Sales trends for Fastenal, which supplies factories across the nation, show that the economy has continued to slowly improve from downturns caused by the coronavirus pandemic.
However, the company's healthy quarter was propelled by sales of safety equipment, including personal protective equipment (PPE), not its mainstay fastener products.
Demand for PPE, other safety products and janitorial supplies to help keep workplaces clean and sanitized were still elevated in the fourth quarter and helped Fastenal earn $196.1 million, or 34 cents per share, up almost 10% over the same period last year. Sales increased 6.4% to $1.36 billion for the quarter.
Because of the Winona-based company's business model of providing customers products through Onsite locations and industrial vending machines located within factory complexes, Fastenal was able to get into some manufacturing sites that other companies were not.
"We demonstrated to the market and ourselves some of our problem-solving abilities," Fastenal Chief Executive Dan Florness told analysts on the company's earnings call about their resilience in 2020.
For the year ended Dec. 31, Fastenal saw earnings increase 8.6% to $859.1 million. Revenue was up 5.9% to $5.6 billion.
Sales of PPE were up 35% in the fourth quarter, while fastener sales declined more than 2% in the quarter. The company said the sales trends for fasteners and other products showed sequential improvement over the third quarter.
Fourth-quarter earnings per share and revenue exceeded the consensus analyst expectations of 33 cents per share and $1.34 billion. Annual earnings and EPS also finished slightly ahead of expectations.
While Fastenal was allowed to restock Onsite locations and vending machines where access was otherwise restricted, the pandemic changes did hamper abilities to sign additional Onsite and vending machines.
At the beginning of the year, Fastenal had planned to sign 375 to 400 new Onsite locations in 2020. The company finished the year with 223 new locations, including 36 signings in the fourth quarter, down 54% from the fourth quarter of 2019.
New vending-machine signings for the year were 16,417, and as of Dec. 31, the installed base of vending machines was 95,733, up 6.4% over 2019.
The company also announced it will alter the reporting of its vending signings in 2021 to include the increased adoption of its FAST Bin initiatives, which use "smart bins" that use scales, infrared or radio frequency identification to monitor the usage and amount of bulk items in a bin and use that information to aid customer reorders.
Fastenal has more than 20,000 employees, and has been trying to control COVID-19 in its own operations as it serves other companies' facilities. Florness said it has seen a rise as the number of cases nationwide has increased. In September, the company reported 17 cases per week. In November, that number was 86 cases a week.
Shares of Fastenal closed Wednesday at $48.70, losing about 3.5% of their worth. Fastenal shares finished up 37.7% for 2020.
Patrick Kennedy • 612-673-7926