Fastenal Co. capped a turnaround year of fastener sales growth with a double-digit performance in the fourth quarter of 2017.

Fastenal reported fastener sales grew 13.4% to approximately $381 million (35% of overall sales) in Q4, of which 3.9 percentage points were attributable to the recently acquired Mansco business.

While fastener sales grew during the fourth quarter, the company’s gross margin on fasteners was hurt by inflation.

“In the case of fasteners, we’ve seen our gross margin slip from the both year ago and from the third quarter,” CEO Dan Florness explained during a conference call transcribed by Seeking Alpha. “And really two things that’s driving it. One, a disproportionate amount of growth is coming from large customer, alot of OEM fasteners… but part of the slippage is occurring because the fasteners are seeing inflation right now and we are little rusty on addressing that.”

Fastenal indicated it is in the process of raising its fastener prices.

Overall sales at Fastenal increased 14.8% to $1.09 billion in Q4, with gross profit rising 12.6% to $531.2 million and net earnings gaining 32.8% to $152.4 million.

During the quarter the company signed 4,266 industrial vending machines, an increase of 13.5%. Fastenal now has 71,421 vending machines in operation.

The company opened three branches and closed 37 branches in Q4, bringing the company’s total store count to 2,083 in the U.S., 195 in Canada, and 105 in the rest of the world.

Full-year sales increased 10.8% to $4.39 billion, with gross profit up 10.1% to $2.2 billion and net earnings up 15.8% to $578.6 million.

Fastener sales in 2017 topped $1.56 billion (35.6% of overall sales), up 7.5% from $1.45 billion (36.6% of overall sales) in fastener sales during 2016.

Capital expenditures declined 38% to $112.5 million in 2017, but the company estimates capital expenditures will increase about 32% to $149 million in 2018 “to upgrade and add capacity to our existing hub network and to purchase property for potential future expansion.” Web: Fastenal.com