Summary
Fastenal Company (FAST) reported strong top-line growth in its second-quarter and first-half 2018 results, with net sales increasing by 13.1% year-over-year for both periods. This growth was primarily driven by higher unit sales stemming from a strengthening business environment and successful execution of the company's growth initiatives, including an expansion in industrial vending devices and Onsite locations. The company also benefited from price increases implemented to mitigate marketplace inflation, though these contributed a smaller portion to the sales increase. Despite the robust sales performance, gross profit margin experienced a slight decline, attributed to a less favorable product and customer mix (fewer high-margin fasteners and more sales to larger national accounts) and increased transportation costs. However, operating and administrative expenses as a percentage of net sales improved, demonstrating improved operational leverage. Net earnings saw a significant increase of 41.9% in the second quarter and 36.2% in the first half, partly due to the positive impact of the Tax Cuts and Jobs Act, which lowered the effective tax rate. Investors will be watching the company's ability to manage product mix, control transportation costs, and sustain growth from its strategic initiatives.
Financial Highlights
51 data points| Revenue | $1.27B |
| Cost of Revenue | $650.20M |
| Gross Profit | $617.70M |
| SG&A Expenses | $349.30M |
| Operating Income | $269.00M |
| Interest Expense | $3.20M |
| Net Income | $211.20M |
| EPS (Basic) | $0.18 |
| EPS (Diluted) | $0.18 |
| Shares Outstanding (Basic) | 1.15B |
| Shares Outstanding (Diluted) | 1.15B |
Key Highlights
- 1Net sales increased by 13.1% for both the three months and six months ended June 30, 2018, compared to the prior year periods.
- 2Gross profit margin slightly decreased from 49.8% to 48.7% for the three months ended June 30, 2018, and from 49.6% to 48.7% for the six months ended June 30, 2018, due to product/customer mix and higher freight costs.
- 3Operating income margin remained stable at 21.2% for the three months ended June 30, 2018, compared to the prior year.
- 4Net earnings grew significantly, up 41.9% for the three months and 36.2% for the six months ended June 30, 2018, driven by sales growth and a lower effective tax rate due to the Tax Cuts and Jobs Act.
- 5Diluted EPS increased to $0.74 for the three months and $1.34 for the six months ended June 30, 2018, up from $0.52 and $0.98 respectively in the prior year periods.
- 6The company continues to expand its growth drivers, with significant increases in active Onsite locations (up 56.6% year-over-year) and industrial vending devices (installed count up 14.3% year-over-year).
- 7Net cash provided by operating activities increased to $311.6 million for the six months ended June 30, 2018, from $293.3 million in the prior year, primarily due to higher net earnings.