Fastenal Co., a distributor of industrial and construction supplies, notched double-digit sales growth in the third quarter on the strength of three key growth drivers: Onsite product and service locations at customer facilities, internet-connected vending machines at client locations and the acquisition of Manufacturers Supply Co.
“Add these three components of our business up, and they account for about two-thirds of our growth from the third quarter of last year to the third quarter of this year,” Fastenal president and CEO Dan Florness told analysts on the company’s quarterly earnings call Wednesday.
The company added 4,771 industrial vending machines during Q3 2017, which was comparable to the prior year quarter. Its installed device count at the end of Q3 was 69,058, up 14.3% over the same period in 2016. “The most meaningful thing is our business there continues to grow double digits, just over 20% growth,” Florness said on the call, according to a transcript from Seeking Alpha. Fastenal does not break out online sales.
Sales through vending machines grew at a double-digit pace in the third quarter of 2017, Fastenal says, primarily due to the increase in the installed base.
Fastenal’s internet-connected vending machines, which it places at customers’ industrial plant locations, provide customers with ready self-service access to such products as rivets, nuts and bolts used in manufacturing products, or in repairing equipment. They can also be stocked with non-fastener items like safety goggles and work gloves, products that workers may frequently need to replace on the spot in order to keep working.
Employees typically enter codes into the vending machines to access and retrieve products; machine sensors connected to the internet record when items are removed to update inventory and financial records, and set in motion replenishment orders. Fastenal also sells online at Fastenal.com.
The company added 81 Onsite locations in Q3 compared to 41 signings in the prior year quarter, an increase of 97.6%. Onsite locations are Fastenal-stocked and -managed product sales and service centers located at customers’ facilities, and many of them include Fastenal vending machines.
Fastenal’s March acquisition of Hudsonville, Mich.-based Manufacturer’s Supply Co., or Mansco, also contributed to Q3 growth. Daily sales grew 13.6% in the quarter, including a 1.3% contribution from Mansco, Fastenal says. Daily sales of fastener products grew 12.1% in Q3, of which 3.8 percentage points were attributed to Mansco.
Fastenal paid $57.9 million for Mansco.
For the third quarter ended Sept. 30, 2017, Fastenal reported:
- Net sales of $1.13 billion, up 11.8% from $1.01 billion.
- Gross profit of $555.9 million, up 11.2% from $499.8 million.
- Net earnings of $143.1 million, up 12.8% from $126.9 million.
For the nine months ended Sept. 30, Fastenal reported:
- Net sales of $3.30 billion, up 9.6% from $3.01 billion.
- Gross profit of $1.632 billion, up 9.3% from $1.493 billion.
- Net earnings of $426.2 million, up 10.8% from $384.6 million.
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