Industrial and construction supplies distributor Fastenal reported its September sales metrics and third quarter 2024 financials on Oct. 11, showing a monthly improvement in daily sales, while gross margin continued to slide sequentially.

The Big Picture

• The company posted total September sales of $623.7 million, up 3.2% year-over-year, with daily sales up that same amount. That’s a solid improvement from August’s 2.1% and July’s 0.5%.
• 3Q sales of $1.91 billion increased 3.5% year-over-year, nearly doubling the 2Q’s 1.8% growth rate. Daily sales grew 1.9% year-over-year in 3Q, narrowly besting 2Q.
• 3Q gross margin of 44.9% fell 40 basis points from 2Q and 100 bps year-over-year, which the company attributed to customer and product mix, higher import fees, lapping a shipper rebate from year earlier and lower supplier rebates.
• Fastenal said the pricing environment was stable in 3Q and that price-cost did not meaningly impact sales or gross margin
• 3Q operating profit of $388 million on margin of 20.3% was essentially flat vs. 2Q and trailed the $387 million and 21.0% of a year earlier
• 3Q net profit of $298 million topped 2Q’s $293 million the $296 million of a year earlier
• Fastener sales continued to slide in September, more than made up for by better safety and other sales
• Fastenal’s top end market — heavy manufacturing — saw modest monthly improvement, while other manufacturing saw strong growth and non-residential construction flipped to a narrow gain
• National accounts improved to a healthy majority that were growing in September after sliding to 48.0% of them growing in July. Non-national accounts still declined, but improved from August.
• Fastenal Managed Inventory (FMI) and digital business continued strong growth
• The company estimates that disruptions from Hurricane Helene to operations and logistics in the Southeast and Atlantic Coast regions hurt 3Q daily sales by 5-25 basis points

September was a second straight monthly improvement for Fastenal’s sales after a recent low-point in July. The company ended 3Q with good momentum, improving sales throughout the quarter, while the gross margin decline was in line with what we saw from comparable publicly traded distributors in 2Q amid a lasting soft demand environment.

“Overall, a very FAST-like quarter, with good cost discipline and solid management of the P&L despite a still challenging demand / gross margin backdrop,” Baird’s Industrial Distribution Equity Research unit noted in an analyst note.

Premium: Fastenal Details Rollout of Internal AI Tools (Aug. 23)

MDM’s Take

Fastenal is the only publicly-traded industrial distributor that shares a monthly sales report, making it a good barometer for the overall health and demand status for the markets it serves. The company’s monthly sales gains in September and August suggest that July may have been the industry’s low-point for industrial demand and point to a long-projected acceleration period that has pushed further and further into 2024. Fastenal’s October report will be a stronger indicator of if that’s a legitimate trend.

Go Deeper

Here’s the breakdown of Fastenal’s September 2024 sales report and how each metric compared with August:

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

• United States – 82.7% of sales: +2.3% (+1.4% in Aug.)
• Canada/Mexico – 14.1% of sales: +8.3% (+6.2% in Aug.)
• Rest of World – 5.3% of sales: +5.3% (+6.6% in Aug.)

September Daily Sales by Product Line:

• Fasteners – 30.1% of sales: -3.3% (-2.2% in Aug.)
• Safety – 22.4% of sales: +7.5% (+5.8% in Aug.)
• Other – 47.5% of sales: +5.9% (+3.7% in Aug.)

September Daily Sales by Customer End Market: 

• Heavy manufacturing – 42.4% of sales: +1.0% (+2.3% in Aug.)
• Other manufacturing – 32.2% of sales: +7.5% (+6.6% in Aug.)
• Non-residential construction – 8.8% of sales: +0.9% (-6.4% in Aug.)
• Reseller – 5.2% of sales: -6.2% (-12.5% in Aug.)
• Other – 11.4% of sales: +7.3% (+4.7% in Aug.)

September Daily Sales by Customer Category: 

• National accounts: +7.0% (+6.0% in Aug.)
• 60.0% of Top 100 national accounts were growing (52.0% in Aug.)
• Non-national accounts: -2.0% (-4.0% in Aug.)
• 51.5% of in-market locations were growing (49.1% in Aug.)
• FMI: +10.0% (+7.0% in Aug.)
• eBusiness: +27.0% (+24.0% in Aug.)

September Headcount

Fastenal ended September with a total headcount of 23,518, up 0.6% from August and up 2.9% year-over-year. Full-time selling headcount of 15,080 was down 1.3% from August and up 2.2% year-over-year.

2Q Metrics

Here’s how Fastenal’s 3Q daily sales performed by product line on a year-over-year basis (and how it compared with 2Q):

• • OEM Fasteners (19.0% of total): -3.1% (-2.3% in 2Q)
  • MRO Fasteners (11.2% of total): -5.3% (-4.3% in 2Q)

• Total Fasteners (30.2% of total): -4.0% (-3.0% in 2Q)

• • Safety Supplies (22.5% of total): +6.8% (+7.0% in 2Q)
  • Other Products (47.3% of total): +3.7% (+3.0% in 2Q)

• Total Non-Fasteners (69.8% of total): +4.7% (+4.2% in 2Q)

Here’s how Fastenal’s 3Q daily sales performed by end market on a year-over-year basis (and how it compared with 2Q):

• • Heavy manufacturing (42.7% of total): +0.7% (+1.8% in 2Q)
  • Other manufacturing (32.4% of total): +6.2% (+4.0% in 2Q)

• Total manufacturing (75.1% of total): +3.0% (2.7% in 2Q)

• • Non-residential construction (8.6% of total): -3.6% (+8.5% in 2Q)
  • Reseller (5.1% of total): -11.3% (-6.4% in 2Q)
  • Other (11.2% of total): +5.6% (+6.0% in 2Q)

• Total non-manufacturing (24.9% of total): -1.5% (-1.0% in 2Q)

Here’s how Fastenal’s 3Q daily sales performed by customer type on a year-over-year basis (and how it compared with 2Q):

• National accounts (63.6% of total): +5.6% (+5.8% in 2Q)
• Non-national accounts (36.4% of total): -4.1% (-4.3% in 2Q)

Onsites, Vending & eCommerce

• Fastenal signed 93 new Onsite locations during 3Q24, down from 107 in 2Q. It had 1,986 active sites on Sept. 30, up 11.7% year-over-year. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsites) grew at a low single-digit rate in 3Q year-over-year — the same as 2Q and 1Q of this year. The company’s goal for 2024 Onsite signings remains between 375-400, with the lower half of that range more likely.
• Fastenal’s 3Q sales from its FMI Technology — comprised of its FASTStock, FASTBin and FASTVend offering — totaled $831.5 million (43.0% of total sales), up 9.3% year-over-year (+7.0% in 2Q), with daily sales up 7.6%.
• Fastenal signed 7,281 weighted FASTBIN and FASTVend devices in 3Q, a 22.0% jump year-over-year, while the 123,193 installations it had at the end of September were up 11.8%. The company said its goal for those device signings in 2024 remains between 26,000-28,000.
• Fastenal’s daily sales through its eBusiness — including eProcurement and eCommerce — grew 25.6% year–over-year (25.5% in 2Q) and represented 30.1% of total sales in the quarter (28.7% in 2Q).
• The company’s digital footprint — comprised of eCommerce plus FMI — represented 61.1% of total 3Q sales, up from 59.4% in 2Q.

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