10-QPeriod: Q1 FY2014

FASTENAL CO Quarterly Report for Q1 Ended Mar 31, 2014

Filed April 16, 2014For Securities:FAST

Summary

Fastenal Company reported solid financial results for the first quarter ended March 31, 2014. Net sales increased by 8.7% to $876.5 million compared to the prior year, driven primarily by higher unit sales. Net earnings saw a modest increase to $111.9 million, resulting in diluted earnings per share of $0.38, up from $0.37 in the same period last year. The company continues to invest in its growth initiatives, particularly its FAST Solutions® industrial vending program, which is showing strong adoption and contributing to overall sales growth. The company's balance sheet remains strong with total assets of $2.17 billion. While inventory and accounts receivable increased, reflecting sales growth, operational working capital management appears adequate. Cash flow from operations remained robust, though slightly down year-over-year due to working capital needs. Fastenal also demonstrated a commitment to shareholder returns through its consistent quarterly dividend payments and opportunistic share repurchases.

Financial Highlights

48 data points
Beta

Revenue

$876.50M

51.2% Gross Margin

Net Income

$111.93M

12.8% Net Margin

EPS (Diluted)

$0.10

Total Assets

$2.17B

Cash & Equivalents

$89.02M

Free Cash Flow

$110.73M

Financial Statements
Beta
Revenue$876.50M
Cost of Revenue$428.02M
Gross Profit$448.48M
SG&A Expenses$269.84M
Operating Income$178.85M
Interest Expense$126K
Net Income$111.93M
EPS (Basic)$0.10
EPS (Diluted)$0.10
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net sales grew by 8.7% to $876.5 million for Q1 2014.
  • 2Net earnings increased to $111.9 million, with diluted EPS of $0.38.
  • 3FAST Solutions® (industrial vending) continues to be a significant growth driver, with a substantial increase in installed devices and sales to customers utilizing this technology.
  • 4The company returned capital to shareholders through consistent quarterly dividends and share repurchases.
  • 5Gross profit margin was 51.2%, showing a slight decrease from the previous year's 52.3% but within the company's expected range.
  • 6Operating and administrative expenses remained stable as a percentage of sales, indicating good cost control.
  • 7The company's credit facility was amended to increase the total commitment, providing continued financial flexibility.

Frequently Asked Questions

The primary driver of Fastenal's sales growth in Q1 2014 was higher unit sales, which increased by 8.7% to $876.5 million compared to the prior year. This growth was slightly impacted by price deflation in fasteners and inflationary price changes in non-fastener products.

The FAST Solutions® program is performing well and is a significant growth driver. The company reported a substantial increase in the number of installed vending devices and observed higher sales growth from customers utilizing this technology. It is a key part of their strategy to enhance customer service and drive business.

Fastenal demonstrates a commitment to shareholder returns through consistent quarterly dividend payments, which have been paid since 2011. Additionally, the company engaged in opportunistic share repurchases during the quarter, indicating confidence in its stock value.

Operating and administrative expenses remained stable at 30.8% of net sales, consistent with the prior year. While employee-related expenses increased due to higher headcount and sales commissions, occupancy costs also rose due to increased industrial vending equipment and utilities. The company is managing these costs effectively within its overall operational framework.