Fastenal Company (NASDAQ:FAST) Q4 2022 Earnings Call Transcript

And so it’s really a case of the network matures, even if the mix is beating you down, your branch network is actually becoming more profitable. The other thing is elements inside our business, and I see we’re almost at talks, I’m going to cut it off with this when we’re done, I apologize for that. But the elements of our business are becoming stronger. Now I use vending as an example. Five years ago, I sat down with the fellow that leads our vending business. And if you look at vending as a discrete business within Fastenal, it had operating margins between 13% and 14%. So it doesn’t take a lot of math to figure out, hey, you keep growing your vending business, that’s not friendly to your operating margin. And my comment to Jeff at the time was, Jeff, here are the pieces we need to work on over time.

increased revenue per machine, increased the mix of our exclusive brands, increased the mix of our preferred providing brands lower the cost of our devices. All these things need to occur over time. I’m pleased to say when I look at vending as a discrete P&L, we just looked at it last week, it broke 20% for the first time. And Onsite never had the benefit of organizational investments in it to make it better. Didn’t have FMI. It didn’t have a point-of-sale system that was built for Onsite. It had a point-of-sale system that was built for a branch network. We’re investing in those tools today. That helps the efficiency of the Onsite network, too. So it helps defend the math, but the network is getting better, and we have demonstrated proof that, that occurs already.

With that, it is on the hour. Thank you for your interest in Fastenal. Have a great 2023.

Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.