Fastenal Company (NASDAQ:FAST) reported on Wednesday sterling third-quarter and nine-month results on strong demand for its products, but shares slipped because of lower gross profit and higher freight costs.
The company said nine-month earnings per share (EPS) reached $2.03, higher by 37.4% from the year-ago level of $1.48. The third quarter EPS was at $0.69, 38.3% up on last year's EPS of $0.50 and beating the consensus it would reach $0.67.
Revenues for the nine-month period reached $3.73 billion, 13.1% above the $3.30 billion in the same time frame a year ago. Third quarter revenue was at $1.28 billion, 13.2% higher than last year's $1.13 billion and above the consensus of $1.27 billion.
The company said the strong performance was driven by higher unit sales related to underlying market demand, notably industrial vending. A contributor to our sales growth in the third quarter of 2018 was higher product pricing as a result of increases instituted at the end of the fourth quarter of 2017.
READ: Fastenal shares drop after company posts gain in 1Q profit that didn't exceed analysts' estimates
But the company said that gross profit, as a percentage of net sales, declined 100 basis points to 48.1% in the third quarter of 2018 from 49.1% in the third quarter of 2017.
"The most significant factors behind the decline in our gross profit percentage in the period were the impact of customer and product mix as well as higher freight costs at the branch level. These, combined with impacts from foreign exchange and other organizational elements, reduced our gross profit percentage in the third quarter of 2018," Fastenal said.
Shares of Fastenal were down 5.1% to $52.80 on Wednesday.
Fastener products represented 34.7% of sales in the third quarter of 2018. Daily sales of fastener products grew 10.8%. Sales of non-fastener products represented 65.3% of sales in the third quarter of 2018 and grew 14.9% on a daily basis.
The company is a wholesale distributor of industrial and construction supplies. Fastenal is based in Winona, Minnesota.
Reporting by Rene Pastor, contactable through [email protected]