Fastenal Company · NASDAQ:FAST
Fastenal — Investor Day (April 2018)
54 slides from Fastenal's investor day presentation, Apr 20, 2018
Slide 1: Investor Day: Welcome to the 2018 Fastenal Expo
Updated February 2018 INVESTOR DAY WELCOME TO AT THE 2018 FASTENAL EXPO
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain statements contained in this presentation that are not historical facts are forward-looking statements and are thus prospective. These forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materi
Slide 3: Growth Through Customer Service
GROWTH THROUGH CUSTOMER SERVICE 74% OF OUR EMPLOYEES DIRECTLY SERVE CUSTOMERS VENDING BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT LOGISTICS & SUPPLY CHAINMANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE
Slide 4: Scaling a Growth Driver: Margins by Decade
SCALING A GROWTH DRIVER MARGINS BY DECADE (excl. Recessions) 1987 – 1996 Avg. Gross Margin: 53.4% Avg. Operating Margin: 17.9% 1997 – 2006 Avg. Gross Margin: 51.6%; Avg. Operating Margin: 17.2% 2007 - 2017 Avg. Gross Margin: 51.1%; Avg. Operating Margin: 20.3% 0% 5% 10% 15% 20% 25% 30% 35% 40% $0 $2
Slide 5: Today's Schedule
TODAY’S SCHEDULE 9:45-10:00 INTRODUCTION Holden Lewis 10:00-10:45 LOGISTICS & DISTRIBUTION Walter Tate 10:45-11:45 VENDING & BIN STOCK Jeff Hicks ONSITE Kris Van Dalen 11:45-12:15 NATIONAL ACCOUNTS Bill Drazkowski 12:15-12:30 Break 12:30-1:15 CUSTOMER SHOWCASE Martin Boisvert, Bombardier 1:15-2:00 I
Slide 6: Manufacturing Documented Value: Walter Tate
LOGISTICS & SUPPLY CHAIN BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT LOGISTICS & SUPPLY CHAIN MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING WALTER TATE VICE PRESIDENT OF OPERATIONS
Slide 7: More Than $1 Billion in Inventory
LOGISTICS & SUPPLY CHAIN MORE THAN $1 BILLION IN INVENTORY 37,600,000 PRODUCT PICKS LAST YEAR 650 SEMIS PUT ON 47 MILLION MILES 6,700 CONTAINERS IMPORTED MOVED MORE THAN 800 MILLION POUNDS BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT LOGISTICS & SUPPLY CHAIN MANUFACTURING DOCUMENTED VALUE DI
Slide 8: Distribution center locations
en Lakewood, WA fags i Kitchener, Ontario Gia NS? ae : A ri a Akron, OH High Point, NC Kansas City, MO TPR Salt Lake City, UT ee * [penn Tes | \ » a
Slide 9: Value of Automation
VALUE OF AUTOMATION 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 OPERATIONS AS A PERCENT OF SALES
Slide 10: Our Structural Advantage
OUR STRUCTURAL ADVANTAGE $230M+ using outside carriers $132M Fastenal Fleet ¼ the cost of using outside carriers COST CONTROL SPEED Fastenal DCs Fastenal Semis Fastenal Branches Fastenal Vendors 4.3 deliveries per week 4:50am avg delivery time 68% of branches delivered before 7AM 86% of branches del
Slide 11: Building Upon Our Structural Advantage
LOGISTICS & SUPPLY CHAIN BUILDING UPON OUR STRUCTURAL ADVANTAGE Distribution Centers - Mississippi - Florida LIFT - Vending - Metro Express Logistics - Vendor will call - Customer freight CVO - Strengthening partnerships - Shared investment - Improved service
Slide 12: Manufacturing Documented Value: Walter Tate
LOGISTICS & SUPPLY CHAIN BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT LOGISTICS & SUPPLY CHAIN MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING WALTER TATE VICE PRESIDENT OF OPERATIONS
Slide 13: Vending, Bin Stock, Onsite Solutions
VENDING, BIN STOCK, ONSITE SOLUTIONS KRIS VAN DALEN VICE PRESIDENT OF FAST SOLUTIONS – ONSITE JEFF HICKS VICE PRESIDENT OF FAST SOLUTIONS – VENDING & BIN STOCK BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SU
Slide 14: Adding Value
ADDING VALUE inventory labor acquisition costscapacity to produce capacity to serve OUR CUSTOMERS FASTENAL inventory labor operating costs For many of our customers, the limiting factor to improved productivity is the investment it takes to grow.
Slide 15: Adding Value
ADDING VALUE capacity to produce capacity to serve OUR CUSTOMERS FASTENAL inventory labor acquisition costs inventory labor operating costs Through value-add solutions, we take on productivity-draining activities and costs for our customers...
Slide 16: Adding Value
ADDING VALUE capacity to produce capacity to serve OUR CUSTOMERS FASTENAL inventory labor operating costs …freeing up customer resources and fueling productivity while also broadening the scope and depth of service we can provide. inventory labor acquisition costs working capital TCO savings
Slide 17: Vending & Bin Stock
VENDING & BIN STOCK SERVICING 50K BIN STOCKS OVER 250K TIMES PER MONTH MORE THAN 70K VENDING DEVICES GENERATING NEARLY $900M IN REVENUE TOP 10 MARKETS SERVED OFFER $22B OPPORTUNITY BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE V
Slide 18: The Power of Presence
THE POWER OF PRESENCE SAME-DAY | BRANCH / FMI / VENDING | 24-48 HOURS | LOCAL DISTRIBUTION CENTER | 24-72 HOURS | FASTENAL.COM | TRANSACTIONAL STRATEGIC INSTANT | VENDING / FMI / ONSITE |
Slide 19: Bin Stock Solutions
BIN STOCK SOLUTIONS
Slide 20: Total Vending Devices by Year
TOTAL VENDING DEVICES BY YEAR 40,775 46,855 55,510 62,822 71,421 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 2013 2014 2015 2016 2017 CAGR 15% *Excludes leased locker program (appx 15,000 in 2016 and 2017)
Slide 21: What Makes Us Different
WHAT MAKES US DIFFERENT
Slide 22: Vending Momentum
VENDING MOMENTUM 2014 2016 TODAY Average Signings Per Quarter 4,086 4,515 5,679 Total Customer Sales $1.43 B $1.80 B $587 M Total Vending Sales $486 M $648 M $216 M Vending Customers 11,571 14,140 16,048 % of Company Sales 13% 16% 18% Total Machine Count 46,855 62,822 73,561 Q1 2018
Slide 23: Onsite Solutions
ONSITE SOLUTIONS BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY CHAIN ONSITE PROGRAMS ARE RESPONSIBLE FOR 20% OF REVENUE BUT 40% OF COMPANY GROWTH REVENUE SCALE OF ONSITE PROGRAMS RANGES FROM $600K - $3
Slide 24: Growth and Opportunity
GROWTH AND OPPORTUNITY 160 214 264 401 605 678 10.5% 10.5% 11.6% 14.3% 17.5% 19.9% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2013 2014 2015 2016 2017 Q1 2018 PUBLIC BRANCHES ONSITE LOCATIONS % OF COMPANY REVENUE THROUGH ONSITE $25 BILLION Market Potential 5,600 Curr
Slide 25: Why Fastenal
INFRASTRUCTURE Branches, distribution, logistics FOCUS Leadership support, field participation EXPERTISE Education, experience, wins SCALE Keeping pace, prepared for growth WHY FASTENAL
Slide 26: Evolution of Onsite Revenue
EVOLUTION OF ONSITE REVENUE 0 100 200 300 400 500 600 700 800 $0 $250,000 $500,000 $750,000 $1,000,000 $1,250,000 $1,500,000 $1,750,000 $2,000,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2017 2018 # OF ONSITES AVERAGE ANNUAL REVENUE PER SITE
Slide 27: What Differentiates Fastenal
RELEVANCE Reflecting unique customer needs, priorities, and goals. EFFICIENCY Eliminating waste, capturing time, and measuring the impact. SUSTAINABILITY Instilling lasting improvements and long- term value; bringing solutions aligned with their social and environmental goals. EFFECTIVENESS Enabling
Slide 28: Initial Investments, Leverage and Growth
INITIAL INVESTMENTS LEVERAGE AND GROWTH $75K $25K $125K $XK T I M E 90 DAYS6030 12 MO 24 MO M O N T H L Y R E V E N U E ‘X’ MO REVIEW, PLAN & REINVEST
Slide 29: Onsite Momentum
ONSITE MOMENTUM 2015 TODAY Market Opportunity $25+ Billion $25+ Billion Average Signings Per Quarter 20 100 % of Company Sales 11.6% 19.9% Total Onsite Sales $450.3 Million $236.3 Million Average Annual Revenue Per Site $1.9 Million $1.4 Million Total # of Onsites 264 678 Q1 2018
Slide 30: Vending, Bin Stock, Onsite Solutions
VENDING, BIN STOCK, ONSITE SOLUTIONS KRIS VAN DALEN VICE PRESIDENT OF FAST SOLUTIONS – ONSITE JEFF HICKS VICE PRESIDENT OF FAST SOLUTIONS – VENDING & BIN STOCK BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SU
Slide 31: Documented Value: National Accounts
DOCUMENTED VALUE BILL DRAZKOWSKI EXECUTIVE VICE PRESIDENT OF SALES – NATIONAL ACCOUNTS BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY CHAIN
Slide 32: National Accounts Overview
DOCUMENTED VALUE 200 SALES REPRESENTATIVES MANAGING 1,000+ CONTRACT CUSTOMERS SERVING 40,000 SITES IN 23 COUNTRIES WORLDWIDE REPRESENTING APPROXIMATELY 50% OF COMPANY SALES BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING L
Slide 33: National Accounts Vision
NATIONAL ACCOUNTS NATIONAL SALES TEAM VISION DRIVE REVENUE AND EARNINGS GROWTH BY CREATING STRATEGIC PARTNERSHIPS WITH MULTI- LOCATION CUSTOMERS Position Fastenal as a strategic supply chain partner. Scale the service model effectively and profitably. Develop a consistent pricing model across the en
Slide 34: Aligning Customer Resources
ALIGNING CUSTOMER RESOURCES ALIGNING RESOURCES TO DRIVE KEY ACCOUNT GROWTH TERRITORY SALES REPS BUSINESS SALES SPECIALISTS SAFETY & METALWORKING SPECIALISTS INTERNATIONAL NAT’L ACCTS IMPLEMENTATION / LEAN SOLUTIONS ECOMMERCE SPECIALISTS INDUSTRIAL SERVICES MANUFACTURING SPECIALISTS NATIONAL ACCOUNTS
Slide 35: Making an Impact
$3M REDUCTION IN ON-HAND INVENTORY MAKING AN IMPACT SAFETY + 33% CONSUMPTION REDUCTION
Slide 36: Creating Strategic Partnerships, Identifying Opportunity
CREATING STRATEGIC PARTNERSHIPS IDENTIFYING OPPORTUNITY
Slide 37: Documented Value: National Accounts
DOCUMENTED VALUE BILL DRAZKOWSKI EXECUTIVE VICE PRESIDENT OF SALES – NATIONAL ACCOUNTS BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY CHAIN
Slide 38: Bombardier Customer Showcase Statistics
4 ONSITE LOCATIONS 230+ INSTALLED VENDING MACHINES 12+ COUNTRIES SERVICED 25,000+ UNIQUE SKUS SUPPLIED 32,000,000+ PIECES DELIVERED Based on 2017 data BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY CHAI
Slide 39: Bombardier Relationship Timeline
April 2009 LTSA signed with BTNA April 2012 First expansion beyond BTNA., Sales in Brazil October 2011 First vending machine installed in New York June 2016 Implemented First Onsite location for IGS scope in Sahagun August 2016 Implemented IGS Scope and Vending in Plattsburgh April 2016 Signed Globa
Slide 40: Martin Boisvert, Bombardier Transportation
BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY CHAIN MARTIN BOISVERT TEAM LEAD – STRATEGIC SOURCING, BOMBARDIER TRANSPORTATION
Slide 41: Digital Solutions
DIGITAL SOLUTIONS JOHN SODERBERG EXECUTIVE VICE PRESIDENT OF INFORMATION TECHNOLOGY BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY CHAIN DOCUMENTED VALUE
Slide 42: Digital Solutions Overview
DIGITAL SOLUTIONS SUPPORT NETWORK OF 3,000+ LOCATIONS AND OVER 100K CONNECTED DEVICES IN THE FIELD OPERATE DEVELOPMENT CENTERS IN WINONA, MN; WEST CHESTER, OH; SHANGHAI, CHINA; BANGALORE, INDIA MANAGE 16 MILLION SKUS AND 2.8 MILLION CUSTOMER ACCOUNTS DEVELOP MORE THAN 80% OF OUR APPLICATIONS IN-HOUS
Slide 43: Ecommerce Solutions Development Focus
ECOMMERCE SOLUTIONS DEVELOPMENT FOCUS
Slide 44: Development Focus
DEVELOPMENT FOCUS LOGISTICS INVENTORY SOLUTIONS DATA EXCHANGE MOBILITYSUPPLY CHAIN ANALYTICS INDUSTRIAL SERVICES LISTENING TO OUR CUSTOMERS... AND THINKING BEYOND THE PURCHASE
Slide 45: Digital Solutions Today
DIGITAL SOLUTIONS BIN STOCK Scale Infrared RFID VENDING 5000/3000 Lockers 10K Drawer 10K Cabinets Cutting Tool E-BUSINESS FAST 360 Punch-outT O D A Y
Slide 46: Digital Solutions Future
DIGITAL SOLUTIONS BIN STOCK Scale Infrared RFID VENDING 5000/3000 Lockers 10K Drawer 10K Cabinets Cutting Tool E-BUSINESS FAST 360 Punch-out FUTUR E
Slide 47: Our Commitment: Investing to Drive Productivity
OUR COMMITMENT INVESTING TO DRIVE PRODUCTIVITY
Slide 48: Digital Solutions
DIGITAL SOLUTIONS JOHN SODERBERG EXECUTIVE VICE PRESIDENT OF INFORMATION TECHNOLOGY BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY CHAIN DOCUMENTED VALUE
Slide 49: Fastenal 2018 Investor Day
FASTENAL 2018 INVESTOR DAY HOLDEN LEWIS EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER DAN FLORNESS PRESIDENT & CHIEF EXECUTIVE OFFICER VENDING BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT LOGISTICS & SUPPLY CHAINMANUFACTURING DOCUMENTED VALUE DIGITAL SOLUTIONS BRANCHES ONSITE
Slide 50: Thank You and Enjoy the Show Floor
Updated February 2018 THANK YOU AND ENJOY THE SHOW FLOOR!
Slide 51: Branches
BRANCHES 2,300+ PUBLIC BRANCH LOCATIONS 13,000+ IN-MARKET SALES PERSONNEL $128K AVERAGE MONTHLY SALES PER PUBLIC BRANCH 76% OF REVENUE IS DRIVEN THROUGH OUR BRANCH NETWORK BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY
Slide 52: Employee Development
EMPLOYEE DEVELOPMENT $14 MILLION INVESTED IN EMPLOYEE DEVELOPMENT IN 2017 46 IN-HOUSE TRAINING PROFESSIONALS WITHIN OUR FASTENAL SCHOOL OF BUSINESS OVER 500 COURSES AVAILABLE (ONLINE & IN-PERSON) 650,000 TRAINING COMPLETIONS IN 2017 BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING
Slide 53: Manufacturing
MANUFACTURING $190 MILLION ANNUAL REVENUE IN 2017 350+ SKILLED MACHINISTS 8 MANUFACTURING FACILITIES WORLDWIDE BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DIGITAL SOLUTIONS BRANCHES ONSITE VENDING LOGISTICS & SUPPLY CHAIN DOCUMENTED VALUE
Slide 54: Quality & Engineering
QUALITY & ENGINEERING 100+ QUALITY CONTROL EMPLOYEES 8 ACCREDITED QUALITY LABS WORLDWIDE 20 REGIONALLY-DEDICATED CERTIFIED SALES ENGINEERS MEMBERS OF 87 TECHNICAL COMMITTEES & SUBCOMMITTEES BIN STOCK QUALITY & ENGINEERING EMPLOYEE DEVELOPMENT MANUFACTURING DIGITAL SOLUTIONS BRANCHES ONSITE VENDING L