Fastenal Q3 Results Rise, But Miss View

(RTTNews) - Industrial and construction supplies provider Fastenal Co. (FAST) reported Wednesday a higher profit in its third quarter, boosted by increased net sales. Earnings per share as well as net sales missed Wall Street analysts' estimates.

For the third quarter, net earnings increased 9.2 percent to $119.35 million from $109.32 million last year. Earnings per share grew 8.1 percent to $0.40 from $0.37 a year earlier. On average, 12 analysts polled by Thomson Reuters expected the company to report profit per share of $0.41 for the quarter. Analysts' estimates typically exclude special items.

Net sales rose 7 percent to $858.42 million from $802.58 million a year ago. Analysts expected revenue of $862.54 million for the quarter.

The company said its sales growth reflected the gain of one business day versus the prior year's 63 days. Daily sales, defined as the sales for the period divided by the number of business days, grew 5.3 percent from last year to $13.41 million.

Meanwhile, the change in currencies in foreign countries relative to the United States dollar lowered daily sales growth rate by 0.3 percent and 0.2 percent in 2013 and 2012, respectively.

The company noted that its third-quarter sales growth of 7 percent, which was lower compared to last year's growth of 10.4 percent, was held back partially due to the global economic uncertainty combined with economic policy uncertainty in the United States.

For the quarter, gross margin edged up to 51.7 percent from 51.6 percent a year ago. Operating margin was 22 percent, higher than last year's 21.9 percent.

For the first nine months, net earnings grew 8.6 percent to $349.41 million, and earnings per share rose 8.3 percent to $1.18. Net sales increased 5.7 percent year-over-year to $2.51 billion. This is compared to last year's sales growth of 14.9 percent.

The company said its growth in net sales was impacted by slight inflationary price changes in non-fastener products and some price deflation in fastener products.

"We believe the weakness in the economy in the fourth quarter of 2012 and the first nine months of 2013, particularly in the non-residential construction market, was amplified by the global economic uncertainty combined with economic policy uncertainty in the United States and poor weather conditions," the company said in its statement.

As of September 30, the company had 2,686 stores, and operated 32,248 FAST Solutions (industrial vending) machines.

Fastenal added that it currently have authority to purchase up to 1.6 million shares of common stock.

Fastenal shares closed Tuesday's trading at $49.98, down 0.93 percent. In pre-market activity, shares declined $1.98 or 3.96 percent further, and traded at $48.