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Fastenal (FAST) Q2 Earnings In Line, Sales Miss, Shares Down
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Fastenal Company’s (FAST - Free Report) shares dipped more than 3% in the pre-market trading session on Jul 13 after it reported second-quarter 2023 results. Earnings met the Zacks Consensus Estimate but net sales missed the same. The company’s top and bottom lines, however, improved on a year-over-year basis, given daily sales growth, good expense control and a lower share base.
Although growing digital footprint and market share gains across various product categories are positives, Fastenal’s industrial markets have been slowing down broadly due to decreased customer spending. The company also lowered its Onsite locations expectation for 2023 based on the first half of 2023 performance.
Earnings & Sales in Detail
The company reported earnings of 52 cents per share, in line with the consensus mark but rose 4.6% from the year-ago period.
Net sales totaled $1,883.1 million, missing the consensus mark of $1,885 million by 0.1% but increasing 5.9% from the year-ago level.
Daily sales of $29.4 million increased 5.9% year over year in the reported quarter. The upside was mainly due to higher unit sales, thanks to solid demand for industrial capital goods and commodities, offsetting a contraction for construction and reseller end markets. The foreign exchange adversely impacted sales by 40 basis points.
On a monthly basis, daily sales improved 4.7%, 5.2% and 7.8% in June, May and April 2023, respectively, year over year.
Daily sales of Fastener products (mainly used for industrial production and accounting for approximately 32.6% of second-quarter sales) remained unchanged year over year. Sales of safety products (20.7%) grew 7.9% on a daily basis. Sales of the remaining products (46.7%) grew 9.8% year over year.
On the end-market basis, daily sales of Manufacturing (accounting for approximately 74.8% of second-quarter sales) rose 10.4% year over year. Sales of Non-residential construction (9.2%) fell 8.8% on a daily basis. Sales of Other (16%) declined 3.2% year over year.
Daily sales through weighted FMI devices grew 18.4% for the second quarter and represented 39.8% of net sales.
Daily sales to national account customers (representing 59.3% of total second-quarter net sales) increased 10.3% on a year-over-year basis. Daily sales to non-national account customers (which include government customers and represent 40.7% of total quarterly revenues) rose 0.2% from the prior-year quarter.
The company’s digital footprint increased to 55.3% of sales in the second quarter of 2023 from 47.9% of sales in the year-ago period.
Fastenal Company Price, Consensus and EPS Surprise
Fastenal signed 86 new Onsite locations during the quarter. As of Jun 30, 2023, the company had 1,728 active sites, up 15.1% from the year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsite) increased at a high-teens rate year over year. This was backed by strong contributions from Onsite locations, activated and implemented over the last 12 months and continued growth from older Onsite locations.
For 2023, the company now expects 350 annual Onsite signings versus 375-400 expected earlier.
Margins
A gross margin of 45.5% for the reported quarter was down from 46.5% a year ago. This was due to customer and product mix, given increased growth in the lower margin of Onsite and non-fastener products and lower product margins in certain other product categories. Also, higher organizational/overhead costs added to the negatives.
Operating margin came in at 21%, which was 60 basis points down from a year ago due to lower gross margin.
Financials
As of Jun 30, 2023, cash and cash equivalents were $243.6 million, up from $230.1 million on Dec 31, 2022. The long-term debt at the second-quarter end was $200 million, down from $353.2 million at 2022-end. During the second quarter, FAST returned $199.9 million to its shareholders in the form of dividends.
During second-quarter 2023, cash provided by operating activities totaled $302.1 million, up 99.8% from the year-ago period.
Zacks Rank
Fastenal currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are:
The Zacks Consensus Estimate for BLDR’s 2023 earnings per share (EPS) estimates have increased to $10.27 from $10.11 over the past 30 days.
GMS Inc. (GMS - Free Report) sports a Zacks Rank #1 at present. GMS’ earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 9.2%.
The Zacks Consensus Estimate for GMS’ 2023 EPS estimates have increased to $8.16 from $6.99 over the past 30 days.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) currently sports a Zacks Rank #1. PLAY has a trailing four-quarter earnings surprise of 6.8%, on average.
The Zacks Consensus Estimate for PLAY’s 2023 EPS indicates growth of 28% from the year-ago period.
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Fastenal (FAST) Q2 Earnings In Line, Sales Miss, Shares Down
Fastenal Company’s (FAST - Free Report) shares dipped more than 3% in the pre-market trading session on Jul 13 after it reported second-quarter 2023 results. Earnings met the Zacks Consensus Estimate but net sales missed the same. The company’s top and bottom lines, however, improved on a year-over-year basis, given daily sales growth, good expense control and a lower share base.
Although growing digital footprint and market share gains across various product categories are positives, Fastenal’s industrial markets have been slowing down broadly due to decreased customer spending. The company also lowered its Onsite locations expectation for 2023 based on the first half of 2023 performance.
Earnings & Sales in Detail
The company reported earnings of 52 cents per share, in line with the consensus mark but rose 4.6% from the year-ago period.
Net sales totaled $1,883.1 million, missing the consensus mark of $1,885 million by 0.1% but increasing 5.9% from the year-ago level.
Daily sales of $29.4 million increased 5.9% year over year in the reported quarter. The upside was mainly due to higher unit sales, thanks to solid demand for industrial capital goods and commodities, offsetting a contraction for construction and reseller end markets. The foreign exchange adversely impacted sales by 40 basis points.
On a monthly basis, daily sales improved 4.7%, 5.2% and 7.8% in June, May and April 2023, respectively, year over year.
Daily sales of Fastener products (mainly used for industrial production and accounting for approximately 32.6% of second-quarter sales) remained unchanged year over year. Sales of safety products (20.7%) grew 7.9% on a daily basis. Sales of the remaining products (46.7%) grew 9.8% year over year.
On the end-market basis, daily sales of Manufacturing (accounting for approximately 74.8% of second-quarter sales) rose 10.4% year over year. Sales of Non-residential construction (9.2%) fell 8.8% on a daily basis. Sales of Other (16%) declined 3.2% year over year.
Daily sales through weighted FMI devices grew 18.4% for the second quarter and represented 39.8% of net sales.
Daily sales to national account customers (representing 59.3% of total second-quarter net sales) increased 10.3% on a year-over-year basis. Daily sales to non-national account customers (which include government customers and represent 40.7% of total quarterly revenues) rose 0.2% from the prior-year quarter.
The company’s digital footprint increased to 55.3% of sales in the second quarter of 2023 from 47.9% of sales in the year-ago period.
Fastenal Company Price, Consensus and EPS Surprise
Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company Quote
Vending Trends & Other Growth Drivers
Fastenal signed 86 new Onsite locations during the quarter. As of Jun 30, 2023, the company had 1,728 active sites, up 15.1% from the year-ago period. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsite) increased at a high-teens rate year over year. This was backed by strong contributions from Onsite locations, activated and implemented over the last 12 months and continued growth from older Onsite locations.
For 2023, the company now expects 350 annual Onsite signings versus 375-400 expected earlier.
Margins
A gross margin of 45.5% for the reported quarter was down from 46.5% a year ago. This was due to customer and product mix, given increased growth in the lower margin of Onsite and non-fastener products and lower product margins in certain other product categories. Also, higher organizational/overhead costs added to the negatives.
Operating margin came in at 21%, which was 60 basis points down from a year ago due to lower gross margin.
Financials
As of Jun 30, 2023, cash and cash equivalents were $243.6 million, up from $230.1 million on Dec 31, 2022. The long-term debt at the second-quarter end was $200 million, down from $353.2 million at 2022-end. During the second quarter, FAST returned $199.9 million to its shareholders in the form of dividends.
During second-quarter 2023, cash provided by operating activities totaled $302.1 million, up 99.8% from the year-ago period.
Zacks Rank
Fastenal currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are:
Builders FirstSource, Inc. (BLDR - Free Report) presently sports a Zacks Rank #1 (Strong Buy). BLDR’s earnings topped the consensus mark in all the last four quarters, with the average being 68.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BLDR’s 2023 earnings per share (EPS) estimates have increased to $10.27 from $10.11 over the past 30 days.
GMS Inc. (GMS - Free Report) sports a Zacks Rank #1 at present. GMS’ earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 9.2%.
The Zacks Consensus Estimate for GMS’ 2023 EPS estimates have increased to $8.16 from $6.99 over the past 30 days.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) currently sports a Zacks Rank #1. PLAY has a trailing four-quarter earnings surprise of 6.8%, on average.
The Zacks Consensus Estimate for PLAY’s 2023 EPS indicates growth of 28% from the year-ago period.