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Fastenal taps new CEO from within, reports small jump in profit

Leadership change is third in a year. The company also reported a 2.4 percent rise in third-quarter profit.

October 14, 2015 at 2:31AM
Fastenal’s industrial-supply dispensers give authorized customers’ employees access to supplies by an electronic card. The machines help customers reduce consumption by as much as 40 percent.
Fastenal's third quarter profit rose slightly and the company announced a resolution to a reshuffling of top executives. File photo of a Fastenal dispenser of industrial supplies. (The Minnesota Star Tribune)

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"

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During the quarter, Fastenal increased its sales force by 5 percent, installed 4,689 industrial vending machines in customers' factories, and said it plans to open 60 to 75 new stores while closing about 20 others. Fastenal is closing stores in areas where it has two in proximity. The openings tend to be in places where it serves large national customers.

Dee DePass • 612-673-7725

about the writer

about the writer

Dee DePass

Reporter

Dee DePass is an award-winning business reporter covering Minnesota small businesses for the Minnesota Star Tribune. She previously covered commercial real estate, manufacturing, the economy, workplace issues and banking.

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