01—Abstract
Summary
Summary of the 10-K filed February 7, 2022. Cited figures are marked; the original filing is the authoritative source.
Fastenal Company reported a 6.4% increase in net sales for 2021, reaching $6.01 billiona.
This growth was driven by strong demand from traditional manufacturing and construction customers, coupled with higher pricing. Despite supply chain disruptions, labor shortages, and inflation impacting business operations, the company's gross profit margin improved to 46.2% from 45.5% in the prior year, indicating effective cost management and pricing strategies. Net earnings saw a 7.7% increase to $925.0 millionb, translating to diluted EPS of $1.60.
While growth drivers like Onsite locations and Fastenal Managed Inventory (FMI) device signings showed improvement, they remained below pre-pandemic targets due to customers prioritizing short-term crisis management. The company continues to focus on its 'high-tech, high-touch' strategy, leveraging its extensive in-market location network and digital solutions to enhance customer service and drive future growth.
02—Key points
Key Highlights
- Net sales increased by 6.4% to $6.01 billion in 2021, driven by robust demand in manufacturing and construction sectors and strategic pricing actions.
- Gross profit margin improved to 46.2% in 2021 from 45.5% in 2020, reflecting better product margins and operational leverage.
- Net earnings grew by 7.7% to $925.0 million, with diluted EPS reaching $1.60, up from $1.49 in 2020.
- Despite supply chain challenges and inflation, the company demonstrated resilience by increasing its net sales and profitability.
- Growth drivers such as Onsite locations and FMI devices showed recovery but did not meet pre-pandemic targets, indicating potential for future expansion.
- The company maintains a strong balance sheet with net cash provided by operating activities of $770.1 million in 2021.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Fastenal Co kept $0.15.
- Revenue$6.01B100.0%
- Cost of revenue−$3.23B53.8%
- Gross profit$2.78B46.2%
- Operating costs−$1.56B25.9%
- Operating income$1.22B20.3%
- Interest, other & tax−$292.4M4.9%
- Net income$925.0M15.4%
Where FY2021 revenue went
$6.01B- Cost of revenue: $3.23B, 54% of revenue
- SG&A: $1.56B, 26% of revenue
- Net income: $925.0M, 15% of revenue
- Interest, other & tax: $292.4M, 4.9% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 7, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $6.01B$5.65B | +6.4% |
| Cost of Revenue | $3.23B$3.08B | +5.0% |
| Gross Profit | $2.78B$2.57B | +8.2% |
| SG&A Expenses | $1.56B$1.43B | +9.4% |
| Operating Income | $1.22B$1.14B | +6.6% |
| Interest Expense | $9.70M$9.70M | 0.0% |
| Net Income | $925.00M$859.10M | +7.7% |
| EPS (Basic) | $0.81$0.75 | +7.3% |
| EPS (Diluted) | $0.80$0.74 | +7.4% |
| Shares Outstanding (Basic) | 1.15B1.15B | +0.2% |
| Shares Outstanding (Diluted) | 1.15B1.15B | +0.3% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Fastenal's net sales growth in 2021?
Fastenal's net sales in 2021 grew by 6.4% primarily due to strong demand from its traditional manufacturing and non-residential construction customers. This was supported by higher unit sales and an increase in pricing, which helped to mitigate inflationary pressures. Growth from key drivers like Onsite locations and FMI devices also contributed positively.
How did Fastenal manage its profitability in the face of supply chain disruptions and inflation in 2021?
Fastenal improved its gross profit margin to 46.2% in 2021 from 45.5% in 2020. This was achieved through a combination of factors, including improved product margins (particularly in safety products), better overhead absorption due to higher volumes, favorable supplier rebates, and effective pricing strategies to pass on increased product and transportation costs.
What is the outlook for Fastenal's growth drivers, such as Onsite locations and FMI devices?
While Fastenal saw a recovery in its growth drivers in 2021, with increases in Onsite locations and FMI device installations, these metrics remained below pre-pandemic targets. The company attributes this to customers focusing on short-term crisis management due to supply chain, labor, and inflation challenges, which extended sales cycles for these solutions. Fastenal anticipates continued growth and aims to reach new signing targets in 2022, contingent on market conditions improving.
How has the COVID-19 pandemic continued to impact Fastenal's business in 2021?
In 2021, the direct impact of the COVID-19 pandemic on Fastenal's operations was less pronounced than in 2020, with economic normalization driving strong demand from core customers. However, the pandemic's effects were indirectly felt through ongoing supply chain disruptions, labor shortages, and inflation, which created operational challenges. The pandemic also continued to affect the ability to engage customers for growth driver solutions.
06—Continue