Fastenal’s year-end results couldn’t overcome slow manufacturing, industrial activity

Manufacturing plants had steeper-than-usual plant shutdowns during the holidays on top of slow manufacturing and industrial activity through the year.

Those conditions hampered Winona-based Fastenal’s fourth quarter and annual results, with the company failing to meet analyst expectations.

“Frankly, a frustrating finish to a challenging year,” Fastenal Chief Executive Dan Florness told analysts on the company’s earnings call Friday.

Despite that, Fastenal did better than the manufacturing economy overall. National and regional reports from the Institute for Supply Management and the Mid-America Manufacturing Economy from Creighton University have shown the manufacturing economy contracting for much of the year.

Fastenal’s sales and earnings came in slightly below expectations for the quarter and year ended Dec. 31. Net income decreased 1.6% to $262.10, or 46 cents a share, on revenue of $1.82 billion that grew 3.7% in the quarter.

For the year, the company’s earnings decreased 0.4% to $1.2 billion, or $2.00 a share, on sales that grew 2.7% to $7.5 billion.

Analysts anticipated earnings of 48 cents a share on sales of $1.84 billion for the quarter and $2.03 a share on sales of $7.6 billion for the year.

Fastenal is a national distributor of fastener products, safety supplies and other items, including tools and janitorial supplies. Much of the business comes from proprietary vending devices.

With more than 20,000 vending locations, Fastenal has a good view on activity within facilities. Florness said the first half of December was trending well, but by analyzing sales activity from its machines, Fastenal determined more facilities slowed down or shut down activity than in the previous two years.

Florness called it a “meaningful uptick” since the industrial economy started to weaken in 2022.

Fastenal did make progress on its long-term initiatives of opening more on-site locations within or near its customers. For the year, it signed up 358 new Onsite options, up from 326 from the prior year but still below the company’s goal of signing 375 to 400 new locations each year.

The company now has 2,031 active Onsites, 11.5% more than it had at the end of the previous year. The company did add 27,984 new vending devices as well — which includes its FastVend, FastStock and FastBin varieties — during the year, within the goal it had set for 2024.

Shares of Fastenal closed Friday at $76.08 a share, up 1.8%.