Nut, bolt and factory supplier Fastenal Co. posted strong fourth-quarter growth, meeting Wall Street's profit expectations. The Winona, Minn.-based company, however, missed revenue estimates.
Sales for the fourth quarter ended Dec. 31 rose 13.8 percent to $926 million, the company reported Thursday. Profits rose an impressive 19.3 percent to $118 million, or 40 cents a share.
On average, analysts expected earnings of 39 cents a share and revenue of $936 million. The stock fell 96 cents a share Thursday to close at $43.97.
"It was a very solid quarter," regardless of tepid investor response, said Logan Purk, a research analyst for Edward Jones. "You had the strongest three months of sales growth that we have had in two or three years. And the monthly sales number was phenomenal. December's [growth] was getting close to 20 percent. We have not seen that in a long time."
In a conference call with analysts Thursday, Chief Executive LeLand Hein Jr. and Chief Financial Officer Dan Florness credited the quarter's growth spurt to improved U.S. manufacturing and construction trends, as well as Fastenal's efforts to manage expenses and increase the sales staff within its retail stores.
The company hired 82 new workers during the last quarter and opened 24 new stores during 2014. It will add 20 to 30 more well-staffed stores this year to meet needs of construction and factory customers.
The investment is necessary "to add selling energy to the organization," Hein said. Since July 2013, Fastenal added 2,032 workers, an increase of 19 percent, to its stores and regional management staff.
Besides the personnel ramp-up, Fastenal benefited from the army of self-service industrial vending machines it has installed at customer sites over the past few years. Vending machine sales make up 40 percent of the company's revenue.
