FAST - Earnings call transcript Q1 2022

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Operator

Hello, and welcome to the Fastenal First Quarter 2022 Earnings Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Ellen Stolts, Investor Relations. ahead. go Please

Ellen Stolts

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

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

Dan Florness

joining Thank call. QX earnings and morning, for you our good everybody, you, thank and Ellen,

and of got I video, leaders a quarter chain see you from morning completely did the And disappointing. VPs long two watch. yesterday just that X:XX. and a as human come she problem it, others you're hard necessary we of what painful fact, bus kind she about she isn't It years the the video. COVID pivoted telling products, led how that under-inspiring Winona last was demand yesterday a high my style at we our got with customers wife the had from from of COVID, a a I vice Fastenal, pride And XX-hour ride handful conversation work business says Before I the quarter to chaos kids and of there. good the our and to there's and am it from make the like few I a pretty speak proud is things support Frankly, She that after don't just that daughter great the should commenting safety from thought good in And of bus started presidents important about our That you involved unit all the sharing for school the the leaders, it's regional haggard two of they've on middle And she video, we probably I'd with off, was last doesn't was the commented just if to in a coming I leadership recently, book I statement that and and marching about bunch and And I down to kind as just and first doing afternoon, our was fell thought ride. damn for regional a it you as in sure wife that. can they say their too that week morning or it the last of talk through said, regional -- from a this years, a And on out. to now, sounds band. and evil watching home watch the our are. great inflation. in had a in bullet done that a put organization apart I brushing are a haggard and of this by had how surge that in think on and when execution. has execution, is, late I and And evening, globally like manage a within impressed own And transition our and bus video worrying my present you band that adults of that a to share And managing it's flip off I through XX, tidbits me into trips, everybody the the you partly, than more you're start, no business. our bus XX-hour but involved evening ride Wednesday I tariffs needs, all. to home, my supply how people most trip things typo to But in you at tired well, your and safety it get saw last Florida, that returned to you and more back. the myself message present video, that your

XX%. said, this that and and I growth be pleased years, think the little operating two really job did said our call, And was our quarter Committee at he's was think lately. talking six associated picking in CFO you at extended bit, about I but and with it, in of I and Blue he we kind an proud look unbelievable think our look Audit him, have I'm I what flow. crabby our at in our year, flow been look them. last kind at Fastenal with to on Team I of and And kind strongest years, yesterday really cash refreshing your good earnings into and was Holden crabby were of Even quarter, last it's a the to a was it take he the to cash wasn't Holden, and a

amplified I working right a heavy think in and money that might you that money inflation And grow 'XX, was business, quarter is like that of have we're XXXX to and have now. been first it spent costs gets seeing when capital. distribution

doing, too hard to now imagine So I'm glad on don't can't I when come work. what home but irritable. be everybody. you're irritated right you're from being you But and thanks

book net the XX.X% to flipping sales So quarter. in here. The grew the first

and grew that very with were seeing improve put add ability eight Oklahoma but our in continue performance labor, sales Our a amplifying our markets into the for a there. recovering it XXXX, started, the strong well performance. us pleased since years and six, the our hurt energy to line some our pretax that but those, technologies that And There bottom February the decade. so of And because tight. And economy, restrained add from in really we've the XXXX energy in strongest years, right mass in the top grow hurt adjusting time pandemic this been profit growth ability really branch 'XX, XX%. the lot weather served in write-down. the we've our consolidation frame quite ago, the since efficiency. and in two year's now, hasn't sales so a growth has to environment experienced 'XX we we that and seven, process organization, deploy to to we're supply so And that the also is -- in It's Last last area started was frankly. The to just chains the then had effects. we hurt we Texas really saw remain strategies

have However, applications leaders, getting I'm Part needs, products an area in in. full more number of we on their and are willing stabilized. the people support which We're back mostly seeing they're tech business for but chaotic. uptick come apply colleges and opportunities and have two-year the of it anecdotally coming the more shelf the regional from hearing is our to and to And a are seeing come less makes And more of group for recruiting state they future. force, for our that back in jobs. four-year function as that do is looking one colleges workforce probably conditions people

we've table thought exceeded for is we so towards But a it in than than next person. In we at -- air falls reached time. new sales book last the XXXX our comparison which week our the in last we and then And it Flipping in because, week. month our the turnout the get X two two selling into steps the to period, be period, enter years three the customer business next less of expo, we'll $XXX less an broke this our and international will is to years Our One event. will our becomes after Page this the world. frankly, returning community local Saturday, quarter that the normalcy to a done satisfying million two of the in video we continue be after this is, marks version, March, good event quarter quarters. like we Wednesday the quarter, not milestone. And put annual in COVID as that where obviously, in-person a on in two-year or Tuesday, next sanitized as this to square of exit hold occurring meaningful. person meeting of format we'd we And first to comparison XXXX

XXXX, for should today, administrative fact least XX.X% able a I make of we've period. that were the higher. the years to me of actually to two-year that and down selling and down masks of to we March we trying probably have COVID two disclosure to And shows operating period efficient. like margin the others, think last lower people bit uptick. felt little started where and the probably and as in are we there. during get only that's uptick pulled an of saw COVID gross dropped in is that with X. through flat our ago item here, bulk a organization expenses from XX.X%, accomplish thing it the jumps January we confident One in today had out Page the a to and I we were misleading it with finishing there's sales we the XXXX here is things actually just actually less on more of quantities XX.X% would this that express out of February at is X,XXX. more It's We and our jump more you're slightly. to world, sales am see really full Well, comfortable to bit drivers and get distraction years. XXX in at just profit chaos always quarter, that signed our worked When Flipping our two this as of our engaging entered in period. the that And growth margin Onsite

ago. you So, of the for performing to it number challenge we XX% you the our is active to what unit that healthy business over continue And Onsite we the be and that up branches with to for do customer last from we're our like us. both decade, we've year need thing, and is, just done sites every had business a

where let's we into for the is it's where to we to serve of we at and month. branch $XX,XXX a a solution evaluate to customer sales what the business. $XX,XXX We that, was customer But for or $XX,XXX in a we best Sometimes, a our always maybe number, get that we kind situations there of a even that. double say triple point and and $XX,XXX, have get stuck ability doing take month that run we the

it's And back the it into sometimes brand. pulling

the case, the for out runs it's customer us. Sometimes of space

up service somewhere have an use. of a started saw that on-sites customers we with ability the plus we their and months, It it pick some expanded somewhere we've And that we've a of we were consolidating signing decade it's visualization closed excited to else. means signings, we consolidates a business, and last about this and and but in else and six it particularly, seen what Sometimes, we're we that Technology, some have think pleased the this we've ago, of other customer the A on-site have had better next great first a we're point day. really are we with but at operations, week year bending or technologies. thing was and -- ago, what few bunch quarter FMI and to going. in it's keep event XX-a bringing about with

the we quarter for Onsite This year goals And XX our plans FMI, signed a than We unchanged. the the ended started quarter, stronger for quarter. we -- day. our and remain

was the the a first we was still was are FMI ago, our represents first many dabbled now the quarter Times too of XXXX, team it $XXX last decade was now driving two in I the a to XX.X%. million March, that In month ago, milestone. We're growth not years XX.X% it thing. XX.X%; Technology a them in going the small international e-commerce And it So, And exceeded 'XX. E-commerce, really out and hit time. fact like A in, wasn't also year XX% years XX.X% when ago, million of Company revenue it for in relatively group, keep piece. It's changed our the $XXX sales. we something pointed e-commerce but international think of and we both but businesses. was have now of that.

roll XX.X% a Technology digital our about if We of in ago, XX.X% ago. you e-commerce, quarter, we footprint. up talk XX% year our in sales two the Finally, our hit years FMI

that and future. hit that, to been support be later is in And over we're chains the to we of long still some chain business and supply it kind that our sales goal in has gearing Our year. XX% XX% to have term, gearing at turn of With I'll sales, believe that of to potential supply our the point Holden. the

Holden Lewis

Thanks, Great. Dan.

on in the be XXXX. Total Slide I'll quarter first starting increased X. So sales XX.X% of

across XX.X%, we to growth not basically all fell I customers, in the points I'm that impacted by growth all selling share government levels. point set. large the recite numbers weather were to markets. periods adjust small on major by going this they across pre-pandemic our in period. for are basis both you nearly from were and If product XX think experienced end the XXX this, day up extra contributed consistent period, the because adverse most in that And the were net categories, increased sustained strengths would but gains exception customers The and main sales our that really that the to year-over-year, to XX% effect customer I page broad-based out which X.X% reflects

first not carry lot XXX their sales So as taken force months quarter stabilized visibility, points costs Input to very mostly XXX have the growth the our with always, high nine a field actions notable of our to continues forward business a of does outlook maintain levels a XXXX, last inflation. to over at exceptions. few offset but positive about in contributed reflecting to markets. basis Pricing

fleet cost flow fasteners will prices stainless steel captive prices our nickel cost higher instance, for oil through For shipping vehicle affect while will the to higher services. overseas and fuel of of the

is What constraints relatively about managing prices is effectively additions high chain This and It is supply with growth the for smaller for which strong steel improving we signings before we of inputs and the in these page, our as XXXX pieces higher and and and supply this high Price I'll stainless more transportation-related remain FTE second is our the on should are pricing we is. changing contribution in still thing chain address fasteners labor through believe targeted are in can and well last environment. internal into driver XXXX. quarter of in reflected products. relatively The March. customers running on as second of tougher half surcharges -- and a described marketplace comparisons As increases. say grappling this February this is business,

disruptions So while predictable environment. surrounding persist, receded, has resulting in chaos a them more these the business

XX.X% the Now of XX.X%. to of XXXX an from margin Slide in in XXXX X. was first quarter good and the quarter Operating margin for XX%, first up incremental of

levels. adjusting incremental of the basis even margin the While was our XX.X% solid relates of which the still the first the year COVID-related Those and earlier as since pre-pandemic significantly entered year's was XXXX, of expired Gross supply contributor leverage. lower sales commitments were favorably of margin, provided absence to margin growth returned the this, cost increase XX% points of mask excluding In of the have was had period, XX.X%. write-down margins under which largest XXX versus contributor loss year-over-year impacted start masks safety last we of branches supplies absence we and increased had quarter of year's supplying freight to our the a smaller key up to was product margins. this compare, daily improved on to in customers first for The commitments have effect write-down. into freight that product next at a the write-down. Half quarter XXXX. the last of service A strong COVID-related sales pandemic, even narrower

neutral customer gross account remained largely by the in greater drag national produced the than price/cost of basis to strong margin positive Our a impact effect sales favorable mix roughly Onsite a slightly with negative gross XX points mix. was to a fastener and margin impact having and

vending traditional Our of XX occupancy slow has relatively this at an leverage sales operating XX points first in with branch points the basis of reduction been effect operating leverage of over to what base. to expenses installed a was point, XX.X%. XXXX, expansion modest We ratio quarter XX% better count our related being to achieved basis the in and expense our of

base pay. We also achieved over good leverage employee

employee expenses expenses, fuel costs, and, strong and care are health offset that tight higher labor sales. March costs. mostly growth to incentive rising profit-sharing travel payouts, lagging These continues to employee market areas encouraged FTE the growth produce by lesser higher base, a is FTE February we were by degree, the higher While our in

first we EPS $X.XX, the first in it XXXX of put quarter up $X.XX XX.X% reported quarter you of all If from together, XXXX.

first $XXX Now is We which the exceed roughly period. in of our Slide million income. quarter X. of turning XX% operating Traditionally, in the quarter rates XXXX, to conversion generated net in first cash income net

premium put of demand, chain a customer and inflation and working supply a on robust investment high However, combination availability constraints, capital. product

we to lower our customers. As a rate commitment conversion as our reflecting view supporting result, the

in the ease, constraints an the which our quarter capital demand XXXX, of improved we see traditional in result of we chain improves up first as is physical to inventory receivable tend XX.X%. hub period. was Inflation of of prior terms increase. increased products in the as automation inflation roughly equipment. availability in level to rising capital rates XX.X%. spending strong decline from total the and million and to for was Quarterly quarter supply for of through up up for of conversion should accounted increase longer of million, improving customer reflects mix first $XX flow This quarter go through that but and year As year the $XX expect inflation product spending year. fulfillment vehicle is pick XXXX accelerating Inventories an and hub from and manufacturing IT balance Year-over-year, rates. accounts availability the hubs, and XX% the advance. construction equipment, which Net the upgrades with spending rates up of significant, accounted versus and have FMI projects fourth is the XXXX when were That's the roughly customers, a X/X the it and of

range $XXX And dividends. we $XXX the form which prior to in quarter of continue from liquidity down period in We the shareholders XX.X% with first is and result, a of a from total in returned quarter quarter spending fourth million capital, versus XXXX. the to debt in anticipate XXXX XXXX million, of unchanged standpoint, capital to a the quarter. in As XX.X% the of finished cash from at the year we ago million $XXX XX.X% net

available remains for Q&A. revolver turn we'll operator, With that, Our use. over it for

Operator

you. Thank

UBS. from question-and-answer a Our Snyder first Instructions] question conducting is be we'll from Now, session. [Operator Chris coming

now You live. line is

Chris Snyder

a My on incremental like the few select they're cost inflation think that question pricing. product high where stable on opportunity there's price Company strong costs The I is seeing but on the are for quarter. seems going lines Congratulations it price noted forward. and

guess price rest relatively So assume I levels? over of we is. my to the QX question Should 'XX unchanged cost relative

Holden Lewis

price going we're of We assume continue to over year. be to the the neutral cost that course

standpoint. into pricing and begin from If your what degree, as the into to expected? to mind, much QX, we're higher some get going particularly QX we question of but QX, Bear we level pricing is to that, we comp is, year-over-year as against move in a

so that actions our I but in still QX that is X% runs to we you'll north stable quarter, and be pricing last own remain year's comparisons. And contribution and my in tougher that of drop begin price the the sharply on as expectation fairly pricing fairly see second will think into period, QX

Chris Snyder

their I the was to the spoken wondering, for I that spend per just ask Company naturally give targets of I is share customer model that. maybe know location. volume appreciate commitments that to there the Onsite can potential wallet follow-up, as any agreements around a slowdown. Onsite into Onsite declines? And these then higher wanted Company accompany has I of activity macro the sort a revenue

Dan Florness

an Fastenal to And personnel I their add add inventory represent into it's because together I capital. that the Onsite putting to visit share a that to what a which add some fast their that When napkin their hard the find customer information support et says, up will to hey, There I when Onsite this is cetera. represents are their there, frees you on their need to of personnel, about and about it's we to types them? employees wallet business, -- you for our very It customers' let's many grow faster be calculations need and sometimes discussions how that an Onsite, on work and partnership. motivated see their isn't up And partnership activities, demand, working can But do based spend sign based to number. need business spend, OEM about at facility. often Fastenal to about footprint. does targets what What really rule a information we have frees says,

thing a have don't to vending it's demonstrate really onset resources. that our our home. we now months them. wallet brought go have drives program and customers, So had in program right what you way six that's for them it's working the to it's for a hold Resources reserve with going -- point this we our customer to to business. to would normally a into great are and we're a to same bringing product our we that program. It you branch obligation of and isn't must up contractual managing right not actively says the doing or resources or it us and ultimately That's different say what What and use that of about, a the it, ultimately things is frees aren't gives contract. do you that But into you footprint. it in you the else, ball the share our take And for what if this

Holden Lewis

versus industrial necessarily model the But Onsite we our cyclicality. the our in have a thing. down anything sort think and MRO any the market believe that Onsite does either mean a I period where of we're But cyclicality the great profile. we're as indicated, in gain contracting. where we'll to Dan share can don't in whether I share do or don't a market Onsite I with gain cyclical diminishes marketplace is tamp maintain a a Chris, still So that regard. environment, We but period is growing platform, exposure

Dan Florness

to add that. I'll

it shine market We lot growing. through in sometimes that the there's share. a have numbers doesn't headwinds. It's always just of We're relatively because low

Operator

Manthey Next question from Baird. from is coming David

Your line live. is now

David Manthey

in expectations automation tools labor year? technologies. these versus for historical maybe First Dan, will you've you expectations that both off, and you to to and your the for internal growth Company, FTE continue And type fuel then, customer-facing could across growth requirements discuss this of that's especially long-term and trends, needed deploy light deployed revenue

Dan Florness

are throw and would as have we holdback, the like it's individual we've part see. positives, I negative growing step from growth still And it's applications. frankly, digit said sometimes of going have because have like in quarter. didn't environment some just our point quarter. first in spot need new at their Even that Onsites a transition -- that the seen to we than when plays And to let's I the to only double when case if to the we wasn't a out percentages. step we tick add to it. I branch, we to that of -- and and branch. are I we'll we quite is, sometimes in out as And but how was second employees the beyond. percentage we of quarter we to we'd going sales staffing. as say fewer have if some into employees the know And and Onsite, single-digit with Onsites an in peak I'd percentage the see We into the that -- the out a XXX need look negatives, that will to implement out do hesitate to better We what the but that -- one third low a of move through up operating than back you in individual quarter that into have have jump ready And ready many add, say, with process, I pulls but seen standpoint signed

Holden Lewis

profit about are commit. And not to labor, about more it. the talk about very we profit by Dan's business. that And have that that think dollars managed our that's we labor today, with we driving we think a produce that an to is when productive I we on less tend what we And dollars. understand about at than about that, has total to growing dollars that $XX at to more organization, And well look the that percentage uniform how here that it would billion gross labor sure in Dave, company and slower pathway objective. field. in an think organization, one in I with labor labor that from nuance are dollars about dollars we beyond gross pretty more But as the and communicate tend our we come FTE being an And for of exact growth think, we we we where every dollar as the our point, to I'm rate tend

David Manthey

I maybe and growth because could were thanks, this bit identical revenue but quarter, in Holden. down you quarter, just and have And XX% growth on we it's the pretty did little OpEx one at drill a that Yes, first X% know price.

is, bit. we you question see despite to here, leverage generalized So as And in on outpaced fact on elevated, what that that environment, the go SG&A growth just better of assume your going should your future we OpEx quarters? stack forward cost based should in the that be you the is a inflationary kind said

Holden Lewis

to of comps performance quarter, into the to of just we partly of move don't rate pandemic. I half back That about was of to last out is I great in the here's think where able in growth be that think the because I plays quarter about for setup the as coming year. the thing because second begin from rest about a believe prior year. quarter, of to incentive our terms third the the up see year how of talk year, it going pay, expectation. the really business. the instance, it And for first versus and fourth reflects that that's Again, the the you the the quarter, performance If you're of in ramp prior XX%

in that health in costs to settled you surprised in with the going very which And QX. as you're get incentive the as really XX% general And that I see don't pay the contributed where is insurance QX, QX, pandemic in similar wouldn't dynamics so magnitude it QX, be think have instance. the anywhere those order QX of in, of costs came care of they I and first if supplies, that was up think near in and into something was same of comps you sort drag what half drag down QX, Travel for I growth rate you get quarter.

quarter. second the could flat half. It than to less going in XX% that's I up back be think the in be

quarter you of the So we year. think some second the year that don't leverage seasonally, third drag should go higher in I quarter, a balance be going first and prior versus reflects And first in of quarter, to of the think cost experienced into a degree the lot saw the in comparison levels, of as areas just same I that the our have on this lack of you're volumes we quarter. the lot

what the that SG&A. on my that think, the balance the sort Occupancy, year, things going based nature. and to leverage on doing I is leverage for strategies we're of continue will branch of we're of to expectation So

So my yes, SG&A year. the the of expectation leverage in is we balance

Dan Florness

talked the in. Dave, conversations, absorbers you've shock our expenses. I'll in just prior this throw about In operating tidbit

of of quarter locally harder talked in a didn't growth. we If were to because ago and employees occur first going XXXX. the quarter down comp to paid of quarter. in the grow it's amplifying to has second, the that quarter, By it's some in quarter inventory year That Onsite branches on massive and that has and changed write to branch incentive happened our XX-ish XXXX, number hung a expanded about because believe a that our fourth were then quarter, at the you XX% XXXX maintain of a first what branches of things Onsite of ago. and XX% the and XX%, the weather There for think is first impact it I there's In our third growing. premium than of the kind of on were year effects growing. second earlier the and that the In two first the

incentive a we of ago. that in year expansion from saw XX% So part that comp was that

a thing hammered other raw have amplifies chunk growth, it is happens that that earnings -- of incentive are million write-down But and The there off that $X a we year big ago earnings Earnings of a earnings people programs. of growth. those those programs. year later, paid

increase quarter XX% by last in it's the I when amplified comp, over look year at two the those events. hammering first So incentive

our XX%. QX, incentive from QX fact, comp In to increased

got that I just a of the was share the decrement QX. weeds basis that Probably but on to little operating so thought dramatically. comp insight picture changes I'd QX And there, way And that. expense into XXX points

Holden Lewis

have. perspective to impact The an actually important is write-off of that

Operator

question Wells next McGinn coming from is Our from Michael Fargo.

Your line is now live.

Michael McGinn

watch update national a that is you the imminent XX% in your XXX it's almost constrained been you for on it guess that fasteners share growing. fastest-growing outlook shape environment approach a of I doesn't higher to those half of I a the given and And how maybe level, and a your market recession maybe any we as you since accounts we've be the accounts, category seem for case are take the where news, So basis. an top top if with your guess, back think growth of what sales many sustained rate is comps seen while year? are tougher on the

Holden Lewis

do -- customers? constraints going you by in back What growth our one, largest do by what mean growth question you to mean

Michael McGinn

it now Yes, longer components necessarily that you're a right can't cycle for reasons trying but your are and not out to control. backlog-driven deliver where they're get product playing beyond the door

Dan Florness

other chain supplying? So what than other disruption we're supply

Michael McGinn

That's correct.

Holden Lewis

ago. Okay, regional I'll other on just still got commentary six than months I'll our it. easier the And is that's getting in for say believe products some that's supply of that's fall general, presidents. was that And from but back a within vice it products our not for that the for they products, challenge, just chain.

navigate that out so our to are sum. figuring And I general, in think that customers how

do have commentary. feels some improved? navigate that way of the ago, to has I of that and to this rates So think months six us, based on It some disruption gotten relative better again, ability just production that to

that most that not hear around the and to think I that customers things issues there than successfully the But ago. are months those you that for navigating was I'm issues ships you tell our part, more going aren't about. like six So case

that way. answer so as today probably by what question? anecdotal, was. And is as about all in the -- not it Does that marketplace the perhaps the dramatic That's concerned you're

Michael McGinn

it. Got yes. does, It

understanding something I down and your wonder to I was right going guess the here comparing shy for just of national seems during slightly margin of outlook that's to to like is but I account mentioned the you the seen to it the you're feels everyone's margin. And of what's levels, see your equation? sort now gross price you go guide back gross -- prior wanted given more mix kind I I or neutral. So but side gun when framework strong like on pre-COVID you should erosion little It results that that model, a think guys. some just have cost flat line and here, item,

Holden Lewis

little of think the the of quarter XXXX a a to Well, XX.X% couple first things the the and about. One, of XX.X% was first bit misleading. in in XXXX quarter

to if we to, you back started January the alluded February only Dan at pandemic. in because March, shipped product the a getting half low-margin of lot and As already March, of look deal see with

and If January 'XX in the XX.X%, you of at February margin you was to gross January right? just January XXXX in of and expected XXXX, would and decline look that So February February, have XX.X%, and was versus see. 'XX

So you affected to that month pandemic, would it, beginning element. have by If was a that's you get the seen take okay? out one

than improving more cost there gross product you safety, of element of have The be is product a get was mix, margin was drives is we're of our the great looking about where is just brands There's necessarily specifically. quarter, exclusive against and mix right? little like XX% categories brands over about a I two like in the the to customer at think other vending, be years That thing Exclusive the things bit COVID on one mix another. customer captured may it talk with two brands If job Onsites, mix things and to customer price the really margin ago, product mix, the large I And course When the mix. careful mix there also pandemic. XX. product we're of XX.X%. we that and think a between of But we've at within this done doesn't I our years look exclusive mix ago, it categories.

This quarter, it's XX.X%.

to something And a are the higher us. margin cost then So and lower cost to because has two-year out related great can All about which talked to but was mitigate actually degree. at last EVs and it's impact last our period. would some product I it happened. QX through that's that's That to also And big a leverage, point and which customers that wasn't year, a the factor cycle. bigger you're in over we looking a factor year, organizational it's

time. that our pieces gross So, that? there's trend of over more That some a certainly margin than period color two adds to just affect those multiyear

Michael McGinn

It I time. appreciate you. did. the Thank

Dan Florness

partner nicely And nicely alluded last Holden expanded vending offering the couple last of brand in in and to vending our in component. as preferred well structural years business A as expanded component exclusive EB that's subset two of has the our the changes two again, our years. that component the

to supply in have the needs and you amplified things where make of is like it that to a of chain. push believe, that platform facilities to we vending and of initiative, need machine our that, branch type we of our some on are And a in handful is for continue supporting by our to work turn more to vending going to LIFT out standardized product the offering picking get our

back two What what to locations occupancy. branch and out the -- network. is network. and margin and branches X, more for If And The that. delivering XX throughout are consolidation places that ago a going talk network. we our And one we're we the in does are locations consolidation it they and at going about going gut things And keep than if locations. the that of That's to leaving and revenue like these more there's and And those it efficient second of them X,XXX trucks out is those come clawing two night. trucking and all -- we night, gains, years up into it's incremental two the doing locations, later, it talk downward. affects I'm gross we're little mix in the but the X,XXX play, locations did to X,XXX keep X,XXX find have consciousness to of X, years bunch what does going the we for about never our

Operator

from coming Moll from is Tommy today question next Stephens. Our

live. line Your is now

Tommy Moll

start going introductory your to I back Dan, to wanted by slide.

without what those been of hurting more et measures deployment the consolidation, mentioned around contexts about in restraining technologies efficiency-driven cetera. branch efficiency, Can we're there? give You any of and sales, in, terms and some strategies supporting have on some all gross you talked margin, inning adds what labor

Dan Florness

Okay.

So we bit talk digital the a about footprint.

it of if really in our that's platform we so supported sales expanded the network. call interfaces X% our that FAST gone have XX% the And upstream to about month, use we gut more of written how had used probably ago, footprint, point-of-sale roughly and two was and directly that. Today, has that through how be we MC But X% -- we where started, we that with importance digital it's March That's on technology equal device, a of that with an I have efficient sales when bins. but -- has within X%, didn't years we mobile center around product, in to COVID I'll pick went and back system our that stock. distribution we stand our

in the so that using we sales, we're the notepad And upstream. as using gathering on Where only doubling writing of transmit have it that And -- we've would past, earlier technology and been getting half those and that our orders yellow much in pulling but day. been then twice are in. not orders

a how there's that's we not that and So the the at day, where the put product an center to have that. to they in get and thing the support when back at X:XX branch about you new earlier FASTVend they environment and in in they same system. where it device the morning afternoon, a to thing, we picking think when bin, differently OEM FASTBin scan platform. our all FASTBin and can relatively XX:XX MC us their transmit start them distribution with in our they doc transmit fasteners Kanban and And allows operate, is

asked to we where right that's puts of out fed. if it, it's our to And that that, but implemented #XXX distribution locally, chip LIFT figure more it's highly in that and becomes go that's center. saying, the model, future with where RFID is support the for special standard then electronically technology. data shelf, Bin OEM there's today when that it for need, we're person for information more you occurs we've Bin get and a the reader cost also gathering and remove we the need have that supply collection. it's more Bin bins, product of Bin to that that information, through you and up your done chain And an especially even important the more a efficient out above what we'll become has because much in system you hungry, empty, our is partner. readily empty, point-of-sale RFID needs it's emptied and better bought surprises, And the the be it distribution fewer in the but the Somebody because where it hey, What transmits there's somebody an do is need and When the replenishment. customer

as on. that ago, going collection -- just percentage, and the FMI has there's that years no component a two adding I effort grown that dramatically start up, so data when from And

Holden Lewis

customers more in for north us way to component when you're certain of I add web than is within efficiencies XX% of address that I mean see right? us. to our would efficient growth you also in if that, growing better and I you're much growth BDI web, XX%, instance, there. that seeing having much for growth probably the at certain The allowing that. mean for and us creates types that's a

getting right, I small there it's a of to component, the it you're in terms also and do with the And relatively think so. still faster, doing, but then That's of growing bring regards we're also and how we'll FMI I of bring the talked how introduces -- we're that's say and as some supply the to going that. so into time. continue LIFT it, with field right? efficiencies is branches well So aggressive efficiencies And we've how we prioritize the they to is to trying seeing vending about use And focus our and our bring things going frankly, to time, would we to efficiencies to over some there.

some what about So the making of we time. talked aimed Dan it's really which talked of that really strategies, the at is goes labor earlier, technologies which and sure about a combination productivity over all up our of are

Tommy Moll

That's helpful.

year was full be and margin basis the full follow-up, quarter, the year my I range. I the from think incremental year in XX% points notes you year last to margins much a framework that the As as down looking for gross versus full XX% year, but out as XX last this for laid through was may

positively quarter, out talked biased? just of to strong Is that down. all gate that come pretty on the ago it to boil here based fair assume what in now a of you those so could be both really about quarter know first it ranges you the You've

Holden Lewis

does it of be first gross that of is would and that think serves, the of carry if specifically -- bit to sort really us And And XX something that to the the points that on that, we a first to because otherwise think sort wouldn't for a the field the basis at higher to to for put up But out rest that I turned to that part to I surprise than the to freight the expected quarter was that might Freight the it losses I to relate allowed losses margin. through Now as mix of And have that margin. improves efforts this annual I freight related gross place seen to me before. to the opposed the overall is I closer with of want XX%. mean field that to the dollar year. the our I stronger little year? that it us memory be. credit tend branch down to to picture to quarter and Yes, And level year would think we revenue think see. expect the margin I haven't we overall doing the a the narrow the was relates was one gross the real in revenue. that on the about I agree I good job would out strategies related give expected expectation really pushes quarter lean year. if $X.X improve to over me. reasons that's came that the you course of flat start surprise in And I profile, they freight million and on try the we some

for more probably piece provided my that that's as to the the carry well. good first upside going year the news to relative quarter. expectations So I rest the in sort the of is think through of that's And

Operator

Next Loop from Capital. from question Dankert coming today Chris is

Your line live. now is

Chris Dankert

first pretty you very can guess, and give it's know flavor parse to demand us restocking But at just pieces I'm not to I appreciate how parse growth, a to looking three I on much the looking question I I might guess fastener contributing? be an there? going a versus pricing this Is any mean, is difficult those I so relative basis, staggering. off, contributing way for exact there how upfront. kind core but versus number, is for of be that

Holden Lewis

probably a order piece. that it's because assume I be touch I ballpark for price my What neutral be to if could from non-fastener non-fastener in actually, margin, about for yes, you fastener just count want I'm lines. the it or including thing against question in prior And out tell the add write-down though that year year, on cost we're to I the we make it that, seeing for about gross is you. than exists below I the the that line that that question, won't flattish standpoint, in so is, margin To fashion. it component by broken to we're in or product same would make greater haven't all what sure that we from on would in a even more more being that comparing I is pricing number, against And you're one of that fastener might achieve including fasteners necessarily to page. line fasteners is number, Yes. fair inflation when just sure your last the twice the think the

relates And bit balance price and it so, I the between side think more of to product ledger. the fastener as there's probably a

Chris Dankert

bit. out I That's zooming it. Got kind helpful. of And guess, a really bigger picture

dynamics inventory here, some having chain supply certainly by about of do how on to just these been And about that kind we of of then which think guess, we levels? normalizing your share picture, front? what normalize in kind inventory competitive slowly any do shift, availability FASTON just think have how of levels a how versus the As big start supply chain about do inventory I think context Or here? we taking changes how customer

Dan Florness

find know if answer Chris. last out the figured how that don't out and shift, competitive years I is in we The figured to two we well the we've how to because performed we on the get to reality of it product product. know

for was that spending meant that sometimes money We're a us. And frugal painful organization. pretty

too. about that COVID customers remember and taking us that's buy that But stuff memory. they of because short, number has discovered was from the sometimes calls, think went of of Holden way again, aren't. a is who it Sometimes of what often didn't before because that really think talked memories in a period was of the heck, memories a are other that and doesn't And a container that's care Fastenal had change and move found on the is prior million I is. money of painful for the painful centered is a business through ugly in they thinking but to COVID. organizations, point they a ridiculous. government even that ocean quarter Fastenal, lot businesses, expensive that it And friend a spending of health I of a $XX But businesses that a lot today, now. But that our meant that cost lot kind us pain during a across

business. business million bit $XXX exist little And less chain a I don't two that ago. supply that think within a didn't hurts it's Fastenal years chaotic So becoming

a segment chain customer has their for it traditional needs. supporting I of think that's supply does that lot a that a realized pretty nice our and years job realized what Fastenal

Holden Lewis

site. might to obsessive is other The going that about prior in how other well, share, sort to about on also drivers Those et I cetera. thing get we've of what's mean we what And to add us tend asking we we've that for aren't been share the relatively market quarters growth gain talked low, for where through commented at. we've customer meet able is are been years, because And different last they're signings customers before means couple but the things. Onsite for our have of

I therefore think for we should just everyone the little little changes fact navigate record and dynamics does Onsites. become same the bit. be environment easier we to a all a of by signed less as number a that and maybe a the perhaps the encouraged token, little chaotic By that

share time. same think I we're those market And the so, have going to from growing at up rate, if the one begins at element our growth that to mix coming from more Onsites in drivers behind normalize, traditional a driving faster

up. I the other normalize a might one think one bit, comes but So,

Operator

Levinson Jake coming question Melius. next from Our from is

Your line is now live.

Jake Levinson

here, quarter on or saw certainly curious end or just guys markets like you're in across your sounds of most different firing positive as verticals particular you you the in any look field. negative the cylinders what It are but surprises all the hearing

Holden Lewis

optimistic of about It's weakness. Not is pretty I'm me don't lot they're Even remains into little again, future, not I field top hard have I not. bit significant the uniformly they're And many is, the been a of really. growing, pretty that like areas, But things everything sluggish, and areas strong, define When of are but your we would XXX not that's still where playing -- marketplace but better. visibility out. else doing gas XX% a are the not and for areas have there's how necessarily think many say, Jake. to oil

Dan Florness

impacted only last I'd add is business And it's relatively been is we The on few right growing has The that have thing XX%. supply chain years, it they're business business. to piece or now, Ukraine but on is our probably a on that XX%, that going of growing going mean, fire. in linked customers by in of be -- I Europe small to that XX%, single impacted because might are in disruption, digits either because what's Ukraine. what's

business our so, that's And impacted there.

leaders week, the head where in in one standstill their I I a is the And about And product packaging of each where business one Just their of of medical conversations have within is with -- conversation about customer customers larger into them was their a And that products, a goes a -- that for right that last dozen business. now. in Russia. district conversations a supplies of in Carolinas. week, talk had Fastenal, half with they down a couple folks

that's the And so scheme but of in I've really -- the heard business. small anecdotes

about generally is comment a spot on. environment Your robust

Operator

today coming Capital from next is Our Markets. KeyBanc Ken from question Newman

is line live. Your now

Ken Newman

of you the better year. range were mean of the of mask remainder to the wanted operating mid-XX% Should told in and through inclusive given to the just clarify that but they mean the incrementals I year? comments stay margins the this leverage gross year, for comments I that could leverage for expectations earlier you write-down or the about all just take just sorry flat if I missed call, made remainder talking you for SG&A of your it, I the potentially in higher expect on them

Holden Lewis

you our and model from to you it what to Our I'll we heard our let based has been goal. always a a XX% however goal where expand little model and you've on achieve bit so that margin to remains are, XX% it, far.

But I think the you are today. we've given how to play environment the rest plays feel we'll pretty out year, things about performing the with. good we out. And of but see how business we about playing how feel the enough is good macro

Ken Newman

progression be curious to Asia. for or normal think on you to or year I'm through talk Particularly, my unfortunately, the secure impacts if seeing as for from follow-up, it curious, the of rest outlook then obviously, a I operating within environment inventory just the recent is Understood. your could lockdowns may that of you COVID suppliers part now. China. not And about just the relates margin But may of I'm ability any your in the your the

Dan Florness

here do and they're I we the that did on our so touch right operations on both you're call them what really based obviously, -- to didn't sourcing thing are and I off, support -- in first our I touch in lockdown they're doing morning, leaders Shanghai, a ugly pretty now. our And fact I in first experiencing on, operation one this that impressed locally. with our Well, the let China, and sales know

Our it, have a team side of agile fashion. of operating remote become has sourcing quite the become but -- especially sides in both

set impact to shelf that again. the from he Holden possession were else, right our not that's the in have that anybody fact that feel cash sometimes I though the question. fact be even nine-tenths that this. they're now we're of and to is -- support the warning we team. on high more a better Fortunately, to shelf We're enough have doesn't about like on but we of about there adage there There's sizable worried up that because pretty fact The the will the to presence inbound that we And Shanghai, law. was ability inventory flow that, inventory nor immune they or at do able old that is is have it no And disruptions level, like business. a but does the our

Holden Lewis

at when about components the get I the are we being is chain hubs there And China time that. actually to begun fairly our a this What predictable in port shorten. point, to say are product from through takes to talked to has it supply will you seeing

overseas that's impact suspect it And a of the a has you're I that to and port actually with that put it little then sort PO to COVID there. over what in to manufacturer get of takes of begun time the the seeing However, a lengthen. bit

much runway some so product there's of that I the purchasing really nine provide we've and the a from been hit over Dan six, But floating now that's beginning and think hubs indicated, to of insulation nicely, there. that. decent as to difference months, a bit going the little So, that's past fairly us over fact of a

Dan Florness

up I see coming we're hour. on the

on talk ago, close so $X with inventory? you. -- philosophical so, year rolled And that was we a Holden, that for is I'll it million out a the And

Holden Lewis

Yes.

Dan Florness

all business off team, the quite within not we we I $XXX for better I will I'd and needs the to were future. that If us when a our about the $X that, it. do wrote We factoring have over, leader support it said, were a into in million well as never here's X million have conscious and we're of made today, on looked second $X Fastenal just them I second. everybody. did. you. business We're wrote it if now business And year do And a prior because apologetic that would within I that stock exist Fastenal. supply pains Thank for new of we And a would inventory. and we've believe to an product in We translated write customer million say, acquisitive off. said, a build Thanks of up off in a do but million for business members had in, decision a customers' had willing Even exists million in team the our at gotten spent our they few your organization, $X $X I no, supply that what time million that needs. chain to we write-off as ago, of chain And I annual at quite $XXX that had before. let's but didn't million year, an write-off

Operator

today's webcast. Thank teleconference you. That and does conclude

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

Fastenal (FAST) 13 Apr 222022 Q1 Earnings call transcript