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While adverse weather in January and February threatened to derail some of the company's initiatives, The Fastenal Company (NASDAQ: FAST) has managed to stay the course with its most important strategies.
"One of our very important initiatives, the headcount, we're on track," CEO Will Oberton said in Fastenal's first-quarter investor call. "We're up about just over 15 percent. We're going to stay on that track, continue to add labor at 15 percent, but understand it doesn't translate into 15 percent more labor dollars."
Fastenal is looking to add labor "very heavily on the part-time side," with the goal to bring in more workers for tasks such as answering phones, loading trucks and stocking shelves, freeing up time for managers and salespeople to "be out aggressively calling on our customers and growing our business," Oberton said.
Fastenal is also increasing headcount to "maintain a high level of service and to have someone out seeking customers every day," President Lee Hein said. "That does something to our people and it puts us in a position to take market share, so we're going to continue."
By focusing on part-time workers, Fastenal is looking to better manage expenses and drive up store efficiency. Once efficiency starts increasing, Fastenal plans to "take the rest of the earnings and put it into sales drivers," according to Oberton. "And if our stores become more efficient, we would expect higher growth rates than we historically have gotten because there's more energy out selling and less energy packaging orders."
Fastenal also maintained a focus on its vending program during the first quarter. While total vending signings were down, "growth of the number of customers using it and growth with that group of customers both moved up," Oberton said.
Overall, Fastenal says about 12 percent of its total business is going through vending machines. Close to 40 percent of Fastenal's current business is with customers who have vending as part of their product offering.
"Our goal, over time, is how do we take the 40 percent to 45 percent? How do we take the 45 percent to 50 percent? How do we continue to raise that because it's a very tangible measurement of engagement with our customer?" CFO Dan L. Florness said. "It's not about the number of machines. It's not about all this other stuff. It's about engagement with our customers and driving that growth and the stickiness of that business."
Fastenal's first-quarter sales were up 8.7 percent from the previous quarter, with March sales up 11.6 percent. Sales to manufacturing customers, which accounts for approximately half of Fastenal's business, grew 9 percent in the quarter and 11.5 percent in the month of March. Construction rebounded in March, growing at a rate of 7.5 percent, while construction sales for the quarter grew 2.9 percent.