1/15/2014 3:48:00 PM
NEWS BRIEFS
Fastenal Reports Weakening Gross Margins
Fastener results
After warning investors of shrinking gross margins in December, Fastenal released its earnings report for 2013.
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. Yearly net earnings per share gained 6.3% to $1.51.
“Regarding gross margin, we slid outside our expected 51% to 53% range in the fourth quarter,” the company stated. “As previously disclosed in our December release, this is largely due to: (1) lower utilization of our trucking network which is expected to naturally correct in the new year as seasonality lifts our utilization; (2) supplier incentives, which are typically aligned with the calendar year and reset for 2014; (3) product mix (fasteners carry a higher gross margin), and (4) a very competitive marketplace.”
In 2013 the company’s 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%.
During the year the company 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.
“In 2013, we signed more than 19,000 (vending) machines. We consciously slowed the pace in the second quarter of 2013 to promote a ‘quality of install’ mentality into our rapid approach. We think this was a good decision, and will continue our aggressive push with FAST Solutions®(industrial vending).”
“In July 2013, we began the process of ‘optimizing’ our installed vending machines. This optimization centered on two aspects: (1) the product mix in each machine to maximize customer savings by promoting frequently consumed items and (2) the brand mix in each machine to streamline replenishment.”
Fourth-quarter sales rose 7.5% to $813.76 million, with pre-tax earnings down 0.6% to $157.3 million and net earnings edging up 0.5% to $99.23 million. Q4 earnings per share remained unchanged at $0.33. ©2014 GlobalFastenerNews.com
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