Fastenal Opens 73 Branches in First-Quarter 2007

You don't always hear much about Fastenal Co., Winona, Minn., a diversified industrial distributor with $1.8 billion in 2006 sales and 7,637 employees, because the company likes to keep a low profile.

That hasn't stopped Wall Street analysts from recommending the stock, and Fastenal is appearing more frequently than ever on analysts' “buy” lists.

Electrical distributors, manufacturers and independent manufacturers reps may be more interested in the company's massive branch expansion campaign. Fastenal opened 73 new branches in the first quarter of 2007. As of March 31, the company had 2,037 locations and 7,637 employees.

While the company is known as a diversified industrial distributor with a strong position in fasteners, the company carries 24,000 stock-keeping units (SKUs) in electrical products. Threaded fasteners accounted for approximately 46 percent of the company's consolidated net sales in 2006. The company's product offering also includes 306,000 SKUs in fasteners; 110,000 SKUs in tools and equipment; and 127,000 SKUs in cutting tools and abrasives

According to its most recent annual report, Fastenal plans to increase its number of locations 13 percent to 18 percent annually (calculated on the ending number of stores in the previous year). The company selects new locations for stores based on their proximity to its distribution network, population statistics and employment data for manufacturing and construction. According to its annual report, the company believes that based on the demographics of the marketplace in North America, “there is sufficient potential in this geographic area to support at least 3,500 total stores.”

Fastenal also reported a large sales increase in first-quarter 2007. The company reported a 13.3 percent increase in sales for the quarter ended March 31, 2007. Net sales for the three-month period ended March 31, 2007 were approximately $489.2 million. Net earnings increased from $47.8 million in the first quarter of 2006 to $54 million in the first quarter of 2007, an increase of 12.9 percent.

Fastenal is a big believer in private labeling, and markets some electrical products under the Blackstone and PowerPhase labels. The Blackstone label covers portable cords and work lights, and the PowerPhase label covers surge arrestors. It also sells products under the Fastenal, FastTool, CleanChoice, EquipRite, FastArc and SharpCut brands.