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Fastenal (NASDAQ:FAST) just dropped its Q4 earnings, and investors aren't thrilled. Revenue hit $1.825 billionup 3.7% year-over-year but short of the $1.844 billion consensus. Adjusting for an extra selling day, net daily sales eked out a 2.1% gain. The manufacturing slowdown bit hard, with major customers slashing year-end production. Gross margin shrank to 44.8% (from 45.5% a year ago), squeezed by a tough product mix and rising import duties. Even with digital sales making up 62.2% of revenueup from 58.1% last yearFastenal's overall performance reflects a sector still struggling to regain its footing.
Despite the drag, Fastenal is doubling down on its tech-heavy strategy. The company ramped up its FASTBin and FASTVend installations by 12.2% year-over-year and signed 6,790 new device contracts in Q4. Sales through its FMI (Fastenal Managed Inventory) platform climbed 8.5%, while eBusiness sales exploded 27.6%. But the growth came at a costoperating expenses jumped 6.2%, tightening margins in an already sluggish environment. The question now: Can its digital push outpace the broader manufacturing slowdown?
Looking ahead, Fastenal is going all-in on automation and digital expansion. Management is targeting 66%-68% of total sales from digital channels in 2025 and boosting capital investments to $265-$285 million. The strategy is clear: more tech, more efficiency, more growth. But will it be enough to shake off the weight of a weak industrial sector? Investors will be watching closely.
This article first appeared on GuruFocus.