LONDON, UK / ACCESSWIRE / October 16, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Fastenal Co. (NASDAQ: FAST), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=FAST, following the Company's disclosure of its third quarter fiscal 2017 financial results on October 11, 2017. The maker of industrial and construction fasteners topped sales expectation while it met earnings estimates. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at: http://protraderdaily.com/register/.

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Earnings Reviewed

For the quarter ended September 30, 2017, Fastenal's net sales jumped 11.8% to $1.13 billion from $1.013 billion in Q3 FY16. The Company's sales beat analysts' estimates of $1.12 billion.

During Q3 FY17, Fastenal's gross profit, as a percentage of net sales, declined 20 basis points to 49.1% from 49.3% in Q3 FY16. The Company's operating income, as a percentage of net sales, improved to 20.2% in Q3 FY17 from 20.0% in Q3 FY16l this improvement was attributed to a 40-basis points growth in its operating and administrative expenses, which was partially offset by a 20-basis points decline in gross profit. Fastenal's operating and administrative expenses, as a percentage of net sales, were 28.9% in the reported quarter compared to 29.3% in Q3 FY16.

During Q3 FY17, Fastenal's employee-related expenses, which represented 65% to 70% of the overall operating and administrative expenses, increased 12.3% on a y-o-y basis in Q3 FY17. The increase in employee-related expenses was primarily related to higher bonuses and commissions as a result of growth in net sales and net earnings as well as regulatory driven incremental compensation, increase in the Company's full-time equivalent ('FTE') headcount, increased health care costs, and the inclusion of Mansco's personnel.

Fastenal's occupancy-related expenses, which represented 15% to 20% of operating and administrative expenses in the reported quarter, increased 1.5% on a y-o-y basis, as a decline in Fastenal's number of public branches was more than offset by increases related to growth of vending equipment and an increase in automation at the Company's distribution centers.

Fastenal's net earnings were $143.1 during Q3 FY17, reflecting an increase of 12.7% from net income of $126.9 million in Q3 FY16. The Company's diluted net earnings per share were $0.50 for the reported quarter compared to $0.44 for the year ago same period. Fastenal's earnings met Wall Street's expectations of $0.50 per share.

Growth Driver Performance

During Q3 FY17, Fastenal signed 4,771 industrial vending machines comparable on a y-o-y basis. The Company's installed device count on September 30, 2017 was 69,058, reflecting an increase of 14.3% over September 30, 2016. Fastenal noted that sales through the Company's vending machines continued to grow at a double-digit pace in the reported quarter, primarily due to the increase in installed base.

During Q3 FY17, Fastenal signed 81 new onsite locations compared to 41 signings in Q3 FY16, reflecting an increase of 97.6%. The Company had 555 active sites on September 30, 2017, which represented an increase of 47.6% over September 30, 2016. For Q3 FY17, Fastenal signed 42 new national account contracts, and revenues attributable to national account customers represented 48.7% of its total revenues in the reported period.

Fastenal noted that due to one less selling day in Q3 FY17, its daily sales increased 13.6% to $18.0 million versus daily sales of $15.8 million in Q3 FY16. Furthermore, the Company's March 31, 2017, acquisition of Manufacturers Supply Company ('Mansco') boosted its daily sales growth by 1.3%. Adjusting for the acquisition, Fastenal's daily sales, on an organic basis, increased 12.3% y-o-y, primarily driven by higher unit sales.

Fastenal's products represented 35.6% of sales in Q3 FY17. The Company's daily sales of fastener products grew 12.1% in total, of which 3.8% were attributable to the Mansco business. Fastenal's sales of non-fastener products represented 64.4% of sales in the reported quarter and grew 14.6% on a daily basis.

Balance Sheet and Cash Flow

Fastenal generated operating cash flow of $455.9 million for the first nine months of FY17, up 17.8% on a y-o-y basis, representing 107.0% of the reported period's net earnings versus 100.6% in the first nine months of 2016.

Fastenal invested $76.5 million for property and equipment, net of proceeds from sales, in the first nine months of FY17 compared to $157.4 million in the first nine months of 2016. The Company also paid $277.1 million in dividends during the first nine months of 2017 compared to $259.9 million in the first nine months of 2016. During Q3 FY17, the Company repurchased 600,000 shares of its common stock at an average price of approximately $43.03 per share.

Fastenal's total debt on its balance sheet was $440.0 at the end of Q3 FY17, or 17.8% of total capital, compared to $445.0, or 18.9% of total capital, at the end of Q3 FY16. The Company's accounts receivable was $632.1 at the end of the reported quarter, reflecting growth of 16.2% on a y-o-y basis. Fastenal's inventories were $1.05 billion at the end of Q3 FY17, up 8.3% compared to $993.0 million in Q3 FY16. The Company's accounts payable was $147.1 at the end of reported quarter, up 24.9% on a y-o-y basis, primarily driven by an increase in inventory demand due to sales growth.

Stock Performance

On Friday, October 13, 2017, the stock closed the trading session at $46.58, climbing 1.39% from its previous closing price of $45.94. A total volume of 2.84 million shares have exchanged hands. Fastenal's stock price surged 9.60% in the last three months, 1.70% in the past six months, and 21.49% in the previous twelve months. The stock is trading at a PE ratio of 24.72 and has a dividend yield of 2.75%. At Friday's closing price, the stock's net capitalization stands at $13.45 billion.

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