Fastenal's Chief Executive Dan Florness told analysts on the company's fourth-quarter and year-end earnings call that while he didn't feel great about 2023, it was good enough to reward shareholders.
Industrial production was down, which affected sales, and the construction supplies distributor fell short of some lofty internal goals on major growth initiatives, namely the signing of Fastenal Onsite locations. But the company largely met or exceeded analyst expectations for the quarter and year.
Because supply chains stabilized in 2023, and the company's cash position was strong, Fastenal could do something different: issue a special dividend to shareholders of 38 cents a share.
On Nov. 20, the board of directors announced the special dividend, paid out on Dec. 20. It was in addition to the four regular quarterly dividend payments the board made in 2023 of 35 cents a share.
On the earnings call, Florness gave a more detailed explanation for the company's reason behind the special dividend, only the fourth such dividend Fastenal has paid since going public in the 1980s.
"We invested a tremendous amount of cash into inventory in 2021 and 2022, an incredible amount, because supply change became erratic," Florness told analysts.
As supply chains stabilized in 2023, Fastenal generated ample cash.
"We didn't need it. We sent it to our shareholders. We feel we have a really conservative balance sheet, and we have plenty of gunpowder for anything that we need to do as we move into 2024," Florness said.
