U.S. DIY and Professional Home Improvement Industry was weak in Q1 2024 (3)

May 14, 2024 Jeffrey Cohen, US Advanced Computing Infrastructure Inc.

Weakness in the US economy weakens demand.
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Fastenal Company Q1 2024 earnings.

 Dan Florness, our President and Chief Executive Officer, said "The truth of the matter is the core issue remains sluggish demand. A positive we saw is after 16 consecutive months of sub-50 Purchasing Managers Index, we broke above 50 in the month of March. And the other day, I chatted with Holden and I said, how long have they been checking the PMI statistics and he said, yeah, since early 1970s. So, we did a look and there's been two periods that have had longer duration of 16 months."

"The one would have been in the early 1980s, I believe it was a 19-month duration. The other was in the dotcom meltdown year of the early 2000 that was about a 17 or 18-month duration. Now in full disclosures, they were a little bit longer. They were actually more severe as far as where it went into -- how far into the 40s that it went or even into the upper 30s. "

" about half of our vending sales involve safety products."


; and Holden Lewis, our Chief Financial Officer
"Total and daily sales in the first quarter of 2024 were up 1.9%. Q1 is seasonally low volume to start, but this year contended as well with severe weather in January and a good Friday holiday that fell in March for the first time in five years, an impact that was compounded by a following on the last business day of the quarter. This timing is estimated to have cost us 30 to 50 basis points of growth in the quarter. No matter how one treats this noise, however, it doesn't mask that the primary challenge remains poor underlying demand. Industrial production declined slightly in January and February, but the components that most directly affect Fastenal such as machinery, were much weaker than the overall index."

"The tone of business activity from regional leadership is best characterized as steady at weak levels. We are encouraged by the forward-looking PMI moving above 50 in March for the first time since October '22. However, current conditions remain better defined by the string of sub-50 readings that prevailed in the latter part of '23 and at the start of 2024. "

"gross margin in the first quarter of 2024 was 45.5%, down 20 basis points from the year ago period. Product and customer mix was a drag, partly offset by slightly positive price/cost,"