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Key Takeaways
- Fastenal missed first-quarter profit, sales, and operating profit margin estimates, which it attributed to weaker demand because of a soft manufacturing sector.
- The company also said bad weather and a “tricky calendar” had negative impacts on results.
- Sales of fasteners declined 4.4% from the year earlier.
Shares of Fastenal (FAST) slipped Thursday as the distributor of fasteners and tools attributed lower-than-expected quarterly results to weakness in the manufacturing sector.
The company reported first-quarter earnings per share (EPS) of $0.52, with revenue increasing 1.9% year-over-year to $1.9 billion. Both were slightly below estimates. Operating profit margin was 20.6%, also short of forecasts. Sales of fasteners dropped 4.4% from a year earlier.
CEO Daniel Florness said in an investor presentation that the “core issue remains poor demand.” He pointed to a sluggish Purchasing Managers Index (PMI), explaining that “such slow growth” resulted in pressure on margins and EPS. He argued that “it is difficult to sustain margins at current sales growth rates.”
Florness added that poor weather and a “tricky calendar” also affected results. He noted that Good Friday came in March for the first time in five years, and landed on the last day of the quarter. In addition, the company’s seasonally slow months of January and February had extra selling days, while the seasonally stronger month of March had two fewer.
Fastenal shares fell 4.3% to $71.53 as of 11:19 a.m. ET Thursday but remained up more than 12% this year.