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FASTENAL CO (FAST) Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales grew 3.7% year over year to $1.824B, but daily sales rose just 2.1% due to unusually sharp holiday-related plant shutdowns; diluted EPS was flat at $0.46 as lower volume deleveraged SG&A and gross margin ticked down to 44.8% .
  • Mix headwinds (larger accounts, Onsite, non-fasteners), higher freight/container costs, and Mexico import duties pressured margins; management expects most shipping-related margin pressure to ease in Q1 2025, implying typical Q1 gross margin improvement over Q4 .
  • Strategic KPIs were strong: Digital Footprint reached 62.2% of sales, eBusiness daily sales +27.6%, and Q4 weighted FASTBin/FASTVend signings +24% y/y; Onsite active sites rose 11.5% y/y to 2,031 despite signings below the full-year goal .
  • 2025 capital plan was raised to $265–$285M (DC upgrades, new Atlanta hub, elevated IT, more FMI devices), and the quarterly dividend was increased to $0.43 (up ~10% y/y), reinforcing confidence in cash generation and shareholder returns .

What Went Well and What Went Wrong

What Went Well

  • Digital execution: eBusiness daily sales +27.6% in Q4, with eProcurement +37.6% and Digital Footprint at 62.2% of sales; management targets 66–68% in 2025 .
  • Installed-base growth: Weighted FASTBin/FASTVend installations reached 126,957 MEUs (+12.2% y/y), and Q4 weighted device signings rose 24.3% y/y; Onsite sites increased 11.5% y/y to 2,031 .
  • Management confidence and shareholder returns: Dividend lifted to $0.43 for Q1 2025; 2025 CapEx plan boosts IT, distribution capacity, and FMI hardware to support growth .

Specific quotes:

  • “Our Digital Footprint in the fourth quarter of 2024 represented 62.2% of our sales… we expect that at some point during 2025, 66% to 68% of our sales volume will run through our Digital Footprint.” .
  • “We signed 6,790 weighted FASTBin and FASTVend devices in the fourth quarter of 2024… consistent with our goal.” .
  • “Given our current strong capital position… we increased our dividend by 10%.” .

What Went Wrong

  • Volume/mix headwinds: Q4 EPS flat ($0.46) and operating margin down to 18.9% on lower seasonal volume and deleveraging SG&A (25.9% of sales) .
  • Margin pressure drivers: Higher container and expedited shipping costs (fasteners and safety), unfavorable customer/product mix (larger/Onsite, non-fastener), and increased import duties (Mexico) .
  • December shutdowns materially impacted cadence: Last five business days declined more than 20% at top-100 customers; daily growth swung from >3% in first half of December to flat for the month .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Billions)$1.916 $1.910 $1.825
Diluted EPS ($)$0.51 $0.52 $0.46
Gross Margin %45.1% 44.9% 44.8%
SG&A % of Sales24.9% 24.6% 25.9%
Operating Margin %20.2% 20.3% 18.9%

Segment/product mix (DSR change vs prior year and % of sales):

Product CategoryQ2 2024 DSRQ2 % of SalesQ3 2024 DSRQ3 % of SalesQ4 2024 DSRQ4 % of Sales
OEM Fasteners-2.3% 19.5% -3.1% 19.0% +0.4% 19.0%
MRO Fasteners-4.3% 11.5% -5.3% 11.2% -4.5% 10.9%
Total Fasteners-3.0% 31.0% -4.0% 30.2% -1.4% 29.9%
Safety Supplies+7.1% 21.8% +6.8% 22.5% +4.8% 23.0%
Other Product Lines+3.0% 47.2% +3.7% 47.3% +4.0% 47.1%
Total Non-Fasteners+4.2% 69.0% +4.7% 69.8% +4.3% 70.1%

End market mix (DSR change vs prior year and % of sales):

End MarketQ2 2024 DSRQ2 % of SalesQ3 2024 DSRQ3 % of SalesQ4 2024 DSRQ4 % of Sales
Heavy Manufacturing+1.8% 43.3% +0.7% 42.7% +1.7% 42.3%
Other Manufacturing+4.0% 32.2% +6.2% 32.4% +5.4% 32.0%
Total Manufacturing+2.7% 75.5% +3.0% 75.1% +3.3% 74.3%
Non-Residential Construction-5.5% 8.5% -3.6% 8.6% -4.1% 8.2%
Reseller-6.4% 5.3% -11.3% 5.1% -11.3% 4.9%
Other End Markets+6.0% 10.7% +5.6% 11.2% +7.6% 12.6%
Total Non-Manufacturing-1.0% 24.5% -1.5% 24.9% -0.3% 25.7%

Customer mix:

Customer TypeQ2 2024 DSRQ2 % of SalesQ3 2024 DSRQ3 % of SalesQ4 2024 DSRQ4 % of Sales
National Accounts+5.8% 62.4% +5.6% 63.6% +4.2% 64.2%
Non-National Accounts-4.3% 37.6% -4.1% 36.4% -1.0% 35.8%

KPIs:

KPIQ2 2024Q3 2024Q4 2024
Onsite Signings (Quarter)107 93 56
Active Onsite Locations (End of Period)1,934 1,986 2,031
Weighted FASTBin/FASTVend Signings (Quarter)7,188 7,281 6,790
Weighted FASTBin/FASTVend Installations (MEUs, EOP)119,306 123,193 126,957
Digital Footprint (% of Sales)59.4% 61.1% 62.2%
eBusiness Daily Sales Growth+25.5% +25.6% +27.6%
eProcurement / eCommerce Daily Sales Growth+30.9% / +11.6% +33.2% / +6.6% +37.6% / +2.0%

Additional Q4 items:

  • Net interest expense: $0.5 vs net interest income $0.3 in Q4 2023 .
  • Income tax: $82.2 (23.9% of pre-tax), below 24.5% ongoing due to stock option exercises .
  • Operating cash flow: $282.8 in Q4 (107.9% of net income) .
  • Total debt: $200.0 (5.2% of total capital) at year-end 2024 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Capital ExpenditureFY 2025FY 2024 actual $214.1 $265–$285 Raised
Digital Footprint (% of Sales)FY 20252024 Q4 actual 62.2% Target 66–68% Raised
Weighted FASTBin/FASTVend SigningsFY 202526k–28k MEUs (2024 goal) 28k–30k MEUs Raised
Gross Margin OutlookQ1 2025 vs Q4 2024NAQ1 typically above Q4; most product margin pressure should not recur Improved
DividendQ1 2025$0.39/quarter in 2024 $0.43 per share Raised
Tax RateOngoing~24.5% ongoing ~24.5% ongoing Maintained
Distribution HubsFY 2025Utah upgrade completing Begin Atlanta hub; automated picking additions Expanded
Onsite Targets DisclosureFY 20252024 goal 375–400 Discontinue Onsite sign targets; shift to customer-site metrics Policy change

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesLaunched “Fastenal Intelligence” (FI); next up AI-assisted sourcing; realigning digital under FMI Digital footprint 61.1%; strong FMI installs Strategic plan centered on digitization including AI; Investor Day Mar 13 Expanding scope and visibility
Supply chain logistics & shippingShort-term inefficiencies to support warehousing; easing into Q3 Mexico duties; shipper rebate non-recurrence Higher container cost and expedited shipments pressured margins; price adjustments taken Pressure easing into Q1
Tariffs/MacroPMI sub-50; customer shutdowns/layoffs PMI sub-50; hurricane impact; mixed tone improving Managing potential new tariffs; diverted containers; expectation of unpredictability Prepared; mitigation tools in place
Product performance (fasteners vs safety)Fasteners down; safety up; pricing modestly negative Fasteners down; safety up; mix drag Fasteners contraction eased; safety growth continued Gradual normalization
Regional/operational cadenceJuly shutdowns lengthening; hurricane impacts September stronger despite hurricane; East vs West divergence December shutdowns severe; 6% truck routes canceled mid-Jan due to storms Seasonal shock; early Q1 weather disruption
Customer acquisition and concentrationOnsite 107; FMI 7,188; focus on contracts Onsite 93; FMI 7,281; momentum building $10k+/month sites ~77% of sales; $50k+ sites ~48% of sales; shift to customer-site KPIs Sharpened focus; disclosure change

Management Commentary

  • CEO on December cadence: “First 15 days… trending towards 3%–4%… last 5 days… probably negative, somewhere between 9% and 12%.” .
  • CFO on margin pressures: “Higher container costs affecting fasteners and expedited shipments… we have made price adjustments… most of the product margin pressure in Q4 2024 should not carry into Q1 2025.” .
  • CFO on policy shift: “We will begin providing customer data… Onsites represent nearly 45% of our sales… success is defined by how many customers… can do $10,000 or more per month.” .
  • CEO on digital strategy: “About 62% of our sales… touched our digital footprint. Our goal for next year is 66%–68%.” .
  • CFO on capital priorities: “Net CapEx likely to be 3% to 3.5% of sales over the next few years… Utah hub completion… beginning construction on Atlanta hub… incremental automated picking.” .

Q&A Highlights

  • Shutdowns vs sentiment: Management sees widespread holiday shutdowns but improving customer optimism post-election; expects stabilization and new contract wins to build into 2025 .
  • Customer concentration: 1% of customer sites (> $50k/month) represent ~48% of sales, and ~5% (> $10k/month) ~77%; emphasis on wallet share and Onsite economics .
  • Tariffs preparedness: Team has tools to manage and transparently pass through tariffs; diverted ~35–40 containers to mitigate port strike risk .
  • eCommerce and unplanned spend: Added ~18,000 SKUs back into distribution to improve availability, margin and branch workload; enhancing supplier availability and tracking to improve web experience .
  • OpEx leverage: Target 20%–25% incremental margin with mid-to-high single digit revenue growth; bonuses will reload as pretax improves; leverage resumes as growth reasserts .

Estimates Context

  • Attempted to retrieve S&P Global consensus for Q4 2024 EPS and revenue; data was unavailable at the time of request due to provider limits. As a result, we cannot provide a definitive beat/miss assessment versus consensus for Q4 2024 at this time (values would be retrieved from S&P Global)*.

Key Takeaways for Investors

  • Near-term: Expect typical Q1 gross margin improvement vs Q4 as shipping-expedite costs and container pressures ease; watch January/February cadence following severe December shutdowns and weather disruptions .
  • Mix matters: Larger accounts, Onsite and non-fastener mix drive lower gross margin % but deepen customer moats; margin headwinds should moderate if fastener trends stabilize and safety expediting normalizes .
  • Digital compounding: With Digital Footprint at 62.2% (target 66–68% in 2025), eProcurement strength and expanding FMI installed base support share gains and efficiency—key structural tailwinds .
  • Capital allocation: Raised dividend to $0.43 and increased 2025 CapEx to $265–$285M focused on IT, DC capacity and FMI hardware; signals confidence in cash generation and growth investments .
  • Disclosure evolution: Moving away from Onsite sign targets to customer-site economics ($10k+/$50k+ per month) should improve alignment and investor understanding of value creation .
  • Watch warehousing normalization: Safety category growth tied to warehousing demand; comps toughened in Q4; expect moderation and margin normalization into early 2025 .
  • Strategic catalysts: Investor Day (Mar 13) to detail digitization (including AI) and in-market network strategy; potential narrative upgrade if self-help offsets soft PMI backdrop .

Notes:

  • All financials are GAAP as disclosed. No non-GAAP adjustments were highlighted in the company materials .
  • Segment data reflects product mix and end markets; FAST does not report formal operating segments in these releases .

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