Industrial and construction supplies distributor, Fastenal, reported its 2024 second quarter financial results on July 12. The results showed a new recent low for annual sales growth amid what the company cited as continued challenging underlying market activity.

The Winona, MN-based company posted total April-June sales of $1.92 billion, up 1.8% year-over-year, with daily sales at that same growth rate. It marked Fastenal’s weakest annual sales growth quarter since a 0.1% decline at the height of the COVID-19 pandemic in 2Q21. Growth rapidly recovered to a peak of 18.4% growth in 1Q22 — largely driven by inflationary pricing — and has steadily declined in each quarter since. Sequentially, 2Q24’s growth decelerated slightly further from 1Q24’s 1.9%.

Related: Fastenal CSO Watts Promoted to President, Florness Remains CEO (July 12)

Fastenal’s 2Q24 gross margin of 45.3% fell 30 basis points year-over-year and was down 20 bps from 1Q24. Operating profit of $387 million on 20.2% margin trailed the $395 million and 21.0% of a year earlier and 1Q24’s $390 million/20.6%.

The company’s 2Q24 net profit of $293 million was down 1.8% year-over-year and down 1.7% sequentially.

In its earnings presentation, Fastenal noted the challenge of leveraging its business at low single-digit net sales growth and “the cyclical impact of a challenged product mix on gross profit.”

Here’s how Fastenal’s 2Q daily sales performed by product line on a year-over-year basis:

• OEM Fasteners (19.5% of total): -2.3%
• MRO Fasteners (11.5% of total): -4.3%
• Total Fasteners (31.0% of total): -3.0%
• Safety Supplies (21.8% of total): +7.0%
• Other Products (47.2% of total): +3.0%
• Total Non-Fasteners (69.0% of total): +4.2%

Here’s how Fastenal’s 2Q daily sales performed by end market on a year-over-year basis:

• Heavy manufacturing (43.3% of total): +1.8%
• Other manufacturing (32.2% of total): +4.0%
• Total manufacturing (75.5% of total): +2.7%
• Non-residential construction (8.5% of total): -5.5%
• Reseller (5.3% of total): -6.4%
• Other (10.7% of total): +6.0%
• Total non-manufacturing (24.5% of total): -1.0%

Here’s how Fastenal’s 2Q daily sales performed by customer type on a year-over-year basis:

• National accounts (62.4% of total): +5.8%
• Non-national accounts (37.6% of total): -4.3%

Pricing Impact

Fastenal said the impact of produce pricing on 2Q net sales was a decline of 30 to 60 bps, compared with the 35-55 bps decline in 1Q and significantly contrasts with the 190 to 220 bps benefit of a year earlier. The company said the 2Q impact decline reflects lower fastener pricing — a by-product of lower transportation costs — and lower pricing in certain safety and other product categories.

Onsites, Vending & eCommerce

Fastenal signed 107 new Onsite locations during 2Q24, up from 102 during 1Q. It had 1,934 active sites at the end of June, up 11.9% a year earlier. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsites) grew at a low single-digit rate in 2Q — the same as 1Q. The company’s goal for 2024 Onsite signings remains between 375-400.

Fastenal’s 2Q sales from its FMI Technology — comprised of its FASTStock, FASTBin and FASTVend offering — totaled $811 million (42.3% of total, up from 41.5% in 1Q) increased 7.0% year-over-year (+7.6% in 1Q), with daily sales up by that same amount.

Fastenal signed 7,188 weighted FASTBIN and FASTVend devices in 2Q, up 5.8% year-over-year, while the 119,306 installations it had at the end of June were up 11.4%. The company said its goal for those device signings in 2024 remains between 26,000-28,000.

“We believe these should be increasingly impactful to sales trends as we move through the 2H24 and into 2025,” the company said in its earnings presentation regarding efforts to accelerate customer acquisition.

Fastenal said that daily sales through the company’s eBusiness — including eProcurement and eCommerce — grew 25.5% in 2Q (33.6% in 1Q) and represented 28.7% of total sales (28.6% in 1Q).

The company’s digital footprint — comprised of eCommerce plus FMI — represented 59.4% of total 2Q sales, up from 59.2% in 1Q.

Employee & Branch Count

Fastenal ended 2Q with a total headcount of 23,629 — up 3.1% year-over-year and up 0.3% from 1Q. Full-time headcount of 21,249 was up 3.0% year-over-year and up 1.5% from 1Q.

Elsewhere at the end of 2Q:

• Full-time selling headcount of 15,386 was up 2.6% year-over-year and up 1.9% from 1Q
• Full-time distribution/transportation headcount of 3,172 was up 3.9% year-over-year and flat vs. May.
• Full-time manufacturing headcount 721 was essentially flat year-over-year and vs. 1Q
• Full-time organizational support headcount of 1,970 was up 5.8% year-over-year and up 0.7% from May.

During 2Q, Fastenal closed/converted 4 branches and opened three, bringing its total branch count to 1,599 at the end of June — a net gain of two since the start of 2024 and down 5.0% since the end of 2022. Of that count, 1,276 (80.0%) are in the U.S.

Meanwhile, Fastenal’s Onsites count ended June at 1,934 — up 6.1% from the end of 2023 — and bringing its total in-market locations count to 3,533 — up 3.3% from the end of 2023.

Fastenal’s June

Fastenal’s overall June results were skewed by having two fewer business days than a year earlier, leading to overall monthly sales of $608 million that were down 6.1% year-over-year, while daily sales were up 3.3% — improving from 1.5% and 0.7% in May and April, respectively.

June Daily Sales by Geography, Year-Over-Year:

• United States – 83.1% of sales: +2.8% (+1.6% in May)
• Canada/Mexico – 13.7% of sales: +5.3% (+9.4% in May)
• Rest of World – 3.2% of sales: +7.6% (+1.3% in May)

June Daily Sales by Product Line:

• Fasteners – 30.7% of sales: -2.7% (-1.9% in May)
• Safety – 22.2% of sales: +9.0% (+11.2% in May)
• Other – 47.1% of sales: +4.9% (+6.4% in May)

June Daily Sales by Customer End Market: 

• Heavy manufacturing – 43.5% of sales: +2.2% (+1.5% in May)
• Other manufacturing – 32.2% of sales: +7.1% (+2.2% in May)
• Non-residential construction – 8.5% of sales: -4.6% (-6.2% in May)
• Reseller – 5.0% of sales: -8.6% (-6.9% in May)
• Other – 10.8% of sales: +9.6% (+8.7% in May)

June Daily Sales by Customer Category: 

• National accounts: +8.0% (+6.0% in May)
  • 59.0% of Top 100 national accounts were growing (58.0% in May)
• Non-national accounts: -3.0% (-5.0% in May)
  • 51.1% of in-market locations were growing (48.8% in May)
• FMI: +9.0% (+6.0% in May)
• eBusiness: +26.0% (+26.0% in May)