Summary
Fastenal Company's 2018 10-K filing reveals a year of robust sales growth, with net sales increasing by 13.1% to $4.97 billion. This growth was primarily driven by higher unit sales and, to a lesser extent, increased pricing to offset rising product costs. The company's strategic focus on growth initiatives like Onsite locations, national accounts, and industrial vending continues to yield positive results, with sales growth exceeding 20% through vending devices and Onsite locations. Despite strong top-line performance, the gross profit margin experienced a slight decline of 100 basis points to 48.3% in 2018, attributed to a shift in product and customer mix (fewer fasteners, more national accounts), rising transportation costs, and a lag in passing on product cost inflation to customers. Operating income as a percentage of net sales remained stable at 20.1%. Net earnings saw a significant increase of 29.9% to $751.9 million, partly due to the benefits of the Tax Cuts and Jobs Act which lowered the effective tax rate.
Financial Highlights
51 data points| Revenue | $4.97B |
| Cost of Revenue | $2.57B |
| Gross Profit | $2.40B |
| SG&A Expenses | $1.40B |
| Operating Income | $999.20M |
| Interest Expense | $12.60M |
| Net Income | $751.90M |
| EPS (Basic) | $0.66 |
| EPS (Diluted) | $0.66 |
| Shares Outstanding (Basic) | 1.15B |
| Shares Outstanding (Diluted) | 1.15B |
Key Highlights
- 1Net sales grew by 13.1% to $4.97 billion in 2018, driven by strong unit sales and strategic pricing adjustments.
- 2Growth drivers such as Onsite locations (up 47.8%), national accounts (revenue up 18.1%), and industrial vending devices (installed count up 13.6%) are performing well.
- 3Gross profit margin decreased by 100 basis points to 48.3% due to unfavorable product/customer mix and rising transportation costs.
- 4Net earnings increased by 29.9% to $751.9 million, benefiting from sales growth and a lower effective tax rate due to the Tax Cuts and Jobs Act.
- 5The company is actively managing its branch network, with a net decrease of 156 public branches in 2018, while expanding its total in-market locations (branches + Onsite) by 4.5%.
- 6Inventories increased by 17.0% to $1.28 billion, partly due to strategic stocking and acceleration of overseas shipments ahead of potential tariffs.
- 7Capital expenditures increased by 48.3% to $166.8 million, primarily for hub property and equipment, and vending devices, indicating continued investment in growth.