Fastenal's Q3 Earnings Meet Estimates, Sales Miss, Stock Up

Core Viewpoint - Fastenal Company reported mixed third-quarter 2024 results, with earnings meeting expectations while net sales fell short of consensus estimates. Year-over-year, net sales increased, but earnings remained flat [1][4]. Financial Performance - Earnings per share (EPS) was 52 cents, matching the Zacks Consensus Estimate and unchanged from the previous year [4]. - Net sales reached $1.91 billion, slightly missing the consensus by 0.3$29.8 million, reflecting a 1.9% year-over-year increase [5]. Sales Breakdown - Daily sales of Fasteners, which accounted for approximately 30.2% of net sales, declined by 4% year-over-year [6]. - Sales of Safety Supplies (22.5% of net sales) grew by 6.8% year-over-year, while Other Product Lines (47.3%) increased by 3.7% [6]. - Daily sales in Heavy Manufacturing (43.3% of net sales) rose by 1.8% year-over-year, and Other Manufacturing (32.2%) grew by 4% [7]. Market Trends - Daily sales in Non-Residential Construction and Reseller segments declined by 3.6% and 11.3%, respectively, while Other End-Markets saw a 5.6% increase [8]. - Daily sales to National Account customers (63.6% of total net sales) increased by 5.6% year-over-year, while sales to Non-National Account customers (36.4%) fell by 4.1% [9]. Growth Drivers - Fastenal opened 93 new Onsite locations in the third quarter, bringing the total to 1,986 active sites, an 11.7% increase from the previous year [10]. - Daily sales through Onsite locations increased at a low-single-digit rate year-over-year, supported by new locations activated in 2023 and 2024 [11]. Margin Analysis - Gross margin was 44.9%, down 100 basis points year-over-year, while operating margin decreased to 20.3%, down 70 basis points [12]. - Selling, general, and administrative expenses as a percentage of net sales decreased to 24.6% from 25% in the prior year [12]. Financial Position - As of September 30, 2024, cash and cash equivalents were $292.2 million, up from$221.3 million at the end of 2023. Long-term debt decreased to $125 million from$200 million [13]. - The company returned $223.4 million to shareholders in dividends during the quarter, with net cash from operating activities totaling$890.5 million, down from $1.08 billion in the previous year [13].