10-QPeriod: Q1 FY2013

FASTENAL CO Quarterly Report for Q1 Ended Mar 31, 2013

Filed April 15, 2013For Securities:FAST

Summary

Fastenal Company reported solid financial results for the first quarter of 2013, demonstrating revenue growth and improved profitability compared to the prior year period. Net sales increased by 4.9% to $806.3 million, driven primarily by higher unit sales. The company also saw an increase in gross profit margin to 52.3% from 51.3% in the same period last year, a trend attributed to improved pricing habits and better freight utilization, despite a slight increase in operating and administrative expenses as a percentage of sales due to slower sales growth. Operating cash flow remained robust, increasing by 21.3% to $160.2 million, reflecting the company's strong cash-generating capabilities. Investments in property and equipment were significant, driven by the expansion of FAST Solutions (industrial vending) and distribution automation. The company maintained a strong balance sheet and continued its commitment to returning capital to shareholders through dividends, although no stock repurchases were made in the quarter.

Financial Highlights

48 data points
Beta

Revenue

$806.33M

52.3% Gross Margin

Net Income

$109.05M

13.5% Net Margin

EPS (Diluted)

$0.09

Total Assets

$1.95B

Cash & Equivalents

$159.24M

Free Cash Flow

$104.73M

Financial Statements
Beta
Revenue$806.33M
Cost of Revenue$384.45M
Gross Profit$421.88M
SG&A Expenses$247.33M
Operating Income$174.76M
Interest Expense$34K
Net Income$109.05M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net sales grew 4.9% year-over-year to $806.3 million for the first quarter of 2013.
  • 2Gross profit margin improved to 52.3% from 51.3% in the prior year's first quarter.
  • 3Net earnings increased to $109.0 million, or $0.37 per diluted share, up from $100.2 million, or $0.34 per diluted share, in Q1 2012.
  • 4Operating cash flow surged by 21.3% to $160.2 million.
  • 5The company continued to invest in growth initiatives, particularly its FAST Solutions (industrial vending) program and distribution automation, leading to higher capital expenditures.
  • 6The FAST Solutions (industrial vending) business continued its strong growth trajectory, with cumulative machines installed reaching 25,447 by the end of Q1 2013.
  • 7The company declared a quarterly dividend of $0.20 per share in April 2013.

Frequently Asked Questions

The primary driver of Fastenal's sales growth in the first quarter of 2013 was higher unit sales. While there were some inflationary price changes in non-fastener products and price deflation in fasteners, the net impact on sales growth was limited. The FAST Solutions (industrial vending) initiative also contributed to faster growth.

Fastenal's profitability improved in Q1 2013. Gross profit margin increased to 52.3% from 51.3% in the prior year's first quarter. This improvement was attributed to better pricing habits, driven by a new price guidance system, and improved freight utilization. Net earnings also rose to $109.0 million.

Fastenal is making significant investments in its FAST Solutions (industrial vending) program and in distribution automation. These investments are aimed at enhancing fill rates, freeing up store personnel time, and expanding the company's reach and service capabilities, aligning with its growth strategy.

The company's operational working capital, defined as accounts receivable and inventories, grew by 8.2% year-over-year. While accounts receivable growth was influenced by sales growth and timing of payments, inventory growth was driven by new store openings, expanded stocking at stores and distribution centers, direct sourcing, private label expansion, and the growth of industrial vending solutions.