Fastenal (FAST) 3Q 2016 Earnings Call

posted in: Earnings Call, Notes | 0

Fastenal (FAST) CEO Daniel Florness said they have been shrinking the amount of employees in the company after hiring a substantial amount in 2015

“During the last twelve months, we have reduced our headcount by 430 people in our stores and 115 people in total. We continue to add headcount where necessary to support our growth initiatives, notably our Onsite business (defined as dedicated sales and service provided from within the customer’s facility). However, the continued softness of the North American industrial economy has caused us to more intensively scrutinize our full- and part-time staffing levels outside of these initiatives. Indeed, after increasing our total headcount every quarter during 2015, it has declined during every quarter of 2016.”

They saw business conditions in the 3rd quarter of 2016 that were very similar to conditions in the first 2 quarters

“Business conditions in the third quarter of 2016 looked very similar to those in the first half of 2016. Daily sales growth remained slow at 1.8% in the third quarter of 2016, versus growth of 1.9% and 1.6%, respectively, in the first and second quarters of 2016. Our OEM and construction fastener sales remain relatively weak, reflecting the sustained relative weakness of our heavy equipment and construction end markets.”

Operating in a tough business environment

“It’s not a great environment to do business in. But that’s the world we live in and that’s the world we need to contend with. And there is a lot of uncertainty. But the certainty I do know is that we have a great organization, a great group of people out there managing our business. And we are going to continue to focus on our growth drivers and we are going to continue to let our regional vice presidents, our district managers, our hub managers, our support leads run their perspective groups. But we will need to be mindful of the environment we are in.”

Fastenal (FAST) CFO Holden Lewis said large customers are slowing their oders

“Qualitatively, it’s not clear to us that the tone changed much in the third quarter. We saw that the sales of fasteners into heavy manufacturing construction end markets were relatively weak as we have seen before. The same could be said of our largest customers. Our top 100 was flat to maybe down slightly during the period. But again, these are the same dynamics that have persisted throughout 2016.”