Fastenal reported its 2021 fourth quarter and full-year financial results on Jan. 19, with the figures showing continued strong sales and profit growth that accelerated throughout the year, ending it with double-digit year-over-year sales and profit growth in Q4.
Fourth Quarter
The Winona, MN-based company — No. 4 on Industrial Distribution's 2021 Big 50 List — reported total Q4 sales of $1.53 billion, up 12.8 percent-year-over-year and up 14.6 percent on a daily sales basis. That was up from 10.0 percent year-over-year growth in Q3.
Fastenal's Q4 gross profit improved 15.2 percent year-over-year at margin of 46.5 percent, while operating profit of $301 million increased 13.8 percent at margin of 19.6 percent. The company's Q4 total profit of $231 million jumped 17.9 percent.
The company ended the quarter and year with accelerating momentum, as December sales grew 11.0 percent year-over-year and 16.5 percent on a daily basis, outpacing November's daily sales growth rate of 13.2 percent.
"The fourth quarter of 2021 continued to experience strong, economically-driven growth in underlying demand for manufacturing and construction equipment and supplies, which drove higher unit sales that contributed to the increase in net sales in the period," the company said in its earnings release. "This strength was aided by fewer holiday-related customer facility shut-downs than we typically experience."
Other Fastenal Q4 notes:
- Fastenal ended Q4 with 1,793 public branch locations, down 10.5 percent year-over-year and down 66, or 3.6 percent, from Q3. The company opened two public branches in Q4 and closed 68, while activating 65 Onsite locations and closing 16. For all of 2021, Fastenal opened 10 branches and closed 220 while activating 242 Onsite locations and closing 91. From 2018-2021, Fastenal's branch count has gone from 2,227 to 1,793, while its active Onsites count has gone from 894 to 1,416.
- Fastenal ended Q4 with a total absolute headcount of 20,507, up 0.7 percent year-over-year and up 1.4 percent from Q3. Total full-time-equivalent headcount grew 3.0 percent year-over-year and 2.9 percent from Q3.
- Fastener daily sales increased 24.2 percent year-over-year and represented 33.5 percent of total sales, compared to 30.8 percent and 33.6 percent of net sales in Q4 2020 and Q4 2019, respectively.
- Safety products represented 21.4 percent of Q4 net sales, compared to 23.5 percent and 18.7 percent in Q4 2020 and Q4 2019, respectively.
- Daily sales of other products increased 12.8 percent year-over-year and represented 45.1 percent of net sales, compared to 45.7 percent and 47.7 percent of net sales in Q4 2020 and Q4 2019, respectively.
- Daily sales to national account customers increased 19.9 percent year-over-year, with 82 of the company's top 100 national account customers experiencing growth (including 87 of top 100 in December). National accounts represented 57.8 percent of total Q4 sales.
- Daily sales to non-national account customers, including government, increased 7.6 percent, and igrew in the mid-teens when excluding government.
- Employee-related expenses increased 16.5 percent year-over-year. The company noted higher wages and a significant increase in bonus and commission payments that reflected improved business activity and financial performance vs. 2020.
Full-Year Sales & Profit
For the full-year, Fastenal posted total 2021 sales of $6.011 billion, up 6.4 percent over 2020, with daily sales up 7.3 percent. Gross profit of $2.78 billion improved 8.2 percent at margin of 46.2 percent, while operating profit of $1.22 billion increased 6.6 percent at margin of 20.3 percent. The company's 2021 net profit of $925 million improved 7.7 percent over 2020.
Product Mix & Pricing Update
Fastenal added that, like in Q3, Q4 growth was slightly limited by slower growth or contraction in sales of certain products to certain end markets related to the COVID-19 pandemic, which were highly elevated throughout 2020. This was exemplified by Fastenal's Q4 daily sales to government and warehousing customers declining by 35.7 percent and 3.5 percent, respectively. Meanwhile, daily sales of safety supplies returned to growth, rising 3.5 percent. Daily sales of janitorial products decreased 3.4 percent.
Fastenal's product mix ended 2021 as follows (vs. 2020):
- Manufacturing: 41.9% (39.0%)
- Manufacturing - Heavy equipment: 27.0% (23.4%)
- Construction: 11.1% (11.3%)
- Reseller: 7.5% (8.0%)
- Government/Education: 4.6% (8.1%)
- Transportation/Warehousing: 4.9% (6.9%)
- Other: 3.0% (3.3%)
On the product pricing front, Fastenal said its overall impact on net sales in Q4 was 440 to 470 basis points. Fastenal noted that it took pricing actions throughout 2021, including in Q4 as part of its strategy to mitigate the impact of marketplace inflation on gross margin, particularly for fasteners and transportation services.
Vending
During Q4, Fastenal signed 44 new Onsite locations, following 75 in Q3, 87 in Q2 and 68 in Q1. The company noted Q4 signing were below its expectations, which it sees as a function of a lengthening of the sales cycle due to ongoing challenges from inflation, supply chain constraints, labor shortages and the pandemic. The company had 1,416 active sites on Dec. 31, 2021, up 11.9 percent from a year earlier. Daily sales through Onsite locations (excluding sales transferred from branches to new Onsites) grew better than 20 percent year-over-year. Despite the disappointing Q4 signings and 274 total new signings in 2021, the company still has a 2022 goal of 375 to 400 signings.
The company's Fastenal Managed Inventory (FMI) — comprised of its FASTVend, FASTBin and FASTStock offerings — had Q4 net sales of $543 million, up 45.4 percent year-over-year and comprised 35.1 percent of total company sales, compared to 27.2 percent of net sales a year earlier. Total 2021 FMI sales of $1.94 billion were up 39.9 percent vs. 2020 and comprised 32.0 percent of total company sales, up from 24.3 percent of 2020 sales. Fastenal signed 3,972 FASTBin/FASTVend units in Q4, up 11.9 percent year-over-year. It signed 19,311 total units in 2021, up 17.0 percent vs. 2020.
E-commerce & Digital
Fastenal reported that for all of 2021, daily sales through its e-commerce channels (via EDI, other technical integrations and web verticals) grew 45.2 percent vs. 2020. It grew even faster in Q4 at 48.2 percent year-over-year, representing 15.0 percent of total Q4 revenues.
Overall, Fastenal said its digital products and services (comprised of FMI and e-commerce sales that don't represent FMI services billings) represented 46.4 percent of its total Q4 sales, up from 39.1 percent in Q1.
Analysis
Financial services provider Edward Jones provided the following opinion to Industrial Distribution on Nov. 19 regarding Fastenal's Q4 report:
"Fastenal delivered solid results, although sales remained mixed across the business segments. Solid sales trends were maintained in key manufacturing and construction markets, driving fastener daily sales growth of 24% over last year. However, the demand from some end-markets declined as pandemic-related demand was moderating. For instance, daily sales to governments and warehouses fell, as did sales for janitorial products. Profitability remained stable, as pricing increases offset rising costs on materials and transportation given high commodity prices and supply chain constraints. We expect management to remain disciplined on pricing and focus on operational expenses to help offset pressures on profitability. In our opinion, Fastenal should be able to gain traction with its growth initiatives as the industrial economy grows and pandemic restrictions ease. Longer-term, we feel the company will continue to foster relationships with key customers and participate in growth industrial end-markets."
December
- Notable statistics from Fastenal's December monthly report:
- Total sales of $476 million grew 11.0 percent year-over-year, with daily sales up 16.5 percent. That compares with November sales of $524 million that grew 18.9 percent year-over-year and 13.2 percent on daily sales basis.
- By geography, daily US sales grew 15.4 percent; Canada/Mexico sales grew 22.1 percent; and other International sales grew 25.6 percent
- By end market, daily sales to manufacturing customers grew 25.8 percent (20.1 percent in November), while sales to non-residential construction customers grew 13.5 percent (11.7 percent in November)
- By product line, daily fastener sales grew 25.5 percent (19.4 percent in November); safety sales grew 7.2 percent (0.7 percent in November); and other sales grew 14.4 percent (9.9 percent in November)
