Fastenal (FAST 54.72, +5.19, +10.48%) spiked 7.3% in pre-market after
beating quarterly earnings expectations.
The provider of fasteners, tools, and supplies to businesses reported above-consensus second quarter earnings of $0.74/share on a 13.1% year/year spike in revenue to $1.27 bln, which was just ahead of expectations.
Daily sales also grew 13.1% year/year to $19.8 mln while gross margin weakened to 48.7% from 49.8%. Daily sales of fastener products grew 11.1% while sales of non-fastener products grew 14.8%. Fastener sales made up 35.4% of total sales while non-fastener sales made up the remaining 64.6%.
The company notes that it raised prices in the second quarter of 2017 in anticipation of inflation, which seeped through the marketplace, weighing on gross margin for the second quarter. Higher freight expenses and changes in product and customer mix also contributed to the decline in gross margin.
The company's gross margin saw no change on a sequential basis as challenges from product inflation and mix were offset by improved freight management and leverage related to growth.
Employee-related expenses grew 10.0% due to a higher headcount, higher base wages, and higher bonuses and commissions. The company ended the quarter with a full-time equivalent headcount of 18,444, up 4.7% year/year.
The company ended the quarter with $425 mln in debt, which represented 16.0% of total capital, down from $445 mln, or 18.3% of total capital, one year ago.
Five branches were opened in the second quarter while 43 branches were closed. The company converted one branch from a public to a non-public location.
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