Fastenal Company Reports 2020 Annual and Fourth Quarter Earnings
Fastenal Company (NASDAQ: FAST) reported its 2020 financial results, showing a 5.9% increase in net sales to $5,647.3 million. The fourth quarter saw a 6.4% rise in net sales compared to the previous year, driven by demand for safety and janitorial products. However, gross profit margin declined 130 basis points to 45.6%. Operating income increased 8.0% year-over-year, while net earnings rose 8.6% to $859.1 million. The company returned $803.4 million in dividends, including a special dividend, reflecting a positive financial outlook.
- Net sales increased $5,647.3 million in 2020, a 5.9% increase from 2019.
- Operating income rose 8.0% to $1,141.8 million for the year.
- Net earnings increased 8.6% to $859.1 million, with diluted EPS of $1.49.
- Dividends returned to shareholders totaled $803.4 million in 2020, including a special dividend of $0.40.
- Gross profit margin decreased 130 basis points to 45.5% in 2020.
- Daily sales of fastener products fell 2.3% compared to Q4 2019, indicating weakness in this segment.
Fastenal Company (Nasdaq:FAST), a leader in the wholesale distribution of industrial and construction supplies, today announced its financial results for the quarter and year ended December 31, 2020. Except for share and per share information, or as otherwise noted below, dollar amounts are stated in millions. Share and per share information in this release, and in the financial statements attached to this release, has been adjusted to reflect the two-for-one stock split effective at the close of business on May 22, 2019. Throughout this document, percentage and dollar calculations, which are based on non-rounded dollar values, may not be able to be recalculated using the dollar values included in this document due to the rounding of those dollar values.
PERFORMANCE SUMMARY
|
Twelve-month Period |
|
Three-month Period |
|||||||||||||||||
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
|||||||||
Net sales |
$ |
5,647.3 |
|
|
5,333.7 |
|
|
5.9 |
% |
|
$ |
1,358.0 |
|
|
1,276.9 |
|
|
6.4 |
% |
|
Business days |
255 |
|
|
254 |
|
|
|
|
63 |
|
|
63 |
|
|
|
|||||
Daily sales |
$ |
22.1 |
|
|
21.0 |
|
|
5.5 |
% |
|
$ |
21.6 |
|
|
20.3 |
|
|
6.4 |
% |
|
Gross profit |
$ |
2,567.8 |
|
|
2,515.4 |
|
|
2.1 |
% |
|
$ |
618.8 |
|
|
598.4 |
|
|
3.4 |
% |
|
% of sales |
45.5 |
% |
|
47.2 |
% |
|
|
|
45.6 |
% |
|
46.9 |
% |
|
|
|||||
Operating income |
$ |
1,141.8 |
|
|
1,057.2 |
|
|
8.0 |
% |
|
$ |
264.4 |
|
|
238.9 |
|
|
10.6 |
% |
|
% of sales |
20.2 |
% |
|
19.8 |
% |
|
|
|
19.5 |
% |
|
18.7 |
% |
|
|
|||||
Earnings before income taxes |
$ |
1,132.7 |
|
|
1,043.7 |
|
|
8.5 |
% |
|
$ |
262.2 |
|
|
236.4 |
|
|
10.9 |
% |
|
% of sales |
20.1 |
% |
|
19.6 |
% |
|
|
|
19.3 |
% |
|
18.5 |
% |
|
|
|||||
Net earnings |
$ |
859.1 |
|
|
790.9 |
|
|
8.6 |
% |
|
$ |
196.1 |
|
|
178.7 |
|
|
9.7 |
% |
|
Diluted net earnings per share |
$ |
1.49 |
|
|
1.38 |
|
|
8.4 |
% |
|
$ |
0.34 |
|
|
0.31 |
|
|
9.6 |
% |
Quarterly Results of Operations
Net sales increased
Daily sales of fastener products declined
Our gross profit, as a percentage of net sales, declined 130 basis points to
Our gross profit, as a percentage of net sales, increased 30 basis points to
Our operating income, as a percentage of net sales, increased to
Employee-related expenses, which represents
Our net interest expense was
We recorded income tax expense of
Our net earnings during the fourth quarter of 2020 were
Growth Driver Performance
We signed 16,417 industrial vending devices during 2020, including 3,456 devices during the fourth quarter of 2020. On a business day basis, we signed 75 in the first quarter of 2020, 54 in the second quarter of 2020, 73 in the third quarter of 2020, and 55 in the fourth quarter of 2020. Our installed device count on December 31, 2020 was 95,733, an increase of
We plan on altering our presentation of vending in 2021 to reflect development of our FAST Bin technologies, a family of "smart bins" that are based on scale, infrared, or RFID technologies. Our industry has long utilized bin clusters, which we call FAST Stock, close to the point of use within a customer location, providing a measure of convenience and efficiency in dispensing fasteners and other products. However, maintaining these systems requires significant manual effort to ensure sufficient supply and timely replenishment. FAST Bin, in contrast to FAST Stock, is a set of electronic inventory management solutions that automate process controls by providing 24/7 continuous inventory monitoring, real-time inventory visibility, and more efficient replenishment that makes customers, and our own operations, more productive. As such, FAST Bin can improve supply chain visibility for a broader range of products, complementing vending. We view industrial vending and FAST Bin, along with FAST Stock, to be part of a suite of tools (called 'Fastenal Managed Inventory', or FMI) that together provide Fastenal with the ability to better and more visibly manage our customers' product consumption and fulfillment. As a result, beginning in 2021 we plan to report 'Weighted FMI Device' signings and installations, which is the combined activity of FAST Vend and FAST Bin converted into a comparable unit of measure, or 'machine equivalent unit' (MEU). This conversion takes the targeted monthly throughput of each FMI device signed or installed and compares it to the
We signed 223 new Onsite locations (defined as dedicated sales and service provided from within, or in close proximity to, the customer's facility) during 2020. This included 85 signings in the first quarter of 2020, 40 signings in the second quarter of 2020, 62 signings in the third quarter of 2020, and 36 signings in the fourth quarter of 2020. We believe the pandemic adversely affected our ability to generate signings, particularly during the second and fourth quarters of 2020 when COVID-related impacts were greatest, as key decision-makers at our customers were focused more on short-term crisis management than long-term strategic planning. We had 1,265 active sites on December 31, 2020, which represented an increase of
Daily sales to our national account customers (defined as customer accounts with a multi-site contract) grew
Balance Sheet and Cash Flow
We produced operating cash flow of
We returned
Total debt on our balance sheet was
Accounts receivable were
Additional Information
The table below summarizes our total and FTE (based on 40 hours per week) employee headcount, our investments in in-market locations (defined as the sum of the total number of public branch locations and the total number of active Onsite locations), and industrial vending devices at the end of the periods presented and the percentage change compared to the end of the prior periods.
|
|
|
Change Since: |
|
|
Change Since: |
|||||
|
Q4
|
Q3
|
Q3
|
|
Q4
|
Q4
|
|||||
In-market locations - absolute employee headcount |
12,680 |
|
12,708 |
|
-0.2 |
% |
|
13,977 |
|
-9.3 |
% |
In-market locations - FTE employee headcount |
11,260 |
|
11,302 |
|
-0.4 |
% |
|
12,236 |
|
-8.0 |
% |
Total absolute employee headcount |
20,365 |
|
20,336 |
|
0.1 |
% |
|
21,948 |
|
-7.2 |
% |
Total FTE employee headcount |
17,836 |
|
17,862 |
|
-0.1 |
% |
|
18,968 |
|
-6.0 |
% |
|
|
|
|
|
|
|
|||||
Number of public branch locations |
2,003 |
|
2,033 |
|
-1.5 |
% |
|
2,114 |
|
-5.3 |
% |
Number of active Onsite locations |
1,265 |
|
1,236 |
|
2.3 |
% |
|
1,114 |
|
13.6 |
% |
Number of in-market locations |
3,268 |
|
3,269 |
|
0.0 |
% |
|
3,228 |
|
1.2 |
% |
Ratio of in-market location FTE headcount to in-market locations |
3:1 |
3:1 |
|
|
4:1 |
|
|||||
Industrial vending devices (installed device count) (1) |
95,733 |
|
94,395 |
|
1.4 |
% |
|
89,937 |
|
6.4 |
% |
Ratio of industrial vending devices to in-market locations |
29:1 |
29:1 |
|
|
28:1 |
|
(1) | This number primarily represents devices which principally dispense product and produce product revenues, and excludes slightly more than 15,000 devices that are part of our locker lease program where the devices are principally used for the check-in/check-out of equipment. |
During the last twelve months, we reduced our total FTE employee headcount by 1,132. This reflects a decline in our in-market FTE employee headcount of 976, as well as declines in headcount at our distribution centers and manufacturing operations. These reductions are primarily related to efforts to control expenses in response to weaker demand from traditional manufacturing and construction customers. This was only partly offset by additions in non-branch selling and support roles. The latter most significantly reflects an increase in personnel in Information Technology, which includes the addition of employees from our acquisition of certain assets of Apex, as well as roles to support customer acquisition and implementation, particularly as it relates to our growth drivers and to support general corporate functions.
We opened two branches in the fourth quarter of 2020 and closed 32 branches, net of conversions. We activated 58 Onsite locations in the fourth quarter of 2020 and closed 29, net of conversions. For the full year of 2020, we opened twelve branches and closed 123, net of conversions. For the full year of 2020, we activated 257 Onsite locations and closed 106, net of conversions. The number of closings reflects both normal churn in our business, whether due to redefining or exiting customer relationships, the shutting or relocation of customer facilities, or a customer decision, as well as our ongoing review of underperforming locations. Our in-market network forms the foundation of our business strategy, and we will continue to open or close locations as is deemed necessary to sustain and improve our network, support our growth drivers, and manage our operating expenses.
CONFERENCE CALL TO DISCUSS QUARTERLY RESULTS
As we previously disclosed, we will host a conference call today to review the quarterly results, as well as current operations. This conference call will be broadcast live over the Internet at 9:00 a.m., central time. To access the webcast, please go to the Fastenal Company Investor Relations Website at https://investor.fastenal.com/events.cfm.
ADDITIONAL MONTHLY AND QUARTERLY INFORMATION
We publish on the 'Investor Relations' page of our website at www.fastenal.com both our monthly consolidated net sales information and the presentation for our quarterly conference call (which includes information, supplemental to that contained in our earnings announcement, regarding results for the quarter). We expect to publish the consolidated net sales information for each month, other than the third month of a quarter, at 6:00 a.m., central time, on the fourth business day of the following month. We expect to publish the consolidated net sales information for the third month of each quarter and the conference call presentation for each quarter at 6:00 a.m., central time, on the date our earnings announcement for such quarter is publicly released.
FORWARD LOOKING STATEMENTS
Certain statements contained in this document do not relate strictly to historical or current facts. As such, they are considered 'forward-looking statements' that provide current expectations or forecasts of future events. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of terminology such as anticipate, believe, should, estimate, expect, intend, may, will, plan, goal, project, hope, trend, target, opportunity, and similar words or expressions, or by references to typical outcomes. Any statement that is not a historical fact, including estimates, projections, future trends, and the outcome of events that have not yet occurred, is a forward-looking statement. Our forward-looking statements generally relate to our expectations and beliefs regarding the business environment in which we operate, our projections of future performance, our perceived marketplace opportunities, our strategies, goals, mission, and vision, and our expectations about future capital expenditures, future tax rates, future inventory levels, future Onsite and weighted FMI device signings, and future operating results and business activity. You should understand that forward-looking statements involve a variety of risks and uncertainties, known and unknown (including risks related to the COVID-19 pandemic), and may be affected by inaccurate assumptions. Consequently, no forward-looking statement can be guaranteed and actual results may vary materially. Factors that could cause our actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those detailed in our most recent annual and quarterly reports. Each forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any such statement to reflect events or circumstances arising after such date. FAST-E
FASTENAL COMPANY AND SUBSIDIARIES |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(Amounts in millions except share information) |
|||||||
|
|
|
|
|
|||
|
|
December 31,
|
|
December 31,
|
|||
Assets |
|
(Unaudited) |
|
|
|||
Current assets: |
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
245.7 |
|
|
174.9 |
|
Trade accounts receivable, net of allowance for credit losses of |
|
769.4 |
|
|
741.8 |
|
|
Inventories |
|
1,337.5 |
|
|
1,366.4 |
|
|
Prepaid income taxes |
|
6.7 |
|
|
16.7 |
|
|
Other current assets |
|
140.3 |
|
|
157.4 |
|
|
Total current assets |
|
2,499.6 |
|
|
2,457.2 |
|
|
|
|
|
|
|
|||
Property and equipment, net |
|
1,030.7 |
|
|
1,023.2 |
|
|
Operating lease right-of-use assets |
|
243.0 |
|
|
243.2 |
|
|
Other assets |
|
191.4 |
|
|
76.3 |
|
|
|
|
|
|
|
|||
Total assets |
|
$ |
3,964.7 |
|
|
3,799.9 |
|
|
|
|
|
|
|||
Liabilities and Stockholders' Equity |
|
|
|
|
|||
Current liabilities: |
|
|
|
|
|||
Current portion of debt |
|
$ |
40.0 |
|
|
3.0 |
|
Accounts payable |
|
207.0 |
|
|
192.8 |
|
|
Accrued expenses |
|
272.1 |
|
|
251.5 |
|
|
Current portion of operating lease liabilities |
|
93.6 |
|
|
97.4 |
|
|
Total current liabilities |
|
612.7 |
|
|
544.7 |
|
|
|
|
|
|
|
|||
Long-term debt |
|
365.0 |
|
|
342.0 |
|
|
Operating lease liabilities |
|
151.5 |
|
|
148.2 |
|
|
Deferred income taxes |
|
102.3 |
|
|
99.4 |
|
|
|
|
|
|
|
|||
Stockholders' equity: |
|
|
|
|
|||
Preferred stock: |
|
— |
|
|
— |
|
|
Common stock: |
|
2.9 |
|
|
2.9 |
|
|
Additional paid-in capital |
|
61.9 |
|
|
67.2 |
|
|
Retained earnings |
|
2,689.6 |
|
|
2,633.9 |
|
|
Accumulated other comprehensive loss |
|
(21.2 |
) |
|
(38.4 |
) | |
Total stockholders' equity |
|
2,733.2 |
|
|
2,665.6 |
|
|
|
|
|
|
|
|||
Total liabilities and stockholders' equity |
|
$ |
3,964.7 |
|
|
3,799.9 |
|
FASTENAL COMPANY AND SUBSIDIARIES |
|||||||||||||
Condensed Consolidated Statements of Earnings |
|||||||||||||
(Amounts in millions except earnings per share) |
|||||||||||||
|
|
|
|
|
|
|
|
||||||
|
Year Ended
|
|
Three Months Ended
|
||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||
|
(Unaudited) |
|
|
|
(Unaudited) |
|
(Unaudited) |
||||||
Net sales |
$ |
5,647.3 |
|
|
5,333.7 |
|
|
$ |
1,358.0 |
|
|
1,276.9 |
|
|
|
|
|
|
|
|
|
||||||
Cost of sales |
3,079.5 |
|
|
2,818.3 |
|
|
739.2 |
|
|
678.5 |
|
||
Gross profit |
2,567.8 |
|
|
2,515.4 |
|
|
618.8 |
|
|
598.4 |
|
||
|
|
|
|
|
|
|
|
||||||
Operating and administrative expenses |
1,427.4 |
|
|
1,459.4 |
|
|
354.7 |
|
|
359.9 |
|
||
Gain on sale of property and equipment |
(1.4 |
) |
|
(1.2 |
) |
|
(0.3 |
) |
|
(0.4 |
) | ||
Operating income |
1,141.8 |
|
|
1,057.2 |
|
|
264.4 |
|
|
238.9 |
|
||
|
|
|
|
|
|
|
|
||||||
Interest income |
0.6 |
|
|
0.4 |
|
|
0.3 |
|
|
0.1 |
|
||
Interest expense |
(9.7 |
) |
|
(13.9 |
) |
|
(2.5 |
) |
|
(2.6 |
) | ||
|
|
|
|
|
|
|
|
||||||
Earnings before income taxes |
1,132.7 |
|
|
1,043.7 |
|
|
262.2 |
|
|
236.4 |
|
||
|
|
|
|
|
|
|
|
||||||
Income tax expense |
273.6 |
|
|
252.8 |
|
|
66.1 |
|
|
57.7 |
|
||
|
|
|
|
|
|
|
|
||||||
Net earnings |
$ |
859.1 |
|
|
790.9 |
|
|
$ |
196.1 |
|
|
178.7 |
|
|
|
|
|
|
|
|
|
||||||
Basic net earnings per share |
$ |
1.50 |
|
|
1.38 |
|
|
$ |
0.34 |
|
|
0.31 |
|
|
|
|
|
|
|
|
|
||||||
Diluted net earnings per share |
$ |
1.49 |
|
|
1.38 |
|
|
$ |
0.34 |
|
|
0.31 |
|
|
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding |
573.8 |
|
|
573.2 |
|
|
574.1 |
|
|
574.0 |
|
||
|
|
|
|
|
|
|
|
||||||
Diluted weighted average shares outstanding |
575.7 |
|
|
574.4 |
|
|
576.4 |
|
|
575.6 |
|
FASTENAL COMPANY AND SUBSIDIARIES |
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(Amounts in millions) |
|||||||
|
|
Year Ended December 31, |
|||||
|
|
2020 |
|
2019 |
|||
|
|
(Unaudited) |
|
|
|||
Cash flows from operating activities: |
|
|
|
|
|||
Net earnings |
|
$ |
859.1 |
|
|
790.9 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities, net of acquisition: |
|
|
|
|
|||
Depreciation of property and equipment |
|
153.3 |
|
|
144.6 |
|
|
Gain on sale of property and equipment |
|
(1.4 |
) |
|
(1.2 |
) | |
Bad debt expense |
|
7.5 |
|
|
5.5 |
|
|
Deferred income taxes |
|
2.9 |
|
|
15.0 |
|
|
Stock-based compensation |
|
5.7 |
|
|
5.7 |
|
|
Amortization of intangible assets |
|
9.1 |
|
|
4.1 |
|
|
Changes in operating assets and liabilities, net of acquisition: |
|
|
|
|
|||
Trade accounts receivable |
|
(29.7 |
) |
|
(30.4 |
) | |
Inventories |
|
36.0 |
|
|
(84.4 |
) | |
Other current assets |
|
17.1 |
|
|
(10.4 |
) | |
Accounts payable |
|
14.2 |
|
|
(0.8 |
) | |
Accrued expenses |
|
20.6 |
|
|
10.7 |
|
|
Income taxes |
|
10.0 |
|
|
(7.7 |
) | |
Other |
|
(2.6 |
) |
|
1.1 |
|
|
Net cash provided by operating activities |
|
1,101.8 |
|
|
842.7 |
|
|
|
|
|
|
|
|||
Cash flows from investing activities: |
|
|
|
|
|||
Purchases of property and equipment |
|
(168.1 |
) |
|
(246.4 |
) | |
Proceeds from sale of property and equipment |
|
10.6 |
|
|
6.6 |
|
|
Cash paid for acquisition |
|
(125.0 |
) |
|
— |
|
|
Other |
|
0.8 |
|
|
0.1 |
|
|
Net cash used in investing activities |
|
(281.7 |
) |
|
(239.7 |
) | |
|
|
|
|
|
|||
Cash flows from financing activities: |
|
|
|
|
|||
Proceeds from debt obligations |
|
1,000.0 |
|
|
910.0 |
|
|
Payments against debt obligations |
(940.0 |
) | (1,065.0 |
) | |||
Proceeds from exercise of stock options |
|
41.0 |
|
|
58.5 |
|
|
Purchases of common stock |
|
(52.0 |
) |
|
— |
|
|
Payments of dividends |
|
(803.4 |
) |
|
(498.6 |
) | |
Net cash used in financing activities |
|
(754.4 |
) |
|
(595.1 |
) | |
|
|
|
|
|
|||
Effect of exchange rate changes on cash and cash equivalents |
|
5.1 |
|
|
(0.2 |
) | |
|
|
|
|
|
|||
Net increase in cash and cash equivalents |
|
70.8 |
|
|
7.7 |
|
|
|
|
|
|
|
|||
Cash and cash equivalents at beginning of year |
|
174.9 |
|
|
167.2 |
|
|
Cash and cash equivalents at end of year |
|
$ |
245.7 |
|
|
174.9 |
|
|
|
|
|
|
|||
Supplemental information: |
|
|
|
|
|||
Cash paid for interest |
|
$ |
8.4 |
|
|
13.9 |
|
Net cash paid for income taxes |
|
$ |
260.1 |
|
|
242.7 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20210120005152/en/
FAQ
What were Fastenal's earnings results for Q4 2020?
How much did Fastenal pay in dividends in 2020?
What was the impact of the pandemic on Fastenal's sales?
How did Fastenal's operating income change in 2020?