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Fastenal (FAST) Q3 Earnings Beat, Margins Up on Solid Demand
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Fastenal Company (FAST - Free Report) reported impressive third-quarter 2021 results. Both the top and bottom lines not only beat the Zacks Consensus Estimate but also improved on a year-over-year basis.
Its shares jumped nearly 1% in the pre-market trading session on Oct 12, after it reported the results.
The company witnessed strong demand for manufacturing and construction equipment and supplies, and an uptick in sales of certain COVID-19-related products. However, slower growth or contraction in sales of certain COVID-19-related products in few end markets limited the growth. Also, product pricing affected net sales by 230-260 basis points (bps) during the quarter. It continues to experience pressure related to product and transportation cost inflation.
Earnings & Sales in Detail
The company reported earnings of 42 cents per share, which topped the consensus mark of 41 cents by 2.4% and grew 9.7% from the year-ago period.
Fastenal Company Price, Consensus and EPS Surprise
Net sales totaled $1.554 billion, beating the consensus mark of $1.538 billion by more than 1% and increasing 10% from the year-ago figure of $1.413 billion.
The company reported daily sales of $24.3 million, reflecting an increase of 10% year over year. On a monthly basis, daily sales improved 11.1%, 9% and 9.7% for September, August and July, respectively, year over year.
Daily sales of Fastener products (mainly used for industrial production and accounting for approximately 33.4% of third-quarter sales) rose 20.2% year over year backed by higher manufacturing and construction demand. Sales of safety products (accounting for 21.1% of second-quarter sales) declined 2.9% on a daily basis. The downside was mainly due to the absence of surge-related PPE sales, partly offset by improvements in manufacturing and construction demand. Sales of the remaining products (accounting for 45.5% of third-quarter sales) grew 9.2% year over year.
Vending Trends & Other Growth Drivers
Fastenal signed 230 new Onsite locations during the first nine months of 2021. As of Sep 30, 2021, the company had 1,367 active sites, up 10.6% from the year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsites) increased more than 20% in the reported quarter from a year ago.
Based on the year-to-date signings and presumption of historically lower signings for fourth quarters, the company expects signing 285-325 Onsite locations in 2021, down from its prior expectation of 300-350. Daily sales through weighted FMI devices grew 45% in the third-quarter and represented 33% of net sales.
Daily sales to national account customers (representing 56.6% of total revenues) increased 16.89% on a year-over-year basis in third-quarter 2021. Daily sales to non-national account customers (which include government customers and represent 43.4% of total revenues) rose 2.2%.
Margins
Gross margin of 46.3% in the quarter improved 100 bps from the prior-year period. The improvement was driven by favorable product and customer mix, overhead/organizational leverage, improved product margins, and lower rebates.
Also, the operating margin remained in line with the year-ago figure of 20.5%.
Financials
Cash and cash equivalents were $250.5 million as of Sep 30, 2021, up from $245.7 million on Dec 31, 2020. Long-term debt at quarter-end was $330 million, down from $365 million at 2020-end.
In the first nine months of 2021, cash provided by operating activities totaled $613.7 million compared with $780.8 million in the year-ago period.
Other top-ranked stocks in the Zacks Building Products – Retail industry include GMS Inc. (GMS - Free Report) , Beacon Roofing Supply, Inc. (BECN - Free Report) , and Builders FirstSource, Inc. (BLDR - Free Report) . While GMS sports a Zacks #1 Rank, Beacon Roofing and Builders FirstSource carry a Zacks Rank #2.
GMS, Beacon Roofing, and Builders FirstSource are expected to generate earnings growth of 59.6%, 85.1%, and 108.3% for current year, respectively.
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Fastenal (FAST) Q3 Earnings Beat, Margins Up on Solid Demand
Fastenal Company (FAST - Free Report) reported impressive third-quarter 2021 results. Both the top and bottom lines not only beat the Zacks Consensus Estimate but also improved on a year-over-year basis.
Its shares jumped nearly 1% in the pre-market trading session on Oct 12, after it reported the results.
The company witnessed strong demand for manufacturing and construction equipment and supplies, and an uptick in sales of certain COVID-19-related products. However, slower growth or contraction in sales of certain COVID-19-related products in few end markets limited the growth. Also, product pricing affected net sales by 230-260 basis points (bps) during the quarter. It continues to experience pressure related to product and transportation cost inflation.
Earnings & Sales in Detail
The company reported earnings of 42 cents per share, which topped the consensus mark of 41 cents by 2.4% and grew 9.7% from the year-ago period.
Fastenal Company Price, Consensus and EPS Surprise
Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company Quote
Net sales totaled $1.554 billion, beating the consensus mark of $1.538 billion by more than 1% and increasing 10% from the year-ago figure of $1.413 billion.
The company reported daily sales of $24.3 million, reflecting an increase of 10% year over year. On a monthly basis, daily sales improved 11.1%, 9% and 9.7% for September, August and July, respectively, year over year.
Daily sales of Fastener products (mainly used for industrial production and accounting for approximately 33.4% of third-quarter sales) rose 20.2% year over year backed by higher manufacturing and construction demand. Sales of safety products (accounting for 21.1% of second-quarter sales) declined 2.9% on a daily basis. The downside was mainly due to the absence of surge-related PPE sales, partly offset by improvements in manufacturing and construction demand. Sales of the remaining products (accounting for 45.5% of third-quarter sales) grew 9.2% year over year.
Vending Trends & Other Growth Drivers
Fastenal signed 230 new Onsite locations during the first nine months of 2021. As of Sep 30, 2021, the company had 1,367 active sites, up 10.6% from the year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsites) increased more than 20% in the reported quarter from a year ago.
Based on the year-to-date signings and presumption of historically lower signings for fourth quarters, the company expects signing 285-325 Onsite locations in 2021, down from its prior expectation of 300-350.
Daily sales through weighted FMI devices grew 45% in the third-quarter and represented 33% of net sales.
Daily sales to national account customers (representing 56.6% of total revenues) increased 16.89% on a year-over-year basis in third-quarter 2021. Daily sales to non-national account customers (which include government customers and represent 43.4% of total revenues) rose 2.2%.
Margins
Gross margin of 46.3% in the quarter improved 100 bps from the prior-year period. The improvement was driven by favorable product and customer mix, overhead/organizational leverage, improved product margins, and lower rebates.
Also, the operating margin remained in line with the year-ago figure of 20.5%.
Financials
Cash and cash equivalents were $250.5 million as of Sep 30, 2021, up from $245.7 million on Dec 31, 2020. Long-term debt at quarter-end was $330 million, down from $365 million at 2020-end.
In the first nine months of 2021, cash provided by operating activities totaled $613.7 million compared with $780.8 million in the year-ago period.
Zacks Rank & Other Key Picks
Fastenal currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the Zacks Building Products – Retail industry include GMS Inc. (GMS - Free Report) , Beacon Roofing Supply, Inc. (BECN - Free Report) , and Builders FirstSource, Inc. (BLDR - Free Report) . While GMS sports a Zacks #1 Rank, Beacon Roofing and Builders FirstSource carry a Zacks Rank #2.
GMS, Beacon Roofing, and Builders FirstSource are expected to generate earnings growth of 59.6%, 85.1%, and 108.3% for current year, respectively.