Fastenal Company announced its financial results for the quarter and year ended December 31, 2017. Net sales increased 108% for the year, and 14.8% in the fourth quarter. Gross profit for the year was 10.1%.
“A return to double-digit sales and pre-tax earnings growth in 2017 was a great way to celebrate our 50th year in business,” said Dan Florness, president and CEO. “Our customers’ demand improved, this demand lifted our business. Also encouraging was how the hard work of Fastenal employees generated accelerating signings and sales growth in our growth drivers. This momentum, our ability to leverage operating expenses, and the benefits of tax reform have set up 2018 to be another strong year for Fastenal.”
Quarterly results of operations
Net sales increased $140.5, or 14.8%, from the fourth quarter of 2016 to the fourth quarter of 2017. The March 31, 2017 acquisition of Manufacturers Supply Company (‘Mansco’) increased sales growth by 1.4 percentage points. The remaining portion of the increase was driven primarily by higher unit sales. The higher unit sales resulted primarily from improvement in underlying market demand and contribution from growth drivers, most notably industrial vending and onsite locations.
Growth driver performance
Fastenal signed 4,266 industrial vending machines during the fourth quarter of 2017, an increase of 13.5% compared to the fourth quarter of 2016. Fastenal’s installed device count on December 31, 2017 was 71,421, an increase of 13.7% over December 31, 2016. Sales through vending machines continued to grow at a double-digit pace in the fourth quarter of 2017, primarily due to the increase in the installed base. These amounts do not include the machines deployed as part of Fastenal’s leased locker program.
The distributor signed 57 new onsite locations during the fourth quarter of 2017 compared to 43 signings in the fourth quarter of 2016, an increase of 32.6%. Fastenal had 605 active sites on December 31, 2017, which represented an increase of 50.9% over December 31, 2016.
Fastenal signed 32 new national account contracts (defined as new customer accounts with a multi-site contract) in the fourth quarter of 2017, and revenues attributable to national account customers represented 49.8% of total revenues in the period.
Daily sales to national account customers grew 18.5% in the fourth quarter of 2017 over the fourth quarter of 2016. Beyond signings (or growth activities), large customers can provide insights into the trends of the overall marketplace. As recently as the fourth quarter of 2016, weak industrial demand was depressing growth for this group with sales to only 51 of Fastenal’s top 100 customers growing compared to 49 contracting. This dynamic started to improve in the first quarter of 2017, and has continued to improve, including in the fourth quarter of 2017, with sales to 72 of the top 100 customers growing (54 growing 10% or more), and sales to 28 of our top 100 customers declining (14 declining 10% or more).