Vending Machines and Virtue
My dears, Fastenal’s 2024 Annual Report read like the war diary of a seasoned general—determined, resourceful, and marching onward despite adverse terrain. While the broader industrial economy sputtered like an old lawnmower in February, Fastenal clung to its strategy with the grip of a Dowager on her late husband’s fortune.
First, a curtsy where it’s due: revenue rose 2.7% to a record $7.55 billion. Mind you, that’s no champagne-worthy affair—but it’s admirable, given the headwinds. Net income dipped slightly (-0.4%) to $1.15 billion. Some might panic. Granny does not. For heaven’s sake, we are still talking about a company yielding 14.6% net margins with no debt tantrums and cash flow strong enough to ruffle even BlackRock’s monocle.
What truly tickles my coiffure is their continued expansion of Onsite programs and FMI® devices. By year-end 2024, 42.5% of revenue flowed through these managed inventory schemes, and a delightful 60.4% stemmed from their “Digital Footprint.” Granny adores a firm that can put a chip in a bolt and still mind the tea trolley.
Then came Q1 2025, and my darlings—they haven’t missed a step. Daily sales rose 5%, driven by contract customers and sturdy gains in safety and janitorial lines. Their fastener business, once the problem child, finally stirred from its nap with a modest 1.1% growth. Meanwhile, digital channels and FASTVend continued their charm offensive, with tech-driven sales now comprising over 61% of the top line. Even in a weak industrial climate, Fastenal is expanding its share of wallet.
Yet not all is rose-scented. Gross margin remains at 45.1%, weighed by mix shifts and logistics costs. Operating cash flow was down 21.8% year-over-year—partly due to strategic inventory builds and larger customers taking their sweet time paying. And that, my dears, is not a trend one ignores.
Still, let us not overlook this: over 87% growth in high-spend customer sites since 2017, a doubling of $50k+/month clients, and a moat that deepens with each vending machine installed. Their trinity of tech, talent, and tenacity endures—and Granny remains impressed.
Now, cast your gaze below. The chart tells the tale of a company whose income has climbed the mountain, rested briefly in 2024, and appears to be gathering strength again in 2025.
Granny’s Verdict: Allocate. The future belongs to firms that marry high-touch service with high-tech precision. Fastenal, it seems, has brought both to the altar—and they’re happily wed.
