Fastenal (FAST) Q4 2023 earnings summary

Executive summary

• Q4’23 daily sales growth was 3.7%; diluted EPS rose 8.4% to $0.46. For FY23, net sales grew 5.2%, daily sales 5.7%, and EPS 6.7% to $2.02.

• Growth initiatives showed uneven performance, while key-account development, Onsite and FMI expansion, and digital sales helped defend operating margin amid soft activity and less favorable pricing.

• FY23 operating cash flow reached a record $1.43B, up 52.3%; cash conversion was 124.0% of net earnings versus 86.6% in 2022.

Financial highlights

• Q4’23 gross margin was 45.5%, up from 45.3% YoY; operating margin was 20.1%, up from 19.6%.

• Operating expenses were 25.3% of net sales versus 25.7% in Q4’22, despite low daily sales growth.

• Q4’23 operating cash flow was $354.0M, or 132.9% of net earnings; FY23 operating cash flow was $1,432.7M.

Outlook and guidance

• 2024 Onsite signing goal: 375–400 locations; 2023 signings totaled 326.

• 2024 FASTBin and FASTVend signing goal: 26,000–28,000 MEU, following 24,126 MEU signed in 2023.

• Digital Footprint sales are expected to reach 66% at some point in 2024; long-term expectation remains 85%.

• U.S./Canada traditional branch count is expected to remain between 1,400 and 1,500; year-end 2023 count was 1,441.

• 2024 net capital spending range is $225M–$245M, for hub capacity, facility picking capabilities, FMI purchases, and IT.