10-QPeriod: Q3 FY2023

FASTENAL CO Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 17, 2023For Securities:FAST

Summary

Fastenal Company (FAST) reported solid financial results for the third quarter and the first nine months of 2023, demonstrating resilience in a dynamic market environment. For the three months ended September 30, 2023, net sales increased by 2.4% to $1.85 billion, with daily sales up 4.0%. Diluted earnings per share (EPS) rose to $0.52, a 4.1% increase year-over-year. The company's strategic focus on Onsite locations and digital initiatives continues to drive growth, with Onsite locations showing a low double-digit sales increase and the Digital Footprint expanding to 57.1% of total sales. For the nine months ended September 30, 2023, net sales grew by 5.7% to $5.59 billion, and diluted EPS increased by 6.3% to $1.55. Operating cash flow showed significant improvement, up 68.8% year-over-year, largely due to working capital normalization and improved supply chain conditions. While facing headwinds from softer manufacturing demand and decelerating fastener pricing, Fastenal's diversified product and end-market approach, coupled with its expanding digital capabilities, positions it well for continued performance.

Financial Highlights

51 data points
Beta

Revenue

$1.85B

45.9% Gross Margin

Net Income

$295.50M

16.0% Net Margin

EPS (Diluted)

$0.26

Total Assets

$4.60B

Cash & Equivalents

$297.50M

Free Cash Flow

$341.20M

Financial Statements
Beta
Revenue$1.85B
Cost of Revenue$998.30M
Gross Profit$847.60M
SG&A Expenses$460.90M
Operating Income$386.70M
Interest Expense$2.10M
Net Income$295.50M
EPS (Basic)$0.26
EPS (Diluted)$0.26
Shares Outstanding (Basic)1.14B
Shares Outstanding (Diluted)1.15B

Key Highlights

  • 1Net sales for Q3 2023 increased by 2.4% to $1.85 billion, driven by a 4.0% increase in daily sales.
  • 2Diluted EPS for Q3 2023 was $0.52, up 4.1% from the prior year period.
  • 3For the first nine months of 2023, net sales grew 5.7% to $5.59 billion, and diluted EPS increased 6.3% to $1.55.
  • 4Operating cash flow significantly improved in Q3 2023, increasing 50.5% year-over-year to $388.1 million.
  • 5The company's Digital Footprint (FMI and eCommerce) represented 57.1% of Q3 2023 sales, up from 49.5% in Q3 2022.
  • 6Investments in property and equipment for the full year 2023 are now projected to be between $180.0 to $190.0 million, a reduction from previous guidance.
  • 7Total debt was reduced to $260.0 million by the end of Q3 2023, down from $555.0 million in the prior year.

Frequently Asked Questions

Fastenal's net sales for the third quarter of 2023 increased by 2.4% to $1.85 billion compared to $1.80 billion in the third quarter of 2022. Daily sales, which account for the number of selling days, increased by 4.0%.

Profitability remained strong. Net earnings for the third quarter of 2023 increased by 3.8% to $295.5 million. Diluted earnings per share (EPS) rose by 4.1% to $0.52 in Q3 2023 from $0.50 in Q3 2022.

The company reported improved operating cash flow in Q3 2023, with a significant portion attributed to working capital becoming a source of cash rather than a use of cash, unlike the prior year. This normalization is due to improvements in global supply chains and a slightly slower business activity, reducing the need for working capital expansion. Inventories decreased by 9.8% year-over-year to $1.51 billion, while accounts receivable increased by 5.4% to $1.17 billion.

Key growth drivers include Fastenal's Onsite locations and its Digital Footprint (FMI technology like FASTStock, FASTBin, FASTVend, and eCommerce). Onsite locations saw daily sales grow at a low double-digit rate year-over-year in Q3 2023, and the company signed 93 new Onsite locations in the quarter. The Digital Footprint's share of total sales increased to 57.1% in Q3 2023 from 49.5% in Q3 2022, demonstrating strong adoption of their technology solutions.