Onsites Push Fastenal Profits Higher in 4Q as 2023 Sales Top $7.3B - Modern Distribution Management

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Onsites Push Fastenal Profits Higher in 4Q as 2023 Sales Top $7.3B

Fourth quarter sales, profits and margins all edged up from a year earlier, and December daily sales topped November's. Get our in-depth breakdown here.
Fastenal 2021 october sales
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Fastenal reported its 2023 fourth quarter and full-year financial results on Jan. 18, showing that sales and profits edged up during the period despite what’s been cited a softening demand conditions by most of the industrial distribution sector.

The Winona, MN-based company posted 4Q23 total sales of $1.76 billion, up 3.7% year-over-year, with daily sales up by that same amount.

The company’s 4Q gross profit margin of 45.5% edged up from the 45.3% of a year earlier and trailed 3Q’s 45.9%. The 4Q operating profit of $354 million improved 6.3% year-over-year, while the operating margin of 20.1% topped the 19.6% of a year earlier and trailed 3Q’s 21.0%.

Fastenal posted a 4Q23 net profit of $266 million, up 8.5% year-over-year.

The company said it experienced higher unit sales during 4Q23 primarily due to growth at its onsite locations (locations with dedicated sales and service provided from within or in proximity to the customer’s facility), particularly those opened in 2023 and 2022, and with large customers. 

For the full year, Fastenal reported 2023 total sales of $7.35 billion, up 5.2% compared with 2022, with daily sales up 5.7%. The company’s 2023 gross margin of 45.7% trailed 2022’s 46.1%. 2023’s operating profit of $1.53 billion grew 5.2% compared with 2022, while operating margin of 20.8% was identical. Fastenal posted a 2023 net profit of $1.16 billion, up 6.3% compared with 2022.

Pricing Impact 

Fastenal said the impact of product pricing on net sales during 4Q23 was modestly positive at 350 to 380 basis points. That’s down considerably from the 550 to 580 bps cited for 3Q23. The company added that pricing for fasteners has decelerated faster than the company’s non-fastener products.

4Q23 Product Line Performance

Here’s how Fastenal’s three product categories performed in 4Q23 on a year-over-year daily sales rate change:

  • Fasteners (31.1% of sales vs. 33.0% in 4Q22): -2.3% vs. +9.1% in 4Q22
  • Safety supplies (22.5% of sales vs. 21.3% in 4Q22): +9.4% vs. +10.7% in 4Q22
  • Other (46.4% of sales vs. 45.7% in 4Q22): +5.3% vs. +12.1% in 4Q22

4Q23 Customer End Market Performance

Here’s how Fastenal’s customer end markets performed in 4Q23 on a year-over-year daily sales rate change:

  • Heavy manufacturing (42.5% of sales): +5.8%
  • Other manufacturing (31.1% of sales): +3.3%
  • Non-residential construction (8.8% of sales): -7.4%
  • Reseller (5.6% of sales): -7.9%
  • Other (12.0% of sales): +13.5%

4Q23 Customer/Channel Type Performance

Here’s how Fastenal’s customer end markets performed in 4Q23 on a year-over-year daily sales rate change:

  • National accounts (62.0% of sales): +8.5%
  • Non-national accounts (38.0% of sales): -3.2%

Onsites & Vending

Fastenal signed 58 new onsite locations during 4Q23, finishing the year with 326 new signings for 2023. That fell short of the company’s goal of 350, which the company said reflects a lengthening of the sales cycle due to softer business conditions and the ongoing training of a pipeline of managers to staff future signings.

Fastenal had 1,822 active onsite locations as of Dec. 31, 2023, up 12.3% from a year earlier. Daily sales through onsite locations (excluding sales transferred from branches to new onsites), grew at a mid single-digit rate during 4Q23 year-over-year.

The company’s goal for onsite location signings in 2024 is 375 to 400.

4Q23 sales from Fstenal’s FMI Technology — comprised of its FASTStock, FASTBin and FASTVend offering — improved 11.3% year-over-year, with daily sales up by that same amount. For the full year, 2023 FMI sales improved 15.9% compared with 2022, with daily sales up 16.3%. 

Fastenal signed 24,126 weighted FASTBin and FASTVend devices in 2024, which was within the company’s stated goal of 23,000 to 25,000. FMI comprised 40.3% of Fastenal’s 2023 sales (41.5% in 4Q), up from 36.7% in 2022. 

Fastenal said its goal for weighted FASTBin and FASTVend device signings in 2024 is 26,000 to 28,000.

eCommerce & Digital Footprint

Fastenal said that daily sales through the company’s eCommerce (via web verticals, EDI or other technical integrations) grew 28.3% during 4Q23 year-over-year and represented 24.8% of total sales.

The company’s digital footprint — comprised of eCommerce plus FMI — represented 58.1% of total sales during 4Q23, up from 52.6% a year earlier.

Executive Appointment

During its 4Q23, Fastenal appointed Anthony Broersma as its Executive Vice President of Operations, effective Oct. 11.

Fastenal’s December

Fastenal’s daily sales improved 5.3% year-over-year during December, up from 3.8% in November. 

Daily Sales by Geography, Year-Over-Year:

  • United States (84.0% of sales): +4.8% (+3.1% in November)
  • Canada/Mexico (12.6% of sales): +9.4% (+8.6% in November)
  • Rest of World (3.4% of sales):  +1.3% (+2.3% in November)

Daily Sales by Product Line:

  • Fasteners (30.5% of sales): -1.9% (-3.0% in November)
  • Safety (23.1% of sales): +11.2% (+10.8% in November)
  • Other (46.4% of sales): +6.4% (+5.8% in November)

Daily Sales by Customer End Market: 

  • Heavy manufacturing (42.3% of sales): +5.7% (+5.5% in November)
  • Other manufacturing (30.9% of sales): +4.6% (+3.2% in November)
  • Non-residential construction (8.4% of sales): -5.5% (-8.2% in November)
  • Reseller (5.5% of sales): -6.9% (-4.6% in November)
  • Other (12.9% of sales): +21.0% (+12.1% in November)

Daily Sales by Customer Category: 

  • National accounts: +11.0% (+9.0% in November)
    • 68.0% of Top 100 national accounts were growing (57.0% in November)
  • Non-national accounts: -3.0% (-3.0% in November)
    • 53.4% of non-national accounts were growing (42.1% in November)
  • FMI: +11.0% (+10.0% in November)
  • eProcurement: +28.0% (+48.0% in November)

Employee & Branch Count

Fastenal ended December with 23,201 total personnel, up 3.6% year-over-year and flat vs. November. That includes 15,070 selling personnel (full-time), up 4.1% year-over-year.

MDM’s Fastenal “Big Pivot” Series

If you haven’t done so yet, be sure to check out John Gunderson’s three-part series on Fastenal’s “Big Pivot” which transformed the company from a distributor dependent on its branch network to one that prioritizes integrated supply and self-service. 

On MDM’s 2023 Top Distributors Lists, Fastenal was No. 6 for industrial supplies, No. 4 for MRO, No. 7 for fluid power, No. 1 for fasteners and was on our unranked gases/welding and safety lists.

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