快扣 (FAST) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Fastenal Company third-quarter 2016 earnings conference call.

女士們、先生們，大家好，歡迎參加 Fastenal 公司 2016 年第三季財報電話會議。

(Operator Instructions)

（操作說明）

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Ellen Trester. Ma'am, you may begin.

再次提醒，本次電話會議正在錄音。現在我謹向大家介紹今天會議的主持人，艾倫·特雷斯特女士。女士，您可以開始了。

Welcome to the Fastenal Company 2016 third-quarter earnings conference call. This call will be hosted by Dan Florness, our President and Chief Executive Officer, and Holden Lewis, our Chief Financial Officer. The call will last for up to 45 minutes, and we'll start with a general overview of our quarterly results and operations, with the remainder of the time being opened for questions and answers.

歡迎參加 Fastenal 公司 2016 年第三季財報電話會議。本次電話會議將由我們的總裁兼執行長丹·弗洛內斯和財務長霍爾頓·劉易斯主持。本次電話會議將持續最多 45 分鐘，我們將首先概述我們的季度業績和營運情況，剩餘時間將用於問答環節。

Today's conference call is a proprietary Fastenal presentation and it is being recorded by Fastenal. No recording, reproduction, transmission, or distribution of today's call is permitted without Fastenal's consent. This call is being audio simulcast on the Internet via the Fastenal Investor Relations home page, investor.fastenal.com. A replay of the webcast will be available on the website until December 1, 2016 at midnight Central Time.

今天的電話會議是 Fastenal 的專有演示，並由 Fastenal 進行錄音。未經 Fastenal 同意，不得對今天的電話會議進行任何錄音、複製、傳輸或分發。本次電話會議將透過 Fastenal 投資者關係主頁 investor.fastenal.com 在網路上進行音訊同步直播。網路直播的回放將在網站上提供，直至2016年12月1日中部時間午夜。

As a reminder, today's conference call may include statements regarding the Company's future plans and prospects. These statements are based on our current expectations, and we undertake no duty to update them. It is important to note that the Company's actual results may differ materially from those anticipated. Factors that could cause actual results to differ from anticipated results are contained in the Company's latest earnings release and periodic filings with the Securities and Exchange Commission, and we encourage you to review those factors carefully. I would now like to turn the call over to Mr. Dan Florness.

提醒各位，今天的電話會議可能涉及公司未來的計劃和前景。這些聲明是基於我們目前的預期，我們不承擔更新這些聲明的義務。值得注意的是，公司的實際業績可能與預期業績有重大差異。可能導致實際結果與預期結果不同的因素已包含在公司最新的收益報告和定期向美國證券交易委員會提交的文件中，我們建議您仔細閱讀這些因素。現在我將把電話交給丹‧弗洛內斯先生。

Good morning, everybody, and thank you for joining in on our earnings call this morning. And I also want to welcome Holden, to not only the earnings call, but to our organization as well. Holden's been here now for I believe, 5 1/2 weeks, so he's a seasoned veteran of the Fastenal organization.

各位早安，感謝大家今天早上參加我們的財報電話會議。我還要歡迎霍爾頓先生參加本次財報電話會議，也歡迎他加入我們的組織。霍爾頓在這裡已經待了大約 5 週半了，所以他已經是 Fastenal 組織的資深員工了。

When we started 2016, had a handful of expectations for the year. And I thought I'd run through those expectations, and talk a little bit how the year's played out of relative to those expectations. First expectation for the year, we're going to open some stores. We hadn't opened much stores in recent years. We're going to open a few more stores, not a lot, but a few more, because that is part of our long-term growth, and it's about always exploring ways to grow in different markets.

2016年初，我們對這一年有一些預期。我想回顧一下這些預期，並談談今年的實際結果與這些預期相比如何。今年的首要目標是開設一些門市。近年來我們並沒有開設很多新店。我們打算再開幾家店，雖然不多，但確實會開幾家，因為這是我們長期發展的一部分，也是我們不斷探索在不同市場發展的方法。

The second thing we were going to do is we were going to reinvigorate our store network. We talked about the CSP 16 at our Investor Day last November. Essentially, we injected about $75 million of inventory in our store network to be a better supplier, a more efficient supplier, and a better same-day supplier. And we're pretty good already, but let's get better.

我們要做的第二件事就是重振我們的門市網路。我們在去年 11 月的投資者日上討論過 CSP 16。從本質上講，我們向門市網路注入了約 7,500 萬美元的庫存，以成為更好的供應商、更有效率的供應商和更好的當日送達供應商。我們已經做得相當不錯了，但讓我們做得更好。

Third item, let's reinvigorate our vending. We've created a wonderful vending business in the last five years, but in the last two years, we've lost some steam. In 2014 and 2015, we were signing about 4,000 a quarter. So we were -- had run rates of about 16,000 a year, and really saw there's a lot more potential there, and our capabilities are strong, and this naturally works with our store and Onsite network. Let's go after this more aggressively.

第三點，讓我們重振自動販賣機。過去五年，我們打造了一個非常棒的自動販賣機業務，但近兩年來，我們的發展勢頭有所減弱。2014 年和 2015 年，我們每季大約簽下 4000 份合約。所以，我們當時的年運行率約為 16,000，我們真正意識到那裡還有更大的潛力，而且我們的能力很強，這自然與我們的商店和現場網路相契合。讓我們採取更積極的行動。

The fourth, speaking of our Onsite network, let's transition to an Onsite mentality for growth. History says we'll sign about 5 to10 a year. In 2015, we had started the transition, and we signed about 80. Could we sign 200 in 2016?

第四點，說到我們的現場網絡，讓我們轉變思路，以現場思維促進成長。歷史數據顯示，我們每年大約會簽署 5 到 10 份協議。2015年，我們開始了轉型，並簽署了大約80份協議。我們能在2016年簽下200名球員嗎？

Five, our comps going to ease in Q3 (multiple speakers -- technical difficulty) Sorry about that, folks. I'm not sure where that came from. Our comps were going to ease a bit in Q3, would allow for mid single-digit growth in sales, and gives us a little more flexibility on what we could afford to spend, as we approached the year.

五、我們的比賽將在第三季放寬（多揚聲器－技術難題）。對此，各位，很抱歉。我不確定那是從哪裡來的。第三季同店銷售額將有所下降，這將使銷售額實現中等個位數的成長，並使我們在今年接近年底時，在支出方面擁有更大的靈活性。

Let's focus on our growth drivers in 2016. Let's demonstrate to ourselves and others that we can grow in this environment. And let our regional vice presidents, our district manager group, our hub manager group, our support leads run their business. It's an incredibly talented group. They run an incredibly impressive business. Let them run it, let's focus on our growth drivers. And points 7, 8, 9 and 10, serve your customer, serve them every day, improve their business and ours, and be creative, we will grow.

讓我們重點關注2016年的成長驅動因素。讓我們向自己和他人證明，我們能夠在這種環境下成長。讓我們的區域副總裁、區域經理團隊、樞紐經理團隊和支援主管們自主管理他們的業務。這是一個才華橫溢的團隊。他們的企業經營得非常出色。讓他們去管吧，我們專注於自身的成長動力。第 7、8、9 和 10 點，服務好你的客戶，每天服務他們，改善他們的業務和我們的業務，並且要有創造力，我們就會成長。

What are some of the realities of the year? We are opening some stores. We opened about 30 -- we'll have opened between 35 and 40 stores for the year. I think that's a good number for us in 2016.

這一年有哪些現實？我們正在開設一些門市。我們開了大約 30 家店——今年我們將開 35 到 40 家店。我認為這對我們來說，在2016年是一個不錯的數字。

One item that changed on our stores is in May of 2016, the Department of Labor published some new rules regarding exempt employees. This rule, while it doesn't impact our Company in totality, because it essentially raised the threshold of what qualifies as an exempt employee from a -- there's rules for duties that qualify you, and there's also a rule for pay. And those rules were increased dramatically in 2016.

我們商店的一項變更是，2016 年 5 月，勞工部發布了一些關於豁免員工的新規定。這項規定雖然不會對我們公司造成全面影響，但它實際上提高了符合豁免員工資格的門檻——有規定說明哪些職責符合豁免條件，也有規定說明哪些薪酬符合豁免條件。這些規定在 2016 年得到了大幅加強。

Because of that change, it does impact our smaller stores. Because in our smaller stores we don't always compensate above that $48,000 level, because we have folks that are building a business, and we're a sales-minded organization. But the opportunity is huge. But as you all know from the years of us publishing our pathway to profit data, stores under $75,000 a month are not profitable -- are marginally profitable, and this damages that.

由於這項變化，確實會對我們的小型門市產生影響。因為在我們規模較小的門市，我們並不總是支付超過 48,000 美元的薪酬，因為我們的員工都在努力發展業務，而且我們是一個以銷售為導向的組織。但機會巨大。但正如大家從我們多年來發布的盈利路徑數據中了解到的那樣，每月營業額低於 75,000 美元的商店是不盈利的——只是勉強盈利，而這會損害盈利。

And we decided to close some stores. We moved fairly aggressively on it. We closed 65 stores in Q3. We have another 32 stores queued up to close in Q4, and we're also evaluating another group we're going to look at in 2017.

於是我們決定關閉一些門市。我們採取了相當積極的行動。第三季我們關閉了65家門市。我們還有 32 家門市計劃在第四季度關閉，我們還在評估另一批門市，我們將在 2017 年進行考察。

But because of the close to 100 stores that we identified for closure, we did book up a reserve in the third quarter for those closures primarily related to the occupancy. But we moved fairly quickly on it. These closures should have a minimum impact on our revenue, similar to closures in the past, because the stores have another -- these locations have another store in reasonably close proximity. And as you know from previous conversations, the vast majority of our revenue is business to business, most of it going out our back door, and we're delivering to the customer sites.

但由於我們確定了近 100 家門市需要關閉，我們在第三季為這些主要與入住率相關的關閉預留了儲備金。但我們很快就採取了行動。這些門市的關閉應該會對我們的收入造成最小的影響，與過去的關閉類似，因為這些門市在相當近的距離內都有另一家門市。正如您從先前的談話中了解到的，我們絕大部分的收入來自企業對企業，其中大部分收入都來自我們的後門，我們直接將產品送到客戶現場。

So if we're serving a market with five stores versus four stores, or three stores versus four stores, doesn't necessarily change our ability to grow or ability to maintain the business we have. And typically, we maintain 90%-plus of the business when we close a store. But it did change a bit of our thought process, as we've gone through the year, just because of the changing landscape, the reality we live in.

因此，如果我們服務的市場擁有五家門市而不是四家門市，或三家門市而不是四家門市，並不一定會改變我們發展的能力或維持現有業務的能力。通常情況下，我們在關閉一家門市時，還能保留 90% 以上的業務。但隨著這一年的過去，我們所處的環境和現實發生了變化，這確實改變了我們的一些想法。

CSP 16, we moved aggressively on that early in the year. Our store conversion is largely behind us. We believe this broadens our ability to -- as I mentioned earlier be a better same day supplier, appeal to a broader range of customers. We believe ultimately this will help us, as we go into 2017 with our construction customers. But we believe it makes us a more efficient business.

CSP 16，我們在年初就積極推進了這個專案。我們的門市改造工作基本上完成。我們相信這將擴大我們的能力——正如我之前提到的，成為更好的當日送達供應商，吸引更廣泛的客戶群。我們相信，這最終將對我們有所幫助，因為我們將在 2017 年與我們的建築客戶合作。但我們相信這會讓我們成為更有效率的企業。

On vending, our run rate has improved. We've been signing 4,700 to 4,800 per quarter, instead of the closer to 4,000 we were doing in the last two years. Right now, our run rate, if you just take that number and annualize it, it's about 19,000 run rate versus the 16,000 the last couple years. This is okay. It's not great.

自動販賣機的運轉率有所提高。我們現在每季簽的合約數量是 4700 到 4800 份，而不是過去兩年接近 4000 份。目前，我們的運行率，如果將這個數字乘以年化，大約是 19,000，而過去幾年是 16,000。這樣可以。不太好。

We added 200 and some people earlier in the year to ramp this number up. That ramp has been moving a little bit slower than I would have liked. I'd like the quarterly number to start with a five versus a four. But we've improved it nicely.

今年早些時候，我們增加了 200 多人，使這個數字迅速成長。那條坡道的建造速度比我預想的還要慢。我希望季度數字以 5 開頭，而不是 4。但我們已經做了很好的改進。

And I also have to acknowledge the fact that, as you all know from previous calls, we signed a rather sizable vending leasing program earlier in the first half of the year, and we've deployed in the last four months roughly 11,000 vending machines into that program. And that's created a little bit of distraction to our program. But I'd still like a number that starts with a five, but we've made nice progress.

我還必須承認，正如大家從之前的電話會議中了解到的，我們在今年上半年早些時候簽署了一項規模相當大的自動售貨機租賃計劃，並且在過去四個月中，我們已經向該計劃部署了大約 11,000 台自動售貨機。這給我們的專案造成了一些幹擾。但我仍然想要一個以 5 開頭的數字，不過我們已經取得了不錯的進展。

Regarding the transition to Onsite, I'm frankly impressed with our team. We still have work to do, but I'm impressed with the fact that we signed 133 year-to-date. That put us on pace to do roughly 180. Our record year last year was 80.

關於向現場辦公模式的過渡，坦白說，我對我們的團隊印象深刻。我們還有很多工作要做，但我對我們今年迄今為止簽下 133 份合約感到印象深刻。這樣一來，我們大概可以完成 180 個。我們去年創紀錄的成績是 80 人。

I believe we're creating momentum for our business into the future. Because the closer we get to the customer, whether that be with our store network, our vending platform, or our Onsite, history has demonstrated we take market share when we do that, because we have a servant's heart within our organization. Our covenant with our customer, we will help you be a better business by being a great supplier, a great partner to you, and the Onsite strategy only makes that better. And I'm very pleased with the transition we're making, and that I expect us to continue making as we enter 2017.

我相信我們正在為公司未來的發展創造勢頭。因為歷史證明，我們越是貼近顧客，無論是透過我們的門市網路、自動販賣機或現場服務，我們就能獲得市場份額，因為我們的組織內部有一顆服務至上的心。我們與客戶立下契約，我們將透過成為您優秀的供應商和合作夥伴來幫助您成為更好的企業，而現場服務策略只會讓這一切變得更好。我非常滿意我們正在進行的轉型，我期望我們在進入 2017 年後繼續進行這種轉型。

Point five, the comps are easing in the third quarter, and that will help us. Unfortunately, we're still stuck in that band of [1%] to [3%]. If you look at it from Q2 to Q3, our sales are treading water, but there's two stories going on in there. Our fastener business continues to be weak. That business has been weak since the spring of 2015, and our fastener revenue dropped about $10 million from Q2 to Q3.

第五，第三季同業比較數據下降，對我們有利。遺憾的是，我們仍然停留在 [1%] 到 [3%] 的區間內。如果從第二季到第三季來看，我們的銷售額停滯不前，但裡面其實有兩個故事。我們的緊固件業務依然疲軟。自 2015 年春季以來，該業務一直疲軟，我們的緊固件收入從第二季到第三季下降了約 1,000 萬美元。

Under the hood, our fastener margin improved nominally from Q2 to Q3. Under the hood, our non-fastener margin improved nominally from Q2 to Q3. We didn't execute that -- we haven't been executing that well in my opinion in 2016 in general on our freight. Our propensity to charge freight has weakened in the last six, seven quarters.

從內部來看，我們的緊固件利潤率從第二季到第三季略有提高。從實際營運情況來看，我們的非緊固件利潤率從第二季到第三季略有提高。我們沒有做到這一點——在我看來，2016 年我們在貨運方面總體上執行得併不好。在過去的六、七個季度裡，我們收取運費的傾向已經減弱。

Lower fuel prices is part of the reason, discipline is the other, perhaps the marketplaces makes it a little more challenging to charge freight. But there's still ample examples where we can charge it, and we're not, and we need to be better at executing on that front. But the product margins under the hood, again, we had mix going against us, because the fastener business was down about $10 million. We continue to see us inching along in improving the relative gross margin on the components.

燃油價格下降是部分原因，紀律是另一個原因，或許市場環境也讓運費收取更具挑戰性。但還有很多例子表明我們可以對此進行收費，但我們沒有，我們需要在這方面做得更好。但就產品利潤率而言，我們再次面臨不利因素，因為緊固件業務下降了約 1,000 萬美元。我們看到，我們在提高零件相對毛利率方面持續穩步前進。

If sales are up 5%, 6% as we were expecting, the fact that our expenses are up a little above [5%] would be okay, wouldn't be great but it would be okay. Unfortunately, that's not the fact pattern, and we're pulling some levers on expenses. One of those levers that we're pulling is to help offset some of the [DOL] impacts as we go into 2017, to offset some of the investment impacts we made in 2016.

如果銷售額如我們預期的那樣成長了 5% 或 6%，那麼我們的支出略高於 [5%] 也是可以接受的，雖然不算太好，但還可以接受。遺憾的是，事實並非如此，我們正在採取措施控制開支。我們正在採取的措施之一是幫助抵消一些[美國勞工部]在2017年帶來的影響，抵消我們在2016年進行的一些投資帶來的影響。

The regulatory environment, well, you all watch the news. I'm not sharing a secret here. It's not a great environment to do business in. But that's the world we live in, and that's the world we need to contend with, and there's a lot of uncertainty.

監管環境方面，你們都關注新聞吧。我這裡說的可不是什麼秘密。這裡不是個理想的經商環境。但這就是我們所處的世界，也是我們必須面對的世界，其中充滿了不確定性。

But the certainty I do know, is that we have a great organization, a great group of people out there managing our business. And we're going to continue to focus on our growth drivers, and we're going to continue to let our regional vice presidents, our district managers, our hub managers, our support leads run their respective groups. But we'll need to be mindful of the environment we're in.

但我確信的是，我們擁有一個優秀的組織，一群優秀的人在管理我們的業務。我們將繼續專注於我們的成長動力，並將繼續讓我們的區域副總裁、區域經理、樞紐經理和支援主管管理他們各自的團隊。但我們需要注意我們所處的環境。

It's a different earnings call for me this quarter, and as the last couple quarters have been, in that I don't have a bunch of spreadsheets sitting in front of me, ready to answer any and every question, just talking about the business. And I'm upbeat about our business, as I look forward. There's a lot of good things, from a momentum standpoint, but it was a tough quarter. With that, I'll turn it over to Holden.

對我來說，本季的財報電話會議與以往不同，也與過去幾季不同，因為我面前沒有一堆電子表格，可以隨時回答任何問題，我只需要談談業務狀況。展望未來，我對我們的業務充滿信心。從發展動能來看，有很多利多因素，但這仍然是一個艱難的季度。這樣，我就把麥克風交給霍爾頓了。

Great. Thank you, Dan. I'll cover the numbers, and try to give a little bit of color into what we saw that generated them. In terms of the revenues, total and daily sales in the third quarter were both up 1.8%. That's the third straight quarter where we've seen daily sales growth between that 1.5% and 2% range. We did like that the quarter finished in September with a daily sales rate up 2.8%. But as you all know, the comparison did get quite a bit easier, and that's a pattern that's going to continue into the fourth quarter.

偉大的。謝謝你，丹。我將介紹這些數字，並嘗試對產生這些數字的原因進行一些生動的描述。從營收來看，第三季總銷售額和日銷售額均成長了 1.8%。這已經是連續第三個季度日銷售額成長率在 1.5% 到 2% 之間了。我們很高興看到 9 月季度末的日銷售額成長了 2.8%。但正如大家所知，比較變得容易多了，而且這種趨勢將會持續到第四季。

Qualitatively, it's not clear to us that the tone changed much in the third quarter. We saw that the sales of fasteners into heavy manufacturing, construction end markets were relatively weak as we've seen before. The same could be said of our largest customers.

從定性角度來看，我們並不清楚第三季的基調是否有很大的變化。我們發現，緊固件在重型製造業和建築終端市場的銷售情況相對疲軟，這與我們之前看到的情況一樣。我們最大的客戶的情況也類似。

Our top 100 was flat to maybe down sightly during the period. But again, these are the same dynamics that have persisted throughout 2016. If there was any incremental change, it may have been that the US business grew a little less quickly, while Canada and Mexico actually strengthened. But at the end of the day, it all blended into what we thought was a fairly consistent quarterly sales performance.

在此期間，我們的前 100 名名單基本上持平，甚至可能略有下降。但這些動態與 2016 年全年持續存在的動態相同。如果有什麼細微的變化，那就是美國業務的成長速度可能略有放緩，而加拿大和墨西哥的業務實際上有所增強。但最終，這一切都融合在一起，形成了一個我們認為相當穩定的季度銷售業績。

This sluggishness does mask the progress we're making on our growth drivers. Dan alluded to some of this, but we did sign over 4,700 vending machines in the third quarter. Our total installed base rose by more than 2,000 units. We now have 60,000 -- more than 60,000 in the field.

這種緩慢的進展掩蓋了我們在成長驅動因素方面取得的進展。丹也提到其中的一些，但我們在第三季度確實簽下了超過 4700 台自動販賣機。我們的總裝置量增加了2000多台。我們現在有 6 萬多人——超過 6 萬人在現場。

That's a figure that does not include the machines that are related to our lease locker program which is being rolled out as we expected it to be. We also signed 41 Onsites in the third quarter. We're up to about 133 year-to-date.

這個數字還不包括與我們的租賃儲物櫃計劃相關的機器，該計劃正按預期逐步推出。第三季我們也簽了 41 份現場服務合約。今年迄今為止，我們已經統計了大約 133 個。

The SKUs related to our CSP 16 initiative are growing faster than the Company as a whole. And we'll provide some additional insights into the CSP 16 and Onsite initiatives after the fourth quarter. But again, overall, we think that those initiatives are proceeding nicely.

與我們的 CSP 16 計畫相關的 SKU 的成長速度比公司整體成長速度更快。第四季結束後，我們將對 CSP 16 和 Onsite 計劃提供更多見解。但總的來說，我們認為這些措施進展順利。

In terms of gross profit, our gross margin was 49.3% in the third quarter. That's down 120 basis points annually, and that's down 20 basis points versus last quarter. We've discussed the gross margin ramifications related to the relative growth of our non-fastener large customer mix in the short and intermediate term. And that dynamic was significant in the annual decline we saw this quarter.

第三季度，我們的毛利率為 49.3%。與上季相比下降了 120 個基點，與上季相比下降了 20 個基點。我們已經討論了短期和中期內，非緊固件大客戶組合的相對成長對毛利率的影響。這種動態因素對我們本季看到的年度下滑起到了重要作用。

In particular, fasteners as you saw as a percentage of sales, that's down 180 basis points year-over-year to 36.1%. That does have an impact on our gross margin overall. That was also a factor in our modest sequential decline. But that said, we're a bit disappointed that the gross margin slipped in the third quarter.

特別是緊固件，正如您所看到的，其銷售額佔比去年同期下降了 180 個基點，至 36.1%。這確實會對我們的整體毛利率產生影響。這也是我們業績略有下滑的因素。但話雖如此，我們對第三季毛利率下滑感到有些失望。

We looked at the gross margin of the fastener and non-fastener categories. They remained stable. We did good work there. We don't believe that we saw any meaningful pressure within the product categories themselves.

我們考察了緊固件和非緊固件類別的毛利率。它們保持穩定。我們在那裡做得很好。我們認為，在產品類別本身中，並沒有看到任何實質的壓力。

We did see higher freight costs this quarter. That relates to both the weak demand, also perhaps our own diligence around inventory levels during the quarter. But regardless, the freight was a significant contributor to the downward drift we saw in the sequential gross margin, Q2 to Q3 of 2016.

本季我們確實看到了更高的貨運成本。這既與需求疲軟有關，也可能與我們本季對庫存水準的嚴格把控有關。但無論如何，貨運是導致 2016 年第二季到第三季毛利率季減的重要因素。

In terms of operating expenses, our operating margin was 20% in the quarter. That's down 210 basis points annually, and down 60 basis points sequentially. On a year-over-year basis, our total headcount at the end of the third quarter was down 115 people. That decline was greater in our part-time labor. As a result, the full-time equivalent headcount was actually still up 1.4% in the quarter. And that reflects both the Fasteners, Inc. acquisition as well as the additions we made to vending and Onsites.

就營運費用而言，本季我們的營業利潤率為 20%。與去年同期相比下降了 210 個基點，與去年同期相比下降了 60 個基點。與去年同期相比，我們第三季末的員工總數減少了 115 人。兼職員工的降幅更大。因此，本季全職員工人數實際上仍增加了 1.4%。這也反映了 Fasteners, Inc. 的情況。收購以及我們對自動販賣機和現場服務所做的補充。

Sequentially, total headcount at the end of the third quarter was down 460 people. The full-time equivalent was down 4.8%. And that just relates to what's become prudent headcount management, given the sluggish demand environment, and our efforts to prune some of our stores. We did see an increase in healthcare expenses in this quarter. However, overall, the employee-related expense as a percentage of sales, we thought were stable year-over-year, and frankly improved slightly sequentially.

第三季末，員工總數較上季減少了 460 人。全職員工人數下降了 4.8%。鑑於需求疲軟，我們採取了審慎的人員管理措施，並努力精簡部分門市，這與此有關。本季醫療保健支出確實有所增加。然而，總體而言，我們認為員工相關費用佔銷售額的百分比與去年同期相比保持穩定，坦白說，環比略有改善。

Occupancy, expenses there were up, both on an annual and sequential basis. This relates to three things. First and most significantly, is the continued growth in our vending equipment. Revenues through our vending machines were still up almost 10% in the third quarter. That's well above our corporate growth, so we feel good about these investments.

入住率和相關支出均有所上升，無論是按年還是按環比計算。這涉及到三件事。首先也是最重要的是，我們的自動販賣設備業務持續成長。第三季度，我們自動販賣機的收入仍成長了近 10%。這遠高於我們的公司成長率，所以我們對這些投資感到滿意。

Secondly, we continue to invest in our distribution infrastructure, primarily related to automation initiatives we've had under way. We think that that will contribute to long-term productivity. And then third, in the third quarter, the expense was also lifted due to the closing of those 65 stores. For those reasons in the short-term, and given the current environment, occupancy expenses are certainly playing a material role in pushing down our near-term margin.

其次，我們繼續投資於我們的分銷基礎設施，主要與我們正在進行的自動化計劃有關。我們認為這將有助於提高長期生產力。第三，由於關閉了 65 家門市，第三季的支出也減少了。鑑於這些原因，短期內，以及當前的市場環境，入住率肯定會對我們近期的利潤率造成實質的負面影響。

Cash flow generation, we generated $133 million in operating cash in the third quarter. That's down about 5% versus last year, really related just to lower income this period. But it does represent 105% of this quarter's net income which is actually slightly better than last year. We did have a free cash deficit of about $27 million. That includes our having paid our dividend. But we also saw capital spending rise, and that's simply a function of the lease locker program with Walmart, and sort of the costs related to that. We didn't buy back any shares in the period, and we did add about $15 million in debt to finance the free cash shortfall.

現金流方面，我們在第三季產生了 1.33 億美元的營運現金流。與去年相比下降了約 5%，這主要與這段時期收入下降有關。但這確實佔本季淨收入的 105%，實際上比去年略好。我們當時的自由現金流缺口約 2,700 萬美元。這包括我們已經支付了股息。但我們也看到資本支出增加，這只是沃爾瑪租賃儲物櫃計畫及其相關成本的結果。在此期間，我們沒有回購任何股票，我們增加了約 1500 萬美元的債務來彌補自由現金流的不足。

Lastly, on balance sheet, our total debt at the end of the third quarter is now about $445 million. That is up $130 million from the end of third quarter last year. On a net cash basis, our total debt now is 13.5% of total capital, up marginally from 10.2% in the same period a year ago. That rise is modest. It relates to the modest free cash generation we've had from lower earnings, the higher inventories we put out there due to CSP 16, some stock repurchase, and of course, the payment of our dividend. We do view the balance sheet as being conservatively capitalized, and we have ample liquidity to continue to invest in the business, and pay our dividend.

最後，從資產負債表來看，截至第三季末，我們的總債務約為 4.45 億美元。這比去年第三季末增加了1.3億美元。以淨現金計算，我們的總債務目前佔總資本的 13.5%，比一年前同期的 10.2% 略有上升。這一漲幅並不大。這與我們因獲利下降而獲得的適度自由現金流、由於 CSP 16 而增加的庫存、一些股票回購以及當然還有我們支付的股息有關。我們認為資產負債表資本充足且穩健，我們有充足的流動資金繼續投資於業務並支付股息。

In terms of working capital, this will be my last comment, we were comfortable with how the numbers shook out. The receivables came in at about 49.7 days. That is comparable to where it was year-ago. Inventories came in at [$159.6 million]. That's well ahead of where we were a year ago, but that was expected.

關於營運資金，這是我最後要說的，我們對最終的數位結果感到滿意。應收帳款平均週轉天數約 49.7 天。這與一年前的情況基本上相同。庫存為[1.596億美元]。這比一年前的狀況好得多，但也在意料之中。

It does reflect our infusing the CSP 16 products into the field, the acquisition of Fasteners, Inc. which will anniversary in November, and the increase in Onsite locations. But the annual increase in dollar inventories was 9.5%. That was -- that did achieve our goal of keeping growth below 10%. So overall, we're comfortable with where the condition of our balance sheet is, given the effect of the significant growth investments that have impacted it.

這確實反映了我們將 CSP 16 產品投入市場，以及對 Fasteners, Inc. 的收購。該公司將於 11 月迎來週年紀念日，並且現場辦公地點數量將會增加。但美元庫存的年增率為 9.5%。那確實實現了我們將成長率控制在 10% 以下的目標。總的來說，考慮到重大成長投資的影響，我們對目前的資產負債表狀況感到滿意。

That's all I have. And with that, we'll turn it over to questions.

這就是我全部的資料了。接下來，我們將進入問答環節。

(Operator Instructions)

（操作說明）

Our first question comes from the line of Ryan Merkel with William Blair. Your line is open.

我們的第一個問題來自瑞安·默克爾和威廉·布萊爾的對話。您的線路已開通。

Thanks, good morning, guys.

謝謝，各位早安。

Good morning, Ryan.

早安，瑞恩。

So first, can you talk a little bit more about September? Which to me, it looked like sales stabilized at a low level. But how did the month start and finish? And I know you said that not much has changed with the end markets, but are you seeing any signs that the industrial economy is bottoming?

首先，您能再詳細談談九月的情況嗎？在我看來，銷售額似乎穩定在了較低水準。這個月是如何開始和結束的呢？我知道您說過終端市場並沒有太大變化，但是您是否看到工業經濟觸底的任何跡象？

I can't say that we are, Ryan. I can tell you that with two weeks left in the month, and looking at where I thought the month was going to finish and how it played out, there were no surprises in the last 10 days, which says as much about our large account performance as it does our small account performance, just the dynamics of timing during the month. But I can't say that we saw any kind of inflection.

我不能說我們是，瑞恩。我可以告訴你，這個月還剩兩週，看看我之前對這個月結束的預測以及最終的結果，最後 10 天沒有任何意外，這既說明了我們大客戶的業績，也說明了我們小客戶的業績，只是這個月時間安排的動態而已。但我不能說我們看到了任何形式的轉變。

Holden, I don't know if you have any comment to add to that?

霍爾頓，我不知道你還有什麼要補充的嗎？

Yes, and what I'll say about that Ryan is, when we look at sort of our customers by category or end market grouping, we didn't see a lot of changes. In September, we might be lapping some of the issues around the energy side, but that would be one month in hand with that, and we'll see how that plays out through fourth quarter. But there may have been some indication on that in some of those customers.

是的，瑞恩，關於這一點我想說的是，當我們按類別或最終市場分組來查看我們的客戶時，我們並沒有看到太多變化。9 月份，我們或許能解決能源方面的一些問題，但這畢竟是一個月的時間，我們得看看第四季情況會如何發展。但可能在某些客戶身上已經有所體現。

We probably saw a little bit of incremental weakness in the heavy duty truck customers that we might have. But beyond those two items there -- not a lot more to add in terms of end markets.

我們可能發現，我們現有的重型卡車客戶群出現了一些漸進的疲軟。但除了這兩點之外——就終端市場而言，沒有太多可補充的了。

Regionally, we indicated the US was a little bit weaker than the international. Some of that might simply reflect changes in currencies, more than anything else. But there wasn't a whole lot of change beyond those fairly minor sort of differences in the quarter or in the month.

從區域層面來看，我們指出美國的力量略弱於國際水準。其中一些可能僅僅反映了貨幣匯率的變化，而沒有其他原因。但除了季度或月份內這些相當細微的差異之外，並沒有太大的變化。

Okay. Fair enough. You need to see a little bit more evidence, before you're willing to call a bottom, I understand. Then moving to incremental margins. I think in the last call, Dan, you said that the new level was 20% to 25%, just given the Onsite business that's ramping. But what level of sales growth do you need in 2017 to get there?

好的。很公平。我明白，在斷定價格觸底之前，你需要看到更多的證據。然後轉向增量利潤率。丹，我想你在上次通話中說過，鑑於現場業務的成長，新的水平是 20% 到 25%。但2017年你需要達到怎樣的銷售成長水準才能達成這個目標？

Well, if you look at our expense growth right now, we're running -- and I'm assuming in this discussion that gross margins, the drain that we've seen in the last five, six quarters moderates, our fasteners as a percentage of our business moderate to a certain degree. And there's a better shine-through of the revenue growth, or maybe I could just answer to the context of gross profit [dollar] growth we need. Right now, our operating expenses are up about 5% year-over-year. Some of that because of the investments we've made. We need to structurally lower that, probably closer to 3.5% to 4%, so that at 3.5% to 4% revenue growth, we can let that shine through.

嗯，如果你看看我們目前的支出成長情況，我們正處於——而且我假設在這次討論中，毛利率，也就是我們在過去五六個季度看到的下滑趨勢，會有所緩和，我們緊固件業務占我們業務的比例也會在一定程度上有所緩和。而且營收成長也更加明顯，或者我也可以只回答我們需要的毛利（美元）成長問題。目前，我們的營運費用年增約 5%。部分原因是由於我們進行的投資。我們需要從結構上降低這個比例，可能接近 3.5% 到 4%，這樣，在 3.5% 到 4% 的營收成長下，我們才能真正展現出這個優勢。

Obviously, one thing that's inherent in our numbers right now is of the accordions that are within the -- if you think of the cost structure of Fastenal, our incentive comp is at an incredibly low point right now. So we'd be very mindful of the structural expenses we're adding, as we look into 2017 and 2018, because we know there will be some expansion in that cost pool as we go into 2017 and 2018. And that's frankly, a good thing. That was also a component -- I'm not going to paint the picture of the DOL rule changes were the only reason we closed some stores. They were a reason we moved pretty quickly. But we do need to be mindful of some structural costs that we can remove from the business, especially in an environment where Onsite's a bigger part of our growth driver going forward.

顯然，我們目前的數據中固有的一個問題是，考慮到 Fastenal 的成本結構，我們的激勵薪酬目前處於非常低的水平。因此，在展望 2017 年和 2018 年時，我們會非常注意增加的結構性支出，因為我們知道，隨著 2017 年和 2018 年的到來，成本池將會有所擴大。坦白說，這是一件好事。那也是其中一個因素——我不會把勞工部規則的改變描繪成我們關閉一些門市的唯一原因。他們是我們迅速採取行動的原因之一。但我們確實需要注意一些可以從業務中剔除的結構性成本，尤其是在現場服務在未來將成為我們成長驅動力的更大組成部分的環境下。

So next year, you need mid single-digit top line, maybe a little bit better to see some meaningful earnings leverage, is that fair?

所以明年，你需要達到個位數的營收成長，或許還要更好一些，才能看到一些有意義的獲利成長，這樣說合理嗎？

Yes, yes.

是的，是的。

Yes, I think it's also fair, Ryan to suggest that coming into this year, we sort of took it for granted that we'd grow mid single-digits and planned to invest around that. I'm not sure that we're making such -- that we're making any such assumption about the go forward market, given that we haven't seen any meaningful improvement in the markets. And so, we're not necessarily going to assume that we're going to make those same investments for that same level of growth. We may be prudent, if we don't begin to see the revenue growth rates begin to tick up.

是的，瑞安，我認為你的說法也很有道理，因為在今年年初，我們理所當然地認為我們會實現個位數中段的增長，併計劃圍繞這個目標進行投資。我不確定我們是否做出了這樣的假設——鑑於我們還沒有看到市場有任何實質的改善，我們是否對未來的市場做出了任何這樣的假設。因此，我們不一定會假設我們會進行相同的投資以獲得相同的成長水準。如果我們沒有看到收入成長率開始上升，那麼我們或許應該謹慎行事。

Right. Makes sense. Okay, thanks. I'll pass it on.

正確的。有道理。好的，謝謝。我會轉達的。

Thank you. Our next question comes from the line of David Manthey with Robert W. Baird. Your line is open.

謝謝。我們的下一個問題來自大衛·曼西和羅伯特·W·貝爾德的系列文章。您的線路已開通。

Thanks. Good morning, guys.

謝謝。各位早安。

Good morning, Dave.

早上好，戴夫。

Could you remind me of the math on vending? You ask that customers have an incremental spend of about $2,000 a month, I believe it is. Is that a net goal after the reduction in usage of the products that are in the vending machine?

你能幫我回想一下自動販賣機的數學原理嗎？您要求客戶每月增加消費額約為 2000 美元，我相信是的。在減少自動販賣機內商品的使用量之後，這是否是最終目標？

Yes, it is. And it does not need to be vending revenue. And again, that's based on the machine itself, and different machines have different requirements. The FAST 5000 which is roughly I think 40% of our fleet that's that $2,000 number.

是的。而且這筆收入不一定是自動販賣機的收入。而且，這取決於機器本身，不同的機器有不同的要求。FAST 5000 大約占我們車隊的 40%，也就是那 2000 美元的數字。

But for lockers which have a lower cost basis than the FAST 5000, the number might be $1,200 or might be $1,000. That's why we have disclosed historically, we talked about both our absolute device count, but then our weighted average count. Because the weighted average is more akin to the $2,000 number.

但對於成本低於 FAST 5000 的儲物櫃來說，價格可能是 1200 美元，也可能是 1000 美元。這就是為什麼我們過去披露的信息，我們既談到了我們的絕對設備數量，也談到了我們的加權平均數量。因為加權平均值更接近 2000 美元這個數字。

Okay. Got it. And if I recall, your realized incremental revenues was something less than that $2,000. Is that still the case?

好的。知道了。如果我沒記錯的話，你實際實現的增量收入不到 2000 美元。現在情況仍然如此嗎？

No, our realized historically, if you look at that as far as growth with those customers, that was realized, again, not all of it through the machines. Our average machine runs closer to $1,100, $1,200, versus that $2,000. But we do achieve growth outside of the machine. And that's why you see our vending direct -- our business with the vending machine continues to grow. And our non-fastener business which, about 25% of our non-fastener business goes through a vending machine, and that's why that business continues to grow mid single-digits in an environment where the peers in that business are contracting.

不，從歷史角度來看，如果你看看這些客戶的成長情況，你會發現，這並非完全是透過機器實現的。我們平均每台機器的售價接近 1100 美元、1200 美元，而不是 2000 美元。但我們確實在機器之外實現了成長。這就是為什麼你會看到我們的自動販賣機直銷業務——我們與自動販賣機的業務持續成長。還有我們的非緊固件業務，其中約 25% 的產品是透過自動販賣機銷售的，這就是為什麼在同行業務萎縮的環境下，我們的業務仍然保持個位數中段的成長。

Okay. So what you're saying is that per weighted average machine, you are achieving $2,000 of total net growth, again yet realizing that's not just through the machine, that's all-in for the customer; correct?

好的。所以你的意思是，每台加權平均機器可以實現 2000 美元的總淨增長，但同時也要意識到這不僅僅是機器本身帶來的增長，而是客戶的所有收益；對嗎？

Correct.

正確的。

Okay. All right. Thank you for that. And then, how much higher were your occupancy costs due to the closures in the current quarter? And then, you mentioned a reserve for future closures that you took in the third quarter. I think you said it wasn't that meaningful, but could you just give us an idea of what that was?

好的。好的。謝謝。那麼，由於本季部分門市關閉，您的入住成本增加了多少？然後，您提到了第三季為應對未來停業而預留的儲備金。我想你說過它沒什麼意義，但你能大概描述它的意義嗎？

I believe it was just over -- just under $1.1 million that we booked during the quarter. And again, what that is, once we make the -- and this is the -- this is the Dan throwing the CFO hat on for a second. Sorry, some habits are hard to kill. What you accrue when you are closing locations, is you look at future expenses you'll incur, that do not have a future benefit.

我相信我們本季的營業額略高於——略低於 110 萬美元。再說一遍，一旦我們做出決定——這是——這是丹暫時戴上財務長的帽子。抱歉，有些習慣很難改掉。關閉門市時，你會考慮未來將產生的、沒有未來收益的費用。

And so, in the third quarter store closures, there's some real estate that we need to contend with. And in the fourth quarter locations, there's some real estate costs we'll need to contend with. And those we accrue up, based on assumptions of similar closures in the past. But it's about $1.1 million.

因此，在第三季門市關閉的情況下，我們需要應對一些房地產問題。在第四季選址方面，我們還需要處理一些房地產成本問題。而我們根據過去類似關閉情況的假設，累積了這些資金。但金額大約是 110 萬美元。

All right. And then, a final question on pricing. You've been seeing some pressure on the fastener side recently. Has that alleviated at all? Can you talk fasteners, non-fasteners, and then your outlook for 2017 on pricing?

好的。最後，還有一個關於定價的問題。最近，緊固件方面出現了一些壓力。情況有所緩解嗎？您能談談緊固件、非緊固件，以及您對 2017 年價格走勢的展望嗎？

I don't know if we have an outlook, a generic outlook for fasteners and non-fasteners. My earlier comments were from Q2 to Q3, our gross margin on fasteners ticked up nominally.

我不知道我們是否有一個展望，一個針對緊固件和非緊固件的通用展望。我之前的評論是指從第二季度到第三季度，我們緊固件的毛利率略有上升。

I look at that, and say that probably should have occurred structurally, just because some of the weakness usually occurs that we're seeing most acutely is in the OEM fasteners. And so, mix should be helping fasteners a little bit. So I'd look at that, and Holden characterized it as treading water. Our non-fasteners, we improved a little better than 20 basis points from Q2 to Q3.

我看了之後覺得，這很可能是結構上的缺陷，因為我們最常看到的某些弱點通常出現在原廠緊固件中。因此，混合應該對緊固件有一定的幫助。所以我會關注這一點，霍爾頓將其描述為原地踏步。在非緊固件方面，我們比第二季到第三季提高了 20 多個基點。

Okay, but from a pricing point, Dan?

好的，但從價格角度來看呢，丹？

From a pricing standpoint, not much going on there, Dave. That's the non-fasteners is much about us doing a better job of managing the mix.

從價格角度來看，那邊沒什麼大的變化，戴夫。非緊固件的問題在於，我們需要更好地管理混合物。

Okay.

好的。

To the extent, Dave, that in prior quarters there was any confidence from our people that there was a little bit of pricing pressure that they were seeing on fasteners, I would say that the confidence is not as high that they're seeing that pressure at this point. So it was never huge on fasteners to begin with. And whether we're anniversarying it or what have you, it doesn't seem to be a big factor in what we saw this quarter. And again, I think that's reflected in part by the fact we had relatively stable margins on our -- when you look at the category specifically.

戴夫，如果說前幾季我們的員工對緊固件的價格壓力有所信心，那麼我認為，目前他們對這種壓力的信心已經不如以前那麼高了。所以它一開始就沒怎麼用過緊固件。無論我們是否在慶祝週年紀念或其他什麼，這似乎並不是我們本季所看到的結果的一個重要因素。而且，我認為這部分原因在於，當我們具體觀察該類別時，我們的利潤率相對穩定。

All right. Thanks, guys.

好的。謝謝各位。

Thank you. Our next question comes from the line of Hamzah Mazari with Macquarie. Your line is open.

謝謝。我們的下一個問題來自 Hamzah Mazari 與 Macquarie 的關係。您的線路已開通。

Good morning. Thanks for taking my question. Just a question on the --?

早安.謝謝您回答我的問題。關於——有個問題？

Good morning.

早安.

Good morning. A question on the Onsite business, maybe Dan if you could frame for us how should we think about the ramp period associated with a new Onsite store, either in revenue per month or however you want to describe that? Just trying to get a sense of how the Onsite business ramps over time and gains critical mass? And I realize it will vary depending on the customer, but just any sense of that would be helpful.

早安.關於 Onsite 業務，Dan，您能否為我們闡述一下，我們應該如何看待與新 Onsite 門市相關的增長期，無論是以每月收入還是您想用其他方式來描述？我只是想了解一下現場服務業務是如何隨著時間推移而發展壯大並獲得臨界規模的？我知道這會因客戶而異，但任何這方面的了解都會有所幫助。

What we talked about a year ago -- I'll answer it in two components. What we talked about a year ago was, and what Chris talked about as he studied a lot of our existing Onsites, is that you could take a $20,000 or $30,000 a month relationship, and grow it to $120,000 or $130,000, $150,000 relationship in 12 to 24 months. We still believe that to be true.

我們一年前討論過的問題——我將分成兩部分來回答。一年前我們討論過，克里斯在研究我們許多現有的現場服務時也談到過，你可以將每月 2 萬或 3 萬美元的客戶關係，在 12 到 24 個月內發展成為 12 萬美元、13 萬美元甚至 15 萬美元的客戶關係。我們仍然相信這是事實。

We ramped so many, the 80 and then the ones we've signed this year, many of which were turning on at different times last year and different times this year. In our earlier commentary, we talked about in January giving a little bit more insight in what we've seen from this first group of 80, now that we'll have a calendar year under our belt, and then what we're seeing in the new group coming in that have turned on, as we've gone through the quarters.

我們已經啟動了許多項目，包括去年的 80 個項目以及今年簽約的項目，其中許多項目去年和今年的啟動時間各不相同。在我們之前的評論中，我們談到了在 1 月份對第一批 80 名球員的觀察結果進行更深入的分析，現在我們已經走過了一年，然後我們又看到了新一批球員在幾個季度中的表現。

I'd just as soon hold the answer to that, for that point in time as we'll have more succinct data to share with you. What I can tell you is our assumptions initially, we have not seen evidence that causes us to think that assumption should be different going forward.

我寧願暫時保留這個問題的答案，等到我們有更簡潔明了的數據可以與您分享時再告訴您。我可以告訴你們的是，就我們最初的假設而言，我們還沒有看到任何證據表明，今後這個假設應該會有所改變。

Got it. And then, just a follow-up question. On the gross margin, anything you can quantify around freight, and also the CSP 16 start-up costs? Just trying to get a sense of the margin degradation regarding those two items? It's (inaudible) like margins coming in, your expectation was probably flat to up slightly, given some of the inventory you pulled of out last quarter. Is that fair?

知道了。最後，還有一個後續問題。關於毛利率，您能能量化一下運費方面的哪些費用，以及 CSP 16 的啟動成本嗎？我只是想了解這兩個項目的利潤率下降？（聽不清楚）就像利潤率一樣，考慮到上個季度你清理了一些庫存，你的預期可能是持平或略有成長。這樣公平嗎？

Yes, yes, that's a fair characterization of what we talked about in July. If you look at the CSP, from a gross margin perspective, the stuff we were seeing earlier wasn't about CSP 16 so much. That was about, we were introducing some new tools into our business, inventory by location and some other aspects like that, and we [aggressively] moving on some inventory from a clearance standpoint.

是的，是的，這很準確地描述了我們七月討論的內容。如果你從毛利率的角度來看 CSP，我們之前看到的那些事情與 CSP 16 並沒有太大關係。當時的情況是，我們正在為業務引入一些新工具，例如按地點進行庫存管理以及其他一些方面，並且我們正在從清倉的角度積極處理一些庫存。

The CSP 16, those, the margins on those products are nicely above the Company average. That has as much to do about the mix of who that business is going to, as it is about the actual products. Because in the CSP 16, there's a fairly strong mixture of tool categories, et cetera, that don't necessarily have a higher gross margin, but the mix of customers is beneficial in that business. So that CSP 16 has a positive influence over all the gross margin, albeit relatively small impact on the relative dollars.

CSP 16 的利潤率遠高於公司平均。這與企業的目標客戶群構成密切相關，而與產品本身則密切相關。因為在 CSP 16 中，工具類別等的組合相當複雜，這些類別不一定具有更高的毛利率，但客戶組合對該業務是有利的。因此，CSP 16 對所有毛利率都有正面影響，儘管對相對金額的影響相對較小。

And Hamzah, in terms of the impact on freight, I mean, our gross margin declined 20 basis points sequentially from Q2 to Q3. I think it's fair to suggest that freight was a significant piece of that 20 basis points, if not all of it.

哈姆扎，就貨運的影響而言，我的意思是，我們的毛利率從第二季到第三季環比下降了 20 個基點。我認為，貨運成本是造成這 20 個基點變動的重要因素，甚至可能是全部因素。

Great. Very helpful. Thank you, guys.

偉大的。很有幫助。謝謝大家。

Thank you. Our next question comes from the line of Adam Uhlman with Cleveland Research. Your line is open.

謝謝。我們的下一個問題來自克利夫蘭研究公司的亞當·烏爾曼。您的線路已開通。

Hi, guys. Good morning.

嗨，大家好。早安.

Good morning.

早安.

Just sticking with that freight theme for a second here, we've talked about fuel and execution behind that. I'm wondering if you're seeing any changes in how the market approaches freight, because obviously, a lot of consumer markets, consumers expect free shipping? And so, maybe you could talk about how much of your revenue base you already have free freight with certain customers? And then, maybe talk a little bit more about the pushback or the execution issues that you're seeing there?

再繼續討論一下貨運這個話題，我們已經談到了背後的燃料和執行情況。我想知道您是否觀察到市場對貨運方式有任何變化，因為很顯然，在許多消費市場，消費者都期望免運費？那麼，或許您可以談談您目前有多少收入來源已經與某些客戶實現了免運費？然後，能否再多談談你所遇到的阻力或執行方面的問題？

Well, two things going on here, Adam. One is, if you think of our growth drivers both short-term and multi-year, our growth drivers are, lend themselves towards things that really don't have a freight component to them. Vending, there really isn't a freight component to vending. So that business, that growth, that $600 million-plus business a year is freight-free, because it's part of the offering we have. If you think of CSP 16, by placing it in the store, those products don't really lend themselves to having freight charged on them, whereas perhaps in the past there would have been some freight on some of that revenue, again that's a relatively small impact.

嗯，這裡有兩件事，亞當。一方面，如果你考慮我們的短期和多年成長驅動因素，你會發現，我們的成長驅動因素傾向於那些實際上與貨運無關的事物。自動販賣機，其實並不涉及貨運環節。所以，這項業務，這項成長，這項每年超過 6 億美元的業務都是免運費的，因為它是我們提供的服務的一部分。如果你考慮 CSP 16，把它放在商店裡，這些產品就不太適合收取運費，而過去可能有些收入會收取運費，但這影響相對較小。

One of the selling impacts or selling philosophies of the Onsite is that, by moving Onsite to their facility there's certain costs we can strip out. One of them is, some of your working capital costs, because we can stock that inventory because we're a more efficient supply chain.

Onsite 的銷售策略或銷售理念之一是，透過將 Onsite 搬到他們的工廠，我們可以消除某些成本。其中之一是，我們可以節省一些營運資金成本，因為我們擁有更有效率的供應鏈，可以儲存這些庫存。

Some of that is, because we're more orderly in what we're ordering and our visibility to when we see the -- we learn about transactions before they become quotes and purchase orders. And so, we can be more efficient in how we manage our freight costs. So those are structural changes over time that aren't necessarily detrimental in the true sense of the word.

部分原因是，我們在訂購方面更有條理，而且我們對何時看到這些資訊也有了更清晰的了解——我們在交易變成報價單和採購訂單之前就能了解到這些交易。這樣一來，我們就能更有效地管理貨運成本。所以這些都是隨著時間推移而發生的結構性變化，從真正意義上講，這些變化並不一定是有害的。

I think one of the things that can happen when you're going through this environment of some of the structural changes don't necessarily have a freight component to them, is that you can convince yourself that maybe the other pieces don't have as great a propensity to have freight on them as they did in the past. Maybe that -- a piece of that is the tone of the leaders of the organization, and I look at myself when I say that. Maybe I'm not pushing it hard enough.

我認為，在這種結構性變化不一定涉及貨運成分的環境下，可能會出現的情況之一是，你會說服自己，其他部分可能不像過去那樣容易承載貨運成分。也許這其中一部分原因在於組織領導者的語氣，而當我這樣說的時候，我也會反思自己。也許我做得還不夠努力。

But it's a case of sometimes you can convince yourself on why you can't do some stuff, and you need to convince yourself on why you can, why you should. And I think that's probably the bigger culprit in this equation than the marketplace. Because the marketplace doesn't change that abruptly to explain some of the degradation we had.

但有時候，你可以說服自己為什麼不能做某些事，但你需要說服自己為什麼能做、為什麼應該做。我認為這才是造成這種情況的更大原因，而不是市場因素。因為市場不會突然發生如此劇烈的變化來解釋我們所經歷的一些衰退。

Okay. Thank you. And then, if we could just switch gears back to the revenue growth trends, the non-res construction, sales have been weaker some time. And I think Holden, you mentioned that we're starting to cycle against some of the oil and gas headwinds that we had last year. And maybe could we dig into that a little bit more deeply, what have you been seeing by region? Any pick-up in oil-related customer growth recently? Thank you.

好的。謝謝。然後，如果我們能把話題轉回收入成長趨勢上來，非住宅建設的銷售額已經有一段時間比較疲軟了。霍爾頓，我認為你剛才提到，我們正在開始扭轉去年石油和天然氣產業面臨的一些不利局面。或許我們可以更深入地探討一下，您從各個地區觀察到了哪些情況？最近石油相關客戶成長是否有回升？謝謝。

It would probably be premature to get particularly excited about what we're seeing. As I said, in September, it looked like maybe a couple of our national accounts within that energy piece began to see some of their annual rates of change become less severely negative. But they're still negative. And we'll see how the next couple of months, couple and next quarter plays out on that space.

現在就對我們目前所看到的情況感到特別興奮可能還為時過早。正如我所說，9 月份，我們能源領域的幾個國家帳戶的年度變化率似乎開始出現一些負面變化，但降幅有所減輕。但他們的檢測結果仍然是陰性。接下來幾個月、幾季以及下一個季度，我們將拭​​目以待該領域的發展。

But I think that the real emphasis that we would make -- and I guess, this is -- came about the question of bottoming, we're not seeing things get a lot better. If those customers get better, it's because the comps are getting easier. Maybe we'll be pleasantly surprised, and demand will actually improve from here going forward. But it's a little bit early to make any such declaration in any of those markets.

但我認為我們真正應該重視的——我想，這就是——是關於觸底反彈的問題，我們並沒有看到情況好轉多少。如果這些客戶的滿意度提高，那是因為可比客戶更容易獲得滿意的評價。或許我們會驚訝地發現，未來需求其實會從此有所改善。但現在就對這些市場做出這樣的聲明還為時過早。

I'll throw one comment in. I had the opportunity early last week to reach out to our regional leader in the Gulf Coast. Steve and his team have gone through a pretty ugly period in the last year, year and-a-half. And that business grew in September, and it was fun making that call, and congratulating him. Because I know from a first-hand basis, some of the discussions I personally had with him, as well as other individuals in that business unit. They've had a really ugly period, and I was really happy for them, to see their business grow in the month of September.

我再補充一點。上週初，我有機會聯繫了我們在墨西哥灣沿岸地區的負責人。在過去一年到一年半的時間裡，史蒂夫和他的團隊經歷了一段非常艱難的時期。9 月那項業務發展壯大，打電話祝賀他真是件令人愉快的事。因為我親身經歷過，我曾與他以及該業務部門的其他人員進行過一些討論。他們經歷了一段非常艱難的時期，看到他們的業務在九月有所增長，我真的為他們感到高興。

That's good to hear. Thank you.

聽到這個消息真好。謝謝。

Our next question comes from the line of Sam Darkatsh with Raymond James. Your line is open.

我們的下一個問題來自 Sam Darkatsh 與 Raymond James 的對話。您的線路已開通。

Good morning, Dan. Good morning, Holden, how are you?

早上好，丹。早安，霍爾頓，你好嗎？

Good. Good morning, Sam.

好的。早上好，山姆。

Fine, thank you. Good morning.

好的，謝謝。早安.

A couple questions here. First off, related to -- back to vending, the spread between the growth in vending customers and non-vending customers is obviously pretty tight right now. I'm trying to think about what factors might occur that would create that spread to re-widen in vending's favor, especially with your thoughts, Dan, that you think the fastener business ultimately for you stabilizes from here?

這裡有幾個問題。首先，回到自動販賣機話題，目前自動販賣機顧客和非自動販賣機顧客的成長差距顯然非常小。我正在思考哪些因素可能導致這種利多局面再次朝自動販賣機方向擴大，尤其是考慮到丹，你認為緊固件業務最終會從此趨於穩定？

Yes, we had quite a few vending machines that have been running negative, and vending relationships that have been running negative. And I asked our team to take a look at this group of vending machines, and it's a sizable group of vending machines. So it's a population you could look at, and you could actually glean some knowledge from it. We took a good hard look at it, and what we saw -- because one visibility we have into our customer business that we've never had before, is insight into how many unique people are using the device.

是的，我們有不少自動販賣機出現負收益，而且與自動販賣機的合作關係也出現了負收益。我讓我們的團隊查看了這組自動販賣機，這是一組相當大的自動販賣機。所以這是一個值得研究的人群，你可以從中獲得一些知識。我們仔細研究了一下，發現——因為我們對客戶業務有了以前從未有過的了解，那就是有多少獨立用戶正在使用該設備。

If there's 100 employees that are in this customer's facility, you know that, because those 100 people are in the database of people that can use the vending platform. And it also what -- of those 100 people can get these products versus those products.

如果該客戶的工廠有 100 名員工，您就知道這一點，因為這 100 人都在可以使用自動販賣機平台的人員資料庫中。而且，這100個人中，有多少人能得到這些產品，又有多少人能得到那些產品。

If I'm in the welding area, I have access to the welding tips. But if I'm not in the welding area, I don't have access to those six buttons if you will -- or those six products. And one thing that jumped out for us, where we had vending machines that were negative, and again it was a sizable number, is the number of employees in the database right now, versus a year ago had dropped.

如果我在焊接區域，我就可以拿到焊嘴。但是，如果我不在焊接區域，我就無法使用那六個按鈕——或者說那六種產品。我們發現一個很明顯的現象，那就是自動販賣機的餘額為負數，而且數量相當可觀。此外，資料庫中的員工人數與一年前相比有所下降。

And that group, the number of employees had dropped about 10%. And I don't recall offhand, how many customer locations this included. But that tells me we have a bunch of customers -- and our fastener business was negative at those customers. We have a bunch of customers who have downsized some operations, maybe they have fewer shifts, maybe they have fewer people per shift. But they had downsized, in this group about 10% actual headcount, and we were seeing in those machines, revenue down in the teens.

而該部門的員工人數則下降了約 10%。我一時想不起來這其中包括多少個客戶地點。但這說明我們有很多客戶——而我們在這些客戶那裡的緊固件業務是負成長的。我們有許多客戶縮減了部分業務規模，例如減少了班次，或減少了每班的人員。但他們縮減了規模，這個團隊的實際員工人數減少了約 10%，我們看到這些機器的收入下降了十幾個百分點。

So that's a case of there was some serious belt tightening going on. But there was just a drop in consumption, because there's a drop in the workload at that business. And that's -- the economics are such, that if there's fewer employees from a year ago, they need fewer safety glasses and gloves and the consumables that go with having people.

所以，這說明當時確實在嚴格控制開支。但消費量確實下降了，因為該企業的工作量減少了。這就是經濟法則：如果員工人數比一年前減少，那麼他們需要的安全眼鏡、手套以及其他與員工相關的消耗品也會減少。

Interesting. A couple more quick questions, if I could. What would prompt a resumption of the share repo activity? Is it just a matter of once you no longer require the capital for the Walmart initiative, or is it something else?

有趣的。如果可以的話，我還想問幾個問題。什麼因素會促使股票回購交易活動恢復？只是因為你不再需要沃爾瑪計畫的資金了嗎？還是另有其他原因？

I don't know if we know the answer to that right now, Sam. One of the -- personally, one of the advantages of bringing in somebody like Holden into the organization, is the perspective of Fastenal has historically been, we're boringly conservative Midwesterners. And we tend to look at the business probably not as financially astute as we should, and that's probably a reflection of the old CFO.

山姆，我現在還不知道我們是否知道答案。就我個人而言，將像霍爾頓這樣的人引入公司的一個優勢是，Fastenal 一直以來的觀點是，我們是沉悶保守的中西部人。我們看待企業的方式可能不夠精明，缺乏應有的財務洞察力，這或許反映了老一代財務長的思維方式。

I like the fact that we have a voice at the table that is going to challenge us to think about our business differently, the fact that -- think about our working capital, think about our capital structure. Just think about the business in general a little bit differently, doesn't mean we're going to change suddenly on our appetite for doing different things, because we've changed our appetite on that over the last two years. But we've been -- as you see from the numbers, we've been pretty quiet on the buyback. And I don't know that that will change in the next few months.

我很高興我們能在談判桌上擁有發言權，這將挑戰我們以不同的方式思考我們的業務，思考我們的營運資金，思考我們的資本結構。只是從另一個角度思考整個業務，但這並不意味著我們會突然改變對做不同事情的興趣，因為在過去的兩年裡，我們在這方面的興趣已經改變了。但正如你從數字中看到的，我們在股票回購方面一直保持低調。我不知道這種情況在未來幾個月內是否會改變。

When the decision was originally made, part of it was simply the capital structure had been so under -- so overly conservative, if you will. At this point, with 13% debt to cap is certainly not a lot. There is plenty of room to go higher should we choose to do so, but at the same time, we do in fact have debt at this point. So the same urgency to address our capital structure isn't quite where it might have been originally. And so, there may be reasons to buy back stock in the near to intermediate term, but there's no urgency to do so.

最初做出這個決定時，部分原因是資本結構過於保守——或者說過於保守。就目前而言，13%的債務上限確實不算高。如果我們願意，還有很大的提升空間，但同時，我們目前確實背負著債務。因此，解決資本結構問題的迫切性已經不如最初那麼高了。因此，短期到中期內可能有理由回購股票，但沒有必要急於這樣做。

And then the last question if --?

最後一個問題是──？

I'm going to -- Sam, I'm going to have to -- we're going to have to take that one offline. I see we're at 45 minutes past the hour, and we've always religiously held to the 45 minute conference call. I realize it's the start of earnings season. Everybody has a lot of demands on their time.

我得──山姆，我得──我們得把那個話題下線。我看到現在已經過了整點 45 分鐘，而我們一直嚴格遵守 45 分鐘電話會議的規定。我知道現在是財報季的開始。每個人都有很多事情要忙。

I want to close the call by thanking everybody for your interest in the Fastenal organization, and learning a little bit about our quarter, and about our growth drivers. I'm as excited about the opportunities for our business as I was a year ago, as I was five years ago, and really feel we've begun -- taken two nice steps, 2015 and 2016, into transitioning to an Onsite mentality for growth. And I'm excited about what that means for our future. Thank you, everybody, and have a good day.

最後，我要感謝大家對 Fastenal 公司的關注，感謝大家了解我們本季的業績以及我們的成長動力。我對我們業務的發展機會感到興奮，就像一年前、五年前一樣，而且我真的覺得我們已經開始了——在 2015 年和 2016 年邁出了兩個不錯的步伐，朝著以現場服務為導向的增長模式轉型。我對此感到非常興奮，因為這將對我們的未來產生積極的影響。謝謝大家，祝大家今天過得愉快。

Thank you.

謝謝。

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone have a wonderful day.

女士們、先生們，感謝各位參加今天的會議。程式到此結束，各位可以斷開連接了。祝大家今天過得愉快。