Investor Teleconference Presentation First Quarter Fastenal Company April 12, 2017

Transcription

1 Investr Telecnference Presentatin First Quarter 2017 Fastenal Cmpany April 12,

2 Safe Harbr Statement All statements made herein that are nt histrical facts (e.g., gals regarding Onsite and vending signings as well as expectatins regarding capital expenditures) are frward lking statements within the meaning f the Private Securities Litigatin Refrm Act f Such statements invlve knwn and unknwn risks, uncertainties and ther factrs that may cause actual results t differ materially. Mre infrmatin regarding such risks can be fund in the Frm 10 K frfastenal Cmpany fr the year ended December 31, 2016 filed with the Securities & Exchange Cmmissin. Any numerical r ther representatins in this presentatin d nt represent guidance by management and shuld nt be cnstrued as such. The appendix t the fllwing presentatin includes a discussin f certain nn GAAP financial measures. Infrmatin required by Regulatin G with respect t such nn GAAP financial measures can be fund in the appendix. 2

3 CEO Messages n 1Q17 EPS $0.60 $0.50 $0.44 $0.46 $0.40 $0.30 $0.20 $0.10 $0.00 Daily Sales Rate (DSR) Grwth 10% 8.8% 8% 6.2% 6% 5.0% 4% 2.7% 1.5% 1.9% 1.6% 1.8% 2% 0% (2%) (2.0%) (4%) Demand gains drve daily sales grwth f 6.2% annually, the fastest since 1Q15. Fastener sales returned t grwth, and nn fastener sales grew 9.4% (and duble digits in March). Pre tax earnings grew 5.5%, the fastest pace since 2Q15. Achieved 20 bps f perating expense leverage, which cntributed t an imprved incremental perating margin. Strng cash flw driven by seasnality, lwer capital spending, and the absence f incremental CSP 16 investment. Clsed acquisitin f Mansc, Fastenal s largest t date. 3

4 1Q17 Grwth Driver Update Onsite Signings and Active Sites Signed 64 new Onsites, finishing with 437 active lcatins (up 51.2%). Our gal remains signings in 2017 (versus 176 signings in 2016) Signings Active Sites Signed 5,437 vending units, up 17.0% annually. Sales f prduct thrugh ur machines grew duble digits. Our gal remains 22,000 grss signings in Vending Signings and Installed Base (in Thusands) ,430 5, Ttal Natinal Accunts sales rse 9.2% in 1Q17. Sales t 64 f ur Tp 100 custmers grew in the perid. Daily Sales f CSP prduct including CSP 16 stck put int the stres last year rse 10.4%. Signings Installed Base Vending data excludes units assciated with ur leased lcker prgram 4

5 1Q17 Business Cadence 15% 10% 5% 0% (5%) (10%) (15%) 15% 10% 5% 0% (5%) Prduct Categry DSRs 9.4% 0.8% Fasteners (35.6% f Sales) Nn Fasteners (64.4% f Sales) End Market DSRs 6.4% 6.0% 4.0% The U.S. PMI averaged 57.0 in 1Q17, vs in 1Q16 and 53.3 in 4Q16. U.S. Industrial Prductin (IP) was +0.6% in Jan./Feb vs. 1Q16 and +0.3% vs. 4Q16. Fastener sales grwth turned psitive n better macr trend. Nn fastener sales accelerated and were +11.8% in March. Sentiment is strng in cnstructin and il/gas and is firming in manufacturing. The chief laggard is transprtatinrelated manufacturing. (10%) Heavy Mftring Ttal Mftring Cnstructin 5

6 1Q17 Results Summary Annual Rates f Change 1Q17 1Q16 % Chg. Dllar amunts in millins, except per share amunts Net Sales $1,047.7 $ % DSR Yr./Yr. % Chg. 6.2% Grss Prfit $518.0 $ % Grss Prfit Margin 49.4% 49.8% (40 bps) Emplyee Related Exp. 3.7% Occupancy Related Exp. 1.2% Selling Transprtatin Exp. 20.6% Operating Incme $212.5 $ % Operating Incme Margin 20.3% 20.4% (10 bps) EPS (Fully Diluted) $0.46 $ % Onsite Signings % Vending Signings 5,437 4, % Stre Cunt 2,480 2,626 (5.6%) Stre FTE 11,197 11,380 (1.6%) Ttal FTE 16,756 17,045 (1.7%) Operating Cash Flw $210.4 $ % % f Net Earnings 156.8% 131.9% Capital Expenditures (Net) $19.1 $28.8 (33.7%) Dividends $92.6 $ % Dividends Per Share $0.32 $ % Share Repurchase $0.0 $59.5 Ttal Debt $365.0 $370.0 (1.4%) Tt. Debt/Capital 15.6% 16.9% Percentage calculatins may nt be able t be reprduced due t runding f dllar values. The grss prfit margin declined mstly frm mix changes, as well as higher freight csts (increased activity), and expenses related t an inventry tracking initiative. Gd leverage f emplyee and ccupancy csts, supprting an imprved incremental perating margin f 18.5%. Higher fuel csts lifted transprtatin expense. Price was nt a factr, thugh cnditins are increasingly inflatinary. Headcunt was lwer annually but ticked up sequentially with business activity. A lwer stre cunt, including frm 4Q16 t 1Q17, reflects the clsure f lcatins that were able t be cnslidated int nearby facilities. 6

7 1Q17 Cash Flw Prfile Operating Cash Flw (Millins f US $) 131.9% 156.8% * Percentages abve the bar represent OCF as a % f Net Incme Net Capital Expenditures and Depreciatin (Millins f US $) $28.8 Net Capital Expenditures 2017 Net CapEx Target: ~$119M $19.1 Depreciatin Operating cash flw was up 26.4% t a recrd $210.4 millin, r 156.8% f net earnings. Seasnality, better earnings, and the absence f spending related t CSP 16 cntributed. Net capital spending f $19.1 millin fell 33.7% t a six year lw due t lwer spending related t CSP 16, distributin center prjects, and trucks. We cntinue t expect net capital expenditures t be dwn 35% in Primary uses f free cash were dividends and the acquisitin f Mansc. Ttal debt was 15.6% f ttal capital, dwn slightly frm the prir year. 7

8 Appendix Nn GAAP Financial Measures This dcument includes infrmatin n ur Return n Invested Capital ( ROIC ), which is a nn GAAP financial measure. We define ROIC as net perating prfit less incme tax expense divided by average invested capital ver the trailing 12 mnths. We believe ROIC is a useful financial measure fr investrs in evaluating the efficiency and effectiveness f ur use f capital and believe ROIC is an imprtant driver f sharehlder return ver the lng term. Our methd f determining ROIC may differ frm the methds f ther cmpanies, and therefre may nt be cmparable t thse used by ther cmpanies. Management des nt use ROIC fr any purpse ther than the reasns stated abve. The tables that fllw n page 9 include a recnciliatin f the calculatin f ur return n ttal assets ( ROA ) (which is the mst clsely cmparable GAAP financial measure) t the calculatin f ur ROIC fr the perids presented. 8

9 Return n Invested Capital Calculatin f Return n Invested Capital Recnciliatin f ROIC t Return n Assets (ROA) TTM TTM TTM TTM (Amunts in millins) 1Q17 1Q16 (Amunts in millins) 1Q17 1Q16 Operating Incme $807.1 $826.2 Net Earnings $507.4 $515.0 (Incme Tax Expense) (293.4) (307.4) Ttal Assets $2,714.6 $2,533.4 NOPAT $513.7 $518.8 ROA 18.7% 20.3% Ttal Current Assets $1,789.0 $1,698.1 NOPAT $513.7 $518.8 Cash and Cash Equivalents (142.4) (135.7) Add: Incme Tax Expense Accunts Payable (144.1) (145.4) Operating Incme Accrued Expenses (171.4) (174.1) Add: Interest Incme Prperty & Equipment, Net Subtract: Interest Expense (6.8) (4.1) Other Assets, Net Subtract: Incme Tax Expense (293.4) (307.4) Invested Capital $2,256.7 $2,078.2 Net Earnings $507.4 $515.0 ROIC 22.8% 25.0% Invested Capital $2,256.7 $2,078.2 Add: Cash and Cash Equivalents Add: Accunts Payable Add: Accrued Expenses Ttal Assets $2,714.7 $2,533.4 * Amunts may nt ft due t runding differences. 9

10 Sequential Trends Cum. Chg., Cum. Chg., Cum. Chg., Cum. Chg., DSR BENCHMARKS Jan.* Feb. Mar. Jan. t Mar. Apr. May June Jan. t Jun. July Aug. Sep. Jan. t Sep. Oct. Jan. t Oct. Nv. Dec. BENCHMARK (1.1%) 0.9% 4.5% 5.5% (1.0%) 1.9% 1.8% 8.4% (3.7%) 3.8% 1.8% 10.3% (2.4%) 7.6% (3.7%) (6.9%) 2017 DSR 0.2% 1.5% 3.6% 5.1% Delta v. Benchmark 1.3% 0.6% (0.9%) (0.4%) 2016 DSR 0.4% (0.8%) 1.5% 0.7% 1.7% 0.6% (0.2%) 2.9% (2.3%) 2.4% 1.5% 4.5% (0.9%) 3.6% (5.5%) (6.6%) Delta v. Benchmark 1.5% (1.7%) (3.0%) (4.8%) 2.7% (1.3%) (1.9%) (5.5%) 1.4% (1.4%) (0.2%) (5.8%) 1.5% (4.0%) (1.8%) 0.3% 2015 DSR (3.6%) (0.1%) 4.2% 4.0% (2.1%) 3.4% 0.9% 6.3% (4.3%) 4.1% (0.9%) 5.0% (2.0%) 2.9% (3.0%) (8.4%) Delta v. Benchmark (2.5%) (1.0%) (0.4%) (1.5%) (1.1%) 1.4% (0.9%) (2.1%) (0.6%) 0.3% (2.7%) (5.3%) 0.4% (4.7%) 0.7% (1.5%) 2014 DSR (1.4%) 3.0% 7.1% 10.3% (2.6%) 4.2% 2.5% 14.8% (3.8%) 5.8% 1.0% 18.0% (1.5%) 16.2% (2.7%) (5.9%) Delta v. Benchmark (0.3%) 2.1% 2.6% 4.8% (1.6%) 2.3% 0.7% 6.4% (0.1%) 2.0% (0.8%) 7.7% 0.9% 8.6% 0.9% 1.1% DAYS COUNT TOTAL * The January average is based n the histrical change in January vs. Octber. All ther mnths are sequential. NOTES: In 2017 Easter will fall in April (in 2016 Easter was in March). We began t use a benchmark based n a five year average ( ) in Previusly, we used lngerterm averages. Amunts may nt ft due t runding differences. 10

11 Emplyee Statistics Abslute Cunt FTE Cunt HEADCOUNT STATISTICS 1Q17 1Q16 Change 4Q16 Change 1Q17 1Q16 Change 4Q16 Change Stres/Onsites 13,169 13,658 (3.6%) 12, % 11,197 11,380 (1.6%) 10, % Nn Stre Selling 1,578 1,609 (1.9%) 1, % 1,535 1,551 (1.0%) 1, % Selling Persnnel 14,747 15,267 (3.4%) 14, % 12,732 12,931 (1.5%) 12, % Distributin 3,375 3,466 (2.6%) 3,403 (0.8%) 2,407 2,452 (1.8%) 2, % Manufacturing (4.4%) % (3.4%) % Administrative 1,085 1,133 (4.2%) 1,086 (0.1%) 1,027 1,051 (2.3%) 1,039 (1.2%) Nn Selling Persnnel 5,075 5,242 (3.2%) 5,083 (0.2%) 4,024 4,114 (2.2%) 3, % Ttal Persnnel 19,822 20,509 (3.3%) 19, % 16,756 17,045 (1.7%) 16, % NOTES: FTE Full Time Equivalent. FTE is based n 40 hurs per week. 11

12 Stre Statistics STORE STATISTICS New Stre Openings 1Q Q Q Q Cumulative Clsed/Cnverted Lcatins Clsed Lcatins Clsed (Curr. Quarter) 0 0 (1) (5) (5) (4) (3) (13) (13) (12) (26) Clsed (Annual) (1) (8) (10) (7) (28) (16) (16) (73) (50) (144) (26) Cnverted Lcatins (Annual) Stre t Custmer Only 0 (2) (1) (1) 0 0 (2) (2) (6) (16) (2) Custmer Only t Stre Cumulative (1) (10) (11) (6) (27) (13) (18) (74) (56) (159) (28) YEAR END STORE COUNT 2,160 2,311 2,369 2,490 2,585 2,652 2,687 2,637 2,622 2,503 2,480 NOTES: Includes 2,182 stres in the U.S., 196 in Canada, and 102 in the rest f the Wrld. Year End Stre Cunt includes all lcatins that sell t multiple accunts (traditinal stres, verseas stres, and strategic accunts stres). It excludes lcatins that sell t single accunts (strategic accunts sites and Onsites). 12