Fastenal (FAST) 13 Apr 232023 Q1 Earnings call transcript

Greetings. Welcome to the Fastenal 2023 First Quarter Earnings Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I’ll turn the conference over to Taylor Ranta of Fastenal Company. Taylor, you may now begin.

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

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

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

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

the occurring, the and also lot little we expo attendance had the the earnings up so event, of international event the didn’t customer have first One because at a is we X today travel, Thank you, just some different our restrictions, we we this years things I limit Last Fastenal Taylor and is This pleased didn’t and morning we great of a thing really customer and limit Holden the great because an quarter and good had had site COVID. to to call. those welcome the about an year, but obviously, with X we event yesterday because finished for event. event, This ago have to and conference that were year, of we engagement. everybody of nice call that a natural year had are of attendance.

were there to And facilities. to the of our customers’ continuing of transformation accelerate year. four event One inside theme areas inside give to this visibility focus them their their to the walls, is four better happening digital what was

seen and one in to securing opportunity second a we last their has a The of lot our allowing chain. to more supply forward. chains as chains about supply think world really and lot change was of move several the The a impacts way customers the their supply really strategic years continually over

their of elements a to or whether your and floor tools power the operation, goals fourth event. them customers’ those serve I to ESG. And it resonated that was when and goals was transformation, your to provide element about the our then sharing of chain, it’s And the also understanding we throughout of in lot – some with that. do points productivity, your comes it’s ways journey production we well the third The supply piece digital this bringing productivity your their can four understanding think

moving Now the on quarter. to

softer. saw as management pleased and The a an we share the expense over increase during quarter, quarter the able fact in were numbers, the with monthly of we $X.XX, of our despite came year. earnings you strong team had March to per produce incremental margin the really daily in first So XX.X% had bit sales last

business. side, it of manage in month fastener but ability are of the in our business, in despite in it. team’s seeing ISM now with really our had the to below down and particularly impressed are that we the that, – XX ticked March. through And OEM We fifth piece our And

were years, we a beeping have I the in And XXXX, sorry is sales, larger as of and a) quarter about have you In at to we have in today talked post-COVID. of – it’s our our organization, My were done the but business XX.X%. cost, is in if compare average XXXX, coming ones really More we business that is the really am the – we managing first pre-COVID of if sales. as our the first onsite. for nice is about And laptop here percentage in operating from XXXX. they made costs operating to XX.X% As prior background. of pieces quarter all job of branch look the back and of changes of a

nice done see and shining a have efficiencies of our it digitizing We bring to that business job to through. you

able on X and The we customer year business our pre-pandemic. we other have deepened been our piece in better as supply needs where we ago, our seeing is we, chains to were lower days engagement only was we inventory as hand from not X understand their as what months with our also have as improved but globally, our ago of and inventory,

with taken we of do that. that our team’s and entire X inventory worth timeframe have network really So about out weeks’ ability the of over impressed to

in business, business your show a distribution well, manage working you Finally, that flow. cash expenses manage managing your your capital well, well, up your see it’s if you

So of $XXX so higher and year we XX% our which and generated a XXX% in operating ago earnings operating cash million quarter. was million, $XXX than was cash that the about additional flow of was

periods. Our CapEx, net CapEx, similar both is very in

And in flow, that the return first pattern or will in cash a shareholders. pay business us which we we invest puts be able and our right the And the dividends. to we to So and continued quarter. free are million to announced paying $XXX in a very a position night, strong last quarter dividend in about out nice a just of – out we then now dividend second quarter,

foot book. the of X Page to Moving

year. sites at Active finished first increase quarter. the X,XXX, so in quarter XX% a XX signed we Onsite, about So last from

the that performance. in XXX steadfast an the you engagement most XX% of are the you weaker and when I on from saw our when feel open a Onsites think about intention at we the in sales branch X this days, of the to our going good months. remain the come but March. QX, If Onsite, first here we Number be last XXX year. business – sign that to quarter, I next We Onsite transferred bit so was about little in And where grew in to QX several going to ignore event strong the

performance an I at If technology, by this team FMI strong incredibly quarter. the look

year, ability build signings per COVID, as day. the support idea XXX in have low sign XX a down And up We neighborhood XXs. quarter, This towards a day. our it’s signed We day. month XXs in infrastructure to numbers dropped quarter, first past XX March, dropped the talked slowly the the during this built we day. in Last year, we of And – In per XXX we signed per signed XX from the the about XXs, first our to start that way we of in upper we back. day.

performance you platform. continuing team strong our expand by and that really can in see So, the to

and And March, we time for feel about was we the for goal ever. the really good of month broke XX pleased XX,XXX year. the quarter FMI the our for between and In Our of XX.X%. XX,XXX first signing

e-commerce, that revenue we quarters, fall XX% broke the quarter to seen continue really recall see we growth have I we strong in last As first XX%. that believe for are at prior time. about this in of

me, sales digital of came versus XX% to And together, ago. then in hit at we XX% – year later our pieces we finally, about drive XX% a March, the that And we our if if XX% believe tell goal excuse you goal our footprint is of footprint. roll of And digital through XX%. to in all able of those a in will is to some that Time number that accomplish long-term of business the year. type going with are is month

that, With it will over I to Holden. turn

Thank Great. Dan. you,

wanted bit perspective his overall comments on our build a offer Before diving Slide Dan’s of details the to a I of little state on on the into to the little of earlier bit X, remarks prepared in business. quarter

our technology effort. are of you and recall, of the simultaneous accelerated in actions the outgrowth. This sales, market structure our with adversely FMI mix-related grow and affecting as and to we short-term sales the and of basis annual priorities adds XXXX, its gross incremental deployment Onsite penetration Fastenal footprint we levels as an digital though well continue also If achieve our Those onset pandemic historical shifted to pressure. margin continue

of against benefits the changes the rest business. be of However, need our weighed those to

Relative pre-pandemic business, of to and productivity generate reduced facilities. the meaningful labor begun have footprint we cost our to the

‘XX, the XX.X%, of greater first the first the XX% first our the the from As first quarter than have quarter and ‘XX quarter first we from of chain our saw XX our accounts improved what growth ‘XX leverage from and from our incremental time. first of of a to time, of quarter in ‘XX has structure result, we appreciably the same despite supply disruption improving have intensity. national to marketplace inflation The our days mix. and from the cost Team of the XXX our sharpened asset days Blue days leverageability inventory have despite and differentiation to days XXX quarter over of of is XXXX the XXXX in to lowering to sustainably quarter the capacity fallen declined receivables while XX of for At margin our

business today productive we prior that pandemic is than XXXX in to are and results. these stronger, were We more quarter very first a the clear

into jump let’s So those.

point in XX sales several a a modest affecting basis XX sales. XXXX. currency increased items the negative XX point drag. storms had X.X% to impact, while There of are Daily was February other basis first quarter

points not first XXX XXXX approximately surprise pricing through XXX continue basis of contributed down quarter approximately continues points XXXX. to the It is a basis and XX to will down from points moderate. growth from to fourth the likely the period, of This basis trend in XXXX. and XXX quarter First,

third our see several to and are construction our unchanged retailer XXXX. and businesses. in business of major dynamics the we customers, These reseller Second, since continue weakness quarter international

business, with labor, strong have geopolitical events. non-North dollar retailer to respect their also in tightened with facilities and a Our which our affected customers belts American along

the decision conscious accounts, construction we focus our leverage. Softer on to larger contributing key to made position branches is better to labor reflects which

downshift Even daily March in accounts a and branch in DSR growth Onsite investments growth to in continue including slower structure we of to manufacturing X.X% did by reflecting large activity strongly, Third, perform X.X%, roles. as changes broader and in fasteners. and market represented just see sales so, our

forward frankly early marketplace, does isn’t on will We Now growing make our outgrow too of anticipate It’s have X a read good not we lot don’t a we do visibility. that which now. month and trend. a have to to right continue April

softer finish a note. However, did on the quarter

incremental The margin The basis the Slide up the outperformance is our meaningfully prior quarter actions XXXX where February narrowed versus other incremental but widening XX in from was Onsites inbound was XX.X%, price/cost fourth to year-over-year, supply negative costing XXXX. of margin we margin a first in from shipments decline X. operating was negative while to Operating This experienced over we product quarter. category, smoother margin XX% sales the – XXXX first products Gross to were down fasteners with mix points only declining the the year. remaining non-fasteners Now higher chain. reflect in of the stocking XX.X%, went fasteners Price/cost pricing of the in gap we as year. half GAAP XX.X%. in in experienced still largely quarter expenses growth non-Onsites. adjusted place was in our entirely second lower and eliminated and customer or as due prior is into of

These And likely costs ledger, declines allowed good to than and then better in sequential leverage the was freight the for We on record persist contribution margin revenues container freight import the are for and fleet the our expenses. to captive of other anticipated. side saw containers on of couple purchased annual quarters. of next both and from side dynamics

XX payroll the past quarter expense of points lower the in side, XX generated first months closings pay of occupancy the from on slightly points of produced second from generated expense. highest expenses. XXXX On for a quarter. the company branch record Total basis We the leverage for incentive we over operating basis XX facility was as leverage our costs first

in pay Other quarter the single-digits. total growth of quarter first costs, XXXX high in growth down roughly incentive lower one-third was of the the benefited from being bad expenses pre-tax quarter with the selling-related However, of debt lower for operating XX% XXXX, from for first the company of pre-tax profits XXXX XXXX. higher was reported from largely and IT, costs over which offset Putting in first $X.XX it costs of insurance transportation asset higher general sales-related and EPS altogether, up sales, travel. first by $X.XX, we quarter

by from I which or XX.X% the to Slide income improvement an first was tend demand color debt have quarter the a We net XXXX Year-over-year, in customer first first X.X% receivable in this quarter at reduce cash approximately strong period, of partly this improvement XXXX, cash slightly Now receivables in putting of account quarter the conversion working in And offset first turning use of accounts the in but provide X. customers, of increase rate in of the in fourth in of to the period. and reflects quality. in of source moment, terms. the our up key first a a to XXXX, in on longer in cash from $XXX million XXX% the generated to quarter higher a XXXX in in of more but an capital net mix allowed operating larger swinging bit flow us XXXX. quarter This will debt cash of quarter was XX.X% XX.X% down from up the XXXX. of significant

X.X%. to intentionally unwind Further, indicated of as built XXXX the Inventories earlier, material through normalization a up in layer of product is we was the the bottlenecks. significant believe will us growth inflation Inflation to supply late what releases as rightsizing manage global the in contributor XXXX progresses. chains of inventory not been process allowing XXXX period. additional cash and with year to continue of that We early inventory had rose

quarter approximately $XX was of first spending XXXX million. in the capital Net

range for $XXX behind our pace capital million first Our quarter million $XXX and spending of timing that in spending remains XXXX to being net reflects expenditures.

equipment investments, XXXX, equipment. course IT fleet Over the of we higher hub expect on spending and

operator, turn will it you that, With over answers. for to and we questions

questions. Dankert Instructions] Markets. Thank Chris first from And with our Please line comes Loop proceed question Capital of you. your [Operator the with

guys. Thanks taking the for good Hey, question. morning

morning. Good

adding first of guess, do growth how they I thinking and kind about kind today about right are going now, conversations how labor about Just feel there? thinking management your of off, with we forward? RVPs or FTEs management

hiring. to trend labor when this is, and We into you look you was where the be RVPs at in about PMI year. the have about plan the to production, looking talked with premise forward cautious really coming look when we industrial management a And be really needed the at have

think out grew February, you demand to will obviously, in related Now healthy In people that as sort January the pretty little in our a added little I we I tell March, well. that. also March of and we demand that out hiring adds point bit. and softened that I bit called softened a would

are We react that always how about seeing. changes talked quickly can fairly have we we to

responding having just been really And down where you the the not year add think And they adjust right been, to adding has so need by it have resources. by the demand. prepared conversation. message that same message have to the that a for to be I adding to shift in they again, field that’s And We we entered resources a conveyed.

to the significant India, see the of where growing overall right. mix of We our full-timers, right, we part-timers have business, are in those continue piece a portion in made added of

So I they to think to labor doing the focused organization that on right understand is from standpoint. the be what a metrics need

March, in of encouraged slowed executing on I are they And was adds. down so as demand that hiring the sort the that. I think did

the we think doing are So I right things.

thinking calculus kind that closures more the of Thank are the growth how perspective? the around so any of here. that. to pace the of on from seems a rest then channel great positioning relative CSP to of the you you again, business change there be the business or approach bit That’s lagging Does color. a And much just about

are By CSP growth, what you to? referring

guess business, the growing Just of national traditional I correct? non-national my of that accounts accounts obviously most the is assumption under piece the more and is Onsite, branches,

our you business referring they But are So the as you’re are national I is remember non-national business release. local well. to but think do – the what accounts sector support yes, accounts branches that our they only support on not the referring to, traditional

confused on for smaller local when right? reseller, think bit, little them sort customers seeing. been in I The the customer, clarification. that. you things customers construction a happening there few that traditionally, is have was I provide service smaller right, that the of old model there, is CSP, So of larger about of the unwind focus And a what say shifted degree talked thank about and construction, CSP of CSP by years a of our ago. mean intended surprised to And market. me in of the a sort time was what’s we can’t move to you online trying stocking – that when began creating That in that that what draw you lot and priorities those local high our I’m the in to market some in customer branch a we’re to

again, that see the relative growth really difference to you to construction well. in that’s the versus what really manufacturing, achieve, the accounts is is which, non-national the of to as weakness that that, think national think trying related seeing we’re you’re I part accounts relative in I

related. Does So question? I think to things that are your get those all

on I’ll sense there. for does. guys. much the there. the And there. quarter, Thanks That ton makes detail leave of That so of it luck best

Thank you.

your Our Jefferies. with of is Please from next the question with proceed line Volkmann question. Steve

year know. time, sort Can the or transition on? Thanks, you long two, long of assume that goes that some where from do thread that’s customers? don’t away pull you in I lasts a takes you of How move just process these How I think Great. that Holden. a on smaller one more think guys. that slightly do I business construction-type

call of through cadence probably the that them those how service months, is semantic. the year. setting area. customers. phrase this of we That looking played have we’re will has bulk it, truth suspect to some at I but don’t trying a preceding, suspect I aside the move away the The transition that love different model, type just I out XX in period will that last probably in softness from

we think a it to think think I probably on into the drag into than where those get begin represent today. And sort comps. does year, lap QX I we’re doesn’t in and position of it I you next business our as

transition those seeing those look going two today large I a that’s sort the transition, that through to to think you we that that because of to And in think manufacturing and is. you’re it as think work as we So or that’s three customers, it right lap once are I customers at shine really what growth the transition over quarters. begin I next

think chart branch talk in consolidations last we shared you the several the years, if we’re of we’ve of near of Also, each of that about end the process. January

our about think if you our if partner. supply where so the engaged know if ever, we’re just we you So Digital They Footprint a rarely, into facilities. don’t from about come segments, one customer customer customers chain located. – perspective, probably we’re think their of highly Those are

in you’re few other market from customer. a segment you this if and away moving so And are you further actually consolidate a locations, of

of point. we’re you that year Holden’s if into get at as probably to comment And where that that we look ultimate away branch right so well. And count, ties being at a

Yes.

relatively the well would indicated, reason another that I because those longer customers that that that weaker that. pun, a location to Dan you have of is the consolidation, as And there. no mean pardon so to when I have been mention earlier, lot comment branch times that’s to that visiting go customer why back failed that’s Chris’ been looping otherwise smaller

So well. element that’s that of an as

are something the of think of you of Or dynamic. interesting your can it. seeing? slightly. it’s the semantics, I destocking rather that But are so you overlay as seeing, that’s we’re visibility? of other think you Got that about go would end now rates that When Right. normalize switch production deceleration slowdown? kind supply actually for Apologies the was for think customers unsuccessfully. is sort chains you’re market talk of struggling I the be might because some have up kind better Yes. at that better than supply Do would Do chains what you customers it’s part actual do your and down. interesting And you an

have I’m visibility just any any if and pass then you So that, into it of I’ll curious on.

Yes.

really shave begin about the both from So that regionals up, of to now chains hold now how their talk you product you’re Steve. because brought have of customers is can they One and they the touched on – feedback suppliers seeing back simply things that production bit. they may was normalize, up as did sort to extra little supply tried back a sort of product, can their

to seeing spending well But from get they there a in regionals the an wallets their of also that of just of adjusting element is I bit, as our So a comments supply are customers as both capital chain. terms number did tightened expenses. also operating

And there playing things, think of of dynamics those is so little those I bit out. a both

a The about go business to product In perspective, business use product I if XX%, other from in of from our grew March, XXs. if low and January. piece fasteners XX% around That so X%. our January, OEM XX.X% kind was insight it back I’ll of is – revenue, growing line you perspective, an think

our in for If March off. stronger is that safety, January. it that business with than example, contrast in I production safety dropping So grew did

January haven’t March that comp in COVID the issue. and of been a off been I’ve – activity. last days. comp I That, honestly February. don’t safety comp last of year. don’t a had know, was But I was a bit some over pushed if little now I I has was But that’s business little of a issue a some bit that it believe with fell case issue know Now at the because because the given a around being few show there

a in ties in well, little and pending be remaining If particularly think our the at we’re the production metalworking. I fall off seeing bit a look some strength in those that bit, I into products, there’ll that as deployment. also did

great color. you, Got Thank guys. That’s it.

Thanks, Steve.

of from with comes Baird. your Please David Manthey line questions. question with next proceed the Our

unmute. talking, you’re if Dave,

next on, moving with Please And our of proceed from your Markets. Capital Ken KeyBanc the is line question of Newman questions.

morning, Hey, guys. good

Hey, morning. Ken. Good

could that fastener Holden, minor here the we just questions in a guess, bigger volumes you margin for here. assume similar. also and typically think looks I And how comp the I the were a should if part more in costs? March. trends the I’m you portfolio mix, fastener bit it’s I two, to on pretty sequential April negative month? net One, talk two slowdown of sales since shipping curious impact but little guess, the about container the think accretive of that we do called out lower Obviously,

to regards think. volume With Yes. trying sort the versus the I’m side, price of – side to the

line, was negative. By slightly it

be. It would would be. It

think an today, commentary fastener the I fasteners again, of our XX% OEM line. And OEM represent fasteners business. of So about that’s Dan about particular. in the referenced most cyclical it’s mean that I element. sort our

affect a And in going it’s to of of the some you side fastener in the so a volumes get the sort when period, slowdown business.

margin a be you’re right, to Now tends it higher line.

to the rest, that degree so And mix slower the does have that adverse impact. than fasteners an grow

we cycle been that’s about, mix cycle. impact. It’s the think always something I sort about a lot to of case, talk

have fasteners OEM mix impact the overall When do. is gross MRO The a the the company than higher fastener OEM gross not our do if the margin MRO in than it’s fasteners the component of different Could piece. in fasteners, be falloff is the margin.

some well And you need of mean, I – the quarter, it. follow-up big guess of if Got prices as for talked maybe here, color. last your transportation then to I curious renegotiate as steel I’m because vendors costs. you That’s pricing my helpful with

about I’m curious here also prices but the months. steel color You’ve you on think update material? negotiations if bit, price/cost easing obviously of a – you the stayed recent in kind a higher bit talked have transportation any I on in have for little

shipping that’s are and of steel with And aware covenant customer. We acutely our our costs. pricing

in dynamic best best also conversations we supply marketplace. price, But best reliability are very We’re always a There business. operate to going going chain find the their for quality, on. robust

been a we’ve months fastener for stabilize seeing now. So of prices number

a We’re months come A – margin seeing X right lessening seeing in helps short-term getting gross you’re numbers goods. in and ago. and in we’re And that also squeezed cost that that because that squeezing through as our well. were through now, we seeing X of bit the is of bit little our our in little

And the understood, objective to talk think have think I talked timing always how was we’ve costing – customers as to of we that we our said, I about Dan those those have a cost, and conversations etcetera. covenant to And lower have through customers as working be a at sort think understand of great our to been to appropriate. products us I our with when coming adjust our

to the always And second around get felt I so second pricing adjustments think probably may to time should we’ve have be of sense you trying made. and to those activity that are we that probably see have any in is customers with that the be that that’s as third more quarter to that quarter. case still declines that what our There’ll be decline of sort getting quarter, type costing. activities. we in we’re you a again, But that to

done a and good But cost. job price I understand so think again, I the we’ve matching of sort – And we certainly concern.

done to job that as of cycle side well. team think great the has be I the a the this objective And on price/cost is neutral.

Understood. the Thanks for time.

Thanks.

you. Thank

of Our proceed Baird. with next questions line your come questions. Please from David the Manthey with

Holden. you. morning, Thank Good Dan,

Hey, David.

the answer, pricing methodology to you’re to relation exactly customer your just I front-running you Yes. be supply but price you a your to any And what price extent, decline. or large to clear want to trying general the pricing discuss, lagging just to prior how that chain actual on addressed increase match of COGS in relative I that. the have that’s In versus – a guess, I it wanted to

are that mostly are today. prices steel down, are and saying you little fastener are Your container a prices bit up stable prices

today? look XXXX as here sit So you’re we as any not changes major at anticipating we

sit today, here say I As no. we would

We’re we Again, pricing might happen visibility we actual. know that – pretty We our would we not. have adjust surprise. that good to Again, where in need have to a to is not costing.

align to try those we things. really two so do And

And so didn’t our have point inflation was as pricing the through ahead deliberate. our we period where costing, know, of was and you that really of a

very on where we to anticipate forward, up that side. time to and catch the got – we talked conversation As how will of the going little price it price/cost price about are quarters – just we the bit up we quarters side respond cycle, the two reduce our with having able at is There dramatic we’ve you to customers. put explicitly from that cost with got have standpoint a of as we towards seeing But we the and largely to on to to largely behind cases be a because where And cost just And variables the that’s track actually would the quite pricing, flip side ago, negative through idea quarter. we about we sort so about, all wound ago, is got this talked given having started this fastener talking much the you the costing was. that pricing a to based as be been marketplace, wasn’t we our as costing. but we should enough two

of going business the managing done vending to demand. point, some job Holden’s extreme. at it, a is half was device. our of visibility we lumpiness it three safety, think pretty I break If look business the it. a through great were you have Dave, If Over that changes nice through components, I Part on we’ve to of to side, the fastener into really

on quarter some that through you able been on, well. lines We really the half as touched were pricing on so business, because much some product to quite here there, not safety, that’s remaining of as that probably weren’t as focused have and we’ve manage – the were been of other understand on our Holden the fasteners in business and – our putting attention and the we probably during did did there. adjust So business we we we and half should corrections we the

non-fastener, on piece the So did during raise non-safety we prices some the quarter.

the and I Thanks, guys. dog My answer. appreciate

David. Thanks,

proceed next your Please questions. line Nigel Coe Wolfe with Our of from Research. question the comes with

of growth of know called Thanks. margin. obviously, everyone. you or quite Good revenues, is very XX% so, but portion morning, good freight I the the out small

do how LTL So like And of that forward. right you just to you rate? of to it what continue trending did wondering, can given tonnage – just kind get sounds now, growth kind going is where

just what’s of driving growth? So wondering that kind

of a – can time think in is on the room you sometimes there focus – energy to focus over things. on guilty you I enough of of be handful

standpoint things need put equation. things probably that, of a sometimes attribute were little talk me the we years of we that I of that freight what the And energy chaotic, side on fall we off need are of would from bit in things if push get I’ll problem recent to say say, that on. And focus you And the guilty what are anything, really the it into to you the this part you and a to folks, this some hey, to things when about, fix. have pivot is sometimes because focus.

that of distractions we several freight the it’s more case ago so and pricing other And all little to and a habits the years came we’re X bit COVID of some were reverting the play. probably into that X life maybe had waning And years. of in last a say I’d of

it to The freight, to really some focus at moving charge other have element we trucks for using we our ability from freight. own good our on is lost while

dynamics have So going we on. those two

we’re and back how a much on be on our what to out nice punch. one-two that’s goes we’ve probably improved We’re network, and through charging should own where we

some and there the which mean of spend. times couple today, sustainable is and – a there long-term sort alluded some is in things number of of And increase in we’ve which I plant an to now. think are of here But are of in a I factoring

so becomes plan a it that right? own third-party logistics, of for us our have down, go because business, becomes bigger spend our plant easier to our portion And of more we part As in freight trend. seen

into structure sustainable. What as go stable the though to semis revenues there, you the it’s the fleet some I route will going are business, is cost think of fairly we and at to think least process are efficiencies of up, because some which gone and our I not I and revenues we be think the important, bring that well. continuous so fairly business just leveraged as referring is of up We will focus of our continue. actually have that as the or did executing that’s ongoing some rescheduling improvement in consolidation routes,

that lot. other was in The down this one, is, container a a are piece though that quarter occurred benefit. costs And

year-over-year. something down XX% like think I

that some So was unwind also inventory. our this things that of a down benefit. point quarter sort of the we’re doing out lot I would container flow to a because is

was quarter in our flow first XX%. so container the down also And

couple things, against those the years. route freight If those I of that be last think than not drop, two base in I business. they come other lower like latter in improve couple revenue third-party, issues, The sorts revenues consolidation, going to could dollars then of plant issues, are adjusting necessarily will sort begin the activity do aren’t cost that to levels for those that’s things appeared last different quarters. demand may things But because the work to of spend, of freight continue are our they’ll I you. long-term Now next big revenues. our the that stable think variable to then right, freight and think

so some in things the great is execution freight going standpoint, I with there organization. And on

a guys. out quick the But weather then Yes. February. one, March about that’s you in length. we some Thanks, great. called impact And now just No, at sales talked

out You in anything didn’t blaming companies call March. are but in some weather March,

explain the the some of any towards So of back I’m the impacts end weather saw just could maybe month? there wondering you that weakness were

Yes. think February. rise just March? pain that’s weather there in threshold find We’ve Can mentioned. bought that at Can find in true It Sure. January? wasn’t of to tried I was some there you someone was RVP worth an doesn’t No. threshold a we raise to discussing. some I that That that thinks in our a

That’s Okay. great. Thanks, guys.

Nigel, a take for what quick first was worth, answering it’s look. as that I Holden question, did

of the In percentage that X about in last years, we XXXX. in basis freight quarter XXXX of first a was the off identical out it points. first Our of charged the was sales to what XX quarter as dropped it had

Thank Okay. That’s you. great.

JPMorgan. from question Baumann the line Our next proceed of with questions. Pat with Please your comes

taking Thanks Good Hi. morning. for questions. my

Pat. Hi

on or it quarter, be am with just the on X curious, pricing? are the down expectations a were expectations, thinking what just X as this the understood coming how think your was up in as to least with first, your wide February kind point at pricing guess your thinking for the had of and February that depending sales, your points or one into there of of that, you said X I I in cost Just portion quick pricing first actions and input X for it you this How you non-safety Hi. do things month for on slowdown that, pricing the year. actions on could a points, anything Maybe range there doing? or on saw point you about regard to fasteners do just played I you kind I And are think on after to non-fastener, then corollary of volume now March? what year a out.

what from January running question, that February OEM business. and part, of the on touch meat if we production what to then let it. on those think last happened are I But to Holden about just through fastener drop-off you handle numbers, last on the your will I part the linked was will of

as growth. dropped fasteners XX.X% from relative half OEM as Our the – in far – X% to

at the And was pricing actually XX remaining occurred if the action And no so there look drop-off after. there. – days product that lines, you

our about So, of our much parts the not business. I so really mean, the was production other aspect of business, it

I in The agree in those quarter. went with Yes. increases would – price that. sort late the of frankly, plus

such that sure And going are that to standpoint. not we didn’t we expecting to to have wouldn’t yes, that’s to those so really be expect would gross from you see like alluding adverse – you lines I in But a that – not said, responses see so I are seen a that. am that just – we tight The window. that.

relates are of and I the it is of going to we ultimately, things to overall contracts relates wide right. it to given don’t pricing the of remember, visibility to we give how nature, have a as that have great because range away much pricing, customers to deal As because have

is And changes X% that comes down probably in half we occur to it a to area. before adjusting is so will pricing lower And comment, how there because a in range. case. my some of point. wider products that price/cost, If lot have other softens and regardless, the range maybe still we that a of wild of the pricing have think, spoken made XQ talked I which up And to say, sort unrelated pricing it’s was that’s a contracts, doesn’t our if yet neutral, was some I will of we an a And standpoint there that out that’s XQ there. of maybe on is I why be point. it however, to and But etcetera, hasn’t sort then I earlier think we will I changes. demand price people percentage percentage zero – that into that point, based sort exists I a adjust nothing little be question bit our some pressure about if think this from is that’s to but in pricing. pricing think about, suspect the card Again, to that

tell just we order hope that’s – and impacted bunch that of know is will to we pricing, don’t And be the But year have we half that to that pricing And the XQ I back of now with in yet. then XQ, so upper to fastener of adjust do becomes had the never you that if of wildcard our of that that range. fastener do zero half wasn’t give what magnitude what upper would a in comes X% I suspect we the range the pricing, I if down. this confusing.

follow-up No, that’s my year. color. for gross would around this Maybe be helpful then margin

like know. sounded – points maybe better. January. also you think neutral, when commentary basis the could maybe be were It in bit points was freight And talked XX basis expecting XXX to better. of we pricing I Price/cost a sounds be may tracking I contraction don’t

that framework about any differently now. thinking So, you are wondering if

Yes.

when price/cost, progressed, elements think think gross surprise of surprise. were how impacting you that out I in – us, most of mix I that’s as believe quarter. The very only it most the in well. is to it, the those that quarter didn’t believe variables again, variables the we margin So was place when We surprise that that impacting we do price/cost freight, playing degree are XQ. expected XQ variables a variable that last Really, that again, going about If of right. the about simply executed talked didn’t that again, that and I piece. was be benefited freight the about And largely

the my differently expectations year, may to the that’s than really quarter’s that out last conversations. year have around from for from increased gross full margin I played one freight variable but it So, expected last –

I one helpful. in squeeze That’s more will I in, Okay. will.

two? Do we have

it. Yes. time. Appreciate Thanks That’s for great. the

Thank you.

comes next line Levinson Our question from Jacob questions. Research. of Melius with Please with the proceed your

everyone. morning Good Hi.

Good morning.

coming anything am some field I just still the curious – smaller it’s days the customers or your competitors? you here, on credit of in of realize stresses if I of just but terms have early I of either very heard impact out

our debt actually were benefit we to this expense seeing significant not seeing anything was quarter. We – a actually are just regarding in a margin business We reduced No. our not bad – our that.

function can fact little a in function despite I sense. that of one, see the still the you not spending get COVID, you to recession? on the last is exactly a able second come the is a XX% the just volatility million-ish that makes then And with capital fact around years really is has of all obviously, the done planning just a partly few the that growth spending down been mean this That things the bit. fact $XXX Okay. just quickly that, growth or quarter are that year I over it haven’t some that

that’s hey, piece. Well, the

we adding are we long-term. need for other The always is what infrastructure thing

now, in about you Worth our think Texas if So, Fort other the on going facility side distribution the are area. what’s on right Denton, expanding of we and

Salt market. a facility Lake building the are distribution We in

have. we so grown capacity all And we capacity we adding the have because are

the of wasn’t the and in now, we adding. vehicles be you that’s if the quite probably strong side And last we about to most I think If on where have the years just stuff think add right recent our then are available. would that’s capital would struggled piece be, FMI, item because that

that the so the get couldn’t is transportation in RAM our the I we trailers are onsite locations. we produced being a ago, We And to. – of wanted side. CapEx get received Recently, say some I our X.X one am of Fastenal way I was pickups picture pleased that up get visiting into to. now semis That coming down the and Dodge couldn’t to of our we a wanted weeks loosening the couldn’t bunch here, way You is line. going production

And we months so X those have to than kinds of months things, and are XX we today could able ago. better get

you. Thank sense. makes That

Thanks.

Tommy Stephens. proceed next questions with of line Please questions. your the come with Our from Moll

my taking thanks questions. for Good and morning

Good Tommy. morning

to the in may which or OpEx. at quarter, employee-related in math expenses from less of half rate grew wanted see. to is assuming than rest the back walk quarter am start the recurs of that great second I I sales, here the off suspect year. on first you the doing us right, If I my

So, you the be you. you extent qualitative that can for for quarter, commentary what would and just Thank frame anticipate to any the would the helpful, year would well. be second as

walk to you that know necessarily don’t I going Yes. I am back.

able understand we last we to growing just right. the we because this year was I year. I think did not way were it’s the are the mean we leverage grew to reason as quickly source, as why important

the emphasize had numbers quarter, if some have a and I incentive that think healthy I the a quarter this businesses. plays we going rest year. of And of that’s year And not as third second about in to as of But still pay the to last well. it lap out, think large as how the In surprise. healthy we the I wanted are pretty that again, we quarter payout so wasn’t

payouts second expect that healthy have do quarter. third will And we quarter the so and I in incentive

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to And element of lower going we for leveraging the of of so payroll-related that have, that think sort year, in most I us year-over-year expense. are the the pay helps that incentive

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off and higher So, QX. just nominally in drops then

buffer was the a what’s problem year, on positive, and relative quarter, to a happening our happening it same quarter prior the third what depending turns the growth and quarter and a quarter in unless in the second first in us here gives bit would of So, with the of surprises economy presumably earnings to more that and us great that have. be

you. a base the to my terms and helpful. you pre-pandemic level to wanted question. framing appreciate the asset higher Thank in insight The provided very was intensity structural strategic the versus shift question I for and improvements leverage second of on

is progress those some And both so there of initiatives. on clearly

on Are that the focused some any of Thank driving for to XXXX, you through point? this If would the are year? still this attention at there you are our of key really draw about organization what focus work that areas, think ahead you that’s you. the you

first. of That’s a we the includes a If often within our FMI, in number Well, great efficient to both we changes really things of to covenant impact etcetera, making serve channel, flow, in of our great the products customer products, products, channel are I price. through your not a our finding acquisition cash going about come question growth as very quality that drivers mind our what One, availability talk versus customer high are great come customer. and tool of growth the onsite. physically level, about respective things. at if reliability we level first think with brands And using is. of you what to structural me, far what the of for think drivers But of mind standpoint as then is

X back be the several to and elements, back the could took as of piece those but working last worked to tremendous things through. take months. lot products chaotic a that go had we over actually we sheet XXXX, of late One availability, amount had been XX And inventory our capital a balance on of in were years safety because months onto

strong on weeks hand. year, I we very, think when very year, we as So, I take in a flow the out of our of envision quarter cash this inventory can days, not saw first because but

last We at really $XXX,XXX a unit. unit-by-business of to are at you that the of that externally, because a assets, local we level. month inventory, in branch did have And look business because managing we few supply COVID, what things accounts vehicles. inventory talked and annual we is, But statements, like years the inventory. what three inflation, that call the in as receivable haven’t about we We of been is XX. help. than allocation basically look for local optimal CFO all strong we internally those distribution say three of a today things we And would, XX years chain branch, us an sales. a these those if that better place to Then It’s put well financial fully able at our ago. And together, look We loaded and a you sign our our internal our of that’s as look XX%, at XX% look month of Drive our $XXX,XXX receivable at would disruption. through drive at number, we accounts two relationships because towards the

But what have get are to inventory if position get path. going we are either in chain down believes I believe this network, continue and guy, if great pulling right, growing allows or through – us make – moving of it’s I in when am well, know to when puts don’t but to in number. towards XX. are XX. probably XX international to is Holden you the because XX% us Holden the we we conceptually, footprint. you you supply visibility inventory are a me can We more more and revenue If with rationalize to our right really a the FMI that of, is really can cool He I

the and We – can need. in both last you have ports that it through a standpoint kind aside great this the extra both aside, like you visibility of an taken days the manage Setting hey, oceans it’s more that to get that. disruptions shine stuff model and saw have and allow XX from with, And to standpoint. it’s setting working needed you across and year capital through from inherently And a cash for seen an that pool human efficient our capital quarter. you to

our the here it our about in seeing operating people questions through cost. are expenses, of shine You particularly components

down yet. to now than on that standpoint, velocity of lot place, import were role, system EVPs far probably we advantage years, that behavior can in pandemic we sales years pre-pandemic. will A we get But we things doing lot don’t that will four the that months, have taking to to sort the of about happened, we I are things had ordering. I seven from add right. benefit to more probably, all footprint, would thing things. to have Right is to to the work way months seeing our our are those plenty think if taking necessarily our advantage our advantage you go of how there lot today, are lift, to of there. room business advantage the is taking it’s EVPs. and only we from think X that. but we window say back And there, to be talk things for months we in to Taking those a believe think I new in us still if room our during off. run as of inventory an X nature. were installed, closer When the still mean And that still our purchasing all know maximized we constraints doubled we inventory We the future from things more now, I digital put already about to we or is, the when of the of specialization, branches, of we that well, I sales haven’t where of changes efficient of probably that eight will a get improve to went you the we there that

more Our fulfillment But a rates still there lot are higher. to room go. is

intended about the again, the but road have become – point progressed as still has say nicely, business to comments have that was It And down we we that to road room so run. we where a our make have was we arrived. are to

Great.

watching to the will We progress. will I it look turn forward back.

Thanks.

hour, we we think time see look and left. question. I the more have for there one If I minutes finished one is it’s properly. four to

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UBS. the of Chris next The come line Sure. Snyder with from questions

one the maybe I you. question. Thank for guess

negative we change sounds month? throughout or Specifically, it March that out month of that’s half color saw back product more lines rate last ones guys than are weak the international It kind looking softer markets you Because a three end was of kind ended on been the quarters. stuff the for the like started. customers, softness. construction called of for retail the Any

you get anything the or of as see month weaken went those on? just Thank did you. kind So, did weaker, else

it bit month specific within be the have don’t particular tricky I for within great Louisiana. demand, certainly, outside visibility of still manufacturing, the would you was will What can that [ph] overall most oil little and a part. is I and a you within what Texana – good We is And positive – on into markets a month. end within tell fairly gas the really there. still oriented, But region, tell outlook that’s bucket. which Very Texas our

just softened through to was market have And or is manufacturing is think things that well. little of you. not had you pretty market a regions in March. And specific doing piece. space, any our Frankly, what isn’t majority I an variation I tell some all one will the of other observation. the it And this This broad so vast add stand.

from for advantages a the there the worrying are of a want is one few were things months tremendous last with doing operations our standpoint you days. discussions that six global entities, had when is looking you start are ago. top what the repeating help – that’s And you business to a of customers, and part XX, us look you customers haven’t economic. – XX I a they world customers talk if our we XX positive quite was you the are events. where months if and of a XX And trying or to from to there little our dial noise It when ability through ours we customers and bit, there the So, our ours lot less of our done here at that’s in the at our XX contracting if what the market intersecting But were about, is people business. learn they I months itself, that the of because top you are of top, that’s over kept top really look XXX even months we less of to itself end or few about all if you growing. a – potential for our customers And take is – XX and were think last at breather, customer said, hurt or technology sudden, XX, And the share. reason we things

And long-term, look every going is that nicely enthused. XX is we economy me the is were market growing The more you picking XXX, going customers makes do. day. from through our share success up because what short-term Because do they taking are at economy share. in If to the market to

the return cash to this. We as year generate hour. year focusing With flow it’s today. in am this, I of the deploying a Fastenal Thanks on like healthy a will have like for ever. the business, your be business. would April. more have the interest as a great more the Thanks business. we We maybe and it’s the that, flow rather opportunity excited of in shareholders. everyone. in the at case long-term on cash We But But into Everybody,

conclude This today’s will conference.

disconnect may this you participation. lines at Thank your You your time. for