Fastenal Co.'s third-quarter profit rose 2.4 percent, the company said Tuesday as it also announced a new chief executive who will take charge after a sudden leadership shake-up this summer.
Daniel Florness, 51, Fastenal's chief financial officer since 1996, will become president and CEO effective at the start of 2016. He will succeed Willard Oberton, the former CEO who returned to lead the company this summer after the surprise move in which Leland Hein stepped down from the top job after just a few months to become Fastenal's chief operating officer. Oberton had been CEO from 2002 through last year. He will continue to be chairman after Florness takes over the day-to-day running of the company.
"I think that Dan is clearly a positive for Fastenal because [it ends] the turmoil we have seen with the previous CEO stepping down after a short period of time and then Will stepping back in. But now with Dan, they have their man and it's back to driving results," said Logan Purk, an equity analyst at Edward Jones.
The Winona, Minn.-based distributor of nuts, bolts, construction parts and industrial equipment said its third-quarter profit was $136 million, or 47 cents a share, in line with analysts' expectations. Sales rose 1.5 percent to $995 million, which was shy of analysts' forecasts of $1.01 billion.
Fastenal's stock fell 2.2 percent, or 86 cents a share, to close at $37.95 Tuesday.
Company executives said fastener and supply sales slowed this year as manufacturing and construction customers wrestled with setbacks in the oil and gas sector and with the high U.S. dollar, which has hurt exports.
Signs of lower U.S. manufacturing and construction orders and activity appeared recently in reports from the U.S. Bureau of Labor Statistics, Institute of Supply Management and Creighton University. Minnesota manufacturers and distributors, from 3M to Donaldson Co. and Fastenal, have all been punched by the high dollar and reduced purchasing in the energy and agriculture equipment sectors.
"They are seeing a recessionary environment in the industrial sector, which is where they play," said analyst Purk. "They are struggling to see the top-line growth that we are used to. But it's impressive that they are still seeing growth and still seeing expanding profit margins and that they are still investing in the business"
