Fastenal: Gross Margin Pressure Overshadows Sales Growt

We continue to expect Fastenal’s top line to grow at a faster pace in 2018 than it did in 2017. The firm’s first-quarter sales grew a robust 13.2% (about 12% excluding Mansco) versus the year ago quarter. At this time last year, Fastenal’s sales were up about 6%. Lower-gross margin national accounts and non-fastener sales grew faster than the company average (up 17.3% and 14.5%, respectively), which, as noted above, weighed on Fastenal’s gross margin. Fastener sales increased 11.8% (8.1% excluding Mansco) year over year.

Fastenal’s industrial vending and onsite growth initiatives continued to gain traction during the quarter. The company signed 5,679 vending machines during the quarter (up 4.5% year over year) and now has an installed base of 73,561 machines versus 64,430 at the end of first quarter 2017. Fastenal also signed 100 new onsite locations and now has 678 active onsite locations versus 437 sites in the year-ago quarter.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.