8/18/2014 10:33:00 PM
HEADLINES
STOCKS: Fastenal, Grainger, Wesco, Tree Island and ITW

Fastenal Reports First Double-Digit Fastener Growth Since 2012

Fastenal Co. reported fastener sales had daily growth of 10.5% in July.

“This is our first double-digit fastener growth month since April 2012,” the company stated.

Fasteners represent 41% of overall revenue for the company, making its fastener product line revenue worth approximately $132.7 million in July.

Overall Fastenal revenue increased 14.7% to $323.7 million in July, with daily sales gaining 14.7% to $14.7 million.

Sales to manufacturing customers grew 14.5% during the month, while sales to non-residential construction customers rose 11.6%.

The company’s workforce grew 13.2% in July to 18,161 employees.  Store personnel increased 16.3% to 10,880, while manufacturing personnel increased 12.5% to 641 and distribution personnel gained 12.4% to 2,189.

Fastenal opened no new stores in July.  The company has opened 17 new stores so far in 2014 — 50% fewer than the 34 stores it opened in the first seven months of 2013.

During the first half of 2014, Fastenal’s fastener sales grew 7.1% — including a 6.6% rise in June.

The rebound in growth follows a strategic shift for the industry bellwether.  After decades of growth through new store openings, Fastenal management decided to reduce its overall store count while boosting its workforce.

The company closed eight stores during Q2 and identified an additional 45 stores it intends to close in the second half of 2014. Its overall store count stands at 2,684.

“We felt this was simply a better approach to growing our business profitably,” the company stated in July.

 

Wesco Aircraft Reports Moderate Growth

Wesco Aircraft reported revenue, including fasteners, in the third quarter of fiscal 2014 increased 72% — driven mainly by the February acquisition of supply chain management firm Haas Group.  Organic sales grew 6% during the period, while adjusted net income rose 12% to $33 million. 

“Our North American and Rest of World segments have each experienced steady growth,” stated CEO Randy Snyder.  

“With strong OEM build rates and steady progress in expanding our MRO business, we believe we will finish our the year on a positive note.”

Nine-month revenue increased 42% to $947.7 million, with adjusted net income of $90.9 million.

 

Grainger Sees Organic Sales Growth in July

Grainger reported sales in July increased 6% versus July 2013.  Results for the month included 2 percentage points from acquisitions, net of dispositions, and a 1 percentage point decline from unfavorable foreign exchange.  

Excluding acquisitions and foreign exchange, organic sales increased 5%, driven by 5 percentage points from volume and 1 percentage point from the favorable timing of the July 4th holiday in the U.S., partially offset by a 1 percentage point decline from lower sales of seasonal products. 

Monthly sales in the U.S. gained 7%, while sales in Canada declined 1% and sales in the company’s Other Businesses segment – including results from Asia, Europe, and Latin America – rose 16% in July.

Grainger sales, including fasteners, increased 5% to $2.5 billion in the second quarter of 2014, including 4% organic growth.  Q2 net earnings declined 5% to $206 million, while EPS decreased 3% to $2.94.

Q2 sales in the U.S. rose 7%, while sales in Canada dropped 9% on lower volume and Other Businesses segment sales gained 14%.

In the first six months of 2014 Grainger sales grew 5% to $4.9 billion, while net earnings fell 2% to $423 million and EPS increased 1% to $6.

 

Higher Volumes Drive Tree Island Gains

Tree Island Steel Ltd. reported revenues, including fasteners, increased 17.7% to $47.8 million in the second quarter of 2014, driven by a 25% jump in volume.  

Gross profit declined 15% to $4.6 million, and gross margin per ton declined 31% to $127 per ton.  Q2 gross profit as a percentage of revenue was 9.7% versus 13.3% in Q2 2013. The impact to EBITDA was a decrease to $1.9 million from $2.9 million during the corresponding period in 2013.

For the first six months of 2014, revenues amounted to $93.7 million on 71,534 tons, compared to $78.7 million on 56,762 tons during the same period in 2013. 

“The higher revenues in 2014 reflect increased volumes particularly in the Industrial and Agricultural market segments,” the company stated. 

Six-month gross profit increased to $9.9 million at a margin of 10.6%, compared to $9.6 million and a margin of 12.2%, while gross profit per ton decreased to $139 per ton versus $170 per ton in the corresponding period in 2013. 

“The demand for our products, coupled with our quality and brands across our markets, continue to fuel our growth,” stated CEO Dale MacLean. 

 

ITW Automotive Fastener Revenue Sees Strong Gains

Illinois Tool Works Inc. reported total revenues grew 4% to $3.7 billion in the second quarter of 2014, with operating income increasing 21% to $677 million. 

Organic revenue gained 1.4%, with international revenue up 2% and North American sales improving 1%.

Operating margins of 20.5% increased 300 basis points, with enterprise initiatives contributing 120 basis points.

Automotive OEM organic revenue, including fasteners, grew 8% in Q1, outpacing worldwide auto builds of 2%. Segment organic revenues grew 8% in North America, 9% in Europe and 22% in China. Operating margins of 23.7% increased 310 basis points.

Construction Products’ revenues, including fasteners, declined 0.4% to $444 million.  Segment operating income reached $81 million, with operating margin of 18.2%.

“ITW had a very good second quarter as our operating margins hit record levels, our EPS increased more than 30% and our after tax return on invested capital was near 20%,” said CEO Scott Santi.