| Industrial and construction supplies provider Fastenal Co. (FAST) Monday reported a 42.8% year-over-year drop in profit for the second quarter, hurt by a 21.4% drop in quarterly net sales as well as lower margins. The sluggish economy drove down sales by double digits, impacting particularly the company's industrial production business. Earnings per share for the quarter dropped 43.1% and missed analysts' expectations by four cents.
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| | | {loadposition contentad} | | | | | Second Quarter Results The Winona, Minnesota-based company reported net earnings of $43.54 million or $0.29 per share for the second quarter, down about 43% from $76.17 million or $0.51 per share in the prior-year quarter. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.33 per share for the second quarter. Analysts' estimates typically exclude special items. Net sales for the quarter declined 21.4% to $474.89 million from $604.22 million in the same quarter last year, and missed eight Wall Street analysts' consensus estimate of $487.10 million. Among others in the industry, Melville, New York-based MASC Industrial Direct Co. Inc. (MS) earlier in the month reported a drop in earning for the third quarter, hurt by a drop in quarterly sales amid very challenging economic climate, despite cost controls. Net income was $27.8 million or $0.44 per share, sharply down from $51.4 million or $0.81 per share in the year-ago quarter. Quarterly net sales dropped to $350.5 million from $457.2 in the same quarter a year ago. Another peer, Lake Forest, Illinois-based W.W. Grainer, Inc. (WW) is scheduled to report financial results for the for the second quarter on Wednesday, July 15, 2009. Analysts expect the company to report earnings of $1.14 per share for the second quarter on revenues of $1.532 billion. Other Metrics Operating income for the second quarter dropped to $69.94 million or 14.7% of total sales, from $123.35 million or 20.4% of total sales, in the prior-year quarter. Gross profit for the quarter declined to $242.51 million from $317.39 million in the year-ago quarter, while gross profit margin was down 140 basis points at 51.1% from last year. Operating and administrative expenses were $172.14 million, down 11.2% from $193.90 million in the same quarter last year. However, as a percentage of sales, expenses surged 410 basis points to 36.2%. The company ended the second quarter with cash and cash equivalents of $173.67 million, compared to $76.44 million at end of the prior-year quarter. At the end of the second quarter, Fastenal operated 2,350 stores in the U.S. in all 50 states, Canada, Puerto Rico, Mexico, Singapore, Netherlands, and China selling to the general public. The company pointed out that the strong free cash flow in the second quarter of 2009 allowed it to increase the dividend declared for the quarter by 37% to $0.37 per share over the dividend paid in the previous year of $0.27 per share. The quarterly cash dividend is payable on August 28, to shareholders of record at the close of business on August 17, 2009. Last week, Fastenal's board of directors also authorized share repurchases of up to 2.0 million shares of common stock. The company did not repurchase any shares in the first six-month period. Half Yearly Highlights For the first six months, Fastenal reported net earnings of $92.23 million or $0.62 per share, down 36% from $144.26 million or $0.97 per share in the prior-year period. Net sales for the year-to-date period declined 17.6% to $964.24 million from $1.17 billion in the year-ago period. During the six month period, Fastenal opened 42 new stores, sharply lower than 112 new stores opened in the same period last year. Outlook Looking ahead, the company continues to expect that capital expenditures will drop to $65 million in 2009 from about $95 million in 2008. Stock Quote In Monday's regular trading session, FAST is currently trading at $29.50, down $2.23 or 7.03% on a volume of 0.11 million shares. In the past 52-week period, the stock has been trading in a broad range of $25.87 to $56.48.
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