Fastenal Company FAST reported lower-than-expected fourth-quarter 2024 results, with earnings and net sales lagging the Zacks Consensus Estimate. On a year-over-year basis, the top line rose while the bottom line remained flat.
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Growth in sales was primarily driven by the expansion of Onsite locations, which cater directly to customer facilities, and increased adoption of the company’s digital platforms, including FASTBin, FASTVend, and eBusiness solutions.
The company faced significant challenges, including a soft manufacturing environment throughout 2024. Industrial production remained weak, with many key customers implementing production cuts in December due to holiday-related shutdowns. This weakened demand, particularly for fasteners, a core product category, further affected growth.
FAST stock lost more than 5% in the pre-market trading session on Friday, after the results’ announcement.
Fastenal Company Price, Consensus and EPS Surprise
Fastenal Company Price, Consensus and EPS Surprise
Fastenal Company price-consensus-eps-surprise-chart | Fastenal Company Quote
Fastenal’s Earnings & Sales in Detail
The company reported earnings per share (EPS) of 46 cents, which missed the Zacks Consensus Estimate by 4.2% and remained flat year over year.
Net sales totaled $1.82 billion, missing the consensus mark of $1.84 billion by 1.1% but increasing 3.7% from the year-ago level.
Daily sales of $29 million increased 2.1% year over year in the quarter despite one extra selling day. Growth was limited by a soft manufacturing environment and sharp year-end production cuts by major customers. Foreign exchange rates negatively impacted sales by 20 basis points (bps), compared with a 10-bps positive impact in the year-ago quarter.
Unit sales growth in the quarter was driven by new Onsite locations and larger customers, offsetting weaker activity among smaller customers and non-manufacturing markets. Product pricing had little impact on net sales, unlike the modest positive effect a year ago, with price levels remaining stable.
Daily sales of Fasteners (mainly used for industrial production and accounted for approximately 29.9% of net sales) declined 1.4% year over year. Sales of Safety Supplies (23%) grew 4.8% on a daily basis. Sales of the Other Product Lines (47.1%) also increased 4% year over year.
On an end-market basis, the daily sales rate of Heavy Manufacturing (which accounted for approximately 42.3% of net sales) rose 1.7% year over year. The daily sales rate of Other Manufacturing (32%) grew 5.4% compared with the prior year.
Furthermore, the daily sales of Non-Residential Construction and Reseller declined 4.1% and 11.3%, respectively, compared with the prior-year quarter, while the same for Other End-Markets grew 7.6% in the same time frame.
Daily sales through weighted FMI devices grew 8.2% for the fourth quarter, representing 43.9% of net sales.
Daily sales to National Account customers (which represented 64.2% of total quarterly net sales) increased 4.2% on a year-over-year basis. Daily sales to Non-National Account customers (which include government customers and represented 35.8% of total quarterly revenues) declined 1% from the prior-year quarter.
The company’s Digital Footprint increased to 62.2% of sales from 58.1% in the year-ago period. Fastenal anticipates that 66% to 68% of its sales volume will flow through Digital Footprint at some point in 2025.
Vending Trends & Other Growth Drivers of FAST
In the fourth quarter, Fastenal signed 56 new Onsite locations, bringing the total for 2024 to 358. As of Dec. 31, 2024, the company had 2,031 active sites, up 11.5% from the year-ago period.
Daily sales through Onsite locations (excluding sales transferred from branches to new Onsite) increased at a mid-single-digit rate year over year. This was backed by strong contributions from Onsite locations, activated and implemented in 2024 and 2023, which more than offset the impact of closures and a decline in revenues from the Onsite locations activated before 2023.
Margin Discussion of Fastenal
The gross margin was 44.8% in the reported quarter (better than our projection of 44.7%), down 70 bps year over year. This downside was due to an unfavorable mix of large customers, non-fastener products with lower margins, higher freight costs affecting fastener and safety product margins (expected to ease in 2025), and increased import duties, including a tough comparison to low fees in the year-ago quarter and easing Mexico-related duties.
Selling, general, and administrative expenses – as a percentage of net sales – increased to 25.9% from 25.3% reported in the year-ago quarter due to seasonally low sales, weak business activity, sharp holiday production cuts, and continued business investments. Our model predicted SG&A expenses of 24.5% of net sales for the quarter.
Operating margin was 18.9% (lower than our projection of 20.2%), down 120 bps from a year ago.
Fastenal’s 2024 Highlights
Earnings came in at $2.00 per share, down 0.6% from 2023. Net sales were $7.55 billion, up 2.7% year over year, with daily sales growth rate 1.9%. Gross margin was down 60 bps and operating margin was down 80 bps.
FAST’s Financials
As of Dec. 31, 2024, Fastenal had cash and cash equivalents of $255.8 million, up from $221.3 million as of Dec. 31, 2023. The long-term debt at 2024-end was $125 million, down from $200 million at 2023-end. During the quarter, FAST returned $223.4 million to its shareholders in the form of dividends and $893.3 million in 2024.
In 2024, net cash provided by operating activities totaled $1.17 million, down from the year-ago period’s reported value of $1.43 billion.
Fastenal’s Outlook
Looking ahead, Fastenal expects its ongoing investments in technology and infrastructure to enhance operational efficiency and drive growth. Plans include higher capital expenditures in 2025 to upgrade distribution centers, expand digital platforms, and increase Onsite signings. The company projects that 66% to 68% of its sales will flow through its digital footprint by the end of 2025. However, macroeconomic uncertainties, such as fluctuating industrial activity and cost pressures, remain potential headwinds. Fastenal’s focus on strategic initiatives like digital transformation and customer-centric services is expected to bolster its long-term market position despite short-term challenges.
FAST’s Zacks Rank & Key Picks
Fastenal currently carries a Zacks Rank #3 (Hold).
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