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2014

2014 was a big year for the Fastenal Co.

After a “very challenging year” in 2013, Fastenal reported sales growth doubled in 2014, primarily from volume. Net sales rose 12.2% to $3.7 billion, impacted by slight inflationary price changes in non-fastener products and some price deflation in fastener products. Net earnings grew 10.1% to $494.1 million and EPS gained 10.6% to $1.67.

Those results included steady gains in the company’s fastener products. Fastenal reported 6.9% growth in fasteners during 2014, including 1.6% growth in the first quarter, 5.5% growth in Q2, 9.9% growth in Q3, and 11.4% growth in the final quarter of the year. The company achieved 1.6% growth in fasteners in 2013 and 7.8% fastener growth in 2012.

Fasteners totaled 39.2% of 2014 sales for Fastenal, down from 40.6% the previous year.

Overall Q4 sales gained 13.8% to $926.2 million, with net earnings up 19.3% to $118.4 million and EPS gaining 21.2% to $0.33.

During Q4, Fastenal made an initial foray into the aerospace market by acquiring Texas-based Av-Tech Industries, a wholesale distributor of aerospace fasteners, electronic components, and miscellaneous aircraft parts.

But growth comes at a price in today’s market, and Fastenal is no exception.

In early 2014, then-CEO Will Oberton said his biggest regret of 2013 related to hiring. When asked what he would have changed about 2013, Oberton said: “I would have started hiring sooner. We started accelerating our hiring in June. If I would have done that in January, I think the second half of the year would have looked different.”

That miscalculation may have cost Oberton his job. In December Oberton, 56, resigned as CEO, and the company’s board of directors promoted president Leland J. Hein. Oberton remains chairman of the company’s board of directors.

Since July 2013, Fastenal has added 2,032 people either into a store, or into a leadership role at the district or region level – for an overall workforce increase of 19.2%.

“As we enter 2015, we intend to expand the hours worked at our store locations and will resume the expansion of our headcount to support the future needs of our business and our customers,” the company stated.

Fastenal’s closed 74 stores in 2014, with overall store count dropping 1.9% to 2,637.

The company’s industrial vending program, FAST Solutions, installed 6,080 new machines in 2014, an increase of 14.9% over the previous year’s total.

During 2014, Fastenal co-founders Bob Kierlin and Steve Slaggie retired (see Fastener History section of GlobalFastenerNews.com).

2013

Fastenal CEO Will Oberton called 2013 a “very challenging year” for his company.

Fastenal sales for the year increased 6.1% to $3.32 billion, with pre-tax earnings up 5.8% to $713.5 million and net earnings gaining 6.7% to $448.6 million. EPS gained 6.3% to $1.51.

Full-year fastener sales grew 1.6%, which included Q1 growth of 1.7%; Q2 growth of 1.9%; Q3 growth of 1%; and Q4 growth of 1.9%. 

The company took the unusual step of warning investors in December about its performance.

Oberton’s biggest regret of 2013 relates to hiring. When asked what he would have changed about 2013, Oberton said: “I would have started hiring sooner. We started accelerating our hiring in June. If I would have done that in January, I think the second half of the year would have looked different.”

From May 2013 to December 2013, Fastenal added 1,407 store personnel.

During 2013 Fastenal opened 35 new stores, increasing its overall store count by 1.3% to 2,687. Fastenal’s industrial vending program grew 60.8% to 33,920 installed machines, while the company’s workforce increased 14.1% to 17,277 employees. 

Fastenal reported fastener sales grew 1.6% in the opening quarter of 2014, driven by 5.3% fastener sales growth in March. The company noted some price deflation in its fastener line.

Fastenal sales in Q1 rose 8.7% to $876.5 million on higher unit sales. First-quarter net earnings rose 2.6% to $111.9 million, with EPS up 2.7% to $0.38.

“In 2014, our sales growth was hampered in January and February due to a weak economy and foreign exchange rate fluctuations; however, the biggest impact was a severe winter in North America and its negative impact on our customers and our trucking network,” the company stated. 

During Q1 Fastenal had a net closure of four stores, bringing its overall store count to 2,683. Employee count increased 3% to 17,788 during the quarter.

FAST Solutions recorded a 3.4% increase in the number of installed machines to 42,153 in Q1.

Minnesota Gov. Mark Dayton presented the 2013 Governor’s International Trade Award to Fastenal, which operates in all 50 states, as well as Canada, Puerto Rico, Mexico, Singapore, the Netherlands, Hungary, Malaysia, and China.

Fastenal reported sales, including fasteners, increased 7% to $858.4 million in the third quarter of 2013, with net earnings up 9.2% to $119.3 million. Fastener sales grew modestly, rising 1% during the quarter, down from the 1.9% rate of increase for fasteners in the second quarter.

Sales during the first nine months of 2013 gained 5.7% to $2.51 billion, primarily from higher unit sales. Those results were impacted by “some price deflation in our fastener products.” Nine-month net earnings grew 8.6% to $349.4 million.

2012

Fastenal Co. reported sales grew 13.3% to $3.13 billion in 2012, with pre-tax earnings up 17.2% to $674.1 million and net earnings up 17.5% to $420.5 million.

Fastenal opened 80 new stores during the year, increasing its store count by 3.1% to 2,652 while managing to trim its overall workforce by .2% to 15,145 employees.

Fourth-quarter sales rose 8.5% to $757.2 million, with net earnings gaining 12.9% to $98.7 million.

In the first three months of 2012, the daily sales growth in Fastenal’s fastener product line was approximately 15.4%. This growth dropped to 10.5% in April, 6.1% in May, and 8.6% in June, and then averaged 6% in the third quarter and 2.6% in the fourth quarter. 

By contrast, Fastenal’s non-fastener product lines achieved daily sales growth of  25.1% in the first quarter. This dropped to 24.4% in April, 19% in May, and 19.6% in June, and averaged 18% in the third quarter and 13.6% in the fourth quarter. 

“The non-fastener business has demonstrated relative resilience in 2012, when compared to our fastener business and to the distribution industry in general, due to our strong FAST Solutions (industrial vending) program,” the company stated.

In 2012 Fastenal installed 13,642 industrial vending machines — an increase of 183% from 2011. At the end of December the company reported 21,095 vending machines in operation.

But that growth has marginalized Fastenal’s fastener business, prompting the company to announce plans in mid-2012 to reinvigorate fastener growth.  

To that end, Fastenal transferred a company executive who was working in Europe back to the U.S. to lead the program. Working with Fastenal’s district managers, the OEM fastener team developed a list of more than 3,000 customers with potential to do more than $250,000 a year in fasteners.

Fastenal CEO Will Oberton expressed optimism in growing the company’s OEM fastener business.

“The fastener business is a business that we’re very good at, and there’s a tremendous opportunity out there to grow that business.”

Fastenal sales grew 10.4% to $802.6 million in the third quarter of 2012, while pre-tax earnings gained 13.2% to $175.8 million and net earnings increased 12.9% to $109.3 million.
Nine-month sales rose 14.9% to $2.4 billion, with pre-tax earnings up 18.8% to $516 million and net earnings improving 19% to $321.8 million. 

During the first nine months of 2012 Fastenal opened 73 new stores, up 2.8% since December 2011, bringing its store total to 2,650. By the end of September the company operated 17,013 industrial vending machines, which included 9,560 new machines installed in 2012 — a 128.3% jump in vending machine installations.

“We intend to continue our aggressive push with industrial vending in 2013 and, to this end, expect to open approximately 50 – 100 stores in 2013, or an annual rate of new store openings of 2% to 4%,” Fastenal stated. 

Additional plans include reinvigorating the company’s fastener growth.

In 2012 the company has increased its workforce by 1.7% to 15,431 employees

Fastenal reported net sales grew 14.7% to $804.9 million in the second quarter of 2012, hampered by a slowdown in the industrial production market during the period. Pre-tax earnings gained 19.2% to $179 million, while net earnings climbed 19.3% to $112.3 million.
Fastenal said its end-market growth rate slowed to 15.8% in Q2, down from 20.3% in the previous quarter, which was slightly higher than the 20% rate of end-market growth the company experienced in 2011.

“The best way to understand the change in our industrial production business is to examine the results in our fastener product line. 

“In the first three months of 2012, the daily sales growth in our fastener product line was approximately 15.4%. This dropped to 10.5%, 6.1%, and 8.6% in April, May, and June, respectively.”

Six-month sales gained 17.2% to $1.57 billion, with pre-tax earnings up 21.9% to $340.2 million and net earnings improving 22.4% to $212.5 million.

Vending machine installations are soaring in 2012, driving sales and earnings gains. The company installed 3,238 new machines in Q2, driving its six-month vending machine growth rate up 75% to 13,036. Daily sales growth to vending machine customers rose 34.3% in Q2.

In the first half of 2012 Fastenal opened 53 stores, bringing its total to 2,635. It increased its workforce 2.7% to 15,578 employees. 

Fastenal said the cumulative growth in daily sales from January to June has fallen short of its benchmark figure, as well as the actual results in 2011 and 2010.  

“This fact, as well as the choppiness of the year in general, has caused us to approach the year with a conservative tone.”

Fastenal pointed to the Purchasing Manufacturers Index — a composite index of economic activity in the manufacturing sector — published by the Institute for Supply Management. The PMI has been falling for the past three months, ending in June at 49.7 — its lowest point since 2009.

2011
Fastenal Co. reported sales grew 21.9% to $2.77 billion in 2011, with pre-tax earnings up 33.5% to $575.1 million and net earnings rising 34.9% to $357.9 million.
Sales to manufacturers gained 20%, boosted by a strong finish in the final quarter.

The company opened 122 new stores last year — an increase of 4.9% since the end of 2010, while its workforce increased 14.2% to 15,168 employees. 

It’s biggest momentum came from its latest growth strategy: industrial vending machines.

Fastenal marked a milestone in April, reaching 10,000 vending machines installed at customer locations. The pace of growth has been impressive — from 892 installed machines in March 2010 to 9,798 machines in place at the end of March 2012. The percentage of sales to customers with vending machines more than doubled to 17.8% in Q1.

“In 2011, we … installed 5,528 [vending] machines, an increase of 287% over the 2010 number,” Fastenal stated in its 2011 annual report. 

Installations of FAST Solutions began to rise sharply in mid-2011 after Fastenal boosted the program. The build-up included 13 regional “build centers,” a 24/7 tech support team, and more than 70 demonstration vehicles, as well as a dedicated vending program workforce of 200. 

Meanwhile, their new store openings have dwindled from their double-digit pace before the recession to an annualized rate of 5% in 2011. 

“It is almost like Fastenal is opening small stores in client locations themselves,” one analyst noted.

Fastener products as a percentage of sales totaled 45.8% at the end of 2011, down from 48% at the end of the previous year.

2010

Fastenal reported sales climbed 23% to $650.58 million during the first quarter of 2011, boosted by growth in its industrial products business, which includes Holo Krome.

Pre-tax earnings soared 42% to $128.8 million, with net earnings gaining 42% to $79.5 million.

“The decrease in gross profit percentage, from the second quarter of 2010 to the third and fourth quarters of 2010 and the first quarter of 2011, was primarily caused by the strong growth of our industrial production business, which resulted in a change in our overall business mix,” the company stated. 

“The industrial production business has a lower gross margin; therefore, the change in mix pulled our gross margin down.”

During Q1 Fastenal opened 37 new stores — an increase of 1.5% since December 31, 2010. There were 13,920 total employees as of March 31, 2011, an increase of 4.8% from the 13,285 total employees at the end of last year.

In 2011 Fastenal intends to open 150 to 200 new stores — an annualized rate of 6% to 8%.

Fastenal sales reached $2.27 billion in 2010, while net earnings jumped 44% to $265.4 million. The Winona, MN-based supplier opened 127 new stores during the year, and boosted its workforce by 10.3% to 13,285 employees.

2009
Investors have flocked to Fastenal in recent months, encouraged by the company’s growth. Fastenal reported first quarter sales rose 6.4% to $520.8 million, boosted by a 15.7% jump in sales to OEMs and increased revenue from its Holo-Krome business, acquired from Danaher at the end of 2009.

Fastenal executive VP Cory Jansen oversees the Holo-Krome business, which added one facility and about 90 employees to Fastenal’s operations. Founded in 1929, West Hartford, CT-based Holo-Krome manufactures grade 12.9 socket screw products.

During 2009 Fastenal’s earning fell 34% to $184.4 million amid a 17.5% sales decline to $1.93 billion. Company shares rose 19.5% during an otherwise challenging year that saw the company shed 1,500 workers – about 11% of its workforce – and reduce store openings by more than half the number of locations opened in 2008.

Fastenal opened 69 new stores during 2009, down 57% from the 161 stores it added in 2008. The company also closed 10 locations and “converted one location to a customer only type,” bringing its store total to 2,369.

2008
“2008 was a very good year for Fastenal,” CEO Will Oberton stated in the company’s annual report. “We had solid growth in terms of sales and earnings.”

Fastenal reported sales for 2008 grew 13.5% to $2.34 billion, while net earnings jumped 20.2% to $279.7 million.

“We made some great strides in our distribution centers in 2008,” Oberton noted.

In the fourth quarter of 2008 the company moved into its new automated distribution center in Denton, TX, which replaces our facility in Carrollton. The new facility includes two automated storage and retrieval systems (ASRS) – one for pallet-sized loads and the other for smaller packaged items.

The company has 2,311 stores in operation, including 161 it opened during the year, and reported 13,634 employees on its payroll at the end of 2008.

The company achieved gains in sales and profitability at its manufacturing facilities, with Fastenal’s Rockford, IL, location moving into a newly renovated 100,000 sq ft facility that houses a cold heading plant.

“This expansion, along with some added machinery, will allow us to increase the range of parts we are able to produce in house, once again improving the service we’re able to provide our customers,” Oberton explained.

Fastenal had a presence in Rockford until 2002, when it sold its FAS-N-IT division to The Hillman Group, which closed the site in 2003 and consolidated the work at its Ohio facilities. Fastenal reportedly returned to Rockford in 2005 when it bought a facility owned by Rock River Fastening Corp.

Threaded fasteners accounted for approximately 90% of the fastener product line sales in 2008.

Sales during the fourth quarter gained 4.9% to $544.9 million, with net earnings growing 11% to $62.5 million.

But sales for the opening quarter of 2009 dropped 13% to $489.3 million, forcing the company to slow store openings to under 5% annually and trim its workforce by 6.6% to 12,736 to counter the effects of an entrenched recession.

The company opened 33 new stores during the first three months of 2009.

In 2008 Fastenal agreed to pay $10 million to settle a class action lawsuit relating to the classification of its assistant general managers as exempt from overtime pay. The suit, filed in 2007, also alleged that assistant general managers in California did not receive sufficient meal breaks and paid rest periods under the California Labor Code.

“While the company denies the allegations underlying the lawsuit, it has agreed to enter into the settlement agreement in order to avoid significant legal fees, the uncertainty of a jury trial, distractions to Fastenal’s operations, and other expenses” related to litigation, the company stated.

HISTORY
Fastenal announced a shift in its growth strategy during 2007, transitioning from a growth strategy primarily based on store openings to a blend store openings with increased outside sales personnel at existing stores.

Winona, MN-based Fastenal operates stores in all 50 states, as well as Canada, Puerto Rico, Mexico, Singapore, the Netherlands, Hungary, Malaysia, and China.

Fastenal serves more than 385,000 active customers from 14 distribution centers, including 11 in the U.S. (Minnesota, Indiana, Ohio, Pennsylvania, Texas, Georgia, Washington, California, Utah, North Carolina, and Kansas). The other facilities are in Ontario, Canada; Alberta, Canada; and Nuevo Leon, Mexico. 

Fastenal sells 632,000 different fasteners (90% of which are threaded), as well as tools, fluid transfer components, material-handling and storage products,  janitorial and paper products, electrical supplies, welding supplies, safety supplies, and metals.

Corporate Office: 2001 Theurer Blvd., Winona, MN 55987.
Tel: 507 454-5374 Fax 507 453-8049
Web: fastenal

CEO: Leland J. Hein

Employees: 18,417

©2015 GlobalFastenerNews.com

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