WINONA, Minn. - Fastenal Company (NASDAQ:FAST), a prominent player in the industrial and construction supplies wholesale market, reported a slight miss in its first quarter earnings and revenue, falling short of analyst expectations.
The company posted an earnings per share (EPS) of $0.52, which was $0.01 below the analyst estimate of $0.53. Revenue for the quarter was reported at $1.9 billion, missing the consensus estimate of $1.92 billion. Following the announcement, Fastenal's stock price dropped by 7.41%, indicating a negative market response to the earnings and revenue shortfall.
In comparison to the same quarter last year, Fastenal's net sales increased by 1.9%, from $1.859.1 million to $1.895.1 million. Despite adverse weather conditions impacting sales by 10 to 30 basis points, the company managed to grow its sales, primarily driven by higher unit sales to larger customers and the opening of new Onsite locations in the past two years. The company's gross profit as a percentage of net sales decreased slightly from 45.7% to 45.5%, affected by customer and product mix.
Selling, general, and administrative expenses as a percentage of net sales increased from 24.6% to 24.9%, with employee-related expenses rising 3.9% due to higher average full-time equivalent (FTE) and wages, as well as increased health care costs. This was only partially offset by lower bonus and commission payments.
Fastenal's net income saw a modest increase of 0.9% year-over-year (YoY), reaching $297.7 million. The diluted net income per share remained unchanged at $0.52. The company's operating cash flow for the quarter decreased by 13.6% YoY, representing 112.7% of the period's net income.
The company's growth drivers included the signing of 102 new Onsite locations, with a total of 1,872 active sites as of March 31, 2024, representing an 11.8% increase from the previous year. Sales through Fastenal's Onsite locations and Fully Managed Inventory (FMI) technology grew, with FMI sales increasing by 7.6% YoY.
Fastenal's CEO commented on the results, stating, "Our team has continued to drive growth through strategic customer relationships and our investment in technology, despite facing headwinds from adverse weather and a challenging industrial environment."
Looking ahead, Fastenal did not provide specific financial guidance for the upcoming quarters. However, the company's ongoing initiatives and investments in Onsite locations and FMI technology are expected to support future growth.
Investors reacted to the earnings release with concern, as evidenced by the significant drop in Fastenal's share price. The company will continue to focus on its growth drivers and operational efficiencies to navigate through the current market conditions.
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