快扣 (FAST) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, welcome to the Fastenal Company Q1 2017 Earnings Results Conference Call. (Operator Instructions)

女士們、先生們，大家好，歡迎參加 Fastenal 公司 2017 年第一季財報業績電話會議。（操作說明）

I'd like to introduce your host for today's conference, Ms. Ellen Trester, you may begin.

我謹向大家介紹今天會議的主持人艾倫·特雷斯特女士，請您開始吧。

Welcome to the Fastenal Company 2017 First 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 open for questions and answers.

歡迎參加 Fastenal 公司 2017 年第一季財報電話會議。本次電話會議將由我們的總裁兼執行長丹·弗洛內斯和我們的財務長霍爾頓·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 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 homepage, investor.fastenal.com. A replay of the webcast will be available on the website until June 1, 2017, 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，不得對今天的通話進行任何錄音、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2017年6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.

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。

I would now like to turn the call over to Mr. Dan Florness.

現在我將把電話交給丹‧弗洛內斯先生。

Good morning, everybody, and thank you for taking some time today to listen to our first quarter earnings call. The -- you will note 2 meaningful changes to our method of reporting from prior quarters, and I attribute that to our CFO and our Chief Accounting Officer really challenging the format which we convey the information. You will find a much more abbreviated press -- earnings release document. And then something new is we have a short slide deck to supplement the earnings call to help on some of the talking points. I hope you find it useful.

各位早安，感謝大家今天抽空收聽我們第一季財報電話會議。你會注意到，與前幾季相比，我們的報告方法發生了 2 個重要的變化，我認為這要歸功於我們的財務長和財務長對我們傳達訊息的方式提出了真正的挑戰。您將找到一份篇幅較短的新聞稿/獲利發布文件。此外，我們也新增了一個簡短的投影片簡報，作為財報電話會議的補充，以幫助大家更能理解一些要點。希望對您有幫助。

My comments are going to primarily center on the first 2 pages of commentary, which I believe are Pages 3 and 4 in the book, if you're looking at those pages.

我的評論主要集中在評論的前兩頁，如果你看的是書的第 3 頁和第 4 頁，我認為就是這兩頁。

Earlier this morning, and this is typical with every quarter end, at 7 this morning, Central Time, had a call with our regional leaders and our national leaders: Talk a bit about the quarter, give them some insight, a little bit about what we're going to cover on the call, but really just give some insight on the quarter. I want to touch on a couple of points that were mentioned in that call and then we'll dig into the slide deck.

今天早些時候，就像每個季度末一樣，中部時間早上 7 點，我們與區域領導和國家領導進行了電話會議：談談本季度的情況，給他們一些見解，簡單介紹一下我們將在電話會議上討論的內容，但實際上只是對本季度的情況進行一些介紹。我想先談談電話會議中提到的幾個要點，然後再深入探討投影片內容。

The first one, and for those of you that have covered Fastenal for any period of time, you know that we are a sales-centered organization, a growth-centered organization. That's been our DNA for 50 years, and 2017 does mark our 50th year in business.

首先，對於那些關注 Fastenal 一段時間的人來說，你們都知道我們是一家以銷售為中心的企業，一家以成長為中心的企業。50年來，這已成為我們的DNA，而2017年正是我們公司成立50週年。

The first one centers on establishing goals and hitting goals. In the first quarter of 2017, we came in at roughly 101% of goal, 100.7% is the exact number, but roughly 101% of goal. And we hit or exceeded goal every month for the first quarter. I mention that because part of growth is a mind-set, an attitude. And I think we have a great mind-set and a great attitude of going forward, of serving our customers at a high level and challenging each other to grow and grow every day, every month, every quarter. And so very pleased with that.

第一種方法著重於設定目標和實現目標。2017 年第一季度，我們大約完成了目標的 101%，確切數字是 100.7%，但大約是目標的 101%。第一季度，我們每個月都達到或超過了目標。我之所以提到這一點，是因為成長的一部分是一種思考方式，一種態度。我認為我們擁有良好的心態和積極的態度，致力於為客戶提供高水準的服務，並不斷挑戰彼此，力求每天、每月、每季都取得進步。對此我非常滿意。

The second item that I felt was noteworthy is, if you look across our 2,400 store locations, our 400-plus Onsite locations, look at our business in general, you always have customers that are going through different aspects in their business cycle. We might be growing handsomely with that customer because we're picking up market share. We might be growing nicely with that customer because their business is expanding. Or we might be contracting with that customer because their business is contracting. And that is true of every one of our stores. So in any given month, a percentage of our stores grow and a percentage of our stores don't.

我覺得值得注意的第二點是，如果你縱觀我們 2400 家門市、400 多個現場服務點，縱觀我們整體的業務，你會發現客戶總是處於業務週期的不同階段。我們可能因為在該客戶那裡獲得豐厚的利潤成長，而獲得市場份額。我們與該客戶的合作可能會取得不錯的進展，因為他們的業務正在擴張。或者我們可能因為該客戶的業務萎縮而與他們簽訂合約。我們所有門市的情況都是如此。因此，每個月都有一部分門市實現成長，而一部分門市則沒有。

In the first quarter, over 60% of our stores, about 62% of our stores grew. The last time we did better than that was in the first quarter of 2015. And I cite that because as we transitioned from the first quarter of 2015 to the second quarter of 2015, the oil and gas market of which we had a meaningful presence collapsed in North America, collapsed globally, but collapsed in North America, and our business suffered as a result. So it's good to see us participating from a store-to-store perspective in growth in a way we did before the oil and gas business dramatically slowed.

第一季度，我們超過 60% 的門市，約 62% 的門市實現了成長。我們上一次取得比這更好的成績是在 2015 年第一季。我之所以引用這個例子，是因為在 2015 年第一季到 2015 年第二季過渡期間，我們擁有重要業務的石油和天然氣市場在北美崩潰，在全球範圍內崩潰，但在北美崩潰，我們的業務也因此遭受了損失。因此，很高興看到我們能夠以門市為單位參與成長，就像石油和天然氣業務大幅放緩之前一樣。

Getting onto the flipbook here. First item mentioned, demand gains drove daily sales growth of 6%, 6.2% annually. Again our fastest growth since the first quarter of '15 so that my earlier comments go hand in hand. Our fastener sales, which are really indicators of the economy in all honesty, have struggled ever since the second quarter of 2015. And that business grew, returned to growth in the first quarter. And that business represents over 1/3 of our revenue, about 36%, 37%.

接下來開始翻頁動畫。首先提到的是，需求成長推動了日銷售額成長 6%，年增率為 6.2%。這是我們自 2015 年第一季以來最快的成長速度，所以我之前的評論是一致的。說實話，我們的緊固件銷售額是經濟狀況的真正指標，自 2015 年第二季以來一直舉步維艱。而且該業務在第一季恢復了成長。這項業務占我們收入的三分之一以上，約佔 36% 或 37%。

Our non-fastener business grew at 9.5%, and in the month of March, grew almost 12%. So double-digit growth. So very pleased with the trends in our business as it relates to both aspects of Fastenal, fasteners and non-fasteners.

我們的非緊固件業務成長了 9.5%，3 月成長了近 12%。所以實現了兩位數的成長。我對公司業務的發展趨勢非常滿意，無論是在緊固件還是非緊固件方面。

Our pretax earnings grew 5.5%. It's the fastest rate of growth for us since the second quarter of '15. We achieved 20 basis points of operating expense leverage. And one thing about our business is we have a tremendous amount of incentive comp, a tremendous amount of investments we make periodically in our business. In 2015, we made dramatic investments, and as the economy weakened late in the year, we pulled those investments back. In 2016, it was a lot about righting the ship, lowering some operating expenses, improving some operating expenses to set us up for -- into '17 and '18 and beyond.

我們的稅前利潤成長了5.5%。這是自 2015 年第二季以來我們最快的成長速度。我們實現了 20 個基點的營運費用槓桿率。我們業務的一個特點是，我們有大量的激勵性薪酬，並且我們會定期對我們的業務進行大量的投資。2015年，我們進行了大手筆投資；但隨著年底經濟走弱，我們撤回了這些投資。2016 年，我們做了很多工作來扭轉局面，降低一些營運成本，改善一些營運成本，為 2017 年、2018 年及以後的發展做好準備。

I'm pleased by the fact that we had 20 basis points of operating expense leverage. When you consider the fact that incentive comp, which that was a historically low number in 2016, expanded nicely in the first quarter, because our incentive comp expands as our gross profit dollars and our earnings dollars grow. And so it expanded nicely, and that ate in to some of it. And our profit-sharing contribution that goes to our employees in general expanded nicely from Q1 to Q1. Despite those natural headwinds, we obtained operating expense leverage.

令我高興的是，我們的營運費用槓桿率達到了 20 個基點。考慮到激勵性薪酬在 2016 年處於歷史低位，但在第一季卻實現了不錯的增長，因為我們的激勵性薪酬會隨著毛利和盈利的增長而增長。於是它迅速擴張，但也因此吞噬了一部分。我們向員工提供的利潤分享額度從第一季到第二季都有了顯著成長。儘管面臨這些自然不利因素，我們還是實現了營運費用槓桿效應。

Very strong cash flow. First quarter is always strong for us as it is for everybody in our industry because of the absence of a large tax payment, but very pleased with it. Our capital spending is at a lower level as we'd talked about on our first quarter call. Or -- excuse me, our January call. And we didn't have the CSP 16 investment driving our inventory increase. In fact, if you remove the acquisition we did during the quarter, from December to March, our inventory essentially held flat.

現金流非常強勁。第一季對我們來說總是表現強勁，就像我們行業中的每個人一樣，因為沒有大額稅款支出，我們對此非常滿意。正如我們在第一季電話會議上所討論的那樣，我們的資本支出水準較低。或者——抱歉，應該是我們一月份的通話。而且，我們的庫存成長並非由 CSP 16 投資所推動的。事實上，如果剔除我們本季（12 月至 3 月）進行的收購，我們的庫存基本上保持不變。

Speaking of acquisition, on the last day of the quarter, we closed our acquisition of Manufacturers Supply Company, or Mansco. It's about a $50 million distributor, so for the next 12 months, we'll enjoy about an extra point of growth from this acquisition.

說到收購，在本季的最後一天，我們完成了對製造商供應公司（Mansco）的收購。這是一家市值約 5,000 萬美元的經銷商，因此在接下來的 12 個月裡，我們將從這次收購中獲得約 1 個百分點的額外成長。

Flipping onto our growth driver update on Page 2, some things I think are noteworthy. We got to a nice start on our Onsite signings. We signed 64 in the first quarter. We currently have 437 active Onsite locations. That's a 51% increase from the 289 we had at the end of last year. And our goal remains to sign 275 to 300 Onsites this year. That's a huge goal. Last year, we signed 176, which was more than doubling of the year before, where we had signed 80.

翻到第 2 頁，看看我們的成長驅動因素更新，我認為其中一些內容值得注意。我們的現場簽約工作進展順利。第一季我們簽下了64名球員。我們目前有 437 個活躍的現場服務點。這比去年年底的 289 人增加了 51%。我們今年的目標仍然是簽約 275 至 300 個現場服務點。那可是個遠大的目標。去年我們簽了 176 份合同，比前一年的 80 份合約翻了一番還多。

We also signed 5,437 vending units. That's a 17% increase from first quarter of last year. I didn't go back and look at it in detail, but those -- it was either the early part of 2013 or during 2012 when vending initially exploded for us from the standpoint of we really gained traction. It's probably the last time we've signed over 5,000 vending devices in a quarter. So very, very pleased with our start to the year. Our goal is to sign 22,000 to 24,000 for the year and very pleased with that. Probably the only challenge we had is, every year, there's a certain number of machines that we pull out. And we pulled out some machines in the first quarter. But again, very good traction as we enter the year and as sales of product through our vending machines grew double digits again.

我們還簽約了5437台自動販賣機。這比去年第一季成長了17%。我沒有回去仔細查看，但那些——要么是 2013 年初，要么是 2012 年，當時自動販賣機業務對我們來說開始爆發式增長，我們真正獲得了發展動力。這可能是我們最後一次在一個季度內簽約超過 5000 台自動販賣機。我們對今年的開局非常非常滿意。我們的目標是今年簽約 22,000 至 24,000 人，對此我們非常滿意。我們遇到的唯一挑戰可能是，每年我們都會推出一定數量的機器。第一季我們撤出了一些機器。但今年以來，我們的發展動能依然強勁，自動販賣機的產品銷售額再次實現了兩位數的成長。

National Accounts grew over 9% during the quarter. We've talked in previous quarters about sales to our top 100 customers. 64 of our top 100 customers grew with us, so that helped our national account number.

本季國民帳戶成長超過9%。我們在前幾個季度討論過前 100 位客戶的銷售額。我們前 100 名客戶中有 64 名與我們共同成長，這有助於提升我們的全國客戶數量。

Probably the one challenge point that I see when I look at that is if our -- if National Accounts represent roughly half our business and our business grew at 6% and National Accounts grew at 9%, it means the other half of our business is growing in the low single digits, 3% or so. That's a challenge. And you see that challenge shine through a little bit in our gross margin. The one positive in that though is as we exit the quarter, that group of local other customers changed from growing around 3% to about 5.5%. So a nice way to finish the quarter. And one of the things that's driving that number up a bit is the CSP investments we made last year. And that group of products are growing about 10.5% in the first quarter.

我看到的一個挑戰點是，如果我們的全國性客戶約占我們業務的一半，而我們的業務成長了 6%，全國性客戶成長了 9%，這意味著我們另一半業務的成長速度只有個位數，大約 3%。那確實是個挑戰。而這種挑戰也從我們的毛利率中略有體現。不過，其中一個積極的方面是，隨著本季結束，本地其他客戶的成長率從約 3% 變為約 5.5%。這是結束本季的一個不錯方式。而導致這個數字略有上升的原因之一是我們去年在 CSP 領域的投資。該類產品第一季成長約 10.5%。

With that, I'll turn it over to Holden.

這樣，我就把麥克風交給霍爾頓了。

Great, thank you, and good morning. Before jumping into the quarterly results, I do want to remind the listeners that as Dan said we closed the acquisition of Mansco on March 31. So what this means is our first quarter income statement is not going to reflect any of Mansco's revenues or costs, but our balance sheet will include the assumed working capital asset. So bear that in mind, and we'll call out where necessary, when we're removing that information.

太好了，謝謝，早安。在深入探討季度業績之前，我想提醒聽眾，正如丹所說，我們已在 3 月 31 日完成了對 Mansco 的收購。這意味著我們第一季的損益表將不會反映 Mansco 的任何收入或成本，但我們的資產負債表將包括假定的營運資本資產。所以請記住這一點，必要時我們會特別說明何時刪除該資訊。

But flipping over now to Slide 5. As Dan had covered on Slide 3, our total and daily sales in the first quarter of '17 were up 6.2%. That's a nice acceleration from up 2.7% in the fourth quarter. We do estimate that the benefit of the shift of Good Friday from March into April this year was about a 50 basis point benefit to the quarter. But regardless, even adjusting for this, the first quarter was the strongest that we've seen in the last 2 years. And frankly, that strengthening was also evident through the quarter, with March finishing up 8.4%. Now that does probably include about 100, 150 basis points benefit from holiday timing in the month in particular. But again, we just continued to see acceleration during the period.

但現在翻到第 5 張投影片。正如 Dan 在第 3 張投影片中所述，我們在 2017 年第一季的總銷售額和每日銷售額成長了 6.2%。與第四季成長2.7%相比，這是一個不錯的加速成長。我們估計，今年耶穌受難日從三月移至四月，為本季帶來了約 50 個基點的收益。但即便考慮到這一點，第一季仍然是近兩年來表現最強勁的季度。坦白說，這種強勢表現在整個季度也很明顯，3 月上漲了 8.4%。這其中可能包括因當月假期而帶來的約 100 至 150 個基點的收益。但是，我們再次看到，在此期間，加速成長的趨勢仍在持續。

On Page 5 of the presentation. First, the point is that the backdrop against which we're operating, it really did continue to improve in the quarter. The Purchasing Managers' Index in the U.S., which still represents 88% of our revenue, that averaged and improved to a pretty healthy reading of 57 in the period. Industrial production returned to growth, with an even stronger showing from key sub components like primary metal, fabricated metal and machinery, areas that are more pertinent to our business. And this broadening of industrial demand was reflected by the fact that, as Dan alluded to, a significantly greater number of our stores were actually growing in the first quarter relative to the 53% to 54% pace they have been set through 2016.

簡報第5頁。首先，關鍵在於我們所處的背景，本季情況確實持續改善。美國採購經理人指數（PMI）仍占我們收入的 88%，該指數在此期間平均上升並改善至相當健康的 57。工業生產恢復成長，其中初級金屬、金屬製品和機械等關鍵子部件的成長更為強勁，這些領域與我們的業務更為相關。正如丹所暗示的那樣，工業需求的擴大反映在這樣一個事實中：與 2016 年全年 53% 至 54% 的增速相比，我們第一季實際增長的門市數量明顯更多。

This general improvement showed up in other metrics that we track. Again, our fastener line returned to growth, finishing up 0.8% in the quarter. Growth at our largest customers, as reflected by the National Accounts, accelerated to be up 9% in the quarter. And that included up 11.5% in March. Growth among our manufacturing customers accelerated to be up 6.4%. And our construction customers also returned to solid growth, being up 4% in the quarter.

這種整體改善也體現在我們追蹤的其他指標中。我們的緊固件產品線再次恢復成長，本季成長0.8%。從全國客戶數據可以看出，我們最大客戶的成長速度加快，本季成長了 9%。其中包括3月上漲11.5%。我們的製造業客戶成長加速，增幅達 6.4%。我們的建築業客戶也恢復了穩健成長，本季成長了 4%。

The tone from the regional vice presidents mirror these improvements. There remains a great deal of enthusiasm around oil and gas. And during the quarter, the outlook for the general manufacturing space and the construction space also improved even as the quarter wore on. The only laggard we could see would be manufacturing that's going into transportation markets, things like heavy-duty truck, rail, et cetera. But other than that, frankly, on the whole, customer demand strengthened and broadened throughout the quarter, and we remain encouraged about the near-term trend.

區域副總裁們的聲明也反映了這些改進。人們對石油和天然氣仍然充滿熱情。而且，隨著季度的推進，製造業和建築業的整體前景也逐漸改善。我們唯一能看到的落後者是進入運輸市場的製造業，例如重型卡車、鐵路等等。但除此之外，坦白說，總體而言，本季客戶需求持續增強並不斷擴大，我們對近期趨勢仍然感到樂觀。

Now flipping over to Slide 6. Our gross margin was 49.4% in the first quarter, which is down 40 basis points versus the first quarter last year. Now we've discussed before the ramifications of the relative growth in our non-fastener and large customer mix in the short and intermediate term. And that dynamic probably explains about 30 basis points of the decline in gross margin this quarter.

現在翻到第 6 張投影片。我們第一季的毛利率為 49.4%，比去年第一季下降了 40 個基點。我們之前已經討論過，在短期和中期內，非緊固件和大型客戶組合的相對成長所帶來的影響。這種動態可能解釋了本季毛利率下降約 30 個基點的原因。

The remaining drag can be attributed to a couple of things. First, net freight expense remained a challenge in the first quarter. That said, I do want to note that the freight revenue actually rose on an annual basis for the first time since the first quarter of 2015. On top of that, while the freight expense is a challenge, we did see the overall expense improve in the first quarter relative to where we were in the fourth quarter and the third quarter of last year. So again, that was an impact on our gross margin, but we saw some signs of improvement there.

剩餘的阻力可歸因於以下幾個因素。首先，第一季淨貨運費用仍然是一個挑戰。儘管如此，我還是要指出，貨運收入自 2015 年第一季以來首次實現了年度成長。此外，雖然貨運費用是一個挑戰，但我們確實看到第一季的整體費用相對於去年第四季和第三季有所改善。所以，這再次對我們的毛利率產生了影響，但我們看到了一些改善的跡象。

Secondly, we did incur some costs in the period related to an inventory tracking initiative that we have in some in some of our non-U. S. markets. These 2 things were partly offset by growth in the sales and margin of our Fastenal brands products. But collectively, if you take the impacts of these latter items, they were relatively modest. And frankly, if we ignore mix and just look at our fastener and non-fastener lines, margins were actually stable to slightly higher in the period. As it relates it to pricing, there was not any meaningful impact from that source in the first quarter.

其次，在此期間，我們確實產生了一些與庫存追蹤計劃相關的成本，該計劃在我們一些非美國地區實施。美國市場。這兩方面的影響部分被我們 Fastenal 品牌產品的銷售額和利潤率的成長所抵銷。但總的來說，如果把這些因素的影響單獨考慮，它們的影響相對較小。坦白說，如果我們忽略產品組合，只看緊固件和非緊固件產品線，那麼在此期間，利潤率實際上保持穩定或略有上升。就定價而言，第一季該因素並未產生任何實質影響。

Now our operating margin was 20.3% in the first quarter. That's down 10 basis points on a year-over-year basis. But again, given that our gross margin was down 40 basis points, frankly, we believe our organization did a really nice job leveraging operating expenses in the period.

第一季我們的營業利益率為 20.3%。與去年同期相比下降了10個基點。但話說回來，考慮到我們的毛利率下降了 40 個基點，坦白說，我們認為我們公司在這段期間對營運費用的利用做得非常好。

I'm looking at a couple of numbers to make the point. Employee-related expenses were up 3.7%. This is well below sales growth. And that's despite the increase in bonus comp that Dan referred to, and it's a result of our being able to grow our revenues with a 1.7% decline in our FTE headcount. Now we did add almost 200 new employees in the first quarter over the fourth. And frankly, if demand remains strong, we would expect that headcount to keep rising. However, we are committed to being disciplined with the headcount and continuing to leverage this line.

我用幾個數字來說明這一點。員工相關支出增加了3.7%。這遠低於銷售成長率。儘管丹提到了獎金增加，但這仍然是由於我們在全職員工人數下降 1.7% 的情況下，仍然實現了收入成長。今年第一季度，我們比第四季度增加了近 200 名新員工。坦白說，如果需求保持強勁，我們預計員工人數會繼續增加。但是，我們致力於嚴格控制人員數量，並繼續利用這條生產線。

Occupancy-related expenses were only up 1.2% in the quarter. Now we've had 146 net store closures since the first quarter of last year, and that includes 23 this first quarter. And that's resulted in the flattening of the store occupancy expense. The modest increase in cost then is mostly attributable to vending growth. The higher selling transportation-related expenses were influenced by -- really it was a 23%, 24% increase in the price of diesel and unleaded fuel in the period versus last year.

本季與入住率相關的支出僅成長了1.2%。自去年第一季以來，我們淨關閉了 146 家門市，其中本季就關閉了 23 家。這使得店鋪租金支出趨於平穩。因此，成本的小幅成長主要歸因於自動販賣機的成長。銷售運輸相關費用增加，實際上是由於同期柴油和無鉛汽油價格較去年同期上漲了 23% 至 24%。

The incremental margin in the first quarter was 18.5%. However, we had been able to -- had we been able to hold the gross margin steady, this would have been well north of 20%. And we continue to believe that, assuming a stable gross margin, we can achieve 20%, 25% incremental margins at low to mid-single-digit growth and 25% plus incremental margins at mid- to high single-digit growth in 2017.

第一季的增量利潤率為 18.5%。然而，如果我們能夠維持毛利率穩定，那麼這個數字將會遠遠超過 20%。我們仍然相信，假設毛利率保持穩定，2017 年，在個位數低至中等增長的情況下，我們可以實現 20%、25% 的增量毛利率；在個位數中至高增長的情況下，我們可以實現 25% 以上的增量毛利率。

Flipping to Slide 7. We generated $210 million in operating cash in the first quarter. Now first quarters are seasonally stronger as the period's tax is not due until April. But by any measure, this was a record for any quarter. The amount also represents 156.8% of the quarter's net income, which is above last year's 131.9%. Better earnings contributed as did working capital, which I'll address in a moment.

翻到第 7 張投影片。我們第一季產生了 2.1 億美元的營運現金流。由於第一季的稅款要到四月才到期，因此該季度的業績通常具有季節性優勢。但無論從哪個角度來看，這都是季度紀錄。該金額也佔本季淨收入的 156.8%，高於去年的 131.9%。盈利能力的提高以及營運資金的增加都起到了作用，這一點我稍後會談到。

The net CapEx was $19.1 million, and that's down 34% on lower spending on CSP 16 and DC automation. As a result, our first quarter free cash flow was $191 million, up nearly 39%. We used the proceeds to pay down $93 million -- or to pay $93 million in dividends. We obviously acquired Mansco, and we still were able to lower our debt in the period by $25 million to $365 million at the end of Q1.

淨資本支出為 1,910 萬美元，比前一年下降了 34%，原因是 CSP 16 和 DC 自動化方面的支出減少。因此，我們第一季的自由現金流為 1.91 億美元，成長了近 39%。我們用這筆收益償還了 9,300 萬美元的債務——或者說，支付了 9,300 萬美元的股息。我們顯然收購了 Mansco，並且在第一季末仍能將債務減少 2,500 萬美元，降至 3.65 億美元。

Our debt-to-total capital at the end of the quarter was 15.6%, modestly below the 16.9% a year ago and 16.8% in fourth quarter of '16. We view our balance sheet as conservatively capitalized, with ample liquidity to continue to invest in our business and pay our dividend.

本季末，我們的債務與總資本之比為 15.6%，略低於一年前的 16.9% 和 2016 年第四季的 16.8%。我們認為我們的資產負債表資本充足，流動性充裕，可以繼續投資於我們的業務並支付股息。

In terms of the working capital. We're really comfortable with where the numbers came out. Receivables growth, if you exclude Mansco, was up about 6.5% in the quarter, and that was consistent with the growth in sales. Inventory, if you exclude Mansco, was up almost 3% in the first quarter, but it was flattish sequentially. And this reflects the absence of last year's heavy CSP-related inventory investment. It also reflects though just greater productivity from our distribution centers, and I think more energy enterprise-wide focusing on this line. Payables, if you exclude Mansco, were down about 19%. Last year's payables reflected the aggressive inventory investment we were making for CSP 16, so we had an easy comp there.

就營運資金而言。我們對統計結果非常滿意。如果排除 Mansco 的影響，本季應收帳款成長約 6.5%，這與銷售額的成長一致。如果排除 Mansco，第一季庫存成長了近 3%，但環比基本持平。這也反映出去年與 CSP 相關的巨額庫存投資的缺失。這也反映出我們配送中心的生產效率更高，我認為企業上下也更重視這條生產線。如果排除 Mansco 的支出，應付帳款下降了約 19%。去年的應付帳款反映了我們為 CSP 16 進行的積極的庫存投資，因此我們很容易進行比較。

The second quarter of 2017 should have seasonally lower operating cash flow, but better earnings and the absence of CSP spending suggest good cash flow for the full year. Similarly, we continue to anticipate lower CapEx in 2017 of approximately $120 million due to less spending on the DC automation and the leased lockers.

2017 年第二季的經營現金流應會因季節性因素而減少，但盈利狀況良好且沒有 CSP 支出，這表明全年現金流狀況良好。同樣，由於在資料中心自動化和租賃儲物櫃方面的支出減少，我們繼續預期 2017 年資本支出將減少約 1.2 億美元。

That's all we have for our formal presentation, and with that, we'll turn it over to the operator for questions.

我們的正式介紹就到這裡，接下來我們將把發言權交給接線員，回答大家的問題。

(Operator Instructions) Our first question comes from David Manthey with Baird.

（操作說明）我們的第一個問題來自 Baird 公司的 David Manthey。

First of all, Holden, I think you said that gross margin within the fasteners and the non-fasteners were each higher, but the mix was the thing that drove that 30 basis points of the gross margin degradation. Did I catch that right?

首先，霍爾頓，我想你說過緊固件和非緊固件的毛利率都更高，但正是產品組合導致了毛利率下降 30 個基點。我沒聽錯吧？

That's correct. If you look at just fasteners and non-fasteners without considering sort of the mix of those, you had margins that were slightly higher in both cases.

沒錯。如果只考慮緊固件和非緊固件，而不考慮它們的組合，那麼兩種情況下的利潤率都會略高一些。

Great. Okay. So as it relates to gross margins, 2 questions here. First, I'm wondering if you can help us understand the range of gross margin from sort of highest product to lowest and not to get specific on what those percentages are, but just so we understand the delta between the high and the low. And I'm thinking sort of the 80-20 rule here, products you sell every day, not manufactured or modified products, but just sort of general products available for sale. Could you just help us understand what the difference is between the high and the low? And then the second part of the question is, you mentioned that if you can keep the gross margin flat, you can get to 25% plus contribution margin. Assuming that this mix shift that's going on is pretty much a secular trend given your growth initiatives, if you're able to keep gross margin flat, what would be the mechanism that would get you there that you haven't been able to achieve over the past several years?

偉大的。好的。所以，關於毛利率，這裡有兩個問題。首先，我想知道您能否幫助我們了解毛利率的範圍，從最高產品到最低產品，而不是具體到百分比是多少，只是想了解最高和最低之間的差距。我這裡指的是 80/20 法則，也就是你每天銷售的產品，不是經過製造或改造的產品，而是可以銷售的普通產品。您能幫我們理解高點和低點的差異嗎？問題的第二部分是，您提到如果能維持毛利率不變，就能達到 25% 以上的貢獻毛利率。假設這種產品組合的轉變在你的成長計畫下基本上是一種長期趨勢，如果你能夠保持毛利率不變，那麼有什麼機制可以讓你實現過去幾年未能實現的目標？

I'm going to chime in and help Holden out a little with that question just given my years. First off, David, if you've known from prior conversations, the range of margins in our business are quite dramatic, depending on, are you selling something that's a relatively low value, a convenience pack item or something in our store that is, I need it right now and price really doesn't matter, I just need that item; to I'm basically brokering a transaction, and I'm getting paid a fee for brokering and I'm buying a palette of this product or something. So I mean, the ranges can be from the teens to 80%. I mean, if you really want to get crazy with it. But if you look at the bulk of our business, you really have a range that goes from probably the mid-30s to the low 60s. And our fastener product line runs in the 50s. Our non-fastener products as a group run in the 40s. And that kind of gives you some semblance of it. And you can see that play out when you're looking at a lot of our competitors in where their gross margins are and relative to the products they sell. And the only wildcard I'd throw into that would be the fact that, in our industry, we're a little bit unique in that we have one of the lowest cost structures for freight. And we all sell a product line that by and large a lot of items have relatively low value per pound. So freight becomes a big deal, and that's a structural advantage we have for years to come. If you look at some of the things that we have done or can do to manage to offset a piece of that mix-shift, and I think it's just that: we will be able to offset a piece of it over time because -- we've talked about our Onsite strategy and what that means. Just like we talked about our vending strategy or we talked about our non-fastener strategy, 10 and 20 years ago. All those things, over time, lowered our gross margin. And the way we offset it, one is by better sourcing; one is by structurally challenging ourselves to lower our trucking costs. And those are things we've done very effectively over the last 20 years. A third one is continuing to grow our exclusive brand offerings. And so it's really a case of looking at it and saying, here are our branded supplier offerings and working closely with those brands to grow that business. But over time, maybe narrow some of those bands -- oh, excuse me, brands. The other one is having a strategy for our exclusive brands. Today in the non-fastener world, exclusive brands are about 20% of our revenue. If you were looking at that a decade ago, it was probably 10% of our revenue. And I really don't see a reason why that can't be closer to 30% at some point in time. So it's continuing to challenge and carve out different pieces, and you can bring a cost savings to your customer and improve your gross margin at the same time.

鑑於我的年齡，我想插幾句，幫霍爾頓解答一下這個問題。首先，David，如果你從之前的談話中了解到，我們行業的利潤率範圍相當大，這取決於你銷售的是相對低價值的商品，比如便利包裝商品，或者我們店裡那種“我現在就需要它，價格真的不重要，我只需要那個東西”的商品；還是我基本上是在促成交易，我收取佣金，而我購買的是一整盤這種產品之類的商品。我的意思是，範圍可以從十幾個百分點到 80%。我的意思是，如果你真的想玩得盡興的話。但如果你看看我們業務的大部分，你會發現實際範圍可能在 30 多歲到 60 多歲之間。我們的緊固件產品線運行在 50 多個位置。我們的非緊固件產品整體銷售量在 40 多種。這樣就能讓你對它有一定了解。當你觀察我們許多競爭對手的毛利率以及他們所售產品的毛利率時，你就能看到這一點。我唯一要補充的不確定因素是，在我們的行業中，我們有點獨特，因為我們的貨運成本結構是最低的之一。我們銷售的產品線整體而言，許多產品的每磅價值都相對較低。因此，貨運變得非常重要，這將是我們未來幾年都將擁有的結構性優勢。如果你看看我們已經做了或可以做的事情，來抵消一部分這種組合轉變的影響，我認為就是這樣：隨著時間的推移，我們將能夠抵消一部分影響，因為——我們已經討論過我們的現場戰略及其意義。就像我們 10 年前、20 年前討論自動販賣機策略或無緊固件策略一樣。隨著時間的推移，所有這些因素都降低了我們的毛利率。我們彌補損失的方式有兩種：一是改善採購；二是挑戰自我，降低運輸成本。而這些正是我們在過去20年裡做得非常有效的事情。第三，我們將持續拓展獨家品牌產品線。所以，關鍵在於審視自身，找出我們品牌供應商的產品，並與這些品牌緊密合作，以發展這項業務。但隨著時間的推移，或許可以縮小其中一些範圍——哦，抱歉，是品牌。另一項是為我們的獨家品牌制定策略。如今在非緊固件領域，獨家品牌約占我們營收的 20%。如果十年前你來看這個數據，它可能占我們收入的 10%。我實在看不出為什麼這個比例在某個時候不能接近 30%。因此，它不斷挑戰並劃分出不同的部分，您可以為客戶節省成本，同時提高您的毛利率。

Our next question comes from Ryan Merkel with William Blair.

下一個問題來自瑞安·默克爾和威廉·布萊爾。

So I'm going to follow up on Dave's question. I guess we're all sort of wondering, you mentioned that mix was a 30 basis point year-over-year headwind. So should we assume that, that continues for the rest of the year? Or is there something that you're thinking about that could lessen that impact?

所以我要接著戴夫的問題來回答。我想我們都在想，你提到這種組合年比不利因素為 30 個基點。那麼我們是否應該假設這種情況會持續到今年年底？或者您是否考慮過一些可以減輕這種影響的措施？

I think the -- given where our mix is going, I think you could look to us every year to probably have a headwind like that. I mean, our growth drivers, when you think about Onsite and safety and vending and things like that, I mean, they lend themselves to that. So do I think that given where we're seeing our growth that, that is a reality each quarter of this year? It is. Now, as Dan alluded to, we still hope that there are some things that are going to contribute to somewhat better gross margins. Exclusive brands is something we talked about a lot. I called out the freight a little bit because again, while freight was a bit of a drag in the first quarter, there were some signs that perhaps the freight picture is getting a little bit better. And hopefully as we go into Q2 and Q3, we'll make further strides on that to help us sort of dig into that more structural decline, if you will. So I think the answer is, yes. That structural mix issue is certainly there. But we think that we have means by which to dig into that, if you will, and improve. Also bear in mind that we're coming into the Q1 gross margin. When we think about the decline versus the fourth quarter, some of that reflected the fact that the fourth quarter was an extremely strong period. And we went and looked at a couple of things. I mean, one thing we looked at was, fourth quarter of '16 was up 40 basis points over the third quarter. If you look back historically at what fourth quarters typically do against third -- sorry it's 5 -- I'm sorry, 50 basis points against it. If you look back historically at what Q4 typically looks like against Q3, it's been more like a 60 basis point decline. And last quarter, we called out, we didn't deleverage the trucking network as much as we historically perhaps have, and we had a number of other things that were small individually but added up that just went our way. And so I think a better way to think about the quarter -- about the first quarter number is, historically, if you look at how Q1 plays out versus the prior year's Q3, we were actually up 10 basis points versus last year's Q3, and historically, we're down a couple of -- 20 basis points or so, again, the preceding 5 years. So we believe that we should be able to dig more into that structural decline than we did this quarter. But we feel like we're making some progress on the freight, on the EBs and things of that sort. And yes, we're -- we don't view this as a degradation in our margin picture by any means.

我認為——鑑於我們目前的混合趨勢，我認為你們可以預見我們每年都會面臨類似的逆風。我的意思是，當我們考慮現場服務、安全保障、自動販賣機等等方面時，我們的成長動力就體現出來了，它們本身就有利於這一點。所以，鑑於我們目前的成長勢頭，我認為今年每季都會出現這種情況嗎？這是。正如丹所暗示的那樣，我們仍然希望有一些因素有助於提高毛利率。我們多次討論過獨家品牌這個主題。我稍微提到了貨運，因為雖然貨運在第一季有點拖累業務，但也有一些跡象表明貨運情況可能正在好轉。希望進入第二季和第三季後，我們能在這方面取得進一步進展，以幫助我們深入研究這種更具結構性的衰退。所以我認為答案是肯定的。這種結構混合問題確實存在。但我們認為我們有辦法深入研究這個問題，並加以改進。另外，請記住，我們即將進入第一季毛利率階段。當我們考慮與第四季相比的下滑情況時，部分原因在於第四季是一個非常強勁的時期。然後我們去看了一些東西。我的意思是，我們注意到的一點是，2016 年第四季比第三季成長了 40 個基點。如果你回顧歷史數據，你會發現第四季通常比第三季低——抱歉，是 5——抱歉，是 50 個基點。如果回顧歷史數據，第四季與第三季相比，通常會下降 60 個基點左右。上個季度，我們指出，我們沒有像以往那樣大幅降低卡車運輸網絡的槓桿率，而且還有一些其他事情，雖然單獨來看可能很小，但加起來卻對我們有利。所以我認為，看待本季度——也就是第一季度的數據——的更好方法是，從歷史角度來看，如果你看看第一季度與上一年第三季度的對比情況，我們實際上比去年第三季度增長了 10 個基點，而從歷史角度來看，在過去的 5 年裡，我們下降了大約 20 個基點。因此，我們認為我們應該能夠比本季更深入地探討這種結構性下滑。但我們感覺我們在貨運、EB 以及類似的事情上取得了一些進展。是的，我們——我們絕不認為這會對我們的利潤率造成任何損害。

I'll just add a couple of thoughts to that. So fourth quarter -- or excuse me, third quarter, we were at 49.3%. Here in the first quarter, we're at 49.4%. I always look at fourth quarter as being noisy, whether it's up or down. The other thing is, if you look at our -- the $60 million in growth we've had in the last 12 months, 50% of that came from either Onsite or vending. And so there's a certain weighting that goes in there, and we need to be executing better every day to offset a piece of that weighting. When I look at the margin in the first quarter, the only thing that I'm troubled by is there's about 10 to 15 basis points in there that I find just, personally, frustrating. But I think we're executing quite well.

我再補充幾點。所以第四季——或者抱歉，第三季度，我們的佔比是 49.3%。第一季度，我們達到了 49.4%。我總是把第四季看作是波動較大的時期，無論漲跌。另外，如果你看看我們過去 12 個月取得的 6,000 萬美元成長，其中 50% 來自現場銷售或自動販賣機。因此，其中存在著一定的權重，我們需要每天做得更好，以抵消一部分權重。當我查看第一季的利潤率時，唯一讓我感到困擾的是，其中大約有 10 到 15 個基點讓我個人感到非常沮喪。但我認為我們執行得相當不錯。

Okay. Well, that's helpful. So if few things go your way, your framework for 25%, 30% incremental margins at mid-single digits, high single-digit growth, that's still plausible for this year. But you do need the freight and you probably need mix helping you a little bit. Is that fair?

好的。那很有幫助。所以，如果很多事情都不如你所願，那麼你設定的 25%、30% 的增量利潤率，以及中等個位數、高個位數的成長目標，今年仍然是有可能實現的。但你需要貨運，可能還需要一些其他方面的幫助。這樣公平嗎？

Well, I mean, next 2 quarters, our comps change quite dramatically. And -- because we still were in a -- if you think of what was going on in 2015 and the early part of '16, we were getting traction on the Onsite model. We were correcting some -- getting some traction and fixing some things, and some customers were improving from the standpoint of our vending model. So if you think of the growth that's been occurring in the last 12 months and how that compares to the components of our business that were there in the 12 months prior to that, Q1 of '16 is kind of that one of those half -- last high watermarks. And again, every year I ignore Q4, whether it's a good or bad number, because I don't think it's indicative much of anything.

嗯，我的意思是，接下來的兩個季度，我們的比較數據將會發生相當大的變化。而且——因為我們當時仍然處於——如果你想想2015年和2016年初發生的事情，我們當時正在透過現場教學模式獲得成功。我們正在糾正一些問題——取得了一些進展，並解決了一些問題，從我們的自動販賣模式來看，一些客戶的情況也有所改善。所以，如果你想想過去 12 個月發生的成長，以及它與我們之前 12 個月的業務組成部分相比如何，那麼 2016 年第一季就有點像是上個世紀末的巔峰時期之一。每年我都會忽略第四季的數據，無論這個數字是好是壞，因為我認為它並不能說明什麼問題。

So yes, the commentary around the incremental margins is really to try to make a point that we believe from an operating expense standpoint that we can leverage those lines. And that's despite the fact that we are, as we grow, obviously, we have that shock absorber effect coming from incentive comp and that sort of thing. But the point about the sort of the leverage and those incremental margins is, we feel that we can continue to leverage those lines. And we did a nice job leveraging those lines in Q1, and we think that we'll continue to do a good job leveraging those lines. And yes, if the gross margins cooperate and we do have some easier gross margins to compare against in Q2, Q3, but if the gross margins are stable, then we think that we can get the kind of incremental margins that we've spoken about.

所以，是的，關於增量利潤率的評論實際上是為了說明，我們認為從營運費用的角度來看，我們可以利用這些產品線。儘管隨著我們的發展，很明顯，激勵性薪酬等措施會起到緩衝作用，但這仍然影響著我們。但關於這種槓桿作用和增量利潤，我們認為我們可以繼續利用這些產品線。我們在第一季很好地利用了這些產品線，我們認為我們將繼續善用這些產品線。是的，如果毛利率配合，而且我們在第二季和第三季確實有一些更容易比較的毛利率可以比較，但如果毛利率保持穩定，那麼我們認為我們可以獲得我們所說的增量利潤。

Our next question comes from Scott Graham with BMO Capital Markets.

下一個問題來自 BMO 資本市場的 Scott Graham。

Obviously, a little bit more on this operating leverage thing. So if you were to sort of sketch out how you generate operating leverage, gross income versus your O&A expenses, is there a way to look at this with sales, whether you're sales is basically where it is and where the trends are going, mid- to high single, does that give you -- is that more of a gross margin thing leverage or SG&A. And then sort of a higher level or, let's say, low- to mid-single, does that switch between those 2 lines? Can you kind of maybe sketch out how you look at that?

顯然，關於經營槓桿這方面還需要再多說一些。所以，如果你要大致勾勒出你如何產生經營槓桿，毛收入與你的經營及管理費用，有沒有辦法從銷售額的角度來看這個問題？無論你的銷售額目前處於什麼水平，以及未來的發展趨勢如何，是處於中等偏高的水平，這是否能為你帶來——這更多的是毛利率槓桿還是銷售、一般及行政費用槓桿？那麼，在更高的水平，或者說，低到中等的單音水平，它會在這兩條線之間切換嗎？你能大概概括一下你的看法嗎？

So again, the guidance that we've sort of given on that is, if we hold gross margin stable, then we think that we can get those types of incremental margins just by leveraging the SG&A as we grow. So when we envision discussing those incremental margin levels, I mean, that really talks about leveraging our SG&A more so than the gross profit. And again, it's -- we saw some good signs of that. The -- we talked a little bit about how employment grew and occupancy grew from a cost standpoint. But if you really look at it, when we think about like sales per head for instance, that was up 10% during the quarter, right, because we grew revenues nicely on slightly lower FTE. And that's -- those are sort of the keys to how we get the type of incremental margins that we hope to get. But the discussion that we've had was really we wanted to address our ability to leverage our operating expenses and intending to hold gross margin flat. So if we can achieve significant improvements in our gross margin, I think that that's additive. But again, that's working against the structural mix that we've spoken about.

因此，我們給出的指導意見是，如果我們保持毛利率穩定，那麼我們認為，隨著業務成長，我們可以利用銷售、管理及行政費用來實現這些增量利潤。所以，當我們設想討論這些增量利潤水平時，我的意思是，這實際上更多是在討論如何利用我們的銷售、一般及行政費用，而不是毛利。而且，我們看到了一些好跡象。我們稍微討論了一下從成本角度來看就業成長和入住率成長的情況。但如果你仔細觀察，例如我們考慮人均銷售額，這個季度增長了 10%，對吧，因為我們在 FTE 略低的情況下實現了收入的良好增長。而這些——這些就是我們獲得我們所希望獲得的增量利潤的關鍵。但我們討論的重點實際上是，我們希望解決如何有效利用營運費用並保持毛利率不變的問題。所以，如果我們能在毛利率方面取得顯著進步，我認為這是有益的。但再一次，這與我們之前討論的結構性組合背道而馳。

Yes, I guess I get that, Holden, but where -- I guess, where I'm coming from on this is that if you're putting more stuff in the box or putting more boxes in a truck, there should be gross margin leverage on that, too, right?

是的，我大概明白你的意思了，霍爾頓，但是——我的意思是，如果你在箱子裡裝更多東西，或者在卡車裡裝更多箱子，那麼毛利率也應該有所提高，對吧？

Well, that would be the leverage on the freight side in that you're having better utilization. First off, we have really excellent utilization of our trucking network today. And so it's not so much about you're putting more boxes into a truck. It's those boxes you're putting into the truck, what customer are they going to, what's the nature of the business. If it's a box or an item that's going into a vending machine and it's a -- maybe it's a safety product, it's going to have a different margin profile than if it's a box of fasteners that's going into an MRO user. And so it's really depending on what that box is destined for. The other thing to remember is, as a distributor, the very large majority of the cost that runs through COGS for us is simply the cost of the product. So there may be pieces within COGS that we can get leverage on, but at the end of the day, the very large majority of what goes through cost on COGS is going to be the cost of the product.

嗯，這就是貨運方面的優勢所在，因為你的資源利用率更高了。首先，我們目前的貨運網路利用率非常高。所以，關鍵不在於你往卡車裡裝了多少箱子。你要考慮的是，你裝進卡車的那些箱子，它們是要送到哪個客戶那裡，它們的業務性質是什麼。如果是要放入自動販賣機的盒子或物品，而且是——也許是安全產品，那麼它的利潤率與要放入 MRO 用戶的緊固件盒的利潤率就不同。所以，這真的取決於那個箱子最終的用途。另一點要記住的是，作為經銷商，我們透過銷售成本（COGS）支付的大部分成本只是產品成本。因此，我們或許可以利用銷售成本中的某些部分，但歸根究底，銷售成本中的絕大部分仍然是產品成本。

Okay, got you. And then the follow-up question essentially, is on share repurchases. Is there a point in time, is there a -- I'm sure you've worked this carefully through an ROIC analysis and all that. Is there some type of trigger for share repurchases in '17 that you envision?

好的，明白了。那麼，接下來的問題就實際上是關於股票回購的。是否存在某個時間點，是否存在…我相信您已經透過 ROIC 分析等方法仔細研究過這個問題。您認為2017年是否會有某種觸發股票回購的因素？

I'll respond on that one. We have no trigger place that says we'll buy back or we won't buy back. That's a conversation we have with our board on a regular basis. We have not been in the market for some time. Historically, we've preferred to use our excess cash from the perspective of investing in the business, investing in our growth. And if -- in periods where we're not growing enough to use up all the cash we generate, because the cash we generate is quite attractive. History has said the bulk of that cash, we return to our shareholders in the form of dividend. That's just the way we've structurally handled over time. Our earnings -- excuse me, our dividend release that went out last evening. It's a good 10-year history to give you a perspective on that. No secret to anybody on this call, our stock carries an attractive multiple. And the periods where you've seen it, we've had some periods where the multiple fell off, and we took some excess cash or we took some -- we incurred some borrowings to buy back some stock. But we focus our -- we really focus our time and energy on growing the business long term, because we think that's in the best interest of our shareholder. And in the short term, we return a fair part -- amount of cash through dividends.

我會就此作出回應。我們沒有設定回購或不回購的觸發點。這是我們與董事會定期討論的議題。我們已經有一段時間沒有進入市場了。從歷史上看，我們更傾向於將多餘的現金用於投資業務，並投資於我們的發展。而且，在成長不足以消耗我們所產生的全部現金的時期，因為我們所產生的現金相當有吸引力。歷史經驗表明，我們將大部分現金以股息的形式回饋給股東。這只是我們長期以來在結構上處理問題的方式。我們的收益——抱歉，是昨晚發布的股利公告。回顧過去十年的歷史，可以讓你對這個問題有更全面的了解。在座各位都心知肚明，我們的股票估值倍數很有吸引力。在您看到的那些時期，我們經歷了一些倍數下降的時期，我們提取了一些多餘的現金，或者我們借了一些錢來回購一些股票。但我們真正將時間和精力集中在業務的長期發展上，因為我們認為這符合股東的最大利益。短期內，我們會透過股息回饋相當一部分現金。

And recall that, I mean, last year, we had the leased locker program show up, which is not somethings that's expected to begin the year. And our first priority is to use our resources to be able to grow. And so we had a very nice quarter in Q1 by any measure. Q2 won't be as high. And we used some of those resources to acquire a great company. And...

請記住，我的意思是，去年我們推出了租賃儲物櫃計劃，這並非年初就應該發生的事情。我們的首要任務是利用我們的資源來實現成長。因此，無論從哪個角度來看，我們第一季的業績都非常好。第二季不會像第一季那麼高。我們利用其中的一些資源收購了一家很棒的公司。和...

When you say Q2 won't be as high, you're talking about the cash relative to earnings.

你說第二季不會像第一季那麼高，指的是現金流相對於收益的比例。

In terms of the cash, correct, relative to earnings just because of the double tax payments. But in Q1, we used the resources to buy a great company. And as a result, our leverage is in basically the same area that it has been for some time. And at this point, we prefer to kind of look for other opportunities internally to spend our resources on. And like it did last year, you never know when they're going to come up. So that remains the priority and what we're looking for.

就現金而言，沒錯，相對於收入而言，這只是因為雙重課稅。但在第一季度，我們利用這些資源收購了一家很棒的公司。因此，我們的槓桿作用基本上與一段時間以來的情況相同。目前，我們更傾向於在公司內部尋找其他機會來投入資源。就像去年一樣，你永遠不知道它們什麼時候會出現。所以這仍然是我們的首要任務，也是我們正在尋找的目標。

Our next question comes from Robert McCarthy with Stifel.

我們的下一個問題來自 Stifel 公司的 Robert McCarthy。

One housekeeping item, which Holden, I think we discussed. But just on Page 10 of your well-applauded new slide deck, you have a new benchmark out. And just remind, I think, myself and investors, this is a new benchmark than the one you've published, right, that's going to be taking into account the 5-year average from '12 to '16 as opposed from '11 to '15, is that correct?

還有一件家事，霍爾頓，我想我們討論過。但是，就在你備受讚譽的新投影片簡報的第 10 頁，你就提出了一個新的基準。我想提醒一下我自己和投資者，這是一個與您之前發布的基準不同的新基準，對吧？這個新基準將考慮 2012 年至 2016 年的 5 年平均值，而不是 2011 年至 2015 年的 5 年平均值，是這樣嗎？

That's correct. In last year's documents, we had 2 benchmarks that we were referring to. One was sort of our historical way of looking at it which looked at most years from 1998. And then the other one was sort of the 5-year average that last year would've included 2011 to 2015. As the calendar rolled forward, so did our 5-year average into 2012 to 2016, and that's what we're focusing on now for a benchmark.

沒錯。在去年的文件中，我們提到了兩個基準。其中一個方法是我們從歷史角度來看這個問題，這種方法著眼於 1998 年以來的大部分年份。另一個指標是五年平均值，去年的數據包含了 2011 年至 2015 年。隨著日曆向前推進，我們的 5 年平均值也從 2012 年到 2016 年，這就是我們現在關注的基準。

Perfect. Okay. I just want to make sure that people saw that. Now I guess, in terms of -- on the fastener side of the house, what's your expectation for -- could you review, and I do apologize if you already kind of walked through this, your expectations for what you saw for price in the quarter in terms of growth? And then what are your expectations for the balance of the year in terms of where we could see some price on the fastener side of the house?

完美的。好的。我只是想確保人們看到了這一點。現在我想問的是——就緊固件業務而言，您對——能否回顧一下，如果您已經談到過這一點，我深表歉意——您對本季度價格增長的預期？那麼，您對今年剩餘時間緊固件價格的走勢有何預期？

Right. So pricing was not a meaningful factor in the quarter. Price is something that we just continue to review at this point. Now we obviously have seen some of our competitors take price increases. Many of them have talked about it publicly. We've seen charts where prices for metals are clearly up. So it's hard to conclude anything other than the environment today is certainly more inflationary than it's been in quite some time. But that said, Fastenal has the advantage of being a FIFO company with a pretty long supply chain for fasteners, and that means it takes a while for costs to hit our COGS. And that gives us the ability to evaluate how durable the marketplace is for pricing. And if you remember, last year, there was a time or 2 where we thought pricing could occur and then it wound up not materializing for, probably, demand reasons. And so it's nice to be able to get that sort of look, if you will. I think the real question at this point is, if the marketplace in fact does look like it's going to be willing to accept pricing, is that something that we believe we can get to protect our margins and protect our place in the market? And the answer is, we think that we can, but we do have some time to evaluate it at this point.

正確的。因此，定價在本季並不是一個重要的影響因素。目前，價格是我們仍在評估的一個問題。現在我們顯然已經看到一些競爭對手提高了價格。他們中的許多人都公開談論過此事。我們已經看到圖表顯示金屬價格明顯上漲。因此，除了當今的經濟環境比以往任何時候都更具通膨性之外，很難得出其他結論。但即便如此，Fastenal 的優勢在於它是一家先進先出 (FIFO) 公司，擁有相當長的緊固件供應鏈，這意味著成本需要一段時間才會影響到我們的銷售成本。這使我們能夠評估市場定價的穩定性。如果你還記得的話，去年有一兩次我們認為價格可能會上漲，但最終由於需求方面的原因，價格上漲並沒有發生。所以，能夠擁有那種外觀，如果你願意這麼說的話，也挺不錯的。我認為目前的真正問題是，如果市場確實看起來願意接受這樣的定價，我們是否相信我們能夠獲得這樣的定價，從而保護我們的利潤率和市場地位？答案是，我們認為可以，但目前我們還有一些時間來評估。

I mean, just looking at the math, would it be -- would there be any way that those price action, say, the inflation did rear its -- well, attractive head in this context for the balance of the year, do you think you could overcome the mix headwind to gross margins? Would that math work or not?

我的意思是，僅從數學角度來看，如果通貨膨脹在今年剩餘時間內抬頭，在這種情況下，價格走勢是否有可能出現不利因素？你認為你能克服毛利率面臨的組合不利影響嗎？這樣計算可行嗎？

Well, in the short-term? Well, sure it would.

短期內呢？當然會。

Yes. So there's enough juice there for that to occur?

是的。所以那裡有足夠的能量發生這種情況？

Yes, but keep in mind, our inventory turns twice a year, roughly. So it would be a short-lived event.

是的，但請記住，我們的庫存大約一年週轉兩次。所以這只是一件曇花一現的事。

All right. And then last question because I know you've got to move on to others on the call. Could you just talk about perhaps March in terms of your expectations kind of exiting February, taking into account the Easter shift, how you feel about the month and how you feel about kind of the prospects exiting the month?

好的。最後一個問題，因為我知道你還要繼續回答其他電話會議的問題。您能否談談您對三月的期望，也就是在經歷了二月份的過渡期之後，考慮到復活節假期的影響，您對三月份的感受以及對三月份前景的看法？

We felt better and better, I think, as the quarter wore on.

隨著學期的進行，我們感覺越來越好。

And the month.

以及這個月。

And the month wore on. The -- when I think about the feedback that we're getting from our regional Vice Presidents about their marketplace, we talked about how in December, we started getting some pretty stories about the oil and gas business that weren't translating on the ground. But by the time you got to February, you were starting to see the oil and gas business really sort of pick up again and showing itself in results. And frankly, through March, that continues to be the case, and I think there remains enthusiasm from that area. But what we began to see begin to gain some real excitement as we exited February and then into March was the manufacturing side. And frankly, the construction side. There seems to have been a consensus that has come together through March from our regionals that construction is doing much better. And I think you can see some of that in the growth of the CSP products. I mean, the fact they grew 10% plus in the quarter, I think, tells you something about construction as well. So the -- even as recently as December, the marketplace didn't feel that great. But as we proceeded through the quarter and through the month of March, there was clear progress and improvement in the tenor of the marketplace.

一個月就這樣過去了。當我想到我們從區域副總裁那裡得到的關於他們市場的反饋時，我們談到，12 月我們開始聽到一些關於石油和天然氣行業的漂亮故事，但這些故事並沒有在實際操作中得到體現。但到了二月份，石油和天然氣產業就開始真正復甦，並在業績中有所體現。坦白說，這種情況一直持續到三月份，我認為該地區仍然充滿熱情。但到了二月下旬到三月，我們開始看到製造業方面出現了一些真正的亮點。坦白說，還有建築方面。3 月以來，我們各地區的代表似乎已經達成共識，認為建築業的狀況已經好轉很多。我認為從 CSP 產品的成長中也可以看出這一點。我的意思是，他們本季成長超過 10%，我認為這也能說明建築業的一些問題。所以——即使到了去年12月，市場感覺也不太好。但隨著季度的進展和三月的到來，市場氛圍明顯好轉。

Would you read much into the Easter shift going into April? I mean, how should we think about it? Was -- did it rob 200 basis points in March? Or it was actually more favorable March, rather, would we expect further deceleration in April?

你認為復活節到四月的這段時間變化很大嗎？我的意思是，我們該如何看待這個問題？3月它真的損失了200個基點嗎？或者說，3 月的情況實際上更有利，我們是否可以預期 4 月會進一步放緩？

In the quarter, it -- the shift cost us about 50 basis points. In March, it cost us about 150.

本季度，這一轉變使我們損失了約 50 個基點。三月份，我們花了大約 150 美元。

Right. No, but it did cost you let's say -- yes.

正確的。不，但這確實讓你付出了代價——是的。

It's probably around 5 -- it's probably around 1/3 of a day, if you think about it, Rob, historically. So it gave us probably around $5 million lift in March, and you probably give it back in April.

大概是 5 點左右——羅布，如果你仔細想想，從歷史角度來看，這大概是一天的三分之一。所以它在 3 月可能為我們帶來了大約 500 萬美元的收益，而你可能在 4 月就把它還回去了。

Right.

正確的。

Our next question comes from Robert Barry with Susquehanna.

下一個問題來自薩斯奎哈納的羅伯特·巴里。

I wanted to follow up on this op margin -- sorry, op leverage outlook. You keep referring to stable gross margin but just given where the growth is coming from, it also sounds like we're going to continue seeing some gross margin pressure here for a little while. So is the bottom line that for now op leverage is likely to be more in this high-teens level? Or maybe even a little lower given the headcount has started to grow?

我想跟進一下這個營業利潤率——抱歉，是營業槓桿率展望。你一直提到毛利率穩定，但考慮到成長的來源，聽起來我們還會繼續看到毛利率在一段時間內面臨一些壓力。所以，目前的結論是，營運槓桿率可能更可能維持在十幾個百分點的水平嗎？考慮到員工人數已經開始成長，或許還要略低？

Yes, I mean, again the motivation was to just emphasize the degree to which we think we can leverage operating expenses, right? That's why we talk about with the presumption that we hold gross margins stable. Now as Dan alluded to, gross margins were much higher in Q1 than they'll be in Q2, Q3, so we'll see what happens there. But we remain committed to be able to achieve the leverage of the operating expenses. And we're going to just keep doing work to try to dig into the structural decline in the gross margin that you start with. And we certainly have had that conversation with our regionals and our folks. And said I think that there were some early signs within the freight side, that maybe there's some progress there. So we're just going to have to keep working on improving the gross margin metric. But we do anticipate getting leverage. With regards to the headcount, we would expect that to move up as demand goes up, and also as we continue to accelerate our Onsite signings. We -- Onsite signings take some folks in the store, and we like to backfill those and really get a lot of energy in that store to keep growing from the new base. And so as growth in our -- growth drivers continue to move up, then we would expect to add heads. But again, we saw some good productivity in Q1. And we're not just looking to give that productivity up. We got to do something to support our growth, but we're not looking to begin to dilute that productivity by adding heads too quickly.

是的，我的意思是，我們的動機再次是為了強調我們認為我們可以在多大程度上利用營運費用，對吧？這就是為什麼我們討論時假設毛利率保持穩定。正如丹所暗示的那樣，第一季的毛利率遠高於第二季和第三季度，所以我們拭目以待。但我們仍然致力於實現營運費用的槓桿效應。我們將繼續努力，深入探究毛利率結構性下降的原因。我們當然已經和各區域辦事處及員工進行過這方面的討論。他說，我認為貨運方面已經出現了一些早期跡象，表明可能取得了一些進展。所以我們必須繼續努力提高毛利率指標。但我們預計會獲得談判籌碼。至於員工人數，我們預計隨著需求的成長以及我們繼續加快現場簽約進程，員工人數也會增加。我們－現場簽名活動會吸引一些顧客到店裡，我們喜歡填補這些空缺，讓店裡充滿活力，從而在新顧客的基礎上繼續發展壯大。因此，隨著我們成長驅動因素的持續成長，我們預計會增加人手。但是，我們再次看到第一季生產力表現良好。我們並非想要放棄這種生產力。我們必須採取一些措施來支持公司的發展，但我們不希望透過過快增加人手來降低生產力。

Got you. I mean, I don't want to beat a dead horse here, but just to connect the dots, I mean, it sounds like if gross margin is stable, you can lever in the 20s. If gross margin continues to move down, then we're probably levering in the teens. Is that fair?

抓到你了。我的意思是，我不想老生常談，但只是為了把事情聯繫起來，我的意思是，聽起來如果毛利率穩定，你可以使用 20 倍以上的槓桿。如果毛利率持續下降，那麼我們的槓桿比率可能只有十幾個百分點。這樣公平嗎？

A couple of things I'll throw in. It depends on what your top line growth assessment is. In previous calls, we've said south of 6%, 7%, it's difficult with the cost components we had coming out of '15 and into the first part of '16. That picture improves and lowers it some, and that's why you saw our ability to grow our operating expenses roughly 5.5%. And if you think about that, you have to take a look at what drove the operating expense increase when you look at Q1 to Q1. I often try to pull things into some buckets so I can think about them easier. 25%, 30% of that increase is incentive comp, whether it's in a commission in a store, a bonus paid to somebody outside the store, the profit-sharing contributions, those things that are expanding as our profit growth improves, that's really what drives our labor cost increase right now. It's not so much about headcount because the headcount you're adding typically in a period like this, a lot of it is more on the entry level side, so you could manage through that. If you think of what's the next the biggest group of costs that drove our expense up. We've been -- it's no secret, we've been increasing our IT spend over a number of years. We have some pieces that are turning on actually this quarter that will help our store, our Onsite model quite meaningfully. We're turning on our new website up in Canada. So there's things that we're turning on that are sizable investments. Those investments we've been making and have been going through our P&L. And the other component when I think of that second bucket that was a jump from last year, was the fuel that Holden talked about. It's a big increase in our cost component. That piece of it normalizes in Q2. Because last year, from Q1 to Q2, fuel prices jumped up dramatically, so we'll lap that in Q2, but we haven't lapped it in Q1. The final driver of increases is the continued success we're seeing in vending. We when we add those vending machines, there's an expense that shows up in our occupancy around the cost of the equipment. So those things are really what's driving it. And outside of that, managing the expense really, really quite well. And so it puts us in a position when we go into the deeper part of the year, I believe, to be a little bit more optimistic.

我再補充幾點。這取決於你對營收成長的評估結果。在先前的電話會議中，我們說過，低於 6%、7% 的成本組成是很難實現的，因為這是 2015 年末到 2016 年初的成本組成。這種情況有所改善，並有所改善，因此你們可以看到我們的營運費用增加了大約 5.5%。如果你仔細想想，你必須看看是什麼因素導致了第一季到第二季營運費用的成長。我經常嘗試把事情歸類到不同的類別中，這樣我就能更容易思考它們。其中 25% 到 30% 的成長是激勵性薪酬，無論是門市的佣金、支付給門市外員工的獎金、利潤分成等，這些隨著利潤成長而增加的項目，才是目前勞動成本成長的真正驅動因素。關鍵不在於人員數量，因為在這種時期增加的人員通常都是入門級員工，所以應該可以應付。想想看，導致我們支出增加的下一個最大成本類別是什麼。眾所周知，多年來我們一直在增加IT方面的支出。本季我們將推出一些新項目，這些項目將對我們的門市和現場營運模式有非常重要的幫助。我們的新網站在加拿大上線了。所以，我們正在啟動一些需要大量投資的項目。我們一直在進行的這些投資，並且已經在我們的損益表中進行了核算。而當我想到第二個成長點（比去年有了顯著提高）時，另一個因素就是霍頓談到的燃料。這將大幅增加我們的成本組成。這部分在第二季會恢復正常。因為去年第一季到第二季度，燃油價格大幅上漲，所以我們在第二季度會趕上這一漲幅，但在第一季我們還沒有趕上。推動成長的最後一個因素是自動販賣機業務的持續成功。當我們增加這些自動販賣機時，設備成本會增加我們的租金支出。所以，這些因素才是真正的驅動力。除此之外，費用控制也做得非常好。因此，我相信，這讓我們在進入今年下半年時，能夠更加樂觀。

Thanks, everybody. It's about 45, 46 minutes past the hour. Thank you for your interest in Fastenal. I'll close the way I started. I'm pleased, quite frankly, with the quarter from the standpoint of the business is executing better. Our end markets are given us some lift. We are giving ourselves some lift. Thank you.

謝謝大家。現在大約是整點過45、46分鐘。感謝您對 Fastenal 的關注。我將以與開頭相同的方式結束。坦白說，我對本季業績感到滿意，因為業務執行情況有所改善。我們的終端市場為我們帶來了一些提振。我們正在給自己一些鼓勵。謝謝。

Thank you.

謝謝。

Ladies and gentlemen, that does conclude today's presentation. You may now disconnect, and have a wonderful day.

女士們、先生們，今天的演講到此結束。現在您可以斷開連接了，祝您度過美好的一天。