Fastenal’s Strong Growth Continued in 2Q Despite Lesser Price Increases – Modern Distribution Management

Fastenal reported its 2022 second-quarter financial results on July 13, showing another strong three-month period for sales and net profit, while margins decelerated from 1Q.

The Winona, Minnesota-based distributor of industrial and construction supplies reported total 2Q sales of $1.78 billion, up 18.% year-over-year, with daily sales up an identical amount. 1Q sales growth was 20.3%. The 2Q sales figure fell narrowly short of Wall Street expectations.

Fastenal noted that 2Q continued to experience strong, economically-driven growth in underlying demand for manufacturing and construction equipment and supplies, driving higher unit sales. Foreign exchange negatively impacted 2Q sales by about 50 basis points, the company said.

Fastenal’s April-June gross profit of $828 million likewise increased 18.1% year-over-year, with margin of 46.5% identical to a year earlier and down 10 basis points from 1Q.

The company’s 2Q operating profit of $383 million increased 20.7% year-over-year — trailing the 27.7% gain seen in 1Q — with operating margin of 21.6% up 50 basis points year-over-year and up 60 points from 1Q.

Fastenal’s second-quarter net profit of $287 million grew 19.8% year-over-year and topped 1Q’s $270 million — matching Wall Street expectations.

The company said the overall impact of product pricing on net sales during 2Q was 660 to 690 basis points compared to a year earlier. Fastenal added that it did not take any broad price increases during 2Q, but benefited from carryover actions taken in 1Q, along with the timing of opportunities with national account contracts, and tactical inventory adjustments.

Other stats to note from Fastenal’s 2Q:

• Daily sales to manufacturing customers increased 23.1% year-over-year, while daily sales to non-residential construction customers increased 10.8%. Sales to government customers dipped 2.1%.
• Daily sales to national account customers (57.3% of total revenue) increased 22.9% year-over-year, with sales growing at 91 of the company’s top 100 national account customers. Daily sales to non-national account customers increased 12.2% year-over-year.
• Fastenal signed 102 new Onsite locations during 2Q, bringing its year-to-date signings to 208 and its total active site count to 1,501 as of June 30. That active site count is up 13.5% year-over-year. Daily sales through Onsite locations grew at better than 20% year-over-year during 2Q. Fastenal said it is on track to sign 375 to 400 Onsites for the full year.
• Fastenal’s total company branch count ended 2Q at 1,737 — down 1.3% from 1Q and down 9.6% year-over-year.
• Fastenal ended 2Q with a total company headcount of 21,629 — up 2.2% from 1Q and up 6.5% year-over-year