Fastenal (FAST) 20 Jan 212020 Q4 Earnings call transcript

Greetings, and welcome to the Fastenal 2020 Annual and Q4 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Ellen Stolts. Please go ahead.

Company and Fastenal conference quarter the call. to XXXX fourth annual earnings Welcome be Florness, Financial by Chief call hosted This will Dan and Lewis, Executive Holden our our Chief Quarter. Officer; and President for up general questions operations, and open a our with The call remainder of will to hour the start overview results and quarterly and for of answers. one annual the with will and being last time Fastenal Today’s presentation is conference proprietary and Fastenal. the recorded being is by call call reproduction, is without transmission, or recording, today’s of No consent. permitted distribution Fastenal’s call is on audio-simulcast being Fastenal Investor the the This Internet Relations' via homepage, investor.fastenal.com. the be X, A webcast replay until Central website on March of at Time. midnight will available the XXXX

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

to that over cases of XXX experienced the too into or as video statistics and that we recapping a In Fastenal. last the tangents, apologize were might we'll two the then long. who as had within progress listens of meeting. to September. going I'm COVID And But my XX tell. we I and to with can background was effects of not start things, only of do Through on the information, Time In for In in for rapidly plus game. as if her that cases dramatically. the us The wife the XX,XXX we've I'd have a is, or have when share with be tickets Because the we we say to this I Blue And and you what not experienced share Team piece. talk trying joining if immune, but count and can we I'm game QX -- tickets to increase that shareholders. my in is will more sooner. off see the of our I think I good some if you me most for within that she's Fastenal call. fortunate on earnings discussions But family. health I'm our moderator shared today, October, convert fourth into a progress we Thanks, this organization. COVID needs who I the want in a on Packers September, Fastenal thank we and week. of October, we our and earnings the important for the September, broadly is quarters, I increased per generally And step case XX she previously about about if organization. the in a were very typically Ellen week, month might we a season everybody. cases employees morning, today. we will Sunday's because XXXX with she to I XX if throughout And leadership probably I start more quarter COVID lot with call, will, markets XX when prior somebody online that. And point fast this like A speaking text within to the speaking is operate, with And new our morning had and were done look too able averaging share we just earlier board that our yesterday go one bit that somber

XXX XXX October, within started see XXX in number but XX And still December, so at That we per had in essentially Fastenal the high So family. cases, cumulatively per doubled week. down quite through trend that cases. in had to we XX cases week November, November, cases we XXX

our to from end other with manufacturing, roles way the in locations, That's in or that So over X,XXX ability year, we at cases XX% doesn't consider within and that's interactions when the the that distribution X% just you involve of the operate on our the our of of XX%, human we had employees, day-to-day cumulatively Fastenal. center, of society. site remove working in branch ourselves truck. us employees driving whether business, a fact our working through a beings, population are afford

fact the population five. luxury US I the believe our didn't that COVID. over have we're US And what accurate, of we and the X% had is I if just So that we're has population, read number, about at

perhaps of as to first ability. of to things And one perspective market. bit to XXXX problem we things think and of our beyond. think So we a anxieties of to think into exercising that widen did, improve job I is being solving in we really and mindful common that I society. our we we has nice improve the demonstrated things from move the of themselves XXXX, demonstrated I to business those also them trying did sense, done of When around ourselves believe our every our the exist a mode, of and to protect mode I and team And day the our

they away at a it's machines, people a the we infrastructure And were were their because we turned were because And bins; and we engage we the was And to sites the of marketplace drivers customer's in deployed, demonstrated because facility. enter inside were customer. we we staffing value from growth in And relationship. allowed have that, Our vending place were deployed, have customer. within and to a their saw to stocking unique way our devices of way folks value, we on the because supporting our the ability When standpoint that door, allowed from of, in QX that QX filling with and because with QX, of of react did special our their that a our vending serve a we business success were of were we special to enter. the be to engage most way. and special

customers. special about Fastenal. something whole that's new of Maybe it's The other pieces we demonstrated to a group

and I ingredient all with years business. and down have happened a want reminded you XXs the year other board don't it thing. going XXs an reminded know recall And it forward just a Maybe where that teams into I is it important And pivot and pivot our XX The weird to be year community two it's back and to this business to our versus entered analyst don't look of and year of I coming last. the abnormal. or that's we're thing is forced the the grow Fastenal, my leverage in days. But where or in to the happened. optics recall We ability I great we to might we're is remind the our that's we're a that XXs.

business QX, will QX surge the lose day. have business in business comps weird quarter, a QX we safety we year. in don't we sales or days. push extreme because normal lose days we So we day. a it's then QX, is And of business gain any last saw then if one days. lose QX But in some a will, and the in you on

business day XXX. a it's versus So XXX year

illuminate a platform, largest A great our have technology that on vending was And point were did document is hear and out. and systems will and a it of we platform. platform on our because transaction the the that our read When vending that Just Apex means captive about And far you in lot planet, you from things Apex underpins what the our how our ability back some that I’m to really, we it’s we and disjointed we that excited want as serve conversation, really the industrial broaden as about the other customer. touch platform. March. to

about can platform, that as three and I job as is that to allows And broaden chain supply Fastenal to we’ve Holden of illuminating and press Vend, that the today. and in referring distinct it so years. we a talk it knowledge talked we’ll in are But is the Managed about where which bring FMI vending Things, Within and us now did Suite for our it visibility we’re to FAST Inventory. components, release, think nice

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chain. also it’s from a better a productivity supply it’s more So labor supply but efficient chain,

component call we FAST a what technology. we is, of deployed, is Stock. third mobility tremendous you that The amount as know, all And

us we’ve what platform which This more customer us. is allows efficient and for customer, for past, the the for more a efficient again platform have more in transactional-based. very in system-based illuminate their to Now facility, was the had is they that but

and cost exemplified X.X% talk If So into I’m as vending, growth the quarter in current Page throughout Apex components you transaction for was line take years, been about us. a produced do it our XX.X%. about What engagement prior allows daily our in can in outperformer to to because enter enhance But with and see, Safety, it did a calls the not book, because continue vending us individual our messes we of nothing calls, job largely Vend, managing and operating that. a talked to team on it’s the safety as grew we our with product Holden’s FAST the XXXX we’ll is were quarter. our suspect and I away because customer. that I from great in that operating combined. double-digit, which X, has XXXX, is sales on about really great platform. earnings element numerous The that broadening COVID have talk flip of we well behind an is and But the move

the growth, our a being the of for And to XX% bit less XXXX. but this growth will our market Customer marketplace. have safety us last future, end believe first touched engagement new contribution produced when solving than in swells despite the and up several little in I a and it’s in bit that was and it should talk. open customer problem So as in little of I on about talking, culture years Holden the XXX% opportunities in sales, And his I to improved. of touch drivers highlighted XX%

many XXXX, ravaged in want saw purchase environment choking sign our on do in you’re out. e-commerce employees, to sudden, minutes. folks with of a and maybe move what fasten folks, thing a you’re and because utilization that Apex doing, protect us. don’t ability I want that saw come as touch it I’ll hey where love XXXX. already, on that However, to you come took year a all in on in of hard numbers, It few an the is The a introduces in working introduce, to in last let’s big standing your a like We up our touched you really in step to more variable XXXX you

And What’s and And really commercialization I what I FAST in evolve into one for ability As path, Vend on model. we’re One accounts more about We’ve but critical Fastenal what shine you In to key this to of have also a piece incumbent of into changes. our really thing as refer all words, expense, that is model, what we’ll natural in things come. we branch if and places to. and emerged to our allow evolve to mobility, believe have four become there talked dollars, today. mix we’ve or much there Much group. evolved CSB, more your it’s branch leverage deeper models and the it’s efficient, of this of you call you’re it’s now. customer in our The network walk-in there critical going to the be gross is then and XXXX. margin profile Branch. front; the to we But traditional to because touch us more two doing large other customer. years it, Service going is last element tie is these that’s about the deployment that’s the our really five distinct this are of months traditional. familiar And deeper branch many our spread is the because out but business. showroom Customer through. our upon a of branch to the are mix that our will that’s mentioned, more in Still It’s efficient, a product with where half back door, most

regions handful a years. During XXXX, we’ve for two, actually the and within last this three testing been of

The the the few a it And improvements base. the allows account everybody pickup touch I Customer and right and as And where those front door maybe to it closed the that will regular things like almost that should our maybe to our or now. than branch marketplace the network to of able to the other revenues I’ll we back a want out things we cash closed extra it And different efficiently, in is a door we’re everything to Lewis operate customers. with are in or supply we’ve CFC, that a a paid Lisowski, referred Think and able most is, a what’s half go supplemental maybe go prior this Financial as thing e-commerce entire and a driving branch I our or have to Fulfillment call and Sheryl Sheryl we keep that out on or that a cash, in better flow back it’s of strong of more in occasions Center. the the like it and are shine on in to We we similar minutes. future, and about last shine year, And put door. to late had the year late in the allow amazingly and standpoint our and see was of year. circumstances our position for we to Chief need in table investments the Holden dividend the seen shine team chain out our Officer. some where Chief sitting an call for produced And put out. problems to folks Different the I’m in that us at were Accounting from in XXXX. we and ways. able Officer solving team still closed Holden

sharing dispenses So back that was in is my X, and complements this On July, slide, well. on vending. I at started it looking believe Page as through everybody this I

a we’re it’s I illuminate what for think for way to you, our trends. in us shareholder, underlying seeing

of of two June, and XXXX that XX we the XXX; activity countries. we we’re And the at By call XX. our XXX. History at to a down, early running XX. and data right XXX, that’s be world XX points as from history in in by were we vending This the plus historic of be the XX,XXX were devices year, the regard, we we end are at economy through say XXX index that So would And dropped say, devices should so the snapshots I everything XXX, to were we at March. point, those ahead that, XXX did reason would these at dispenses at it vending shutdown. should going shut out wasn’t weekly dispensing before if

history of XX that April. and drop-off XXX, By down be should So March end in XXX. hey, it September, still were the we XX we says, were from

because is negative So now that eight. ignore -- of couple December of always it’s weeks negative last XX And the world because down last a shuts of year of kind we the holidays. couple of

we be with we still A had you it people because is vending is economic is we The said week of of about to, users. the is should to many sign and able activity. didn’t we’re page that page six. down. just XXX, many that A would The piece if So dispenses. look before in says, that, this as history as piece unique down weren’t we’re about XXX, move next at as we devices like next

to have work using didn’t weren’t those The a many these more XX. we dropped businesses at growth number of By people are back as a at employees much XXX, early Well, signed from machines six. says, to XXX, history would March. as So of week XX shut were year and down when the we’re because at We XXX, that are XXX XXX should because it XXX. we XXXX, June, every end this be customers. in XXX down they end coming we’ve at before how there If some dropped we down is we coming and be XXX. as that were The at week in in the Christmas, October history By many be September, were at eight. We XXX. we’re employees. should to by at of should say,

didn’t probably employment negative In We’re about negative as sign four. we XXX, that devices. down many four the is front, more

and thing the In of Xth underlying few that, still July and So our that’s Page numbers, week. still I I July, to Thanksgiving see. out seeing you’re on the In people activity coming a blips are for but week. early back one late in obviously did subdued. that’s the is apologize obviously X, work point you November, And

we Page quarter. to choppy signed really XX Again, year. X. Onsite; really, the in Going

XXX. we is our the in -- signed to So goal quarter XXX coming

in me, excuse It with XXX March. year; slowed the into coming We’re XXX. to

quarter So about we XX. signed in first

year, book more many than about bit QX XX. surge only signed write-up, But I we our QX we to our believe key of that is the open included year. back Everything the said I for a that. and Things going at year. us and we’re Conditions normal. XX. included read in need internally search, want the chaotic XXX we hunky-dory as a was. QX. it do mindset QX XXX what our own In Holden in will was the signings. was and out flip allow the investment from us do XXX will to environment to in environment XX signing up the quarter COVID QX here. is is In and economy going Second are allow to to ways, the community happen. play marketplace This XXX to market we and don’t back to support way And into borne a the in and Came talked to to The same. the

how We don’t played saw it ball. in out XXXX. crystal a You have

burning But about The not issue that you engagement XXXX. proved about really in you bins and provide to likes open happen. onsite that of can marketplace not engagement information We all time the Vending, the I marker what’s its fact investment the can’t FMI meant is to stuff. whole with concept. bullish We’re better vending the and this bush. value into. tell of the and it’s confuse about the very and we that with kind That’s has to to a translated we’re onsite what is on just community talked the earlier that And is onsite. to signings what going onsite is believe What tell customer.

XX% in it I that quarter surge product the despite actually I of think people -- order I’m XXXX. is it, think XX% hurt fourth growth despite that’s an an are because them, our way our That’s fashion us, community And outside of most revenue that’s e-commerce first that, for because chaotic time e-commerce. In personally the first measures for as, this from of surge we transaction. of all sales Apex actually to fact all it. and the broke And e-commerce e-commerce. lot ever. revenue. history, the it, But in than the outgrowth the that, being more over the the So of to March, XX% this inaccurate our again, way orders, pleased measured read E-commerce, in e-commerce almost of that’s XX% of measure is being of a vending our a getting of is phone. say time

customer to revenue e-commerce, I to digital of text is. because this my that don’t to order And XX% FAST With my just it. bins Holden and but is I’m up. over then to being final wife because true the that, being I have better the think X% the there e-commerce. tell it’s That’s XX% flow going than is shut turn Stock our to customer, me e-commerce or best because the it have

the Holiday X. by Flipping was Great overall opportunities. continues morning. to year, products XX.X% of to us from be quarter, marketplace restocking and share morning. state and at in PPE the up of Fourth the but Good during accounts to timing PPE good up healthcare even continues self-control, Dan. encouraging to so, well period. the and tended of fourth annually. they favorable XXXX, point is period. to sales That’s first quarter the This XXXX, were is and be data of The as in as the XX% over third gains. bought improve pre-stocking were the second All the Slide blend Sales right, X.X% of time larger this acceleration in safety from that growth for the driven of tenor us that from government quarter most the COVID mitigation, customers, XX.X%, some bought quarter. local which

the carry So growth this up our government that annually, driven to state accelerating healthcare that’s going prospects gained saw we products, More share customers in decline. Janitorial have rates reinforce cyclical safety, fourth in same as the continues were of by versus in XXXX, XX.X%. moderation to and X.X% into and Non-safety but local the and products negative XXXX. the third were increased remained quarter verticals generally of up trends of XXXX. quarter

in trends grew Improving a manufacturing, this fourth that into to market optimistic customers particularly fact, have operating don’t day normalization will in quarter producing our material better core signings fasteners chains, continue and In those December. support is but the remain in that XXXX. are territory X.X% We vending around lot We visibility, growth absent regional supply which and in will data our of per added XXX exception of markets, VPs quarter. signings. labor macro handling markets affect continues improve. to to onsite driver COVID believe but conditions. XXX is the our negatively The growth per signings COVID, activity and

facilities light difficult lack The and access However, signings activity COVID quarter of when return of decision makers is to commitments. determine of in XXXX it that protocols and is the delaying into to first challenge to new will carrying potential. makes

Now margin products pricing to we quarter XXXX, revenue points lower and COVID the basis was a quarter X. to vendor taken products even and by that in sees basis quarter down overhead factors of COVID-related margin third the as commonly the channel on and growth clearance, mix, selective improved up Gross Gross Relative decline. of a lower to the on organizational XXXX, the points points of quarter. as points, XX.X% saw deleveraging. basis declined margin was relative lower rebates XXX product XX in products XXX those actions such in sequentially Slide by of fourth share due further more margin margin basis XXX

were margin continued control an tight of the points will last XXX year-to-year. fleet from quarter points produce our and as and cost experienced we headcount earlier generated this look favorable costs of SG&A XXXX. routes growth productivity Nearly meaningfully period, sustain and operating achieved leverage came in largely to to was in labor of the sales improved our XX.X%, having leverage in weekly year. also rationalized of and half Labor over with shipping quarter the fourth year. mid-single-digits in more record that year versus this full fourth basis up XX XXXX, basis Strong costs down We

occupancy and lower on costs as cost insurance as pickup lower our and of also fleet costs. expenses other We vending branch we rationalized as control leveraged travel, well lower on tight freight count branch

XX%. Our incremental margin was

up $X.XX If reported a XXXX. in of fourth you put quarter it of all we earnings per from $X.XX, quarter XXXX fourth share the together, X.X%

million XXXX, X. cash in net representing of XXX% Slide of produced flow to Turning of fourth operating We quarter $XXX income. the

For $XX Weak cash Act-related the cash produced from million moved full about of capital $X.X $XX to XXXX in first XXX% payroll fourth payables demand we working year, freed or operating the taxes CARES benefit up XXXX. that from net income. quarter did billion of flow deferred quarter million of we and and the in of

However, also up related productive mitigated steps sales down with be Accounts Inventories receivable we growth are past collections we XX% with to improved down believe to by taking dues with more working higher X.X% were capital. year-over-year. were X.X%.

a been into We older it from and have stock best We branches taken has useful to used, inventory our branches leaner clearing hubs. steps put be to particularly to energy and make internally model. it move as where to which easier have inventory get it can we closed branches migrated other

substantially lower to branch in capital range. prior $XXX of and result, $XXX up for dividend spending share are million $XXX significant capital million net end, maintenance to assets X.X% X% nearly spending in down at end support be and with non-hub the inventory hub operating growth. net expect deploy increase the carry while being critical a year million of us facility inventory repurchase. a December million higher our combination At we to and project XXXX spending a over total spending including tight is working debt following Winona return Record use. investors revolvers just net the capital As was catch-up XXXX same Apex, for available cash resources just the as in of dividends, for to customers $XXX in to the XXXX, our acquire as income secure product In of in $XXX the all in low-single-digits. was of our year million spending flow a well was controls of special allowed million Net form capital, and onsite to time, to and and XXXX, $XXX

to reporting change in it to and I customer used Dan over long to is alluded product hold this. before one Now to bin in distribution have stocks been wanted turning to discuss, Q&A, The facilities. there

Over these taken few monitor These them FAST Inventory them that that we managed visibility, we’ve XXXX. products we and the sensors scales generate aggressively Managed years, turn can or in digitally or fulfillment complement them and with and those that be and last Bins provide continuously Fastenal products more FMI expand round commercializing the our equipped efficiencies. bins have product digital into tools out anticipate offering, vending,

machines, with As is vending each the target a and vending that that signings XX,XXX a weighted result, into weighted a device based standard were XX,XXX. and going into unit our month our vending XXXX, data in FMI we XXXX, This X,XXX XXXX, to operator, are With signings. point. XX,XXX combine X,XXX FMI single signings. we is FMI output weighted of questions. Bin In to targeting which on will signings In we’ll reporting replace convert a FAST FAST on take device

first [Operator Uhlman Our Instructions] Cleveland Adam coming question Research. today from is from

help kind hiring did tough a Hey, seems any margins if probably you bonuses framework job for help you're on controlling with us good current framework could expenses be environment, perhaps how us of should some and other some great in maybe this rough guys, could out the And year. like costs like year. bigger. with. picks The morning. insights out a up of you company Hey a also successful or about Congrats thinking

I I guess interpret a XX that should probably questions one. broke bit little there. about You in up

to given up I try So that think year-over-year. If our gross will gross would at comps we be of the I think keep years I margin starting expect about about it those to short. might one XXX, be this margin, have, if easy where I

Now, sort numbers some folks really, that getting and with are I've of had that really conversations thing. high

you, XXXX, that to I don't up to the quarters and margin I it's bit. shipping first but XXXX, have I costs of in true need concept of I about, pulled mix showing that down that's probably in going first the let's the second anybody that changed, kind of of mix if about XXXX as of we're nothing we on And think think inventory, quarter think I gross is XX that But expect XX.X%. don't changed. think if repeat. it a think second will baseline, projects magnitude, COVID basis nothing If about still particularly XXXX, inefficiencies, that down else puts So of to If as than our those had pull we're year it; mix which higher I year, just selling But towards XXXX just through or in we think, quarter. surprises that's the three indication a to think points I did the through had into assume tell going so and I margin moving the that XXXX, expect about the going order mask would to we every in think are naturally have quarter be little little I do bit. two a types going else I that about XXXX. get if end baseline in XX% against to a in work

And so a I there. there's pressure think

gross will some our are do where that. And said, that we bit I've to so, be our people in order in conversations of as I the like a being bit magnitude. said, because a up tempered that I be or XXXX I But over somewhat say margin need think I expectations And aggressive think of only with believe XXXX. I I had

little hopefully So gross gives think a about that to a bit you, framework of margin. Adam,

then better, would FTEs would than that I in means objective selling gross I of do it expect energy. operating that, that top be no add adding XX% are somewhat As the better get think because I or getting are of increase that expect our up margin, they whatever the But I labor. than at would more would we growth our relates line. and winds labor we say to the would perhaps kind organization. being that's and of less that

And we labor this year. leverage will we so I that when grow think

growth think I'm together, terms still to on all those year, pieces level can I that in the think, framework margins, the incremental it tie achieve thinking and about. this are whatever would XX% of that XX% of you when so of I we And based

is The Baird. David Manthey from from coming question today

when come I seems like about key strategy. you've whatever; one or ask initiatives fairly of you've guys. significant. the the historically, morning, Hi, stock outlined Bin And Well, wanted you? out are FMI aspects on CSP, How some the you or or site, to or this initiatives the of with good vending

can wondering, opportunity long-term Just you this view stock share the the metrics any or Bin the or you how visualize margin help FMI TAM to of initiative? us

FMI add thing. that through vending vend vending, XX% really revenue close I'll bit little the on think is is of the think I safety product. is a of, to And a component FMI non fastener just, a I of I One,

back If the component the empty, Fast net, So evolving built through in in of of us about environment, your and where above that a RFID and have discussions part Bin Fast is as production I were Bin tells mix bin be that lot bin. we me, cases Stock. most a you and go in current the throw a of Fast month then especially an I standpoint. what is of shelf, you the that the FMI, a last meant think system tub it bin, of having in were FMI that empty might earlier decade, a to we it's from think excuse of

So it's pretty technology. basic

way, environments. resilient If that's you production think about it probably technology, that more

Stock. nice piece, akin has of probably Fast think gross from standpoint MRO third or a that of lot So vending, That's a margin if profile. it of mix the FMI, a I more to of the the MRO. That's

it's and fastener probably that's centered. so very And

Dave? so that margin that And the Does piece. a that's helped, like has fastener more

idea that outlined in terms where these should profitability. you're yes, And pie does. us guess help the charts revenues. of in give terms does an Yes, headed you you've of it of that I think

talk we'll So offline. at

Yes.

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And so the when we've oriented Fast has fasteners. been about towards heavily we had always bins, think stock, which

efficiencies that that addition more And that believe the transmission so these we to type actually fastener of a for would themselves lend argue margin, outside has power in Fast other the fasteners, power terms instance. Dan of will in about talked be you of Bin to what we think happen, come to our and being will involved bin fulfillment fluid that with mind, able lines to process,

to in these will done always bins, bins, in these and we we'll in continue continue fasteners fasteners we've so, bins. do And fasteners to these

nine share we that get to use done to leverage of product mid-XXs of more a non than benefits more is margin consistent efficiencies try can even fastener into a sort our which extent of in Bin gross We'll that, they'll low in bit that We fasteners, to verticals always some and be lower the range. we've type deeply. certainly in little have that verticals, but Those other market more will with business, to for the will fasteners, and Fast our probably fulfillment. typically

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

kind thread, Thanks Hey, additional about my benefit working increasing that talking efficiency, again, question. XXXX any guys from could that labor good on call first for FMI in you supposedly thinking just that to of guys. we're morning, guess about I out taking just initiative? off, further capital pull

For Fast bins? with Bin, the Fast

turn, increasing is there? benefit there any capital if just Yes, explicit you're to inventory of kind working

calls we now, to technology. underlying most to Yes, only what something to it's it of into a years -- of own we're about we'll the it's for the a till started tool other because we're we because have here, bring still year past, ability vending machine be want better bins ahead it. the talking were didn't in we now in think ago, about I in going put a ourselves about sometimes the to some it probably start efficient means to what three our new when reason vending with that's best our because that improves suite and the And it bear. because products And and would some where still the don't local into And really, we local cases the put on about in talking have place is stock site. it. call years you being LIFT get talked is concept, we branch or in what terminal. previous and We about honest the to about XXXX, we pick actually product be, And reason we perhaps, fulfillment when product is inventory,

do products, managing machine some it we're facility, there And strip, is our a with is and that's facility. We're able over and LIFT we more LIFT the put LIFT But out fulfillment what we're strip capital just, into to able little are ago rake type is attractive standpoint that we're years high incredibly from is to really And a about regional supporting these to going doing we're of standpoint vending maybe where talked branch and from labor turnover a time. which it Sometimes center. efficient. that working frequency of of product that with in third what's in that is in vending, something in the what's distribution terminal. distribution,

of are that the a really, small have of year. operating nine vending end just at percentage touching facilities our still We're LIFT We the devices. really

Bin end double right on LIFT be our and at this is from still of at year. the think Fast logic that small the a of working I it's with And base, equally growing. optimistic of about Stock. the the end Fast number ever XX relatively devices we're of to still out, but that applies to We'll some even that relatively goal year work will to vending touching now. but still our next touching operating And year, that at nine projections, X,XXX small a it's capital end

what our to it's XX XXX about our say, supply we're can on we able managing you you contribute if the to is think reduce widgets widgets we XXX being what today at value because the add that go have fastener that core And I to Because and to customers, will shelf, better do, brings to widgets. the those look, them chain.

want make bins and Now those probably check need sure shut safety will to machines those because we we to that the widgets go stock and we we down sure that cetera. XX et perspective, don't our make check those from and customer some include we

worked is with widgets fulfillment. do of about because an on intuitively, correctly, terms to and about efficiencies the -- if XX is what But year hand I far this so commercializing talk widgets the those improvement. too quantities aware we will, can should there be and But be we to we've agree about it's think that more the time And what it is early need, time when some think Dan, in I mean, benefit I working market possible on working XX over you what to Fast first in the are Bin aggressively from built this those capital I brings we're on. informing impact real of and we're are. really of This capital. the can much us of think XXXX XX what

walk Is of kind to prepared margin remarks, in XXXX? it sense thinking look I we XQ does be sense bit? of noise sales. XQ follow a it? a sounds your And there EBIT should Understood. how make really you're it benchmark, of Does to make the people obviously surge briefly, It trying of kind just some to at on how like about very up, lot when that XQ from

virtual centered way the which spoke was these huge meeting government in type certain back leadership a and answer December, I'll sales. our way. business, lot we COVID a of at this Well, of that It's on our recipient it's

And small historically I In most of our second don't year, on a quarter, number XXX% of year our year-to-date about business. final know business over over the a surged for was government the up the of year-over-year. was part relatively X%. -- basis it Our it was for is business XX% but what the

is, so year business, come we that like we expect when okay, grow, normally it a business; still which so do about year. it at internally into talk to we XXXX, is would the a And say what young XX%

where of quarter, And September are quarter matters government to then looking to are So of in QX, all the we're expected we it numbers, XX% thing, saying case when would the government, in XXXX ignore to now we right the at and if XXXX, for then is take that business, ignoring we're to example, for October. building add teams, and XX%, as our second COVID second numbers, because the your year-over-year in XXXX. what another for does But where our QX an you're mean we in January leading that and if your government the in have XXXX. it XXXX, add you're our team,

XXXX us from rest in the government exposure, in more a maybe do to XX want to and government a the are about XX, to where number plus be XXXX people over. contemplates be plus XX XX%, quarter. we're was the should second your negative become the that be But you accelerated that's with And to going growing that's about you're customers, where the the buy in don't the And way XX on for us So XX? and XXXX, that's overall twice our quarter, us, of of to XX And way we marketplace world the aware XX know. second then because is and them that received more a know can thinking it. I to And second people there's of or government the more that or going challenge different signings broader onsite fact unless does math. fact area the where customers numbers. the plus XXXX that saw over in our head only

a standpoint, probably probably more And what out. I half. Maybe economy. in XXXX numbers from an But, I seasonality to you the in about front allow our the business, the I to into call. seasonality build you're is out say a going back how your to of from traditional year as be expectations. is and seasonality think what than think that, also, the year it a know much depending it's is would about answer. is full expect XXXX if the back I traditional Yes, your and of annual outlook for you little played ultimately traditional half do sort don't unusual that'll the as when think your on stronger would quarter standpoint, you macro

coming Merkel is Blair. from Ryan question next Your William from

guys, Hey, questions two for me.

are construction in pricing, What's looks So then for there? for product price flat you was both it freight? like on first slow. off pretty outlook increases the and prices What expecting were this And quarter. XXXX, still

soft, the I As have I improve. different are months, to to wish I construction, continue to that had it relates give last but color say you which the that few conditions is expectations to still

expectation. that be yes, But in that. still than XXXX, is and soft. think results construction through results at XXXX my seeing like that I heading it's weakness we're we if in still XXXX. on this So remedied the that And the to today about what saw would That beginning board things least point, into expectation for be back my coming projects in is at fairly better

overall from some of but the feedback tenor market. part, a the that see, about construction we'll in improvement regions, from for the most So comps they're in obviously the role talking play seeing the

I'm are numbers. that translate to like the in guys So waiting see actually you

is of gas. there one Don't is to tethered lose construction perspective, a and our element oil

though regionals start a is of period too where that is soft, there. probably QX being might that there that absolutely. strength perhaps Yes, are sort And again, remains I think eyeing some seeing you

have yes, say in then the the was to steel. see. of say side, forward, would but that's costs to last quarters. in going going as uptick we'll couple would and happens pricing, been on is not an has it the QX I I material the pricing to I say what different and So pricing question seen we meaningfully would really relate

very same that about persists anticipate that sort or would take have mitigate that I continues of if some to and action talked we then have that. you of many to dynamic think would I

products. if from that So, ended, now, I on we safety We're standpoint, things XXXX. taking with steel ended trends to they've right doing the some tactical we're a as did broad not the continue certainly But degree begun the way of some or pricing actions. guess,

that mitigate XXXX, as anticipate take end roll effect. have ended to I the actions we'd Sorry, QX then, into would that QX and you into to some of

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

morning, Hi, good guys.

But it, years, up don't I Just price the past out the far, know or pricing you a a follow call those really on later is normal the been would it's especially environment, hitting pricing seeing the three term so put early, in question, we've there are guess, the over what cost I from it's for you're if that with something four price of ability your of Holden, tariffs suppliers, pricing to and believe of I in on cycle couple that, ago. this even in about, anything offset kind kind quarter, still Any whether all indicate this to reason of years will that flying competitively talked that framework anything this be beyond and longer cost. or market? kind know, but the we would you normal evenness terms in market. a your a to maybe historical road or

a manner to would cost I it place going put is on, we act same that historically. around increases don't Obviously like, address things we've addressed so. where like because we've ECONXXX prices variables, in think that structure say, internally difference, where were and the would only pricing able steel think If of tariffs situation that we in more conditions happening. necessary I that unique. are up get is the to that, I analyze into that and The be

pre-tariff. than a in we're think today far I place better were we

tariff that. and that technologies really we us use, analytics we use, that the the we rely that structure with to and effective us to on personnel more prompted the make up think that shore internal I

internal So market the think to years a haven't changes ago, today position was that than the dynamics, even our better are seen dynamics any two case in pre-tariff. I I

of of kind normal? the just helpful. off starts or what's related to Got captive it. those at conceptualize Because or That's normal, does about dollar it that point kind of down of Is which then that's the those patches, I folks the deleveraging way think number software at that a there, growth level to talk there again, on absorption way back know, of to number, busy you assets the in but keeping you dynamic. what kind get and would Fastenal benefit point any or or about points to from whether fleet. And keeping a busy or,

think or purchasing, the fleet other captive company but of under we're cyclical when Asian challenge, our is purchasing, certain like industrial and company, I so conditions a cetera, that, of of so I your that's rightfully is that in is that manufacturing, somewhat you any guess, a right. soft, are et sense our A structure. part absorb bit

to So that tend you deleverage. is weak, when demand

of demand go and lot of the which advantage our leverage lot you Now up physical of that of necessarily more this the The we've didn't and opposite weak, we're XXXX, improve. is was business is look at typical. in than plus then sales improvement There's going assets. ship begins is run our our side taking over demand demand begins direct type branches a is And impacting to structure. of our but XX field revenue, our our is to core an those a that business, to business built if lot years, that odd our through year of of a because sort

would the XXXX. what in question I growth going what would some benefit And of to and growth, would terms production your be that so the XXXX answer be next part you then to next industrial the, to year of we're believe getting expect if contrast growing from be in I market saw of we expect is we year, in that think, as we do you leveraging part and

growth for heavily that there's I'm underlying what right. I invest a Because that your manufacturing. is certain difficult. don't market we more amount depends in what But it that where expectations ceiling think I so. So I that becomes mean is. have with we wrestling ceiling on no think

other expect might increases And rate, get We see we but we that certain our that, if I see demand grows. that demand infrastructure have our elements amount in would a fleet. in begin you invest that better, that at of the to same

would leverage it. we so And

ceiling I don't that. see in know I So that a

a when year, we we the day there, overfilled. a another truck truck distribution, out branch. to of is for service in doing dynamics took something filled that need some service earlier to we've in again, that years. day is There's of truck add or That's been another And

that a up that. We out. truck that so with that when grows to is we We've we because we have us technology deployed have didn't to And third really service there. And pulled And to spend did of did better order few service into poised the XXXX. wasn't illuminating see feel for it. where keep of We I And that our our that with we it, continue one go XXXX nice needed we challenge in as our information. years team great to job is the well some party that we do need deploy job what's last as system. because in lot better over new tracking than historically in those reined we're go better in a a

it our getting yes, introduces you know time. ourselves. better probably never nuance right. fixed guess have say when given manufacturer gross we investing within at The company. small I profit, those only cyclical; our an near are of average in amount like anywhere Remember point that cost a is where we're play a exactly I in or does, ship other parcel, you Just the in We're mean, as of costs don't cyclical that we viewed in circles goods as a

little So But the our have leverage classic does. order as it your and in of upside magnitude does the be to deleverage as bit an more regard. downside or manufacturer way cyclical. work average a tend the same that same we No, it way? Does Yes, the the muted same it does? behaves on

coming Mazari from Our next Hamzah from Jefferies. question is

that a for business? Year. parts, New there's vaccine question lot my question. is Happy impact Thanks you what taking around rollout Hey, to of do can any just cycle think speak to, Clearly, business, sales moving onsite, My you margin, largely is maybe the you. on to helps on it qualitatively. the thoughts maybe accelerates maybe slows, as the vaccine gross Safety but, maybe your a impact thank

We're vending weeks, a market about rescue to about just stated we than don't liked stock we're what's in. us the now. and right worried model, the move we that two our is to Well, happening because want months; have of hours, growth don't in like have And I talked We're onsite change to more improve invite stated next worried liked business and stated we lot. strategically they bins. this we about you in because that are thing biggest about drivers the improving about eight two new it our fast the standpoint we this our And I they nervous luxury. And has the success, from to think us, we markers us. model,

think would see think coming onsite the signings, we that And expand we would signings, I the about our goals a pipeline in all, where vending, this. again, see it, with and economy get face that's XX last et customer. people, the whole years so targets But there's the itself in a it And see resumption of let's our manifest taken retains. we have you'd mother tired things bunch as the the the of we'd we things and are of a better. to closer of improve We cetera. months bunch it, to that that those already lot would a makes And Perhaps talked, in I underlying that whole invented is normal society. to a of us we to out XX accomplish. little bit something And whole the that society invention. of positive are months a last and would That's that talked want you engagement because markers it. fact our learned to frankly, necessity There's we back

down of fact don't all that use is I normalize, XXX%. little that fasteners much might that right? But gets concerned it. comps about know lose look sight we about Because We all contribute COVID we're really of time. may but period is safety, going have business, XX in everything lose everybody things perspective, resolved, which to tough in let's concerned signings People that we were almost not some if we safety share but part could say it right? the lose normalized, in and gains safety might not If didn't comp as And very on that's a the -- I it, at of bit and lose and everybody's our it. at safety, of we do growing our maybe easy Yes, same bigger we if it. of of a have because of be that market about well mix, concerned as government not I COVID as safety

but one, gained the lose might we so we And other.

just year, I specifics if if and and an the year, that both you that's the step flips, safety think in and COVID was perspective if gets used the think kind year some at for combines look in -- I at boring back actually results you specifics results. think of it was, stand the out offer. an remarkable don't market from Dan unremarkable the overall how I safety, or that's a writings, and that terrible resolved, look non and about performance performance And back our and in the because it

we that pull off. With would supply part the upriver and that crude did we as I'll and NXX it feel. in base. I like supplier and example it that conversations joining hope because was share important what have we'd the pride accomplish our because proud trusted the XXXX. I done with done were China XX; communicate of in milestone never trust able for we We of that throughout Blue is customer our It never our team we in Team, XM. and suppliers, that, down closing feel system And hour. we'd to that of to we an good that with to between important shareholders on in of us. our Thank we down But And trust on one company tomorrow learning had share and you just of day. we're everybody. after could them. the us. year do support locked our ingredients can for I've with from it a all you network our could was that one We We chain all would, did an that our from And us, supplier we something for respirators was locked shut called and before. January masks ago stuff what request several almost off a the about in that part Fastenal about some numbers. our supplier quite Again, Ellen, part crazy past also what of talked the do for were thought. thank tools. supplier Thanks, trust some believed customer really one Have I'm basically our what you.

That you. concludes teleconference. Thank the

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