10-QPeriod: Q1 FY2012

FASTENAL CO Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 20, 2012For Securities:FAST

Summary

Fastenal Company reported strong performance for the first quarter of 2012, demonstrating robust sales growth of 20.0% year-over-year, reaching $768.9 million. This growth was primarily driven by increased unit sales across both established and newer store locations, indicating healthy demand in its core manufacturing and construction markets. The company also saw a significant increase in net earnings, up 25.9% to $100.2 million, translating to diluted EPS of $0.34, an improvement from $0.27 in the prior year's quarter. This suggests effective operational management and a positive market environment. The company continues to invest in its "FAST Solutions" (industrial vending) initiative, which is showing promising results with a substantial increase in signed vending machine contracts and a growing percentage of total net sales attributed to customers utilizing these solutions. This strategic investment appears to be a key growth driver, as sales to customers with vending machines experienced significantly higher growth rates. Furthermore, the company's balance sheet remains strong, with healthy operating cash flow generation of $132.2 million, providing ample resources for continued investment and returning capital to shareholders through dividends.

Financial Highlights

47 data points
Beta

Revenue

$768.88M

51.3% Gross Margin

Net Income

$100.19M

13.0% Net Margin

EPS (Diluted)

$0.09

Total Assets

$1.81B

Cash & Equivalents

$198.88M

Free Cash Flow

$103.98M

Financial Statements
Beta
Revenue$768.88M
Cost of Revenue$374.70M
Gross Profit$394.18M
SG&A Expenses$232.97M
Operating Income$161.03M
Interest Expense$0
Net Income$100.19M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)1.18B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net sales increased by 20.0% to $768.9 million for the first quarter of 2012 compared to $640.6 million in the prior year.
  • 2Net earnings rose by 25.9% to $100.2 million, with diluted EPS improving to $0.34 from $0.27 in Q1 2011.
  • 3Operating income grew by 25.2% to $161.0 million, indicating improved profitability.
  • 4Same-store sales growth remained strong, with locations open over two years showing a 17.4% increase.
  • 5The FAST Solutions (industrial vending) initiative is a significant growth driver, with a substantial increase in signed vending machine contracts and a growing contribution to sales.
  • 6Operating cash flow was robust at $132.2 million, demonstrating strong cash generation from operations.
  • 7The company declared a quarterly dividend of $0.17 per share, reflecting its commitment to returning capital to shareholders.

Frequently Asked Questions

The primary driver of Fastenal's sales growth in the first quarter of 2012 was higher unit sales. This growth was observed across both older, established store locations ('same-store' sales) and newer store openings, indicating broad-based demand.

The FAST Solutions initiative is performing well and is identified as a key growth driver. In Q1 2012, the company signed 4,568 new vending machine contracts, significantly increasing its installed base. Sales to customers utilizing vending machines experienced a substantial growth rate of 33.9%.

Fastenal continues to return capital to shareholders through dividends. The board declared a quarterly dividend of $0.17 per share on April 17, 2012. While the total dividend paid in Q1 2012 was lower than Q1 2011, this reflects a shift towards quarterly payments, with a total declared for the first two quarters of 2012 amounting to $0.34 per share.

The company is involved in a legal proceeding with a California fastener supplier alleging violation of an exclusive distribution arrangement. While the supplier filed an appeal regarding a summary judgment ruling in favor of Fastenal, the company believes the prospect of incurring a material liability is remote, though the appeals are still pending.