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Fastenal CEO: "The Industrial Environment Is In A Recession - I Don’t Care What Anybody Says!"
You know things might not be going particularly well when you’ve had three CEOs in the space of nine months, and that’s exactly what’s happened at nuts and bolts maker Fastenal which named current CFO Daniel Florness to the top spot on Tuesday.
The move came after the company reported meager top and bottom line results for Q3 this week.
It’s not very difficult to understand why the company's business has come under pressure. The slump in crude prices has put an enormous strain on its energy-related operations. Here’s some color from Credit Suisse who notes that in September, Fastenal saw its first Y/Y sales decline since 2009:
Not surprising, FAST indicated the industrial outlook has deteriorated in particular during the month of September. In fact, September, was the first month since 2009 in which FAST experienced y/y declines. Along with the stronger dollar, FAST noted continued oil and gas headwinds, and heavy manufacturing. By geography, Texas took a step down and FAST noted slowing growth in Canada. Of FAST's top 100 customers, 44 saw top line declines. Of the 44, 32 were negative by more than 10% and 17 were negative by more than 25%. FAST does not expect to see any improvement for the next several quarters and believes the industrial environment is in a recession.
Now hilariously, Credit Suisse somehow managed to take that strikingly bad assessment and turn it into this title: “SteadFAST In the Face of Adversity.” But hey, it’s the sellside so it’s not like they were going to tell you to sell it.
Anyway, what struck us was the rhetoric on the call, especially the retort from new CEO Daniel Florness when William Blair analyst Ryan Merkel (no relation to any “pure hearted” German “lion mothers”) made the mistake of calling the current environment “non-recessionary”:
Merkel: Then just lastly, Fastenal growing zero percent here in September and in a non-recessionary environment, it’s pretty surprising, I think, for a lot of us. But if we just step back and we think about quantifying some of the headwinds, and I don’t want to put words in your mouth but it seems to me, oil and gas customers are probably down, what, 30% this year. It might be a 3% headwind to sales. And then what about exports? I’ve got to think that’s an even bigger impact, but you tell me - and we’ve also got FX as a one-point headwind.
Florness: Yeah, a couple things. First off, the premise of the question, I would argue that anybody selling into the industrial market is not selling into a non-recessionary environment. We are--
Merkel: I agree. I agree with you there.
Florness: The industrial environment is in a recession - I don’t care what anybody says, because nobody knows that market better than we do. You know, we touch 250,000 active customers a month.
Right now in the third quarter, 44 of our top 100 customers are negative. We have not lost any business with that group. They are negative in their spend. In some cases, they are negative because their business is very negative and they are somewhat negative with us.
Of that 44 that were negative, 32 of them were negative more than 10%. Of that 44 that’s negative, 17 of them were negative more than 25%. That’s a sign of a recessionary environment.
So, two very simple, yet very critical takeaways:
- the industrial sector is in a recession,
- whatever you do, do not suggest to Dan Florness that Fastenal's lackluster performance is related to anything other than the pitiable condition of the US economy
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As a former member of the so-called middle class I got one thing to say. Welcome to the party bitches!!! We never left the recession from 08'.
but obama said...
"we touch 250,000 active customers a month"
so do some working gals. big deal.
What a whiner... if sales are down he's supposed to borrow some money to buy his own shares with.
The CEO should retool the manufacturing equipment to make ammo. That will be a growing market for some time.
and not a mention that Banks are buying up all available supplies of nails for nail guns, thought that alone would carry them through.
or guillotines. whichever is easier for them to retool too. Both will be in demand soon.
I used to have a insider at fastenal untill he got fired last year who was a data analyst.
The shit these guys know about the industry in general is UN FUCK ING BELIEF ABLE!!
They know what companies will do in 6 to 12 months as they're in their production lines and in the setup of those lines.
If anybody wants to boost or drop production, they know it because the basic fasteners for those products need to be ordered in advance.
I made a shitload of money on that guy :) To bad he's gone...
Now I've got one who works for Grainger :) He's even better!! :)
But on a side note, both companies are so badly run and both have such a bad managment structure where politics rules over knowledge that they are losing customers and market share on smaller companies.
They're both in no way a true indicator of the economy but rather a sign how giants go down because of overexpansion.
Our firm has recently bought about $300 worth of rope from Grainger. First purchase from them (on our credit account) in about 10 years. So I'd say we are up about a gazillion percent in our year over year purchases from them, so be on the look out for a banner next quarter out of them.
Just trying to look out for you. Buy now, while it's low.
We buy tooling primarily from MSC Industrial, another large supplier for the manufacturing industry. Our rep told us a few weeks ago that he was seeing a real slowdown across many of his long-time customers, large and small that started in the summer and did not pick up as usual in September. He seems to echo what Fastenal says about the industrial market.
they got nothing on the TSA
I know, it's just now hitting the rest of the people and institutions and guess what they can't lower the interest rates anymore. Where fucked.
Fuck it - I am going all in bullish back up the truck - nail guns don't work without these guys making nail gun food.
Buy Moar !
Buy Fastenal. I like this guy's pluck. Just kidding. Sell Fastenel. Its business is going to get f*cked.
Our local Fastenal, until it closed , would hire cute chicks with nice tits that did not know a screw from a nail from a bolt.
I mean they were dumb a pine knots.
I would walk in, they would say " hi!, can I help you?"
I'd say " nope, I doubt it" . Then proceed to just wander the store to find what I needed. Before I learned, I would ask for this or that. They would usually cock their pretty littl heads and give me a stupid look, or say no. Then I would go in the back and find what I needed, that she just said they did not have.
Super overpriced too. But no other options in my area, so I paid the piper.
By the way, I don't think they make shit. They just resell.
+1 for "dumb as pine knots" - love that. Also - pine knots are great for starting fires!
I remember when all those government funded projects started a few years back, people thought it would just stay like that once the money ran out. How can you be so stupid? I was like 19 when that was going on and common sense told me " once the easy money stops, this shit will stop"...Wish i had a trading account back then.
More QE and NIRP will fix everything - for a few weeks.
Think bolts, screws, brackets, nails, hinges - and "un-hinged" from lift-off!
Fastenal CEO: We're Screwed
Fastenal CEO: America's Screwed
Well, thank God unemployment is only 5%.
Drink the koolaid...sitdown and STFU
SUM BITCH!
How can there be a new recession when we are already in a depression??
It's the recession within the depression.
repression???
or decession???
He better avoid nail guns and such in the future. TPTB don't appreciate the negative press.
It's racist to suggest there could be an economic downturn during Obama's reign. How dare he!?!?
"Yes we can!"
Interesting coincidence ....September was the month the peeps got notified their ObamaScare premiums were going up 25%.
Right you are Rainman.
Our firm can accept a 5% increase for our crappy "grandfathered" plan for another year....or elect to upgrade to a compliant plan at a 50% increase!
What would you do? Oh and let me add, the company is in the hole for the year and has zero overhead salary expenses. I think the 50% increase should be chosen...you know, to help the children and all.
You are one of the lucky ones. Our Grandfathered Healthcare was cancelled. We didn't have a choice to keep it at any rate. So were many of the small businesses in my neck of the woods. I was forced to move to an ACA plan and tell my employees they would get less coverage with higher out-of pockets (particularly if something big like emergency room, surgery, hospital stay, or cancer happens), all for higher premiums. We were very limited in our choices because so many of the ACA plans had cut their reimbursement rates to doctors by 30% to 50% so the doctors were dropping the networks like hot potatos. Almost all the Obamacare plans had such tiny networks it would have been cruel to select them for the employees. In addition, all the employees with families were slammed. Under the old plans there were basically 3 rates: single, married with spouse, and family. Under Obamacare they calculate the rate for each member of the family and then add them up. It really impacted families with more than one kid. Ended up with a Gold PPO, with buy-up option to Platinum. All the HMOs had miniscule networks which will mean waiting a long time for appointments.
Yeah 25% is a deal. Medicare going up 52% for 15M so the other 35M can hold at current premiums, no COL for either...O-Care exchanges every state facing steep increases, only the worst cases signing up is driving it the imagined mass migration of healthy young folks to spread that pain never came and hospitals still getting hammered with free care and charity care cases...
The designed failure is working perfectly, obviously the call will go out soon for government single-payer solution, then we can really plunge into the abyss.
Finally, a CEO that speaks the truth.
Industrial, Retail, Commercial, Residential, CAT, Baltic Dry Index, et cetera, are in the greater depression that will become
the Greatest Depression just before it morphs into the Mother-Of-All-Depressions.
Then, we all die except for maybe a few cavemen in the Rockies at best.
The meek shall inherit the earth. The preppers as well. The Femma Nazi will go extinct since no one in their right mind will want one of those anywhere near them when the shit hits the fan. Men will be able to be men again without having State sponsored bigotry directed at them. I for one am looking forward to it. Unless of coarse the nut jobs don't nuke the planet in order to save the planet.
I have a prepper nearby. People laugh him. Not me. I envy his resourcefulness.........and that he will survive....the laughers won't
don't worry about Florness, he'll get plenty.
All anyone had to do to see this recession coming was to look at the drop in corporate profits both before and after taxes.
When businesses see their profits drop, then begin to right size to restore profits.
It really is that simple.
Two years ago I recorded this podcast to tell you how to identify a coming recession.
http://www.blogtalkradio.com/ejmoosa/2013/01/11/ej-moosa-the-naked-truth...
If this keeps up, you won't recognize the US in less than 10 years. Go long on Amish skills training classes.
I don't recognize it now
I stood outside a major department store yesterday, waiting for a friend. I watched literally hundreds of people walk in and out.
Fat, tatted up like convicts, slovenly, and mulatto kids in tow with the "BBW's" who ALL had black baby daddies (it seemed)....
TWO.....2.....normal looking people....
I agree with you
Did they buy anything?
Reminds me of a recent trip to a Macy's.
Here in the East Bay you hardly run into blacks at all, except at the mall.
This ain't the country I grew up in. That's for goddamned sure. If the FSA elects that cunt Hitlery, I'll have to stock up on guns and ammo and head for the boonies.
The Amish will start losing their land as the government uses eminent domain to confiscate it for the red zones of the Wildlands Project map, all part of America 2050 and Agenda 21.
Silly Florness, we can't afford no nuts 'n bolts, this economy is held together with fairy tales and duct tape.
So bullish Dow Industrials !!!!....... Forward
what an idiot trying to sell something to customers....he needs to carry trade a float on a reverse repo CDS against a derivative basket of HFT to make money. Physical products are for chumps. Heck can't he just borrow $500 Billion at ZERO and buy treasures?
You must be a consultant, no?
In 2008 when this all blew up so to speak businesses had 2 choices.
1.) Carry on and pretend everything was fine like the politicians and central bankers were tellin you or ...
2.) Wake the fuck up, get costs under control ASAP for what was going to happen.
Those who followed 2.) even in a negative situation without bleeding losses all over the place can keep trading far longer than 1.) and I know a few that have unexpectedly gone to the wall and there businesses were not that bad TBH but you have to have light at the end of the tunnel "there ain't any".
Those who followed 2.) though cannot continue this way indefinitely.
Fastenal is there ...
Now does anybody want to be optimistic that business / trade is going to massively expand in the next 5 years because I can't see it myself.
I'm grateful for the extension government provided to its criminal buddies on Wall St. It gave me a chance to stack up on supplies, build up my non-fiat savings, diversify, get a foreign passport and sell much of the household junk that would otherwise be tying me down if I had to move at a moment's notice.
The so called "bailout" made the economy worse, but it had given me the much needed time to gather strength and resources. I'm much better off today than I was in 2008.
... though with the government hunting us dissidents, like we're witches you never know. Never underestimate the threat of stupidity imposed upon you through the barrel of a gun.
just a run of the mill inventory recession. as long as winter temps stay in the 70s and there is no snow everything will be fine by spring. dow to 30000!!!!!!
Hey Obama says hes added more jobs than any public servant in the history of mankind and Mr Yellen agrees and we are comfortably past the crisis who do I believe
Maybe he's counting churn.
The recession is an illegit child of hope, pitching the day when there will be a come out of it.
Imagine a more rural structure were people is producing their own stuff with what's left of advanced technique to the one, with avoided time consuming work to the other, time they have because not more enslaved in the prisons for to sack down what's called work.
Alienation of work bye bye.
Imagine this could be the landscape we are rushing to with our productivity.
If you do so, would you still speak of a recession.
Somehow Google Translate has failed us. I don't understand the message in the above post.
It could just be that I am stupid, being a product of the American Education System.
My new business model is selling unicorn skittles autographed by King Putt
Just to quibble....Fastenal is primarily a distributor, though they have expanded in the manufacturing end in the last few years.
That being said, I happen to be in the same business, and am based in Metro Detroit. Our fiscal year coincides with the Feds, and we were running about 20% above last year up until August. We saw a 10% drop in August, and saw another 10 or so fall off in September to end our fiscal year. This month is down from there. I knew that a slow down would have to come evenutally, and from my world, it's here. I just hope we don't fall to 2009 levels again.
In response to an above commentator's comment regarding Fastenal and their poor management, I couldn't agree more. I'm really amazed they can do $4B a year.....though I do really appreciate their ineptness. As I've said many times, they are our best outside salesman.
So basically what Fastenal is saying here is the real economy is like their products; an inclined plane wrapped around a cylinder.
Got it.
Screwed.
Here are some more signs of a recession.
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
http://michaelekelley.com/2015/09/27/vix-predicts-pits-while-pundits-have-fits/
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
Looking at out of work lists in construction in my area, they have only slightly recovered since 2008.
Obviously the Fastenal CEO is a terrorist.
Weeks to months before that company and it's board members get an anal exam from every weaponized alphabet bureau.