Fastenal Company's ( FAST ) April sales slowed versus March due to change in Easter timing. Nevertheless, sales were significantly better than last year indicating that the industrial and construction supplies wholesale distributor's top line is turning around.
April net sales rose 10% year over year to $315.1 million. Daily sales for the month grew 10.0% to $14.3 million, much better than April last year. However, daily sales in April were lower than 11.6% growth in March. Currency was a 0.5% headwind in the month.
Fastenal serves customers in the manufacturing and non-residential construction markets.
Daily sales to manufacturing customers (representing almost 50% of revenues) grew 8.5%, slightly better than 5.6% last year but down from 11.4% in Mar 2014.
Daily sales to non-residential construction customers (representing 20% to 25% of revenues) grew 5.4%, better than 0.8 % in April last year. However, it was slower than 7.6% growth in March.
After struggling for the past many quarters, Fastenal's top line turned around in the first quarter of 2014. Fastenal's total average daily sales growth rate in the first quarter was 8.7%, up from 4.9% in the prior-year quarter, owing to increase in sales volume.
Though the company witnessed softer sales in January and February due to harsh weather, sales improved in March. The double-digit growth in daily sales in March was driven by favorable timing of Easter and increased investments in stores that led to improvement in sales. The Easter holiday proved to be a headwind in April versus a benefit in March.
Management also seems optimistic for top-line and incremental margin growth in future quarters as underlying markets improve, vending re-vamps, sales improvement efforts expand and comparisons remain easy throughout 2014.
Fastenal carries a Zacks Rank #3 (Hold). Better-ranked stocks in the building products/ construction/materials sector include Vulcan Materials Co. ( VMC ), United Rentals Inc. ( URI ) and Martin Marietta Materials Inc. ( MLM ). While Vulcan Materials and United Rentals sport a Zacks Rank #1 (Strong Buy), Martin Marietta has a Zacks Rank #2 (Buy).