Fastenal (FAST) 14 Apr 202020 Q1 Earnings call transcript

Greetings and welcome to the Fastenal 2020 First Quarter Earnings Results Conference Call. At this all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded.

It’s now my pleasure to introduce your host Ellen Stolts. ahead. go Please

to last Chief results Fastenal we'll This the our quarterly first start earnings Lewis, hour, quarter and Welcome will will Company open answers. with operations, the be general call. call our Holden and call the one Executive of for time and a being overview and Florness, Officer. hosted up for conference our and The Chief to Officer; with XXXX Financial remainder by of President questions Dan

Today's webcast is recorded call the Fastenal the via This the on on call XXXX, distribution reproduction, a page, website Investor conference consent. and proprietary until being today's is simulcast by transmission June Fastenal investor.fastenal.com. being is midnight Internet of be of recording, will Fastenal's is Central Time. X, available presentation permitted home without audio the at Relations Fastenal. A No call replay or

that the call expectations, As plans and a current note anticipated update differ conference no These periodic today's the we our actual and to those anticipated. actual those them. and reminder, encourage Factors differ Commission, statements undertake the we Securities from may with company's factors cause you filings important may duty results company's review are on that to materially latest is prospects. to future statements based It to regarding the earnings include results from results in contained and carefully. are could company's release and Exchange

call I Mr. Dan would to Florness. over the turn to now like

– thought and took giving and we a a operate XX rolls I'd thank what quarter out perspective January you for from so in by Back at quick Good we as our up the joining today. and learned in points. we morning I it call countries. different actions everybody recap chronology of start

leaders back organization and with in we group and a based have sales was both that and teams it that COVID-XX. learned from in China we sourcing have firsthand We conversations from about regular a our is in our January organization that in China China,

in that chain realm monitor had to our time some had last shared in time, and our their lockdown great reliable where repeat partner that with to normal supply mind dozen customers, and of SKUs point Apex, we to our what members a customers At particularly was a the good of as years. with we called goal company that and vending been was for the maintain had at that transaction our started a several predictability about specific It potential understanding usage of also who's of for expect. about a board a the in we we

changing On sales the all put from learning what alarm were to extended of in we was in the fact February And we about what our their team New second in were X, our mean of connection sounded of a is in starting release, internally. of COVID-XX that out week the by with some I lessons about – our throughout the world message a was being employees we alarm that the they organization learn and Year to eyes. Chinese that China the

and they and where to operational well to were to to talking start process stabilize our as particularly janitorial. and standpoint could the we teams chain were supply to to begin suppliers access they as and supplier to select marshal our safety of supplier an vending sourcing So prepare from understand products, resources expand better supply where

our folks with a the of half first the with letter with that expand our work we the work mobile we during of lot later footprint February, half home And our a we board began entire support at locations. at than for notified branch also to employees the resources of creating for in the Also IT to also other we business. onsite engaged have the and and to of latter and was February Apex platforms expand intent in mobility change could do transaction we Apex their have sourcing. about allowing our of the don't month. We the signed It whatever potential

Xth over again February It and March that in period. On and attend updates were canceled – taking. about scheduled in than our people steps April were be we our employees to release, three connection X,XXX our Friday, seeing in was and started that March day our with on later video the sales annual we Denver it's day event mid more held was the we to Xth, shared a event expanded a what that customer an

it to prudent think to the we saw event able would the as environment, planned. we off the event didn't come as cancel Given changing be

we locking On were Saturday, in say of sideline to door. notified in customers, XXX,XXX I'm pleased to here, we that we XXth Xth birthday. my XXth, our March person. Weekend a we little approximately celebrated mom's do front March were

of be customer's going our smaller you piece Fastenal the be ever strictly somewhat deliver that store out might of We front an a going into it It might degree. location. a machine. be into a It a stock. goes hardware feels It goes certain delivery. location, back bin those to vending For door. might our it's A door. been to Most have revenue industrial at like out the

customer the door with thought process front the chain, our so of notified protecting our locked. was customers employees, And supply we protecting our

in role learn for our term However, And we marketplace. and business. more industry infrastructure we critical more are to folks and provide better or critical the about started the really open appreciate the

indicated order also to We ahead. customers, please our

place call keep we you order safe door, coming have a We'll on product an safe, business. branch, and supplies we'll at the each do phone, distance to are but ready from for other to you the you. access a to your the can front and online everybody handoff keep allow us the critical If so

I benefits weekly be a turned sent this expanded video Fastenal to to it know and message our our platform our a to to believe paid remove We simple. had their employee was update the later life might and going I comfort XXth, that they worries job to can And paycheck would something side wanted people some and we COVID-XX happened have from week one on. remove the goal coming that quite XXth, elements And what's in bright is expand address if a and that expanded Later of program it our replied a decisions make we be that in child we off. teams home our because a in out days that and the when be might situation a out contract COVID-XX, week we think let better better folks to that's we that school of environment. that's employees we closed, of first specifically wanted March in make March issues where a comfort was the from decisions but of

took mostly we're our time benefits and the benefit affect typically notifying equally engaged in supply affected employees. put both we also step of chain was employees full employees This We full-time to a customer. because in part the place that our

we provide janitorial XXth, but we the out And our them. a as March emailed it to posted was, the This our our was was to one began one intended was not website, customers. On to to first really limit letter teams SKUs on this local critical sent with second industries.

understanding social that repeat and their customers normal our of distance the So standpoint usage. in creates from contact first

chain customer. to So, stable again, your a maintain supply

Apex pleased April birthday. it. the XXth, celebrated we're supply we morning. technology we this and March taking on FaceTime, to the to allocation of to sent XXth, out closed time to our a XXth, that disclosed my our that posted we in third critical the I inventory father first of used letter This made our my I'm website we support a we this approach came one customers. March say, in was vending earlier the Again, father-in-law's and called marketplace. stable release chain use time the XXth ever to reiterate transaction

I'll over talk quarter. the turn to has our first about out now flipbook put to that Holden to

mentioned customers the aside touchdown role in shared setting our organization see, shine a of in safety will in briefly, responded taking Fastenal in the the they personal this. the steps our And with critical period serving a about believe way and vital their we concept Holden the supply you impressed shared I customer marketplace. with As team really the provide they're protect our employees infrastructure, and I'm by with employees to a concerns minutes, few And chain. prudent I like

several we Second priorities. have co-equal bullet, first

paramount As our in our supply society important, our chain employees, the thought our I've role mind alluded our our general as to, safety and process. customers is in Understand agile suppliers, of partner. and

point support expectations. your a discipline And share thoughtful customer to and maintain conversations, restart the don't open as have in lastly, but economy we it, you an We some flow at business what just point. frank and the going cash to that's just not term, stable what what is. know Remain manage support with to to that see you short know, when willing know

given also same safety demand slowed are slowed, the off. financial this the to dramatically business orders were place at customers look as and either shifting of drop not And you that gross and mix safety and shelter in fasteners and government margins down that our see or was their shut you dropping fact We in our abruptly when our statements products our and which fasteners products customers fastener quarter. because business

costs. steps taken operating Accordingly, we have to reduce

I strong discipline believe incredibly distribution this. financial business economics Historically, in we've have sheet. you every a as standpoint of continue it maintaining with balance this this great I play are discipline, have from quarter The the see operated working but in year like also dividend. intention We progresses. great the shined times and your this from sheet saw business this shines activity and We times like also suspect some out balance of of reduced currently to our that unlocks you capital and in model

to XXXX like In as on. laid the for mindful back saw in XXXX, that's in out periods we work by other that shareholders X.X team our of mindful our very million to chunk of approximately our of of our I times XXX(k) I'm dividend priorities plan. and at fact, in history, every to in Fastenal this, our one early I'm are meaningful ability maintain the day, And ever held shareholders. shares is come

evermore has relationship cost in structure primarily intangible, activities. but a the to will history With shifting something murky our An products industries, signing providing customer key both to creates their because lower visibility probably into government, also And to we The closing earlier, in certain but the make XXXX It's our believe onsite this are is responders, lot strategic signing activity signing big we're a late assets ability a thought also quarter a unlock weakening, and I shown of that our a of of it's critical that chain relationship. range a opportunity as purchased supply enhance event that energy cancellation and to as platform part of without vending to supply at future, a et vending Fastenal onsite that our as our change business. also, the onsites mentioned not first not time. great much and at is our customers goals access vending cetera, to and to murkiness show I because why customer that's best. our ranges particularly business enters very for customer healthcare, anything

the March lower April. hey, it. a first that Holden I just in somebody patterns of you're touch than minutes, on signing ranges gone a place and a all believed onsite globally this few XX pipeline is where start wouldn't they're me already but ending I said, become this testament level. at the signed in sign And we've have to in January have a in we way, onsites, onsites Although removed to year. was give where at for It's a are but in signings, to XX therefore, you're in the to still going time March starting proxy it's the discussion a our when and will have and to going stronger and would we had thing with COVID-XX that in look XXXX, back if quarter, going honesty,

over As of closed XX% XXX of active our essentially or or closed March down. just the customer shut were because XXst, was onsites

is signing quarter influenced transactional. It's first strategic different Total vending end of vending perspective, the It's pace that onsite From but about March. last that for good And about from purchase recent thirds a is market us so, feel a we that part it it's of see In XXXX. decade X,XXX saw March of locations, to I story. of standpoint. I at will the over a And add the look did fall we the much at the two things off quick transactional. that. the decisions, means by share Apex what couple that when part very and more business and that of share more March would now was our in vending, end than of streamline created the or I'll XXXX. what I And of is in future. I we it

Florness went night at off. in our Sunday about smoke XX:XX alarm household,

of house ground. XXXX, house was of a My in our but those battery. for Now got case to all dogs bad January you this, don't safely, the a kids back know wife burned This the and and out was gone. that

me an on we told for – are in be I at – the – this finished, battery stock our morning off, local so XX:XX they'd they started fastenal.com hopped I order batteries. at placed And particular when because hauling. I Tuesday at dogs and online at brands. And batteries replacing XX the wasn't it At alarms available gone and weren't

at And an Fastenal.com morning, did pickup. to email is ready ready that order pleased for I'm from say I this X:XX outside locker my receive

go of XX% March the I first X.X. later grew e-commerce that so in quarter ever. in e-commerce in for above I'll then month quarter related XX% pick to the we're first our that today. and total above the time at for And believe And the expanded of sales up

With that, it I'll to turn Holden. over

Daily I'll activity exceeding sales the were up both quarter was slide February X. sales still sluggish, but quarter Growth business sales X.X% Great. and stabilizing. business Thank X.X% XXXX. January was first weather averaging XX.X. by easier were Slide of on the with were norms begin the up in holiday and seasonal you, Dan. and with signs PMI the there two of the first with X.X% cadence and helped comps of encouraging things overall in months up daily were Total

of issues. final X.X% that the number is highlight but the January business which non-OEM, fastener in category XX% similarly, impact. which be One began and of daily to of more days our reflect related more up began A tend the XX% eight parts After non-construction to nearly of March was month COVID-XX sales, down our fastener XX%. being March fasteners were February down represent the cyclical. in roughly telling sales business

shelter our decision and as well This branches. amusement schools, group fasteners and impacted heavily for in to distancing our access place sales includes was parks, social public retail and restrict operations, requirements by to our cash as

of our Another This XX% or lost sales Onsites, have lost there additional in key branches. more million more our area were March than is $X.X closed in business in XXX in in units a likely where account been North America around facility closures. traditional to clearly result total and from would resulted XX% as sales customer than of

market. as in product a organizations the From this to other opportunities. nature of in with the the was Safety, XX% XX% sourcing has the up On hand, of March our March government up more up doubling. second than sales unique crisis business largest our produced healthcare standpoint, with our needs lined was category capabilities global customer

tripled. Sales Dan of earlier, pieces by to warehouse first These more operations are in as our indicated our is overcoming the and priority role our than business societal play economic to challenges COVID-XX. presented smaller and

should However, this has beyond this capabilities we crisis. benefit to believe introduced new which customers, us well also Fastenal’s

but can XXXX though quarter There's and regional their while weakness second of magnitude see plus, far none in ultimate sales visibility worth flat in to the the an is seen of not which would have that being early put that marketplace feedback we plus the quarter situation are region this of business, reads, VPs region down based the the XX% their currently, to XX% influx that of will so government second the very government the the offset down seem of safety see of length through predict decline of extreme to lack elsewhere. noting but order These it's all April. degree XXXX on closer some or but others

of wider did XXXX, We margin Slide the in XXXX. basis to March, versus first by XX.X% a our X, two see first gross down driven the quarter quarter Now things. points in was decline XXX of

of goods our but delevered as growth fixed slowed have costs are our heavily do truck as flattish. First, daily variable, such those operation, fleet, manufacturing, cost we procurement that to

and January slows. the as impact An widened day comp and on based playing helpful basis extra impact of was Second, by usual the abrupt a its was mix of sharply in March XXX to absorber leverage our mostly growth is customer points. from mix. selling role offset This changes incentive shock product SG&A

an basis first XX%. result the margin It's XX a gross points near down pinpoint may operating margin was margin where to with year-over-year, in quarter XX.X% incremental of difficult settle As XXXX term.

factor leverage sales remain would currently wind-up our as cost fixed However, expect. being weak VPs many if a as

to between of similarly and It continue conditions impact gaps gross margin, levels, to sales growth back the mix. and we current small if would government Further, to market would higher fasteners safety relative of widen pre-crisis pressure margin customer much revert Once expect to the reverse. widen.

As new we their also headcount signings fall are formal expectations initiative costs. likely as March that manages XX% in Onsite place, a branches leadership costs, non-sales and as our expect generate do Lower it operating staffing related natural field will below number but occurred the do in relates have reduced in growing of roles. not need to for reduction attrition

openings to by and discretionary steps expect variable certain by based travel threshold. managed sales Certain selling as as bonuses tightly employee a costs continue related and branch additional eliminating a well leadership. employees have to decline reduce closings all earnings base but be natural our pay such also for compensation in as costs field programs, incentive on We related will taken above

were then down our benchmark low The was between similar. was sales Visibility last if a time XX% prove operating reasonable margins to and decremental plus that to by XX% standard. XXXX XX% and even ranged our seemed be normal is be conditions

look in for year. decremental earnings and your XXXX normalization the what volume and what the depends for ultimately like and margins you But full expectations assumptions make mix of business greatly on activity

with needs X, Slide networking XXX% the income. to environment, period. was $XXX Inventories operating cash Turning of The flow the in XXXX of of capital net moderated weakening million quarter first in down quarter days receivable fell were up on first X% Accounts in annually X.X% was flat. the days hand sequentially than outstanding of and being up XXXX by more and three.

capital made $XXX in from to capital the first million of reduced XXXX the $XXX XXXX, million first XXXX. the given light of range in uncertain of quarter spending In was new have net down $XX quarter million million investments for million outlook, down the was capacity spending million market reduced to needs $XXX we Net $XX after previously. $XXX in which XXXX expected from for to our hub

and We to We $XX returned cash in million form in in foresee dividend additional purchase in to but not expect do of million the dividends to no shares. shareholders our $X.XX per share XXXX, quarter change the $XXX share currently buybacks. in

of Our in assets used period $XXX also million cash. purchase Apex in the

XXXX lines no available had be reason on $XXX we those finished after acquisition, of liquidity the first debt level at for quarters-end an versus would we funds a available the At standpoint, total use. partners not XX.X%. million the believe of with our to on of lending year the asset ago with XXXX but From up existing below discussions that our quarter XX.X% additional capital quarter fourth of Apex credit

is under of our Agreement. Note available million $XXX capital Master Another

our more and our We model the generate sales, our That's presentation. profitability scenarios and cash capital all sufficient also for formal the availability for and our will believe for needs. be reviewed existing than will sensitivity model credit different our of working

that operator, with we'll take questions. So

from first coming Baird. David question [Operator Manthey Instructions] today is Our from

now live. line Your is

morning. Hey guys, good

morning. Good

alone. reduction force in a So XXXX the with Back no question that mandate, FTEs FTEs about out FTEs is you XXXX noted official dropped that of your XX% in X,XXX about to there's nearly were and quarter but first my coming or you related in by XXXX headcount. FTE XX,XXX

in if maybe about get a on XX,XXX XX% part hours move of if so, I'm via reasonable to that gauge ballpark, just XXXX reduction and freeze ultimate could how as is XXXX on You've got your flex part time or and something flex the you trying to hours, that of just quickly needed FTEs, FTEs trying the hiring. Is I'm down time gauge you and would is be higher, down reduction today, that. half attrition

answer in I'll that pieces. So

dropped I the if off, April. And you January XX%. First our to those those another between as dropped that's to timeframe, we up. XXXX of numbers goal We one some the business October steps January talent recall, true XXXX, quite mechanically look took about much didn't to from And being have froze to up. I well, remember with XX% today. maintain wanted then our bonus cash. our economy to as employment maintain conserve alter pool to programs could we also But and and we

you being given duration We bunch greater. was businesses down, in is bunch are took I've The a Dave shut some that on with orders the of his touched this in steps know. deeper we because Holden place message prospect that that in of longer customers, of of a this don't information. our just team point At see shelter is,

examples it into is on bias elements would've ago. get stronger as been the we I've May. for our towards now turning on see be to the of And prepared back economy have back also of today team, is said operating the weeks and business economy to than a pieces where believe we You of I turning our couple right

if We back know see economy wouldn't you saw in elements so in being don't place. the to of going back happen, XXXX. drop-off Dave, do a acute on, as but turning hiring I have that's freeze our I as

We have time pulled part hours. back

attrition know insight. don't XXXX, I XXXX in chime you will like letting this what you versus have can maybe are Holden We and any if environment look happen. attrition in

and demand market. was I to add XXXX. the more I strong. for Dave, might that, the and relative and PPE is We products. safety we XXXX to involved in is only to not be That in very remember too this those the mean, case there opportunities opportunities with touched sanitation mean, janitorial to have I thing are on

us, there turned opportunities XXXX quite being. not for has I as So recall, market the off as

a the will as their at decline that to for field what they expect the looking standpoint, their headcount that this declines tell order stage sort of full expectation EVPs Having you you few But spoken in that I about time from is are headcount were of alluding of P&Ls. manages they magnitude a the to. would

head that I all you'll So, think of full-time decline in regions count. see some our of

of headcount opportunities not certainly a right now with uncertainty an and You'll magnitude the to. see decline part-time it's you're hours the order will go with are present referring down. there, are on that and out But that that of

the Okay, just time? that than FTEs clarification, anything point via tools expected, just is this XX% that XX% is you or if down needed specifically mentioned business was there a different possible today a about be we longer And fair the to of would or it or different this if that flex enough. in

it's don't Dave. different believe I

in so average per what to was category. go $XX,XXX the if somewhere month back month, XXXX I a And $XX,XXX in in Our our to don't we're branch, now doing XXXX, headcount $XXX,XXX, branch did timeframe, $XXX,XXX know you probably we that, the last category. the

I don't believe different which is we couldn't is to more activity a drives employees distribution. in now some our pick flex picking system. business But that decade it more there in our it. relative little a you there's because our there's different gives was labor ago, branch, So The per flexibility than automation it,

very guys. Thanks right. much All Great.

Thanks.

from coming Pokrzywinski from Josh is question Stanley. next The Thanks. Morgan

Your line live. is now

Hey, good morning guys.

morning. Good

a time of when way [Audio Dip] last out. the in we back I or hand is anybody got by yours the London March were early the Holden in last shook

appreciate I me not sick. making you

at think questions. would of blame have to I couple don't point. Just been I that

a another guess on continent. couple I of questions. were You

appreciate [Audio you this the broke of sharing point? where quarter the you the, First track in about April that current broke – of would far last Dip] talking quarter mind kind at I and a this your know we're kind of

getting every right Josh. I'm because answer we'll Hey we're be now able other your about if question sure Josh, word. to not

I plus. our – April-to-date, in think down order asked or of being remarks, on my, of to sort my XX% you a I referred I magnitude the prepared think monthly of not

that I think magnitude right? that as you're what asking to to of order color some is. give Is

Correct.

running and right probably down now. XX% We're between XX%

like months mind Now, things how Accounts and thing is more is, to towards the to in part and part little our a of bit tend timing business vending create movement the that, than one the right? month much that does matters, Onsites mean, bear of of the of earlier the given I latter National and month. a

So we point, down this on based to as and still a today are that we've between there's don't know in to we XX% where probably plus. April Josh, been lot XX% but XX% opposed

that. appreciate I

in fact which Last last weekend was for I'll Friday most Friday. maybe to element able that. was Good least meant weren't that Easter And the way weekend, that me. add one is it we celebrate at despite to a that was or normal for of us,

was every probably XX.X%. bit Good impact the we because were about at year, So month-to-date. we looking down where that as I of again, when Good of a little That our Friday. looked worse does of were that Friday, at the But but morning, numbers, placement Saturday business was,

Dan. in one Got of how is customer even an from having obviously, shutdowns, helpful any That's doors just impact totality for not from color just Onsite, sense it. called Then drag their regions, literally the of really you one, the that the just you think extra had but about open? customers to anecdotally out customers, if much

be And the closed the XX% to marketplace. end would over be only our March that fact proxy is and seeing Onsites probably at of what a pretty that were the of that, our manufacturing. the think thing good we're influence in could from a good, I Onsites the more tend of standpoint

first good the first probably are that are think little the that, a month and likes indicator being but there the the are and plays over fact of there week that Onsites I XX% of the are down or education probably pretty that's Holden that a that and is Although a the month side construction that Onsites healthcare obviously week greater touched business, dramatically. in government down way, that and our seeing where first they're the small Smaller a then And intuitively out while of some flip responders on. business of drop more. is pieces is industries of the but piece up our we're of half and

X.X% sense And that nine in of before color to month only in more little kind range. ended, I be expected growth a the we add days might our the the that, to

And safety $XX expected government lost previous. we days things like probably surge of of that have would over sense of the from might to includes eight the have And days imply eight $XX million we're those gotten that, and over in which of flat core a the several to of a construction go otherwise things, that short course gives X.X% impact days million side so that you markets. to the that order in to we’re with having of sort manufacturing very side of kind the in magnitude and things revenues

and it. guys. Got Appreciate it. Stay great safe That's sane color.

Thank you.

Thanks.

Our from from next coming question today is Chris Research. Longbow Dankert

Your live. line is now

morning Hey, guys.

but on a we of dig are or guess into hands? where competitor state the locking is a bringing guess in opportunities first strategic of technology of this vertically about kind could here? out about, it Apex little bit, is and keeping me in very of question. I Or Apex news, kind in the – is fold integrating real Let kind off, and I more just this capability the exciting more it

the a in we from technology So back platform we technology first because previously relationship MRO with this have lack strategic expanded marketplace. in XXXX did exclusivity of our, a did up off good our standpoint, industrial for the line when we

competitors probably decade. have we over great our drove last which So did spot of the a crazy there, some

deeper platform and But became deeper is, technology time over did what a our part it business. the of really

that platform. And XX% our of goes revenue through And platform we we of vending another our so call vending represents platform. XX% that that today roughly stock revenue then to bin have goes our what

about our cycle. into type order some and a of goes mechanism that is facility distribution XX% the through customer's So right business repetitive goes of

of have surprised as dramatically to today and we percentage as would when And our with that business. chain a we see become expanding piece double that see business, time than linked customer our supply more and over we size I we wouldn't double as percentage a our more in of doubled XX%, be

that bringing Because we closer want to standpoint, industrial distribution development partner distribution. about technology with more take was as us great the within last XX they our And interested that as years much transaction of Apex the of partner, so to for expanding platform aligned technology so are the are very industrial it. from outside the where the about is they much

always And from sometimes technology development harmonize that we're a with what's doesn't prioritized means thinking. what

flexibility ability bin can to lines the more us flexibility it between provided in supply ability to gives is what what that. gave stock, also vending, us it go deploy bit we little the automated what us It the through also the what a how so blur is in replenishment us more provided chain. do And is It assets. because

platform. over very of time cost making our supply access so much And lower the it having us the as and technology umbrella the ultimately for see the to of part chain will

safety, is much of XQ is impediment nice of on And way are helpful. allocation of forward would we of products how follow now really those guess is And the on really the sales availability guess That's a has as that here. to a there. it. growth I slower optimizations OEM Safety just offset I me up sounds in kind being a kind that, on comments move from like I really Any here. But lot helpful. XQ. into of demand kind been sales product be assumption an Got my guess XX% allocation of to

We're our on product a the through customers my we place they're own supply because have, do to neighborhood pallets grown we has Demand in by of which for as our all And in to can through bunch comments, platform. going I We access. of of alone night multiples is it are surged, a source to it that a on. backlog mentioned effort weeks, earlier and of not Fastenal in unique back weeks. rely matter of lot see somewhat we're the you February vending in A a days chain, and they and put not delivering every broaden and safety, expand news. March in

we business of from of the quality not it's as we do our peer testing the just because how process chain incredibly in but fasteners only and output, supply our that them with, picky their testing they is product are Achilles their too. beyond quality source it operate getting, their product, who business the chain given we’ll comes vetting own standpoint supply understanding the of their suppliers when vetting not quality we're and one a they also it's the of the what history new with We're when they're the of deal to know

that, around the it's so slightly our XX% historically below is And vending, safety historically. XX%, just is

grown that's to personally will marketplace don't I percentage and be facility, products the safety weekend, and customers up on mean included we everybody greater go of in suspect a and here as of manufacturing people and will the higher there, our world the I I XX% in facility were there people and in last in quarter as well picking second changes mean I into masks wearing in environment. groceries like settings. be clip hold current part that am think I that I a to Obviously believe third some our that's at because and shopping that things in a continue people going working

this the allocations, timing perhaps add I of as suppliers I rolled couple would and were open had map Chinese needs up. that very U.S. COVID-XX production the to really over XXX is sufficient odd and quality product communicating or to they that is on and in the professionals of customer. uses deliver able needs and achieve product of and that find that alternative really professionals, are or product going probably our beneficial specific is putting to suppliers sources the of their in on you the The with sense And how of value sort out the start through a to go the in think as of if things alternative been has ground, some domestically a having diverted has sure will beginning well. Asia, make

think done do alternative we're to that. able product we've And that I of to we've so as to good job think a on. be able really built find gone And being I sources

again, as throughout to supply we're to of delivering pretty keep right And our things a well. of these point. product timing that So indicated, international are And Dan certainly and chain lot of think all at I continuing going most have deserve working I product April for product think has this the folks be as the PPE filled. now advantageous been that credit that we in of still procurement through

the color Got of Stay and it. safe luck out there. Thanks best much guys. so

Thanks.

Chris. Thanks

And from our next question Blair. Merkel is coming from Ryan William

now Your line is live.

Good thanks. Hey, morning.

So I I wanted down to I'm only on XX% little that far. to so bit in. surprised more. to in it's dig want dig April XX% a

safety to sites it what about is thought business. going might job factories like fastener sort the buffering now What in what right impacts you non-res But of just OEM business? with growth about So, that's that continue. would've declines there sounds And that business. the bigger down closed, the shut there. seeing and potentially be and are I of part

has day-to-day describing necessarily a answer I that a on sure playing granular out. just from standpoint. been that great not But I have you're collect for a basis. what level think you We I'm don't Yes,

in weakness just in our in I cities e-mail of that think terms shut states, construction respects. of marketplace construction that side a shared suppliers our – what with about from off had of you're the have in one construction. sort I the many in our the manufacturing of some an There's leaders me side. of yesterday, lot seeing seeing they're

And products so and mitigated some the that nature. describing absolutely extent the environment PPE it's and that of exists things for to by Ryan, being government the our you're and need

exists versus doing. basis, not built the that as areas XXXX I that we're describing the that's you're a need. have on or an that don't the and April what I'm environment the non today. meet to day-to-day that but exactly some there factor. where you're in unlike are define versus there's able are great think product environment just offsetting the the We be So, what sure need think I versus And a is the OEM It's seeing MRO to to construction fasteners

much two lower the sense in XX gross quantify to a points and Makes enough. I gross And gross how the to switching guess maybe know on game, customers way. or headwind magnitude government margin company safety help but mix average? at quarter part second relative any just basis basis question, quantify points fair hold, want don't to the a margin the then be XX or would in coming margins of normal are to Okay, to the and you just guidance margin, expected then the in declines I the helpful times. different it be versus typical Maybe

where of the We've of the from. internally is enough know going a second the gross Right? half first had in it's terms depend don't versus tell half like I I'll want in the comes I this to where right that game. normally and what would margin situation It now. April can't I PPE. the look demand prediction gross about game I prediction margin to be Right? you is world margin conversations to in just, tell doesn't you, really be going have the or don't

that's Ryan. those if where fourth also one quarter. getting that's May, I know point of it. to some too that's situations to hard April, at much see it's where you frankly just, if But of there's can point really it's It's don't answer a if

I'm course down So a drag business. don't can look mix think only The going mix go XX to probably that I is path. QX, I in I you the of give think I point the was through at January basis if to perspective about

where changed because it to changed going the into dramatically had settle was to point that's QX, I to if I March, as going the know that And mean closer wasn't it had customer It basis XX does at out. look mix necessarily because mix drag don't business. product it And as so what was the much. And honestly had.

mix think I answer, but at to going understand to what stage I ways how plays it's for detail, right see don't have you out just could an very us second short was that clearly we're now. and that see to could and question are. in just this window impacting I more a of a you lot like but you over April we impossible give quarter, But wish

that. just add I'll one to tidbit

standpoint and times that we're obligations customer. put we where examples for obligations back getting guidelines the and some probably thing process, strict is table our to And margin where - normal in this there's in is. the society from leaving, on of some through leaving and your we're through probably one getting we your we're interested on look off First there's more it field your you the in pretty the pricing to getting early whatever to society at new because

that a believe we that fact real only did our business. When some us question our the that MRO cost a growth, points also in of it into we higher our the mix economy elements The of as comes as do things the piece not and fasteners. some place in sales step that closed so are or I mix like element would restaurant play Fastenal when case you elements look us and of to that guess percentage parks at market cost long even few at door, customer at into for the our that that regrouping and front hurt the margin is of closed, general. restaurants everybody looking is And business will theme and a probably small

solve of as that time well when in would from this And point I aren't as we supply to buys that a usually procuring would get do that your when we margin as go to fill-in products say say sources – part lower tends more come at customers’ well. you're in I chain needs at

and circumstances of expect the that unwind. sort just So, There that we begins playing it's near whole to that some frankly, when most unusual stabilize, of would in marketplace those thing today mix. are drags are normalize not out term this

that have relevant permanent issues seeing answer that the are we're a but Ryan. it's don't a XQ, not question believe great So issues. to this at point, I you do I for

on And as more don't reverts back to I our think margin is goes revert begins normal reasserting issue have there itself situation normal that that chain back to here. long-term that supply and with we'll they then COVID-XX a exists. I normal think and mix exist pattern gross as long a our to this well. once away as

up. it pass I'll Thanks. understood. Perfect,

you. Thank

you. Thank

is Adam from Uhlman Your coming Research. today next question Cleveland from

is now line Your live.

what Good the was us I Hi, guys. we healthy. then, could. this on realization to out. Hope that numbers moderate quarter? entire the Are in guess expected I seeing today? And discussion you the was gross Could margin cost price or team tell we continue Holden, morning. wanted price to is if level

I Yes, not characterize that in would QX was a what to I would I period. say, the And would in meaningful we our factor the experienced comparable that margin price say characterizing level experienced as in we price still QX. in terms that, of cost, gross

then guess you. from team of do is big a I trying got the It's and bit And be doing could to you thoughts little Okay, a a fulfillment working standpoint your is now? remote Maybe folks facilities? vending on to steps in now? working how expand change got are is right that home what from selling how that through just there access creative selling their Are when sales person. walk Thanks. customers than to are occurring rather the taking organization processes restricting right

in employees if would doing certain piece the might that then small we're another or I you equation. going closed, going a a in work folks But our working working the off, be buckets relatively say onsite. there to but population, in not are think of to in And aspects those every First of know you're most vending might – are remotely. I our our it's the of you of of you're examples of you or are bulk the of probably filling, customer. of folks branch organization business home are onsites those to unless at one be facility and work day going machines

the that believe reduced have our of the places, amount by branches I LinkedIn on cleaning pictures close have filling the received, customers machine dramatically positively because think through front we whether employees door that our web I way or customers. fact is our variety vending vending where the the do – appreciate from people. by the machine, of I to received customers our it's interaction either have they're taken comments we very now over other as through feedback our or of they're

safer business, rep whole coming a to of knowing there's not So feel into a Fastenal I having bunch walking my location. our people

I last creation now model vending is of fulfillment LIFT, had is we inventory year. that for up past seven. at in have believe our And to past. still right changes fulfillment we we're That changing. the so, we slowly vending about two fulfilling in believe terminal. we and the what fulfillment talked as are we've our I call element local One the late to

continue to in we that. So invest

more can fill that's already concentrated We’re we down pick – the can with machines and product into can customer more about you that go inventory a team the how how expanding and And to that's that and element. has a locations we fill individual really a picked machines. go into with

they're but are it make customers still who we done our machines before, we're but getting we're what their signing off by certainly customers. asked customers accommodations filling providing they're accommodate we’re But those so to have There not picking – us our maybe this, in are where packing some up comfortable, services. dropping obviously slips and might from want and and we

Thanks guys.

Thanks, Adam.

you. Thank

question next Darkatsh from from James. Our Raymond coming is Sam

live. now is line Your

are Holden. morning, How Good you? Good morning, Dan.

Good morning.

Good. Fine, thanks.

you're Holden what year, tracking in be and openings watermark will signings obviously, onsite that. I'm openings of of and low sense of the So, respect in terms to of the with this guessing lack visibility onsite signings April for any near-term? terms

Sam. The it a recent I – honest don't had a conversation yes, more to great on know, the Not with but… you've matter, if sense be Dan, of you,

pleasantly of I in of looking that's in operating. I place. say, maybe to had side was dropped Like are than a One to level going haven't. me had more because we organizations March, be pipeline how they testament They're slower did. would they surprised they're have I at signings make And the we already by meaningfully thought says to the I decisions.

of sales environment what supply what I ability example from chain can customers seen supply I've get your ever than really talking than team about Another me firsthand last And in chain says what heard demonstrate one comments over side are resources from the of we've had to I've this more the more about three resources our of our weeks. do.

changes that So animal that talked is a we if that to or put sign different the I'm And of machine. or is more that expands we're The I of it vending element. it are onsite products sure idea of how the a there outside transactional and delivering don't vending are in through it's vending expands sales machine, us repetitive. where that vending vending the more. know And in the that, piece because how helps vending that I if mean about it dollars machine the I context are a not ultimately versus that what by historically, going

have seen a We meaningful increase.

small relatively it I'm dramatically And branches at from recent a the saying would with today delivery. our it And on customer over of than small expect onsites, February And March. with more in in seeing small as going again, it we but transaction to subset have ability a a to base. increase time a that or qualify a a it a creates it's I it from by to basis, stronger coming do of and deliveries. to that it's examples our but two might locker – is And grow on door expand past. distance was meaningful Again, we very that Apex, a now and and where few we're are saw dedicated but

seeing premises sort that instances folks a But model? business we is non-employees does would board the be a if legacy on obviously not it to any really question I even site prior good instances seeing pretty sales as see increasing non-employees. to ask or do onsite visits, intermittent of question on branch guess actually have it that allowed up you're some make any is want of of it. inquiry, just restrictions just as across wanted a the not if And being on that's I customer viewed which the I follow they're lot or people because clear the your you're not of real seasonal or how affect

of I they customer as sure are we what and inside still we're – is seeing delivered we're will of where the happens probably but delivered the mean, with arrangements at their facility. there dock make opposed protocols their product gets it, I'm customer. product There that to the need the following examples probably

products and employees. customers, – in have procuring safety have to for have lined and our now we we our up addition we �� We have products safety for so

– us future. build just them for many like come there intimate so our production a their the mass with own employee requirements of than and their that do to to right but facility, could it vending all because And lines customers personnel I relationship I see customer own to more the by it. stocking devices. we will are and we're And do their of But suspect being the some that our means, examples work facility to of stocking and – tools that of other reduced partners into for into more probably with you'll with of seeing of now are access. from absolutely things impacted would in say

you Thank stay both well. both and

you. Thank

Sam. Thanks,

too. You

I think…

Thanks.

today Your Go I – apologize. next ahead. do question

Well, go ahead.

two have We left. minutes

– top quite minutes possibly question from four hour our for just Jefferies. about it's this be final no, with Mazari Hamzah could until No, the of

live. now is line Your

good morning. squeezing in. safe me Hey, healthy. for and you're Hope Thanks

of fleet expect the Just a a fastener business a mix of part out has COVID-XX? be network, historically coming not I to e-commerce, know you your do question at of that see you captive branch that bigger changing been business model. all? piece big the model with e-commerce Do on

really years, recent right, and we possibilities historically, customers to few e-commerce the on continue are our options as but present to in – platform. it's last been rapidly what really the You're fairly our in growing

And be so, we that expect case. do to the continue to

a be wants engaged business local, wants customer. with to that directly Now, we're be always to be going the to

sort being three for But plays role able show our the – a And the their growing that the needs. a reason of of are of and to is that is. – improvement years really that's is there a to big want customers over certain it's last purchasing customer to use that it to supplemental big so, platform our way e-commerce value that e-commerce that. And why

second the the I certainly I something has I our versus don't QX at traditionally will isn't to in to don't to say to point, in this of quarter a account customers, we me. Hamzah, do. that terms know to least had go is first more expect data, adoption that in That – know, great they numbers that continue. us quarter anything we in opt do emerges as see larger this don't sort they're customers of the Is suggesting way our evident all that I that that know that national do that caused in COVID online dealing the customers or among but trajectory our well of e-commerce something our we've capabilities really growth emerges know longer-term? of but and I of with

All right, great.

I'll just add to that Hamzah.

e-commerce. these in earlier thinking, time, we growth way time what think and of all you about stock are my growth bin of If over talked vending over

bin business our means and be XX% they and – XX% it's that. a stock that the that and the trust positioned supply believe I take time chain can is e-commerce, it's to our of I I for reliability over supply I of see more if know a customer to we're XX% quality trust can create effective. efficient well business So the really I procure. it's And that add simply a product, because is chain being for And the vending value and it's And cost the to our reliable of of discrete today. XX%, objective add

trend. that's if to know expect that not, COVID-XX don't long-term that faster. So, grow I or a yes, I but accelerates

very I'll much. so Thanks rest Great. the Thank take offline. much. you

Hamzah. Thanks,

Thank you.

session. end reached the our any closing over further to I management would floor back turn question-and-answer have or of the to like for We comments.

to you useful everybody you unusual for time forward and Thank our participating returning to normalcy to lives. in our in an everybody. hope today. found I look some call it Thanks we

does today's teleconference. Thank you. conclude That

time your We participation this and your at thank a You disconnect you wonderful have day. may for line today.