Industrial and construction supplies provider Fastenal Co. (FAST) Monday reported a 35% year-over-year drop in profit for the third quarter, hurt by a 21.7% decline in quarterly net sales as well as lower margins.
The weakened economy continued to drive down sales by double digits, impacting particularly the company's industrial production business. Earnings per share for the quarter dropped 34.7% and came in below analysts' expectations by a penny.
Fastenal noted that it plans to resume normal annual store openings by between 7% to 10%, assuming the economy remains somewhat stable, beginning in January 2010.
Third Quarter Results
The Winona, Minnesota-based company reported net earnings of $47.59 million or $0.32 per share for the third quarter, down about 35% from $72.91 million or $0.49 per share in the prior-year quarter. The results for the year-ago quarter included a legal settlement that reduced earnings per share by just over $0.03.
On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.33 per share for the third quarter, with estimates ranging between $0.29 and $0.35 per share. Analysts' estimates typically exclude special items.
Net sales for the quarter declined 21.7% to $489.34 million from $625.04 million in the same quarter last year, and came in line with seven Wall Street analysts' consensus estimate of $489.32 million.
Among others in the industry, Melville, New York-based MSC Industrial Direct Co., Inc. (MSM) is scheduled to report financial results for the fourth quarter on Wednesday, October 21, 2009. The company expects earnings to range between $0.33 and $0.37 per share for the quarter on net sales of between $336.0 million and $348.0 million, compared to last year's earnings and sales of $0.80 per share and $448.56 million, respectively. The Street is looking for earnings of $0.36 per share for the third quarter, on revenues of $343.42 million.
Another peer, Lake Forest, Illinois-based W.W. Grainer, Inc. (GWW) is scheduled to report financial results for the for the third quarter on Wednesday, October 14, 2009. Analysts expect the company to report earnings of $1.34 per share for the third quarter, on revenues of $1.60 billion. Other Metrics
The company's net sales for the month of September 2009 declined 20.8% to $167.10 million from last year's $211.06 million, and August 2009 sales fell 21.4% to $161.70 million from a year ago's $205.81 million. Sales for the month of July 2009 dropped 22.9% to $160.54 million from $208.17 million last year.
Operating income for the third quarter dropped to $76.41 million or 15.6% of total sales, from $117.62 million or 18.8% of total sales, in the prior-year quarter. Gross profit for the quarter declined to $244.51 million from $330.88 million in the year-ago quarter, while gross profit margin was down 290 basis points at 50.0% from last year.
Operating and administrative expenses were $168.12 million, down from $213.31 million in the same quarter last year. However, as a percentage of sales, expenses edged up 30 basis points to 34.4%.
The company ended the third quarter with cash and cash equivalents of $148.82 million, compared to $52.11 million at end of the prior-year quarter.
At the end of the third quarter, Fastenal operated 2,352 stores in the U.S. in all 50 states, Canada, Puerto Rico, Mexico, Singapore, Netherlands, Hungary, Malaysia and China selling to the general public. The company also operates 14 distribution centers in U.S., Canada and Mexico.
In July, Fastenal's board of directors authorized share repurchases of up to 2.0 million shares of common stock. The company did not repurchase any shares in the first nine-month period.
Nine Month Highlights
For the nine month period, Fastenal reported net earnings of $139.82 million or $0.94 per share, down about 36% from $217.17 million or $1.46 per share in the prior-year period.
Net sales for the year-to-date period declined 19% to $1.45 billion from $1.80 billion in the year-ago period.
During the nine month period, Fastenal opened 45 new stores, sharply lower than 140 new stores opened in the same period last year. Outlook
Looking ahead, the company continues to expect that capital expenditures to drop to $65 million in 2009 from about $95 million in 2008.
Stock Quote
In Monday's regular trading session, FAST is currently trading at $41.25, up $1.86 or 4.72% on a volume of 16,100 shares. In the past 52-week period, the stock has been trading in a range of $25.87 to $43.49.
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