10-QPeriod: Q1 FY2023

FASTENAL CO Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 18, 2023For Securities:FAST

Summary

Fastenal Company (FAST) reported a solid first quarter for 2023, demonstrating revenue growth driven by increased demand in manufacturing and industrial sectors, alongside effective pricing strategies. Net sales rose by 9.1% to $1.86 billion, with diluted earnings per share increasing to $0.52, a 10.4% improvement year-over-year. The company's strategic focus on Onsite locations and FMI (FAST stocking, FASTBin, FASTVend) technology continues to yield positive results, with Onsite locations growing 16.3% and FMI sales up 21.3%, contributing significantly to the overall growth and digital footprint. Despite a slight decrease in gross profit margin to 45.7% from 46.6%, primarily due to changes in product mix and higher overhead costs, operating income still saw a healthy increase of 9.8% due to improved operating expense leverage. The company also experienced a strong rebound in operating cash flow, driven by normalization in global supply chains, leading to a reduction in working capital needs. Fastenal remains committed to returning value to shareholders through consistent dividend payments, with a quarterly dividend of $0.35 declared.

Financial Highlights

50 data points
Beta

Revenue

$1.86B

45.7% Gross Margin

Net Income

$295.10M

15.9% Net Margin

EPS (Diluted)

$0.26

Total Assets

$4.58B

Cash & Equivalents

$239.80M

Free Cash Flow

$354.80M

Financial Statements
Beta
Revenue$1.86B
Cost of Revenue$1.01B
Gross Profit$850.00M
SG&A Expenses$456.80M
Operating Income$393.20M
Interest Expense$3.90M
Net Income$295.10M
EPS (Basic)$0.26
EPS (Diluted)$0.26
Shares Outstanding (Basic)1.14B
Shares Outstanding (Diluted)1.15B

Key Highlights

  • 1Net sales increased by 9.1% to $1.86 billion in Q1 2023 compared to Q1 2022.
  • 2Diluted earnings per share (EPS) grew by 10.4% to $0.52.
  • 3The company saw significant growth in its Onsite locations, up 16.3% year-over-year, with daily sales through these locations increasing approximately 20%.
  • 4FMI Technology sales increased by 21.3%, contributing 39.4% of total sales.
  • 5Gross profit margin slightly decreased to 45.7% from 46.6%, impacted by product mix and overhead costs.
  • 6Net cash provided by operating activities saw a substantial improvement, increasing by 68.9% to $388.5 million.
  • 7The company declared a quarterly dividend of $0.35 per share.

Frequently Asked Questions

Fastenal reported a 9.1% increase in net sales, reaching $1.859 billion for the first quarter of 2023, compared to $1.704 billion in the same period of 2022. This growth was driven by higher unit sales, particularly in markets tied to industrial capital goods and commodities, and supported by pricing actions.

Net earnings increased by 9.5% to $295.1 million in Q1 2023, resulting in a diluted EPS of $0.52, up from $0.47 in Q1 2022. While gross profit margin saw a slight decrease to 45.7% from 46.6%, this was offset by improved operating expense leverage, leading to an increase in operating income of 9.8%.

Fastenal continues to expand its Onsite locations, which provide dedicated sales and service at customer facilities, seeing a 16.3% increase in active sites. FMI Technology, which includes FASTStock, FASTBin, and FASTVend, also showed strong growth with sales up 21.3%. These digital solutions are a key focus for enhancing customer service and driving sales, now comprising 39.4% of total sales.

The company reported a significant improvement in operating cash flow, which increased by 68.9% to $388.5 million in Q1 2023. This was largely due to the normalization of global supply chains, reducing working capital requirements. Total debt stood at $400 million at the end of the quarter.