Financial Data and Key Metrics Changes - The company reported a net sales growth of approximately 2% in the second quarter of 2024, with EPS at $0.51, down 2% from $0.52 in the same period last year [86] - Gross margin decreased to 45.1%, down 40 basis points year-over-year, primarily due to product and customer mix [85] - SG&A expenses were 24.9% of sales, an increase from 24.6% a year ago, attributed to higher employee-related expenses and costs associated with customer expos [85] Business Line Data and Key Metrics Changes - The Fastener product line experienced a decline of 3%, with contractions in MRO and OEM products, while safety products grew by 7.1% due to strong growth in warehousing customers [83] - The installed base of weighted devices increased by 11% year-over-year, indicating market share growth [55] - The average order value decreased from $224 to $217, reflecting a drop in customer spending [79] Market Data and Key Metrics Changes - The company noted a sluggish business environment, with 19 out of the last 20 months showing sub-50 ISM readings, indicating a prolonged downturn in industrial production [48][51] - Customer acquisition efforts have shown improvement, with core accounts increasing by 7% in the first half of 2024 compared to a 4% decline in the same period last year [57] - E-business grew by 25%, driven by the e-procurement side, although overall e-commerce performance was described as only "okay" [60] Company Strategy and Development Direction - The company is focusing on enhancing customer acquisition and aligning sales efforts under new leadership to improve performance [74] - Investments in technology, particularly Fastenal Intelligence, are aimed at improving operational efficiency and customer service [69][70] - The company plans to increase net capital spending for 2024 to support automation and technology upgrades, reflecting a commitment to future growth [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the ongoing challenging macroeconomic environment but remains optimistic about the potential for growth in the second half of 2024 due to strong signings activity [63][99] - The leadership emphasized the importance of maintaining discipline in pricing and cost management in response to market conditions [19][84] - There is uncertainty regarding the timing of a market recovery, with management noting that customers are adjusting their cost structures in light of prolonged downturns [112] Other Important Information - The company is undergoing a significant reclassification of inventory, adding approximately 18,000 SKUs to distribution, which is expected to enhance service and gross margin [33] - Operating cash flow for the second quarter was $258 million, representing 88% of net income, indicating strong cash generation despite a soft demand environment [92] Q&A Session Summary Question: Can you provide context on pricing trends in the safety category? - Management acknowledged that while pricing in the Fastener category has been declining, they have managed costs effectively and are focusing on improving pricing discipline in the safety category [15][16] Question: How do you view the impact of warehousing customers on gross margin trends? - Management indicated that the impact from warehousing ramps was as planned in Q2 and should ease into Q3, with expectations for gross margin trends to stabilize [87][88] Question: What are the expectations for SG&A growth in the upcoming quarters? - Management noted that SG&A growth typically tracks revenue growth, and they are focused on maintaining tight spending in the current environment [117]

Business Performance - 2Q24 net sales increased by 1.8%[86], but EPS decreased by 2.0% to $0.51[86] - National Accounts' daily sales increased by 5.8% in 2Q24[36], while non-National Account daily sales decreased by 4.3%[36] - eBusiness daily sales rose 25.5% in 2Q24[69], with eProcurement and eCommerce up 30.9% and 11.6%, respectively[69] Financial Metrics - 2Q24 operating margin was 20.2%, down from 21.0% in 2Q23[97] - Gross margin declined to 45.1% from 45.5% in 2Q23[97] - SG&A costs were 24.9% of sales, up from 24.6% in 2Q23[97] - 2Q24 operating cash flow was $258.0 million, representing 88.1% of net income[13] - Balance sheet debt was 6.3% of total capital in 2Q24, compared to 9.4% in 2Q23[14] Growth Drivers - The installed base of weighted FMI devices reached 119,306, an increase of 11.4% from 2Q23[8] - Activity through the FMI technology platform accounted for 41.8% of sales in 2Q24, compared to 39.8% and 35.6% in 2Q23 and 2Q22, respectively[8] - Sales through the Digital Footprint were 59.4% of total sales in 2Q24, versus 55.3% and 47.9% in 2Q23 and 2Q22, respectively[33] Market Conditions - The U S Manufacturing PMI has been below 50 for 19 of the last 20 months[3] - U S PMI averaged 48.8 in 2Q24[35]

Core Viewpoint - Fastenal's earnings results indicate ongoing softness in the manufacturing and construction sectors, suggesting a potential slowdown in the broader industrial economy [1][6]. Company Performance - Fastenal's Q2 net sales growth was reported at 1.8%, which fell short of the estimated 2.1% increase, partly due to negative currency effects and a challenging product pricing environment [11]. - The operating margin decreased by 80 basis points year-over-year to 20.2%, primarily due to a 30 basis point increase in SG&A costs as a percentage of revenues [5][11]. - Earnings per share (EPS) for Q2 landed at $0.51, which was in line with expectations but a penny lower than the same period last year [5][11]. Market Sentiment - The broader analyst community maintains a neutral sentiment on Fastenal, with shares seen as fairly valued around $65 per share [2][6]. - Fastenal's stock has experienced a pullback since its Q1 results, aligning with the neutral stance on the shares [6]. Industry Context - The manufacturing environment remains challenging, with the ISM Manufacturing PMI reported at 48.5, indicating contraction [10]. - Daily sales growth has been declining for the past quarters, with Q2 growth landing at 1.8%, reflecting a continued tough operating environment [11]. Growth Initiatives - Fastenal reported 107 Onsite signings in Q2, building on 102 signings in Q1, indicating a positive trend in customer acquisition efforts [12].

Fastenal (FAST) reported $1.92 billion in revenue for the quarter ended June 2024, representing a year-overyear increase of 1.8%. EPS of $0.51 for the same period compares to $0.52 a year ago. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Here is how Fastenal performed in the ...

TradingView Do you have a news tip for Investopedia reporters? Please email us at tips@investopedia.com Key Takeaways FAST Fastenal's revenue got a lift even as the distributor of fasteners and other commercial products' CEO said market activity was "challenging." The daily sales rate for non-fastener products increased 4.2% year-over-year. A drop in the daily sales rate for fasteners was less than in the previous quarter. The company said it was encouraged by its efforts to add new customers. Shares of Fas ...

A quarter ago, it was expected that this maker of industrial and construction fasteners would post earnings of $0.53 per share when it actually produced earnings of $0.52, delivering a surprise of -1.89%. Fastenal, which belongs to the Zacks Building Products - Retail industry, posted revenues of $1.92 billion for the quarter ended June 2024, missing the Zacks Consensus Estimate by 0.29%. This compares to year-ago revenues of $1.88 billion. The company has topped consensus revenue estimates just once over t ...

[Performance Summary](index=1&type=section&id=PERFORMANCE%20SUMMARY) For the second quarter of 2024, Fastenal reported a 1.8% year-over-year increase in both net sales and daily sales However, profitability metrics declined, with operating income decreasing by **2.0%** and diluted net income per share falling by **2.0%** to **$0.51** Gross margin contracted from **45.5%** to **45.1%** | | Six-month Period 2024 | Six-month Period 2023 | Change | Three-month Period 2024 | Three-month Period 2023 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net sales** | **$3,811.3 M** | **$3,742.2 M** | **1.8%** | **$1,916.2 M** | **$1,883.1 M** | **1.8%** | | **Gross profit** | **$1,725.1 M** | **$1,707.5 M** | **1.0%** | **$863.5 M** | **$857.5 M** | **0.7%** | | *% of net sales* | **45.3%** | **45.6%** | | **45.1%** | **45.5%** | | | **Operating income** | **$777.1 M** | **$788.1 M** | **-1.4%** | **$386.9 M** | **$394.9 M** | **-2.0%** | | *% of net sales* | **20.4%** | **21.1%** | | **20.2%** | **21.0%** | | | **Net income** | **$590.4 M** | **$593.1 M** | **-0.5%** | **$292.7 M** | **$298.0 M** | **-1.8%** | | **Diluted net income per share** | **$1.03** | **$1.04** | **-0.7%** | **$0.51** | **$0.52** | **-2.0%** | [Quarterly Results of Operations](index=1&type=section&id=QUARTERLY%20RESULTS%20OF%20OPERATIONS) This section details the operational performance for Q2 2024 While sales saw modest growth driven by large customers and Onsite locations, profitability was compressed A lower gross margin, combined with SG&A expenses growing faster than sales, led to a decrease in both operating and net income compared to the prior-year period [Sales](index=1&type=section&id=Sales) Q2 2024 net sales rose **1.8%** to **$1,916.2 million**, driven by higher unit sales to large customers and new Onsite locations This growth was tempered by a **30-60 basis points** decline from product pricing, particularly in fasteners Performance diverged across segments, with manufacturing, non-fastener products, and national accounts showing relative strength compared to non-manufacturing, fasteners, and non-national accounts - Net sales increased **$33.1 million**, or **1.8%**, in Q2 2024, primarily due to unit growth with larger customers and Onsite locations opened in the last two years[1](index=1&type=chunk) - Product pricing negatively impacted net sales by **30-60 basis points**, a reversal from the prior year's **190-220 basis point** increase, reflecting lower fastener and transportation costs[1](index=1&type=chunk) | End Market | DSR Change Q2 2024 vs Q2 2023 | % of Sales Q2 2024 | | :--- | :--- | :--- | | Total manufacturing | **2.7%** | **75.5%** | | Total non-manufacturing | **-1.0%** | **24.5%** | | Product Line | DSR Change Q2 2024 vs Q2 2023 | % of Sales Q2 2024 | | :--- | :--- | :--- | | Total fasteners | **-3.0%** | **31.0%** | | Total non-fasteners | **4.2%** | **69.0%** | | Customer Type | DSR Change Q2 2024 vs Q2 2023 | % of Sales Q2 2024 | | :--- | :--- | :--- | | National accounts | **5.8%** | **62.4%** | | Non-national accounts | **-4.3%** | **37.6%** | [Gross Profit](index=4&type=section&id=Gross%20Profit) The gross profit margin for Q2 2024 decreased to **45.1%** from **45.5%** in Q2 2023 The decline was primarily caused by an unfavorable customer and product mix (stronger growth in lower-margin large accounts and non-fastener products) and short-term supply chain inefficiencies related to warehousing customers - Gross profit margin fell by **40 basis points** to **45.1%** YoY[6](index=6&type=chunk) - Key negative impacts were an unfavorable mix from stronger growth of large customers and non-fastener products, and temporary supply chain inefficiencies Price-cost impact was not meaningful[6](index=6&type=chunk) [SG&A Expenses](index=4&type=section&id=SG%26A%20Expenses) SG&A expenses increased **3.0%** in Q2 2024, representing **24.9%** of net sales compared to **24.6%** in the prior year, indicating cost deleveraging The increase was driven by higher employee base pay, vehicle lease costs, and significant expenses related to a larger-than-expected Customer Expo - SG&A as a percentage of sales increased to **24.9%** from **24.6%** YoY as expense growth outpaced sales growth[52](index=52&type=chunk) - Employee-related expenses, representing **70-75%** of total SG&A, rose **2.4%** due to higher average FTE and wages, partly offset by lower bonuses[52](index=52&type=chunk) - Other SG&A expenses rose **10.1%**, driven by higher vehicle lease costs, Customer Expo expenses, and general insurance[52](index=52&type=chunk) [Operating Income](index=4&type=section&id=Operating%20Income) Operating income margin contracted to **20.2%** in Q2 2024 from **21.0%** in Q2 2023 This decrease was a direct result of the combined impact of lower gross margins and the deleveraging of SG&A expenses | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Operating Income | **$386.9 M** | **$394.9 M** | **-2.0%** | | % of net sales | **20.2%** | **21.0%** | **-80 bps** | [Net Interest, Taxes, and Net Income](index=4&type=section&id=Net%20Interest,%20Taxes,%20and%20Net%20Income) Net interest expense fell sharply to **$0.5 million** from **$2.3 million** YoY, due to higher interest income on cash balances and lower average borrowings The effective tax rate was stable at **24.2%** Consequently, net income decreased by **1.8%** to **$292.7 million**, with diluted EPS at **$0.51** versus **$0.52** in the prior year - Net interest expense decreased to **$0.5M** in Q2 2024 from **$2.3M** in Q2 2023, due to higher interest income and lower interest expense[12](index=12&type=chunk) - The effective tax rate was **24.2%** in Q2 2024, compared to **24.1%** in Q2 2023 The company anticipates an ongoing tax rate of approximately **24.5%**[13](index=13&type=chunk) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | **$292.7 M** | **$298.0 M** | **-1.8%** | | Diluted EPS | **$0.51** | **$0.52** | **-2.0%** | [Growth Drivers](index=3&type=section&id=Growth%20Drivers) The company's growth is propelled by its digital initiatives and Onsite expansion The Digital Footprint, which includes FMI technology and eBusiness, now constitutes **59.4%** of sales, up from **55.3%** YoY eBusiness sales grew **25.5%**, while Onsite locations increased by **11.9%** to **1,934** active sites The company remains on track with its 2024 signing goals for both Onsites and FMI devices - The Digital Footprint (FMI sales + non-FMI eBusiness sales) represented **59.4%** of sales in Q2 2024, an increase from **55.3%** in Q2 2023[5](index=5&type=chunk) - Daily sales through eBusiness grew **25.5%** in Q2 2024 and represented **28.7%** of total sales eProcurement grew **30.9%** and eCommerce grew **11.6%**[5](index=5&type=chunk) - The company signed **107** new Onsite locations in Q2 2024, reaching a total of **1,934** active sites, an **11.9%** YoY increase The 2024 goal remains **375-400** signings[50](index=50&type=chunk) | FMI Technology | Three-month Period 2024 | Three-month Period 2023 | Change | | :--- | :--- | :--- | :--- | | Weighted FASTBin/FASTVend signings (MEUs) | **7,188** | **6,794** | **5.8%** | | FMI daily sales | **$12.7 M** | **$11.8 M** | **7.0%** | | FMI as % of sales | **41.8%** | **39.8%** | | [Balance Sheet and Cash Flow](index=5&type=section&id=BALANCE%20SHEET%20AND%20CASH%20FLOW) The company maintained a strong balance sheet, reducing total debt by **32.9%** year-over-year to **$235.0 million** Q2 operating cash flow decreased **14.6%** to **$258.0 million**, primarily due to changes in working capital, specifically inventory becoming a use of cash The full-year 2024 capital expenditure forecast was raised to a range of **$235.0M** to **$255.0M** to support strong FMI device signings | Working Capital (as of June 30) | 2024 | 2023 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Accounts receivable, net | **$1,204.8 M** | **$1,171.6 M** | **$33.2 M** | **2.8%** | | Inventories | **$1,504.6 M** | **$1,565.4 M** | (**$60.8 M**) | **-3.9%** | | Accounts payable | **$292.6 M** | **$262.0 M** | **$30.6 M** | **11.7%** | - Total debt was reduced to **$235.0M** at Q2 2024 end (**6.3%** of total capital), compared to **$350.0M** (**9.4%** of total capital) a year prior[11](index=11&type=chunk) - Q2 net cash from operating activities was **$258.0M**, a **14.6%** decrease from Q2 2023, mainly because inventory was a modest use of cash versus a significant source of cash in the prior year[33](index=33&type=chunk)[55](index=55&type=chunk) - The full-year 2024 capex forecast was increased to a range of **$235.0M** to **$255.0M**, up from the original range, driven by higher expected investment in vending devices[10](index=10&type=chunk) - Returned **$223.3M** to shareholders via dividends in Q2 2024 No stock was repurchased in the first half of 2024[11](index=11&type=chunk) [Additional Information (Headcount & Locations)](index=7&type=section&id=ADDITIONAL%20INFORMATION) Total FTE headcount grew **3.0%** year-over-year to **21,249**, with increases focused on supporting Onsite expansion, distribution, and IT The network of in-market locations grew **5.1%** to **3,533** This growth reflects the company's strategic shift towards Onsite locations (up **11.9%** YoY) while the traditional branch network has stabilized after a period of rationalization (down **2.2%** YoY) | Metric (as of Q2 end) | 2024 Q2 | 2023 Q2 | Change Since Q2 2023 | | :--- | :--- | :--- | :--- | | Total personnel - FTE headcount | **21,249** | **20,631** | **3.0%** | | Number of branch locations | **1,599** | **1,635** | **-2.2%** | | Number of active Onsite locations | **1,934** | **1,728** | **11.9%** | | Number of in-market locations | **3,533** | **3,363** | **5.1%** | - The strategic rationalization of the branch network has concluded Future growth in in-market locations is expected to accelerate, driven by continued Onsite openings and a stable or moderately growing branch network[16](index=16&type=chunk) | Activity (Three-month Period) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Branch openings | **3** | **3** | | Branch closures, net | **4** | (**28**) | | Onsite activations | **96** | **89** | | Onsite closures, net | (**34**) | (**35**) | [Condensed Consolidated Financial Statements](index=9&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section provides the unaudited condensed consolidated balance sheets, statements of income, and statements of cash flows for the three and six-month periods ended June 30, 2024, and 2023 [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, the company reported total assets of **$4.60 billion**, supported by **$3.50 billion** in total stockholders' equity Key current assets include **$1.20 billion** in net trade accounts receivable and **$1.50 billion** in inventories | Assets | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | **$3,146.7 M** | **$3,020.9 M** | | Total assets | **$4,603.5 M** | **$4,462.9 M** | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | **$717.0 M** | **$661.3 M** | | Total liabilities | **$1,107.9 M** | **$1,114.1 M** | | Total stockholders' equity | **$3,495.6 M** | **$3,348.8 M** | | Total liabilities and stockholders' equity | **$4,603.5 M** | **$4,462.9 M** | [Condensed Consolidated Statements of Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended June 30, 2024, the company reported net sales of **$1,916.2 million** and net income of **$292.7 million** For the six-month period, net sales were **$3,811.3 million** and net income was **$590.4 million** | (Amounts in millions) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net sales | **$1,916.2** | **$1,883.1** | | Gross profit | **$863.5** | **$857.5** | | Operating income | **$386.9** | **$394.9** | | Net income | **$292.7** | **$298.0** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2024, net cash provided by operating activities was **$593.6 million** Net cash used in investing activities was **$101.1 million**, primarily for property and equipment purchases Net cash used in financing activities was **$452.9 million**, dominated by **$446.5 million** in dividend payments | (Amounts in millions) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | **$593.6** | **$690.6** | | Net cash used in investing activities | (**$101.1**) | (**$85.2**) | | Net cash used in financing activities | (**$452.9**) | (**$592.2**) | | Net increase in cash and cash equivalents | **$34.2** | **$13.5** | | Cash and cash equivalents at end of period | **$255.5** | **$243.6** |

The combined assessment of analysts suggests that 'Weighted FASTBin/FASTVend installations' will likely reach 118,313. The estimate compares to the year-ago value of 107,115. Over the last 30 days, there has been a downward revision of 3.1% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe. Bearing this in mind, let's now explore the average estimates of sp ...

Group 1: Hockey Stocks Overview - A Canadian team has not won the Stanley Cup since 1993, and the last Canadian team to play in the final was the Montreal Canadiens in 2021, highlighting a long drought for Canadian teams [1] - The article focuses on selecting three hockey-related stocks for long-term investment, specifically companies that are sponsors or benefit from the NHL [1] Group 2: PepsiCo (PEP) - PepsiCo is the official sponsor of the NHL in the U.S. and Canada for various product categories, having extended its sponsorship through 2026, marking nearly two decades of partnership [3] - Over the past three years, PepsiCo's revenue and operating income grew by 9.1% and 8.6%, respectively, with a return on invested capital of 15.9% [4] - The company has a dividend yield of 3.2%, making it an attractive option for dividend investors [5] - In Q1 2024, PepsiCo reported a 1.9% increase in net sales to $1.90 billion, while operating income fell by 0.8% to $390.2 million [6] - Despite slower demand, PepsiCo expects 4% organic growth in 2024, a return to more normal growth rates [15] - Over the past five years, PepsiCo's stock gained only 28%, underperforming the S&P 500 index, which returned 86% [14] Group 3: Madison Square Garden Sports (MSGS) - MSGS's enterprise value is $5.62 billion, which is 43% less than the combined estimated value of its teams, the New York Rangers and the New York Knicks, valued at $9.88 billion [8] - The Dolan family controls 71% of MSGS stock, which contributes to a discount in share price, although the executive chairman has been recognized for enhancing shareholder value [23][20] - MSGS owns the New York Rangers and the New York Knicks, as well as Madison Square Garden, where these teams play [19] Group 4: Fastenal (FAST) - Fastenal has delivered a five-year gain of 97%, outperforming the S&P 500 by 12 percentage points [17] - The company became a Dividend Aristocrat in February, indicating a strong track record of dividend growth [18] - Fastenal is the Official Supply Chain Solutions Partner of the NHL, providing products and services to enhance the game experience [21] - Following its Q1 2024 earnings report, Fastenal's shares dropped by 12%, prompting a director to purchase $229,100 in stock [22]

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