing to 39.3% in 2014.
  • 5Fastenal continued its strategic store closures in the latter half of 2014, consolidating approximately 52 locations to optimize its store network.
  • 6Capital expenditures remained significant, focusing on distribution automation, industrial vending equipment, and information systems, totaling $183.7 million.
  • 7The company returned substantial capital to shareholders through dividends ($296.6 million) and stock purchases ($52.9 million).

Frequently Asked Questions

Fastenal's primary growth driver in 2014 was increased unit sales, largely stemming from growth at older store locations. This was supported by an expansion in store employees and district/regional leaders, aimed at boosting sales energy, and a stabilization in its OEM fastener business. The FAST Solutions® (industrial vending) initiative also continued to stimulate growth with a subset of customers.

In 2014, Fastenal continued to optimize its store footprint by closing approximately 52 stores, primarily those in close proximity to other Fastenal locations. The company views these closures as consolidations rather than failures, believing it is a better approach to growing the business profitably while retaining the majority of the sales associated with these locations.

Fastenal views its FAST Solutions® (industrial vending) business as a transformative component of its future and believes it has a 'first mover' advantage. The company has been investing to maximize this advantage, with the vending business showing strong sales growth and increasing its contribution to overall company sales. In 2014, sales to customers using vending solutions represented 39.3% of total sales.

Key financial highlights include a 12.2% increase in net sales to $3.73 billion, a 10.1% rise in net earnings to $494.2 million, and a strong operating income of $787.6 million. The company also maintained a healthy gross profit margin and saw improvements in operating and administrative expenses as a percentage of sales. Cash flow from operations was robust, supporting investments in growth and shareholder returns.