Winona-based Fastenal Company's staffing boost paid off with first quarter earnings that beat Wall Street's profit expectations.
Revenue rose during the quarter but missed analysts' estimates by a hair, company officials announced Tuesday.
Fastenal, which sells nuts, bolts and other supplies to construction and industrial customers, reported an 8.8 percent jump in first quarter sales to $953.3 million. Profits rose 14 percent to $127.6 million, or 43 cents a share. Analysts had expected 41 cents.
Officials credited the rise on a focused effort to increase its customer service staffing in its many retail stores. Employment was at 12,907 for the quarter ended March 31. That's up from 11,840 positions a year ago.
As of the first quarter, Fastenal has installed 48,545 industrial vending machines inside customer factories, marking a sizeable jump in the number of vending machines installed during a quarter. The machines have been found to be a cost-efficient and quick way to supply customers with the parts needed for their production.
In a conference call with analysts on Tuesday, Fastenal CEO LeLand Hein Jr. and CFO Daniel Florness said the company's dual approach of supply vending machines and enhanced retail staffing will continue. "By adding more people, we add to our ability to interact with and to serve our customers from our local store and to back them up in some type of support role," Hein said. "Our goal is to aggressively add."
Despite the positive quarter, Fastenal faced several challenges, including being "hit hard" by winter storms, a slowdown in business from customers in the oil sector and the high U.S. dollar, which is starting to pinch some of its customers' export business.
Edward Jones research analyst Logan Purk said the company delivered "pretty good results in the face of a more sluggish growth environment. …"
Fastenal's stock closed Tuesday at $41.79, up $1.77.