快扣 (FAST) 2017 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Fastenal Company 2017 Third Quarter Earnings Conference Call. (Operator Instructions) As a reminder, this conference call may be recorded.

女士們、先生們，大家好，歡迎參加 Fastenal 公司 2017 年第三季財報電話會議。（操作員說明）提醒：本次電話會議可能會被錄音。

I would now like to turn the conference over to Ellen Trester, Investor Relations. You may begin.

現在我將把會議交給投資者關係部的艾倫·特雷斯特。你可以開始了。

Welcome to the Fastenal Company 2017 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 will 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·弗洛內斯和我們的財務長霍爾頓·劉易斯主持。電話會議將持續最多 45 分鐘，首先將對我們的季度業績和營運情況進行總體概述，剩餘時間將用於提問和解答。

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 December 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.

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。

Thank you, Ellen. Good morning, everybody, and thank you for joining us on our third quarter earnings call.

謝謝你，艾倫。各位早安，感謝各位參加我們第三季財報電話會議。

Holden asked me to stay pretty tight to the script today, so I'm going to be going through the slide deck, first couple of slides of that. But I will preface the -- my comments with just a few thoughts, and this is as much a shout out to our Fastenal team as it is to our Fastenal shareholders.

霍爾頓要求我今天嚴格按照劇本進行，所以我將照著幻燈片講解，先講前幾張幻燈片。但在我的評論之前，我想說幾點想法，這既是對我們的 Fastenal 團隊的讚揚，也是對我們的 Fastenal 股東的讚揚。

My first comment to the team is job well done in the quarter. For 9 consecutive months in 2017, we have exceeded our internal goals for sales growth. I'm proud of the team, and I'm happy for the team.

我對團隊的第一個評價是：你們本季工作完成得很好。2017年，我們連續9個月超額完成了內部銷售成長目標。我為這支隊伍感到驕傲，也為這支隊伍感到高興。

Last December, I challenged them at our annual gathering of the leadership of Fastenal with 3 simple messages as we approached 2017. One is let's just grow -- let's just go out and grow our sales. Let's get the business growing. We have a lot of growth drivers. Let's execute and grow our sales. Secondly, let's manage the business well and grow our earnings because long term, the rewards we can create for our customer, our employees, our shareholders and ourselves are centered on our ability to grow our earnings and our returns long term. And if we grow it faster than other companies that you can choose to invest in, the market will reward us from the standpoint of valuation and our employees will benefit from that because a fair number of our employees are also shareholders of the company. Finally, I challenged them to think big about the business. We're going through a massive transformation in the business right now. We've talked about it in previous investor days. We've talked about it in our filings. In the last 10 years, we've grown a tremendously supportive business within Fastenal called vending. In the last 3 years, we've grown a tremendously supportive business to Fastenal and to our customers called Onsite. They're complementary to each other. There are also businesses that Fastenal is uniquely qualified to be successful in and to think big about our future and how the business is going to morph.

去年 12 月，在 Fastenal 領導層的年度會議上，隨著 2017 年的臨近，我向他們提出了 3 個簡單的訊息。一種方法是發展壯大——讓我們走出去，提高銷售額。讓我們一起推動業務成長。我們有很多成長動力。讓我們執行計劃，提升銷售額。其次，我們要好好經營業務，提高獲利能力，因為從長遠來看，我們能夠為客戶、員工、股東和我們自己創造的回報，都取決於我們長期提高獲利和回報的能力。如果我們發展速度比其他您可以選擇投資的公司更快，市場將從估值的角度給予我們回報，我們的員工也將從中受益，因為我們相當一部分員工也是公司的股東。最後，我鼓勵他們從宏觀的角度思考商業問題。我們目前正經歷著一場巨大的業務轉型。我們在之前的投資者日活動中討論過這個問題。我們在提交的文件中已經討論過這個問題。在過去的 10 年裡，我們在 Fastenal 內部發展了一項極具支援性的業務，稱為自動販賣機業務。在過去的 3 年裡，我們發展了一項對 Fastenal 和我們的客戶都極具支援性的業務，名為 Onsite。它們相輔相成。Fastenal 在某些業務領域也擁有獨特的優勢，能夠取得成功，並且能夠對我們的未來以及業務將如何演變進行大膽的思考。

As you noticed in the release, our sales growth accelerated in the third quarter '17. Year-to-date, our daily sales growth is 10.1%. That's the first double digits we have seen since 2014. And as I called out in the quote in the release, we ended the quarter with 15.3% daily sales growth in the month of September. Again, very pleased with top line performance in the quarter.

正如您在新聞稿中看到的，我們的銷售成長在 2017 年第三季加速。今年迄今為止，我們的日均銷售額成長率為 10.1%。這是自 2014 年以來我們看到的第一個兩位數。正如我在新聞稿中引用的那樣，我們在 9 月實現了 15.3% 的每日平均銷售額成長，結束了本季。再次強調，我對本季的業績表現非常滿意。

Our growth drivers continue to gain traction. We have record signings in the third quarter as it relates to Onsite, putting us on track for a very aggressive goal of 275 to 300 signings. Recall, if you go back 4 years ago, 5 years ago, 6 years ago, on average, we were signing about 10 a year. In 2015, we began to move the needle and we began to challenge our team to sign more, and we improved the number to about 75 -- about 175 the next year. And our goal this year was to add another 100 again and do at least 275. I feel very good about us being on pace to accomplish that. Year-to-date, we have signed 213; 64, 68, and now 81.

我們的成長動力持續增強。第三季我們在現場簽約方面取得了創紀錄的成績，這使我們能夠朝著275至300個簽約名額的非常激進的目標邁進。回想一下，如果你回到 4 年前、5 年前、6 年前，平均而言，我們每年大約簽 10 份合約。2015 年，我們開始有所進展，並開始激勵我們的團隊簽下更多球員，我們把簽約人數提高到了大約 75 人——第二年達到了大約 175 人。我們今年的目標是再增加 100 個，至少達到 275 個。我感覺我們正按計劃朝著這個目標前進，前景非常樂觀。今年迄今為止，我們已經簽了 213 份合約；64、68，現在是 81 份。

In all that, we've been investing behind the scenes in additional infrastructure to support the Onsite business. That includes IT infrastructure. That includes implementation infrastructure. Despite those investments, we've continued to obtain operating expense, leveraging our business. Our incremental margin was 21% in the quarter. And one thing about the quarter, we -- it's a 63-day quarter versus a 64 last year. For us to lose a day in a quarter is kind of unusual. We do just over $18 million a day in business. If we would of had a more normal quarter, 64 to 64, most of that incremental gross profit dollars would've gone to the bottom line and our incremental margins on that business would have been about 25%. So feel very good about the expense management we were exercising as we grow and invest in the future of our business.

同時，我們一直在幕後投資額外的基礎設施，以支援現場業務。這包括IT基礎設施。這包括實施基礎設施。儘管進行了這些投資，我們仍然透過利用業務槓桿來降低營運費用。本季我們的增量利潤率為 21%。關於本季度，有一點需要說明——本季度有 63 天，而去年同期有 64 天。對我們來說，一個季度損失一天時間是相當不尋常的。我們每天的營業額略高於1800萬美元。如果我們的季度業績更正常一些，達到 64 到 64，那麼大部分新增毛利潤都會轉化為淨利潤，而我們這項業務的新增利潤率將達到 25% 左右。因此，隨著我們業務的成長和對未來進行投資，我們對所採取的費用管理措施感到非常滿意。

Finally, if I look at it from the standpoint of how much of that converted into cash, our operating cash flow in the third quarter was a record for any third quarter in the history of Fastenal, both from the standpoint of absolute dollars and as -- relative to our earnings. Very pleased with the team. And that requires a big effort from both our supply chain folks as well as our branch and Onsite personnel just of managing the inventory growth because that is the biggest wildcard when it comes to our working capital needs.

最後，從有多少資金轉化為現金的角度來看，我們第三季的經營現金流創下了 Fastenal 公司歷史上任何一個第三季的紀錄，無論從絕對金額還是相對於我們的收益來看都是如此。對團隊非常滿意。這需要我們的供應鏈人員以及我們的分公司和現場人員付出巨大的努力來管理庫存成長，因為這是我們營運資金需求最大的不確定因素。

Touching on the Onsites again, going to the second slide. 81 Onsites signed. We have about 555 active sites. That's up almost 48% from a year ago. And again, I reiterate, our goal is 275 to 300 signings.

再次提及現場考察，請看第二張投影片。已簽署81份現場服務協議。我們大約有555個活躍站點。比一年前增長了近 48%。我再次重申，我們的目標是簽下 275 至 300 人。

A sidebar I'll throw in as it relates to Onsite. As we've ramped up our Onsite in the last several years, it's translated into our ability to grow and take market share faster. In yesterday's meeting I had with our Board of Directors, I was walking through with them that concept of the growing sales component. Last year, in the second -- in the third quarter, excuse me, about 25% of our district leaders -- so we have about 250 district leaders in our business, about 25% of them grew their business double-digit. It's no coincidence -- or it is a coincidence that in the prior year, in 2015, about 25% of our district managers signed in Onsite, and that translated into 75 signings. Last year -- and I've shared this on calls before, last year, we more than doubled our signings because roughly 54% of our district managers signed in Onsite in 2016. Interestingly enough, in the third quarter of 2017, 54% of our district managers grew their business double-digit. Year-to-date, in 2017 -- and our goal for the year in establishing the 275 to 300 Onsite signings, our goal was to keep improving the participation of our leaders in this growth driver. And I challenged the team, can we get to 80%? So we've gone from 25% to just over 50%. Can we add another 30% and get to 80%?

我再補充一點與現場服務相關的內容。過去幾年，隨著我們不斷加大現場服務力度，這轉化為我們更快成長和搶佔市場份額的能力。在昨天與董事會的會議上，我向他們詳細闡述了銷售成長的概念。去年第二季度——抱歉，應該是第三季度，我們大約有 25% 的地區領導——我們公司大約有 250 位地區領導，其中約 25% 的地區領導的業務實現了兩位數的增長。這並非巧合——或者說，這確實是一個巧合，因為在前一年，也就是 2015 年，我們約有 25% 的區域經理在現場簽約，這轉化為 75 個簽約。去年——我之前在電話會議上也分享過——我們的簽約人數翻了一番還多，因為 2016 年我們大約 54% 的區域經理在現場簽約。有趣的是，在 2017 年第三季度，我們 54% 的區域經理實現了兩位數的業務成長。截至 2017 年，我們的目標是實現 275 至 300 次現場簽約，我們的目標是不斷提高領導者對此成長驅動因素的參與度。我向團隊發起挑戰，我們能達到 80% 嗎？所以我們已經從 25% 提高到了 50% 多一點。我們能再增加 30%，達到 80% 嗎？

Year-to-date, 64% of our district managers have signed in Onsite. Success for us in vending 5 and 6 and 7 years ago came from more participation across the organization. Success for us in Onsite follows the same path, a greater portion of our business engaged with their customer, and a manifestation for us is vending and Onsite signings, year-to-date at 64%. I don't know if we'll accomplish 80% by year-end, but I'm really impressed with what we've done in the first 9 months of the year.

今年迄今，我們64%的區域經理已到崗辦公室。5、6、7年前，我們在自動販賣機業務上取得成功，是因為整個組織都更積極參與其中。我們在現場業務方面的成功也遵循同樣的路徑，我們業務的很大一部分都與客戶互動，而我們的表現形式是自動販賣機和現場簽約，今年迄今已達到 64%。我不知道我們能否在年底前完成 80% 的目標，但我對我們今年前 9 個月所取得的成就感到非常滿意。

Total in-market sites today, 2,973. A year ago, we were at 2,921. So that continues to grow as we morph a piece of our business closer to the customer. As you see from our filings, we've closed some branches in the last 12 months as we've done in the last 5 years. Think of it as not a closing, but think of it as a consolidation. We've consolidated 2 branches because part of the business of one has moved Onsite, but our local presence continues to grow.

今天市場上共有 2,973 個站點。一年前，我們的數字是 2,921。隨著我們不斷調整業務方向，使其更貼近客戶，這種趨勢也持續成長。從我們的文件中可以看出，在過去 12 個月裡，我們關閉了一些分行，就像過去 5 年一樣。不要把它看作是關閉，而應該看作是整合。我們合併了 2 家分公司，因為其中一個分公司的部分業務已轉移到 Onsite，但我們在當地的業務仍在不斷成長。

We signed 4,771 vending devices, basically on par with what we did in the third quarter of last year. To me, the most meaningful thing is our business there continues to grow double digits, about -- just over 20% growth, 21% on a daily basis, just under 20% on an absolute basis because 1 less day. But our number of devices we're removing is down as we've gone through the year and is down in the third quarter. So very pleased from the standpoint. It feels like our signings are better and our performance on the existing base is better.

我們簽約了 4,771 台自動販賣機，基本上與去年第三季的業績持平。對我來說，最有意義的是，我們在那裡的業務繼續保持兩位數的成長，成長率略高於 20%，每日成長率為 21%，絕對成長率略低於 20%，因為少了一天。但隨著時間的推移，我們移除的設備數量一直在下降，第三季更是下降。從這個角度來看，我非常滿意。感覺我們簽下的球員更好了，而且我們在現有球員基礎上的表現也更好了。

Finally, our National Accounts business grew about 17% in the quarter, which means our non-National business grew just over double digits for the first time in quite some quarters to give us our combined growth.

最後，我們的全國客戶業務在本季度成長了約 17%，這意味著我們的非全國客戶業務在好幾個季度以來首次實現了兩位數以上的成長，從而實現了整體成長。

So very pleased with the quarter. Our growth drivers are moving the needle. We're managing our operating expenses through that. And one thing you'll notice, I've been completely silent about our gross margin. Holden's going to touch on a few points of that. I'm sure there will be a question or 2 on gross margin, but I'll throw one piece out to the group in the for what it's worth category. If you look at Onsite, if you look at vending and if you look at our Mansco acquisition, add these 3 components of our business up and they account for about 2/3 of our growth from the third quarter of last year to the third quarter of this year. We've previously said all 3 of these operated at a gross margin below our company average but have very attractive operating margin and return characteristics. And at the end of the day, that's what you pay us for.

非常滿意本季的表現。我們的成長動力正在推動局面改變。我們正透過這種方式控制營運成本。還有一點你會注意到，我一直對我們的毛利率隻字未提。霍爾頓將談到其中的幾個要點。我確信會有關於毛利率的問題，但我還是想拋出一點個人見解，僅供大家參考。如果你看看 Onsite 業務、自動販賣機業務以及我們對 Mansco 的收購，將我們業務的這三個組成部分加起來，它們就佔了我們從去年第三季度到今年第三季度增長的大約 2/3。我們之前說過，這三家公司的毛利率都低於公司平均水平，但營業利潤率和回報特徵非常有吸引力。歸根結底，這就是你們付錢給我們的原因。

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

這樣，我就把麥克風交給霍爾頓了。

Thank you, Dan, and good morning. So before jumping back into the slide deck, I did want to call on a few items that made the third quarter 2017 unique. The first is, I just want to call your attention to the last page of the supplemental deck. This quarter, we did take a fresh look at the market exposure of our business and made certain adjustments that affected our end-market mix and slightly altered the growth rates versus what we've reported in the past months and quarters. So please feel free to take a look at that last page.

謝謝你，丹，早安。所以在繼續講解投影片之前，我想先提一下 2017 年第三季的一些獨特之處。首先，我想請大家注意補充卡組的最後一頁。本季度，我們重新審視了我們業務的市場敞口，並進行了一些調整，這些調整影響了我們的終端市場組合，並略微改變了我們過去幾個月和幾個季度報告的增長率。所以請隨意翻閱最後一頁。

Secondly, as Dan indicated, we did have 1 less selling day in the third quarter than was through the prior year. Based on our September daily sales rate, that cost us more than $18 million in sales during the period. That was known, of course, but keep in mind that many of our costs, notably the employee-related expenses, are not days dependent, and that does affect leverage.

其次，正如丹所指出的，我們第三季的銷售日比去年同期少了一天。根據我們9月份的日均銷售額計算，這導致我們在此期間損失了超過1800萬美元的銷售額。當然，這一點我們都知道，但請記住，我們的許多成本，特別是與員工相關的費用，與天數無關，這確實會影響槓桿作用。

Third, we estimate that the hurricane that hit the Gulf, the Southeast and Puerto Rico shaved 20 to 30 basis points from revenue during the quarter. It's hard to estimate the impact of post-storm recovery on our volumes, but we do believe that some of that was present in September, particularly in the Gulf, though not at a level to -- not at a magnitude to offset the original lost sales. In addition to the top line impact, the hurricanes also were a very slight drag to gross margin due to the write-off of damaged assets and an increase in sales of low-margin, storm-related products like water and generators.

第三，我們估計襲擊墨西哥灣、東南部和波多黎各的颶風使本季收入減少了 20 至 30 個基點。很難估計風暴後的恢復對我們銷售的影響，但我們相信，9 月確實出現了一些恢復，尤其是在墨西哥灣沿岸地區，儘管恢復的程度不足以彌補最初損失的銷售額。除了對營收的影響外，颶風還對毛利率造成了輕微的拖累，因為受損資產需要註銷，而且與風暴相關的低利潤產品（如水和發電機）的銷售也有所增加。

Now with that said, let's look back at Slide 5. As Dan indicated, total sales were up 11.8% in the third quarter, but on a daily sales basis, they were up 13.6%, which is an acceleration from up 10.6% in the second quarter. Mansco contributed 130 basis points to this growth, which is consistent with the prior quarter. The third quarter finished strongly, with September's daily sales growth coming in at up 15.3% or up 14% excluding the impact of Mansco.

現在，讓我們回顧一下投影片 5。正如丹所指出的，第三季總銷售額成長了 11.8%，但以日計算，成長了 13.6%，比第二季的 10.6% 成長了 13.6%。Mansco 為這一增長貢獻了 130 個基點，與上一季一致。第三季以強勁的勢頭收官，9 月的日銷售額增長了 15.3%，如果排除 Mansco 的影響，則增長了 14%。

In terms of end market tone, the third quarter felt a lot like the second quarter. Macro data remained favorable, with the PMI averaging a healthy 58.6 and industrial production continuing to grow at a low single-digit rate. As a result, we saw broad strength and further acceleration in our manufacturing markets, while construction sustained a mid-single-digit growth rate. From a product standpoint, we experienced acceleration in both fastener and non-fastener lines. And from a customer standpoint, National Accounts accelerated again, up 17.3% in the quarter, with 71 of our top 100 accounts growing. Growth to the smaller customers also accelerated in the quarter, and it's notable that our non-National Account customers grew better than 10% in September. This contributed to 64% of our branches growing in the third quarter, which is up from 62% in the second quarter and 58% in the first. So based on sustained strength in most of our end markets and strong momentum in the growth drivers that Dan covered on Slide 4, we feel good about our top line momentum entering the fourth quarter.

從終端市場基調來看，第三季與第二季非常相似。宏觀經濟數據依然良好，採購經理人指數 (PMI) 平均為健康的 58.6，工業生產繼續以較低的個位數速度成長。因此，我們的製造業市場整體表現強勁並進一步加速成長，而建築業則維持了中等個位數的成長率。從產品角度來看，緊固件和非緊固件產品線都出現了加速成長。從客戶角度來看，全國性客戶再次加速成長，本季成長了 17.3%，前 100 名客戶中有 71 名實現了成長。本季度，小型客戶的成長也加速，值得注意的是，我們的非全國性客戶在 9 月的成長超過了 10%。這使得我們第三季 64% 的分公司實現了成長，高於第二季的 62% 和第一季的 58%。因此，基於我們在大多數終端市場的持續強勁表現，以及丹在第 4 張幻燈片中提到的成長驅動因素的強勁勢頭，我們對進入第四季度的營收成長勢頭感到樂觀。

Now to Slide 6. On a year-over-year basis, our gross margin was 49.1%, down 20 basis points versus the third quarter of '16. If I look at our organic fastener and non-fastener product categories, there really was very little change in the gross margin. The very driver of the annual decline was the effect of product and customer mix, the inclusion of Mansco and the very slight drag afforded by the hurricanes. We think that these combined probably provided about 30 to 40 basis points of drag to the annual gross margin figure.

現在來看第 6 張投影片。與去年同期相比，我們的毛利率為 49.1%，比 2016 年第三季下降了 20 個基點。如果我看一下我們的有機緊固件和非緊固件產品類別，就會發現毛利率實際上並沒有太大變化。導致年度下滑的根本原因是產品和客戶組合的變化、Mansco 的加入以及颶風帶來的輕微拖累。我們認為，這些因素加起來可能對年度毛利率造成了約 30 至 40 個基點的拖累。

On a sequential basis, our gross margin was down about 70 basis points. Again, the organic margin for our fastener and non-fastener categories were mostly unchanged, and the price/cost dynamic was mostly stable. Seasonality and storm effects did play a role, but the single largest cause of the sequential drop in the period was the behavior of what we call the organizational variables. In the quarter, this includes things such as more third-party shipping, foreign exchange adjustments, lower vendor freight credits as a result of really good inventory control in the period and other items of that sort. Which of these variables move in which direction can be hard to predict in any single period, that in most quarters, it winds up being a series of pluses and minuses that even out. But in the second quarter, these skewed heavily in favor of gross margin. And in the third, that favorable skewing completely reversed. Given these movements over the last 2 quarters, frankly, we look at the best representation of our gross margin probably being the fact that our year-to-date 2017 gross margin of 49.4% is broadly comparable to our year-to-date 2016 level of 49.5%. So year-to-date, we're down about 10 basis points despite the mix effects, the acquisition and those sort of factors that we've talked about in the past.

與上一季相比，我們的毛利率下降了約 70 個基點。同樣，我們的緊固件和非緊固件類別的有機利潤率基本上保持不變，價格/成本動態也基本穩定。季節性因素和風暴的影響確實起到了一定作用，但導致這段時期連續下降的最大單一原因是我們稱之為組織變數的行為。本季度，這包括第三方運輸增加、外匯調整、由於本期庫存控制良好而導致的供應商運費抵扣減少以及其他類似項目。在任何單一時期，這些變數的哪些會朝哪個方向變化都很難預測，大多數季度最終都會出現一系列加減變化，最終趨於平衡。但在第二季度，這些指標嚴重偏向毛利率。而在第三階段，這種有利的偏差完全逆轉了。鑑於過去兩個季度的這些變化，坦白說，我們認為最能體現我們毛利率的指標可能是：2017 年至今的毛利率為 49.4%，與 2016 年至今的毛利率 49.5% 基本持平。所以今年迄今為止，儘管存在成分股組合效應、收購以及我們過去討論過的那些因素，我們還是下降了約 10 個基點。

Our operating margin was 20.2% in the third quarter, up 20 basis points year-over-year. The 20 basis point decline in gross margin was more than offset by the 40 basis point of leverage over operating expenses. Consistent with how our model works, we've leveraged operating expenses every quarter of 2017, and that's resulted in our year-to-date operating margin expanding to 20.5% from 20.3% in the third quarter -- I'm sorry, year-to-date in 2016.

第三季我們的營業利益率為 20.2%，較去年同期成長 20 個基點。毛利率下降 20 個基點，但營運費用槓桿率提高 40 個基點，足以抵銷毛利率下降的影響。與我們的模式一致，我們在 2017 年的每個季度都利用了營運費用，這使得我們今年的營業利潤率從第三季度的 20.3% 擴大到 20.5%——抱歉，是 2016 年的年初至今的營業利潤率。

Employee-related costs were up 12.3%. 130 basis points of this increase relates to Mansco's headcount plus the incremental expenses related to implementation of last year's DOL rules. Having 1 fewer selling day also had a slight negative impact. The remaining increase is a function of the reset of incentive comp throughout the organization given our return to selling growth in 2017 and an increase in overall staffing. Total headcount growth remained modest, up 1.9% or up 3% on an FTE basis, but we have added personnel in 8 of 9 months this year. It does remain a goal of ours to leverage the employee-related expenses over time.

員工相關成本上升了 12.3%。此次成長的 130 個基點與 Mansco 的員工人數以及與實施去年美國勞工部規則相關的額外支出有關。銷售日減少一天也產生了輕微的負面影響。剩餘的成長是由於我們在 2017 年恢復銷售成長以及整體員工人數增加，導致整個組織的激勵薪酬系統重置。員工總數成長較為溫和，成長了 1.9%，以全職員工計算成長了 3%，但今年前 9 個月中有 8 個月我們都增加了員工。隨著時間的推移，有效利用與員工相關的支出仍然是我們的目標之一。

Occupancy-related expenses were up 1.5%. Branch costs are slightly lower, reflecting closures over the past 12 months, more than offset by growth in our vending installed base.

與入住率相關的費用上漲了 1.5%。分公司成本略有下降，這反映了過去 12 個月的關閉情況，但自動販賣機安裝基礎的成長足以抵消這些影響。

Selling transportation-related expenses were up 2.7%, reflecting our ability to leverage our vehicle-moving activities even while we support the growth of our business.

與運輸相關的銷售費用成長了 2.7%，反映出我們即使在支援業務成長的同時，也能利用車輛運輸活動來提高銷售額。

Total incremental operating margin in the third quarter was 21.3%. If you exclude Mansco, that incremental margin was 22.1%. And frankly, we think that, that value was likely reduced by more than 200 basis points by having 1 fewer selling day in the period.

第三季總增量營業利益率為 21.3%。如果排除 Mansco，增量利潤率為 22.1%。坦白說，我們認為，由於該期間少了一個銷售日，該值可能減少了 200 多個基點。

Turning to Slide 7. We generated $163 million in operating cash in the third quarter. That's a record amount for any third quarter, and it's 114% of net income. Year-to-date, we've generated $456 million, which represents 107% of net income, an improvement on the 100% in the first 9 months of 2016. These improvements are primarily a function of better earnings.

請看第 7 張投影片。第三季度，我們產生了 1.63 億美元的營運現金流。這是第三季創紀錄的金額，佔淨收入的 114%。今年迄今為止，我們已創造了 4.56 億美元的收入，佔淨收入的 107%，比 2016 年前 9 個月的 100% 有所提高。這些改善主要歸功於收益的提高。

Net CapEx in the third quarter was $24 million, down 67% due in large part to the absence of spending on vending machines related to the leased locker program. Our anticipated capital spending target for 2017 is unchanged at $127 million.

第三季淨資本支出為 2,400 萬美元，下降了 67%，這主要是由於與租賃儲物櫃計畫相關的自動販賣機支出減少所致。我們預期 2017 年的資本支出目標不變，仍為 1.27 億美元。

In the third quarter, we spent $92 million on dividends and $26 million to repurchase shares of stock. Our level of debt was mostly stable at $440 million. And at 17.8% of total capital, we view our balance sheet as conservatively capitalized with ample liquidity to continue to invest in our business and pay our dividend.

第三季度，我們花了 9,200 萬美元用於支付股息，並花費 2,600 萬美元用於回購股票。我們的債務水準基本上穩定在 4.4 億美元。我們認為，我們的資產負債表資本充足率（佔總資本的 17.8%）較為保守，擁有充足的流動性，可以繼續投資於我們的業務並支付股息。

In terms of working capital, we were particularly pleased with the inventories. If you exclude Mansco, our inventories were up 7%, which significantly trails the growth in sales. This reflected the ability of the field to leverage the heavy investment in branch inventory in 2016 and just more energy enterprise-wide on this line.

就營運資金而言，我們對庫存狀況尤其滿意。如果排除 Mansco 的庫存，我們的庫存增加了 7%，遠低於銷售成長。這反映了該領域能夠利用 2016 年對分公司庫存的大量投資，以及整個企業在該領域投入的更多精力。

Receivables growth excluding Mansco was up 15% in the quarter. As in the second quarter, that it grew faster than sales reflects the acceleration in growth that we saw as the quarter progressed as well as the relative growth of National Accounts.

剔除曼斯科公司的影響，本季應收帳款成長了15%。與第二季一樣，其成長速度超過銷售額，反映了隨著季度推進我們看到的成長加速，以及國民帳戶的相對成長。

Payables excluding Mansco were up 23%. Last year's third quarter was unusually low in the wake of high CSP 16-related purchases in the prior quarter, a dynamic that's likely to repeat in the fourth quarter this year.

不計入曼斯科的應付帳款成長了23%。去年第三季由於前一季與 CSP 16 相關的採購量很高，導致銷售額異常低迷，這種情況很可能在今年第四季重演。

That's all we have for our formal presentation. And with that, we'll turn it over for questions.

這就是我們正式報告的全部內容。接下來，我們將進入問答環節。

(Operator Instructions) Our first question comes from the line of Robert Barry of Susquehanna.

（操作說明）我們的第一個問題來自薩斯奎哈納的羅伯特·巴里家族。

So I just wanted to understand what's happening with price/cost. I know you've talked in the past about benefits of the long supply chain, but I think the inflation would be upon you. Are you getting priced to kind of fully offset the inflation?

所以我想了解價格/成本方面發生了什麼變化。我知道你過去曾談到長供應鏈的好處，但我認為通貨膨脹會隨之而來。目前的定價是否足以完全抵銷通貨膨脹的影響？

Yes, I'd answer that in a couple of ways. In terms of the price that we referred to in the second quarter, we felt like in the second quarter, that resulted in a positive price/cost dynamic. As you roll into 3Q, we feel like we got a little bit of incremental price, but we also began to see a little bit of the incremental costs flowing through. And frankly, those probably balanced out relative to where we were in Q2. So, yes, we feel like the price that we envisioned getting, we got. The costs have begun to come through. We talked about that perhaps hitting in Q4, that will certainly be the case, but we saw some of that hit in Q3 as well to result in sort of a stability in that dynamic, if you will. There is still inflation. That hasn't changed. And I think I would probably answer the question of how we address that the same way I've answered in the past, which is that if at some point we determine that we can't protect our level of profitability without resorting to some sort of price action, then we will take that step, and we believe that we would be successful on that. But we didn't do anything along those lines in the third quarter.

是的，我會從幾個方面來回答這個問題。就我們在第二季度提到的價格而言，我們感覺在第二季度，這帶來了積極的價格/成本動態。進入第三季度，我們感覺價格略有上漲，但同時也開始看到一些成本上漲。坦白說，這些因素可能與我們在第二季度的情況相比已經平衡了。所以，是的，我們覺得我們得到了我們預期的價格。費用已經開始顯現了。我們討論過這種情況可能會在第四季度出現，這肯定會發生，但我們也看到第三季度出現了一些影響，從而導致這種動態趨於穩定。通貨膨脹依然存在。這一點沒有改變。對於我們如何解決這個問題，我想我的回答可能和我過去回答的一樣，那就是，如果在某個時候我們確定，如果不採取某種價格措施，我們就無法保護我們的盈利水平，那麼我們將採取這一步驟，並且我們相信我們會成功。但我們在第三節並沒有採取任何類似的措施。

Got you. And just as a follow-up, I think 4Q gross margin is typically down quarter-over-quarter, right? And then you also had a tough comp this year. So should we expect that sequential pattern to hold maybe something in the high 48% ballpark? Is that kind of how we should calibrate 4Q?

抓到你了。另外，我想問一下，第四季的毛利率通常會較上季下降，對嗎？而且你們今年的競爭也很激烈。那麼我們是否應該預期這種連續模式能夠維持在 48% 以上的水準呢？我們應該這樣校準第四季嗎？

We try not to predict, obviously. I do think you're right that we have a very difficult comp versus the gross margin that we put up last year. And I think that that's certainly going to be a feature of the fourth quarter. In terms of what we expect for gross margin in the fourth quarter, there is typically seasonality. On the other hand, we did have some minor drag related to the hurricanes in this particular quarter. It's difficult for me to kind of give you a number, but we're -- yes, we would just -- we're not going to go towards the number. I think that there's some puts and takes that at the end of the day, the seasonality is usually fairly minor -- fairly modest, and we'll see the degree to which there are some things that offset that.

我們當然盡量不去預測。我認為你說得對，我們今年的業績與去年相比，毛利率確實很高，面臨非常大的比較壓力。我認為這肯定會是第四季的特點。至於我們對第四季毛利率的預期，通常會受到季節性因素的影響。另一方面，本季我們確實受到了一些與颶風相關的輕微拖累。我很難給你一個具體的數字，但是——是的，我們——我們不會朝著那個數字努力。我認為，歸根結底，季節性因素通常相當輕微——相當溫和，我們將看看哪些因素可以抵消這種影響。

Was the hurricane about 10 bps? I just wanted to clarify what the hurricane impact was on the gross margin.

颶風的風速大約是 10 bps 嗎？我只是想弄清楚颶風對毛利率的影響是什麼。

Yes, it was probably 5 to 10 basis points.

是的，大概是 5 到 10 個基點。

This is Dan. I'm going to chime in a quick comment. This is part of the call that always drives Holden probably a little crazy, but he's getting used to it. But if I think about the comments he made earlier and I think about our July call, there was quite a few questions that really we're asking. What lifted gross margin? Because Holden's message over time has been one of, when you think about the growth drivers, the math of the growth drivers should lower our gross margin each year, optimistically, 20 basis points; pessimistically, 25 to 30. And that's just the fact that the growth drivers, the vending, and in the case of this year, our acquisition, tend to weigh down. And then over time, the growth of our non-fasteners relative to fasteners, which are obviously influenced by the growth drivers, weigh it down a little bit. And organizationally, what can we do to work back, to grab back some margin in our sourcing, our logistics, our selection of products, everything. So in the second quarter, we stumbled over ourselves a little bit trying to explain to you all in your questions why we weren't confident that gross margin wasn't a new normal because we talked about a lot of the puts and takes, and everything was a put. This quarter, as Holden mentioned, a lot of the puts and takes leaned towards takes, not puts. Our fastener gross margin was down about 10 basis points. Our non-fastener gross margin was completely unchanged from Q2 to Q3, and I think that's an important component. And so it was really the organizational, the other stuff all worked against us this quarter. History has told me -- and my history perspective is 20 years, 4 quarters a year, so that's about 80 quarters. History has told me that you don't get things that go all your way, or mostly against your way, typically in a quarter. So going into the fourth quarter, and I don't like making predictions, but going into the fourth quarter, I'm not looking for our gross margin to be below 49% from the standpoint of sequential weakening. We'll get a little bit benefit from the hurricane number. Now, in all honesty, there could be 5 basis points of hurricane in the fourth quarter because in Puerto Rico, we don't know all the answers. We do know that all of our employees are safe in the Gulf Coast, in Florida and in Puerto Rico. And in Houston, we had 2 store -- 2 branches that were destroyed by the hurricane. What we know initially about Puerto Rico is we had no branches damaged. It sounds like we came through it reasonably well. Our business suffered, but our assets did not. And more importantly, our employees came through it safely.

這是丹。我來簡單說幾句。每次通話中，這部分內容總是會讓霍爾頓有點抓狂，但他已經習慣了。但如果我回想起他之前發表的評論，以及我們七月的通話，就會發現我們當時確實提出了一些問題。什麼因素提升了毛利率？因為霍頓一直以來傳達的訊息是，當你考慮成長驅動因素時，成長驅動因素的數學計算應該會使我們的毛利率每年下降，樂觀估計下降 20 個基點；悲觀估計下降 25 到 30 個基點。事實就是，成長動力（自動販賣機業務，以及今年的收購）往往會成為一種負擔。然後隨著時間的推移，非緊固件相對於緊固件的成長（顯然受到成長驅動因素的影響）會稍微拖累緊固件的成長。從組織層面來說，我們可以做些什麼來扭轉局面，在採購、物流、產品選擇等各方面奪回一些利潤空間呢？所以在第二季度，我們在回答大家的問題時有點語無倫次，因為我們討論了很多利弊，試圖向大家解釋為什麼我們不確定毛利率是否會成為新的常態，而所有事情都被視為利空。正如霍爾頓所提到的，本季許多買賣交易都傾向於買入，而不是賣出。我們的緊固件毛利率下降了約 10 個基點。從第二季到第三季度，我們的非緊固件毛利率完全沒有變化，我認為這是一個重要的組成部分。所以，真正導致我們業績下滑的是組織方面的問題，其他因素在這個季度都對我們不利。歷史告訴我——我的歷史視角是 20 年，一年 4 個季度，所以大約是 80 個季度。歷史告訴我，事情通常不會在一個季度內完全順心，或者大部分事情都與你相反。所以進入第四季度，我不喜歡做預測，但就第四季度而言，從環比下降的角度來看，我不認為我們的毛利率會低於 49%。我們會從颶風數據中獲得一些好處。說實話，第四季颶風預報可能會有 5 個基點的變化，因為在波多黎各，我們無法預測所有情況。我們確切地知道，我們所有的員工在墨西哥灣沿岸、佛羅裡達州和波多黎各都是安全的。在休士頓，我們有兩家門市──兩家分店都被颶風摧毀了。我們最初了解到的波多黎各的情況是，沒有樹枝受損。聽起來我們撐過來了，情況還不錯。我們的業務遭受了損失，但我們的資產沒有損失。更重要的是，我們的員工都平安度過了難關。

Our next question comes from the line of Ryan Merkel of William Blair.

我們的下一個問題來自威廉布萊爾的瑞安默克爾。

First question is on incremental margins. Just given the 12% top line, I would have expected incremental margins at 25% plus. So my question is, is this still an achievable target if we adjust for restoring incentive compensation, hurricanes and 1 less day?

第一個問題是關於增量利潤率的。單就 12% 的營收成長率而言，我原本預期增量利潤率會達到 25% 以上。所以我的問題是，如果我們調整恢復激勵性薪酬、颶風以及減少一天工期等因素，這個目標是否仍然可以實現？

Yes. I mean, we -- organically, the incremental margin came in around 22%, and we believe that the day itself probably cost us the rest of the gap between that number and about 25% in the quarter. If you think about it, that extra day cost us about $18 million in revenues. Now bear in mind, of course, we know about that in advance, of course, the day is not a surprise, but it still does cost us year-over-year $18 million in revenues. We don't get a discount on our base salaries, which are a significant portion of our total employee-related expense, and there's other elements within the operating expense category that we don't get a discount on just because we have 1 fewer day. And so we do believe that the organic incremental was around 22%. And if you -- if it weren't for that extra day not being there, we think that it would've been in that 25% range.

是的。我的意思是，我們自然成長的利潤率約為 22%，我們認為當天的損失可能導致本季利潤率與該數字之間約 25% 的差距進一步擴大。仔細想想，多出來的這一天讓我們損失了約 1800 萬美元的收入。當然，請記住，我們事先就知道這件事，這一天當然並不令人意外，但這仍然使我們每年損失 1800 萬美元的收入。我們的基本工資沒有折扣，而基本工資占我們員工相關總支出的很大一部分；此外，營運支出類別中的其他項目，即使我們少工作一天，也不會獲得折扣。因此，我們認為有機成長率約為 22%。如果不是因為多缺席了一天，我們認為成功率應該在 25% 左右。

Okay. So no change really long term to high single-digit sales growth. You can get 25% or so incremental margin.

好的。因此，從長遠來看，銷售成長不會有太大變化，仍將維持高個位數成長。你可以獲得大約 25% 的額外利潤。

Yes. In the short term, I would agree to that. The real question, Ryan, is when you look out to the future, what percentage of our growth is coming from the Onsite model. And again, in the quarter, it was about 30% of our growth. What percent of the growth is coming from Onsite? And what does that do to weigh down that incremental margin? But we're very mindful of managing the expenses around that. And I don't know if Holden touched on this, sometimes the discussion at the board meeting yesterday and discussion on the conference call get muddy for me, but I don't know if he touched on it, so if I repeat, I apologize. But right now, we're anticipating Q4 branch-level occupancy -- by occupancy, I'm talking about rent. Utilities change with the season, but I'm talking about rent expenses. Right now, we're expecting Q4 will be lower than Q1, and I don't know if that's ever happened in the history of Fastenal. And so we're being very mindful of managing that expenses because we do believe we can get, in the short term, incremental margins in the mid-20s. I can't speak to 4 and 5 years from now if they're mid-20s or if they're closer to the lower 20s, but I know that we'll be growing our returns and our cash flow handsomely at that time.

是的。短期內，我同意這種說法。瑞恩，真正的問題是，展望未來，我們的成長有多少百分比來自現場服務模式。同樣，本季這部分成長約占我們總成長的 30%。現場銷售帶來的成長佔比是多少？那會對增量利潤產生什麼影響呢？但我們非常注意控制這方面的開支。我不知道霍爾頓是否談到了這一點，有時昨天董事會會議和電話會議上的討論對我來說會變得很模糊，但我不知道他是否談到了這一點，所以如果我重複了，我道歉。但就目前而言，我們預計第四季各分公司的入住率——我所說的入住率指的是租金。水電煤氣等公用事業費用會隨季節變化，但我說的是房租支出。目前我們預計第四季度業績將低於第一季度，我不知道這在 Fastenal 的歷史上是否發生過。因此，我們非常注意控制這些支出，因為我們相信，在短期內，我們可以獲得 20% 左右的增量利潤。我無法預測 4 年或 5 年後他們會是 25 歲左右還是接近 20 歲，但我知道到那時我們的收益和現金流都會大幅成長。

Yes. I would just chip in 2 things. One, that math is basically correct. Bear in mind again, the difficult gross margin comp in the fourth quarter, however, will make it difficult on a single quarter way basis to do that. But to Dan's point, I mean, we're trying to grow this business. We're doing a fairly successful job of it given where our revenue growth rates are compared to the marketplace and things of that nature. And we are going to continue to grow and outgrow the market and gain market share. And so whereas we are going to manage our expenses to be able to achieve a very healthy incremental margin, and we do think about that double-digit growth in that 25% type of incrementals. Sometimes we get questions of why it can't be more, why it can't be more. And the answer is because we not only manage our expenses, but we also manage our expenses to be able to grow. And so I think the math that you're talking about makes some sense to us.

是的。我只想補充兩點。第一，這個數學模型基本上正確。但請記住，第四季毛利率同比較高，因此單季實現這一目標將比較困難。但正如丹所說，我的意思是，我們正在努力發展這項業務。考慮到我們的收入成長率與市場平均的比較情況等等，我們在這方面做得相當成功。我們將繼續發展壯大，超越市場，並持續擴大市場佔有率。因此，我們將控制支出，以實現非常健康的增量利潤，我們確實考慮過兩位數的成長，即 25% 的增量。有時我們會聽到這樣的問題：為什麼不能更多？為什麼不能更多？答案是，我們不僅管理好支出，而且還透過管理支出來成長。所以我覺得你說的這些數學原理對我們來說是有道理的。

Our next question comes from the line of Scott Graham of BMO Capital Markets.

我們的下一個問題來自 BMO 資本市場的 Scott Graham。

So earlier this year, we were talking about how we sort of wake up in the morning with a 20 to 30 basis point gross margin drag that you are -- that you were -- at that time, you said you were confident in being able to backfill, owing to mix and what have you. It sounded to me, and maybe I'm just reading too deeply into this, but the growth drivers now do seem to be that 20 to 30 basis points, and that does not include what would seem to be product mix, which has been running negative. And I'm wondering if the growth drivers include customer mix. So is it still 20 to 30? Or maybe is it now higher than that?

所以今年早些時候，我們談到我們早上醒來時發現毛利率下降了 20 到 30 個基點，而你當時——你當時——說你很有信心能夠彌補這一損失，因為產品組合等等。在我看來，也許是我過度解讀了，但目前的成長動力似乎確實是那 20 到 30 個基點，而且這還不包括產品組合的變化，而產品組合的變化一直呈負增長。我想知道成長動力是否包括客戶群組成。所以還是20到30嗎？或者現在價格可能比那更高？

Yes. So a couple of things. First, I don't think we ever said we were confident that we backfill. I think what we've said is that we were going to have a 20 to 30 basis point headwind, just as you say, waking up in the morning at the beginning of the year, and that we'll certainly work very hard to try to backfill that. But over an extended period of time, we would not be surprised if our gross margins are lower, but that is on the back of significant growth in market share gains, right? So I never said confident, but we certainly do wake up every day knowing we're in a hole and making an effort to try to fill it up. But there is certainly never any guarantee that we would do that year-after-year. With respect to the mix question, no, the mix is not different. When we talk about the 20 to 30 basis point drag, that really does fill in the product. It fills in the customer. That is really trying to take into account all the variables. And the reason it does that is because I look at that mix relative to how our margins are performing across the product set, which would encompass everything that we're doing from a growth standpoint. So no, I think that 20 to 30 basis points that we wake up to every year, I think that's the number. Now we talked about how 3 quarters of our revenues are fasteners and Onsites and National Accounts and vending, that we believe that we have a significant moat in, and those also happen to be our growth drivers. They're going to become a bigger part of the mix, and they also have even lower gross margin. If in a year or 2 that 75% becomes 80% or 85%, if that 20 to 30 become 30 to 40, maybe, but that's a function of very defensible revenue and market share gains. And we'll try to fill in that hole too, but we certainly would not guarantee it.

是的。有兩件事。首先，我認為我們從未說過我們有信心可以填補空缺。我認為我們已經說過，正如你所說，年初早上醒來時，我們將面臨 20 到 30 個基點的不利影響，我們一定會非常努力地彌補這一損失。但從長遠來看，如果我們的毛利率下降，我們不會感到驚訝，但這都是建立在市場份額大幅增長的基礎上的，對吧？所以我從來沒說過自己有信心，但我們每天醒來都知道自己身處困境，並且努力去填補它。但我們當然無法保證年復一年都會這麼做。至於混合比例的問題，不，混合比例沒有不同。當我們談到 20 到 30 個基點的拖累時，這確實會完善產品。它為顧客提供資訊。這確實試圖將所有變數都考慮在內。之所以這樣做，是因為我會根據我們所有產品組合的利潤率表現來衡量這種組合，這涵蓋了我們從成長角度所做的一切。所以，不，我認為我們每年醒來看到的 20 到 30 個基點，我認為就是這個數字。現在我們談到，我們四分之三的收入來自緊固件、現場服務、全國客戶和自動販賣機，我們相信我們在這些領域擁有強大的競爭優勢，而這些也恰好是我們的成長動力。它們將在產品組合中佔據更大的比例，但它們的毛利率也會更低。如果一兩年內 75% 變成 80% 或 85%，如果 20% 到 30% 變成 30% 到 40%，也許可以，但這取決於非常可靠的收入和市場份額增長。我們也會盡力填補這個空缺，但我們當然不能保證一定能做到。

Understood. And I apologize if I misquoted you there. So it does stay at 20 to 30...

明白了。如果我剛才引用錯了你的話，我深感抱歉。所以它確實保持在20到30之間…

Scott, hold on a second. Dan will chip in before we move to the next topic.

斯科特，等一下。在我們進入下一個主題之前，丹會先補充幾句。

I'm going to just chime in. If your definition of backfill is at the gross margin line, the answer is different than if your definition of backfill is at the operating margin line or operating income line because in the last 12 months, if I look at Q3 to Q3, we gave up 20 basis points of gross margin. We picked up 20 basis points of operating income. And so I read that as we backfilled the 20 with 40 basis points of operating expense leverage from a backfill perspective because at the end of the day, the numbers that really matter on the income statement are further south than the gross margin line, and we backfilled that 2x over. And that's the key to the business. And that was done in an environment where -- as you know from reading our proxy or if you read through our proxy, you'd see that our incentive comp is really centered on paying out a piece of our profit dollar growth in the case of our leadership team, and that's true of many of our support areas as well as our logistics costs in the case of distribution and gross profit dollar growth or sales and gross profit dollar growth at the branch and Onsite location. So in the current quarter, our incentive comp is up between 25% and 30% because we're reloading incentive comp. So that -- in that environment, we picked up 40 basis points of expense leverage. When we get through 2016 -- 2017, excuse me, that reload is largely complete. We have a little bit of reload in the first quarter, but in the second quarter, our incentive comp had dramatically expanded. So we have the benefit of that when we get into the second quarter of 2018 and partially there, in the first quarter of 2018.

我也來說兩句話。如果你對「彌補損失」的定義是毛利率，那麼答案就與你對「彌補損失」的定義是營業利潤率或營業收入不同，因為在過去的 12 個月裡，如果我看一下第三季度到第三季度，我們的毛利率下降了 20 個基點。我們獲得了 20 個基點的營業收入。因此，我理解為，我們用 40 個基點的營運費用槓桿來彌補 20 個基點，因為歸根結底，損益表上真正重要的數字比毛利率線更低，所以我們用 2 倍的倍數來彌補它。這就是生意的關鍵。而這一切是在一個這樣的環境下完成的——正如您從我們的委託書中了解到的，或者如果您仔細閱讀我們的委託書，您會發現，我們的激勵薪酬實際上是圍繞著支付我們利潤增長的一部分來激勵領導團隊，這同樣適用於我們的許多支持領域，以及我們的物流成本，例如分銷和毛利增長，或者分支機構和現場地點的銷售額和毛利增長。因此，本季我們的激勵薪酬提高了 25% 到 30%，因為我們正在重新調整激勵薪酬。因此，在這種環境下，我們獲得了 40 個基點的費用槓桿。當我們度過 2016 年到 2017 年，抱歉，那時重新加載的工作就基本完成了。第一季我們有一些調整，但第二季我們的激勵薪酬大幅成長。因此，到了 2018 年第二季度，我們就能享受這種好處，而且在 2018 年第一季度，這種好處也能部分實現。

Got you. That's great color. My follow-up is a little simpler. The acceleration in sales in September was impressive. I was just sort of wondering if you maybe could parse out the piece of, let's say, of sales that you recaptured from Harvey. My guess is that, that would be a smaller piece of it. And instead, I'm hoping that you can answer the sort of which end markets look like they accelerated in September.

抓到你了。顏色真好看。我的後續工作就簡單一點。9月的銷售成長速度令人印象深刻。我只是想問，你能不能把從哈維那裡奪回的那部分銷售額單獨列出來。我猜想，那隻是其中很小的一部分。相反，我希望你能回答一下，哪些終端市場在9月看起來加速成長。

Yes. So to take the first question about Harvey, it was fairly modest, and it was primarily in Houston that we would have regained some of what we lost in August. But that regain was probably about 1/3. I mean, we're probably talking about $0.5 million, maybe a little more than that in terms of what we recaptured. I will tell you, going forward, it's a difficult number for us to really understand, so we'll do our best, but it's a hard number to refine. But I'm fairly comfortable at this point that we actually lost more in revenue in September from Irma and Maria than we gained in recovery in Houston. So the hurricanes were a net negative in both August and September. That's what I would say with regards to that. And then in terms of end markets, it really -- it gets down to the manufacturing end markets, right? If you look at our heavy equipment, it accelerated. If you look at heavy manufacturing -- but honestly, our manufacturing business as a whole accelerated across the board. And you talk to the RVPs, and they still talk about oil and gas is still doing fairly well and all the flow-through that comes with that. So the manufacturing complex, in general, I think, continues to accelerate. The transportation complex for us, which doesn't include a lot of automotive, bear in mind, but that continues to expand for us. So it's -- there weren't a lot of areas that I could point to that were soft or weren't getting better.

是的。所以，關於哈維颶風的第一個問題，它的影響相當有限，主要是在休士頓，我們才得以彌補八月份失去的一些損失。但那次恢復可能只有三分之一左右。我的意思是，我們大概能追回 50 萬美元，或許還會更多。我要告訴你們，展望未來，這個數字對我們來說很難真正理解，所以我們會盡力而為，但這個數字很難精確計算。但我現在相當有把握地說，9 月我們因颶風艾爾瑪和瑪麗亞造成的收入損失實際上超過了休士頓災後重建帶來的收入。因此，颶風在八月和九月都帶來了負面影響。關於這一點，我的看法就是這樣。然後就終端市場而言，實際上——最終還是要歸結到製造業終端市場，對吧？如果你看看我們的重型設備，你會發現它們加速了。如果你看看重工業製造業——但說實話，我們整個製造業都全面加速發展了。你和區域副總裁們談，他們仍然認為石油和天然氣產業發展良好，以及隨之而來的所有流通環節。因此，我認為製造業總體上仍在加速發展。對我們來說，交通運輸綜合體並不包含許多汽車相關業務，但這一點需要注意，不過它正在不斷擴大。所以——我並沒有發現很多薄弱或沒有好轉的領域。

Our next question comes from the line of Luke Junk of Baird.

我們的下一個問題來自 Baird 公司的 Luke Junk。

First question on Onsite. I realized we're still early stage here relative to when you really put your foot down on the accelerator in terms of signings. But what I was wondering is, how was the revenue run rate tracking on average relative to the numbers that you've laid out at 2015 Analyst Day? That is the about $1 million of year 1 market share gains and $1.8 million in average annual spend over time. The reason I asked is with the -- pace of signing we're seeing right now, just doing the math on those numbers alone, that would certainly speak to some really sustainable top line momentum coming from that business.

現場面試的第一個問題。我意識到，相對於真正開始大力推動簽約工作而言，我們目前還處於早期階段。但我所想知道的是，與您在 2015 年分析師日上公佈的數據相比，平均而言，收入運行率追蹤情況如何？這相當於第一年約 100 萬美元的市佔率成長，以及長期平均每年 180 萬美元的支出。我這麼問的原因是，就我們目前看到的簽約速度而言，僅根據這些數字進行計算，就足以說明該業務將迎來真正可持續的收入成長勢頭。

Luke, if I look at what we're seeing, I have a few observations. One is we're feeling -- we're continuing to see really good trends in the numbers. Averages are in line with what you're seeing. Averages can be deceiving. You have some that are well above it, some that are below it. That's the nature of averages, I guess. But very pleased with the run rates we're seeing from the standpoint of what we would have expected. One thing that's a tremendous positive for me, when I look at the layers of Onsites we're signing, we're actually seeing better performance out of the 2016 signings that we've been implementing in the latter half of '16 and early half of '17 than we saw in the 2015 signings that we were signing 12 months earlier. Now how much of that is a rising tide? As you all know, the ISM has continued inch up. That's usually a leading indicator. So I'm optimistic that's a sign of things to come. But we're definitely seeing strength in our end markets, but we're also seeing underlying better performance in the Onsites we have signed, again, in '16 versus what we did in '15, which is really positive from the standpoint of the quality versus our historical perspective. So I feel very good about that. I hope that answered your question, Luke.

盧克，如果我觀察我們所看到的情況，我有幾點看法。一方面，我們感覺──我們持續看到各項數據呈現出非常好的趨勢。平均值與你所看到的一致。平均值可能會騙人。有些遠高於這個值，有些則低於這個值。我想，這就是平均值的本質吧。但就我們預期的情況來看，我們對目前的運作率非常滿意。對我來說，有一點非常積極的方面是，當我查看我們正在簽署的現場服務協議時，我們發現，我們在 2016 年下半年和 2017 年上半年實施的 2016 年協議的實際效果，比我們在 12 個月前簽署的 2015 年協議的效果要好。那麼，其中有多少是上漲的潮位呢？如大家所知，ISM指數持續小幅上漲。這通常是一個領先指標。所以我很樂觀，認為這是未來發展趨勢的預兆。但我們確實看到終端市場表現強勁，我們也看到，與 2015 年相比，我們在 2016 年簽署的現場服務項目也取得了更好的業績，從品質和歷史角度來看，這確實是一個積極的信號。所以我對此感覺非常好。盧克，希望我的回答能幫到你。

And the only thing I'll add to that is we continue to see the Onsites contribute more and more to our growth rate. I think this quarter, if you take out what moved from branches to Onsite, if you remove that element of it, the Onsites contributed close to 3.5% of our growth year-over-year. And that is an increase from where we were in Q2, which itself was an increase from where we were in Q1. So it continues to contribute more.

我唯一要補充的是，我們看到現場活動對我們的成長率貢獻越來越大。我認為，如果將本季從分行轉移到現場的業務剔除，去掉這部分業務，那麼現場業務對我們年成長的貢獻接近 3.5%。這比我們第二季度的水平有所提高，而第二季度的水平又比我們第一季的水平有所提高。因此它將繼續做出更多貢獻。

And then follow-up question, just as it relates to the operating leverage looking into next year. Dan, you already touched on this to some extent, but I just wondering if you could put a finer point on the benefit to your growth and pretax income as growth in the incentive comp normalizes to get into the second quarter next year and beyond. I think in the past you've maybe put this in terms of how much pretax earnings growth that the growth incentive comp is consuming, say, right now, where we're in this adjustment period versus a period next year where that's going to normalize to some extent.

然後還有一個後續問題，這與明年的營運槓桿有關。丹，你已經在某種程度上談到了這一點，但我只是想問，隨著激勵性薪酬的增長在明年第二季度及以後趨於正常，你能不能更詳細地說明一下這對你的增長和稅前收入的好處？我認為過去你可能用成長激勵薪酬消耗了多少稅前收益成長來解釋這個問題，比如說，現在我們正處於調整期，而明年這種情況會在某種程度上恢復正常。

Yes. I'll let Dan provide some historical perspective on these numbers since he has it given his 80 quarters, I think, he counted. But I think we usually think about it in the first year of that reset year, if you will. It probably consumes 25% to 30% of our pretax dollar growth, can sort of go to incentive. When you get into the second year, that can perhaps get cut close to in half in terms of how much of your pretax it consumes.

是的。鑑於丹統計過 80 個季度的數據，我想他應該有這方面的經驗，所以我就讓他從歷史的角度來解讀這些數字吧。但我認為我們通常會在所謂的「重置年」的第一年考慮這個問題。它可能會消耗我們稅前美元成長的 25% 到 30%，可以用於激勵措施。到了第二年，稅前支出佔比或許可以減少近一半。

I'll take Dan's silence to mean I got it right.

丹的沉默就說明我猜對了。

You got it right.

你說對了。

Our next question comes from the line of Hamzah Mazari of Macquarie.

我們的下一個問題來自麥考瑞大學的 Hamzah Mazari 家族。

This is Kayvan Rahbar filling in for Hamzah Mazari. Could you give us a sense on what your hearing on Section 232? And the duties on semi-finished steel products and whether that's going to have an impact on margins?

我是 Kayvan Rahbar，接替 Hamzah Mazari。您能否簡單介紹一下您對第 232 條的聽證情況？半成品鋼材關稅是否會對利潤率產生影響？

We don't know yet. I think a decision on that keeps getting...

我們目前還不知道。我認為這個問題一直懸而未決…

I think it would be helpful to explain to everybody else on the call what he's asking.

我認為最好向通話中的其他人解釋一下他問的是什麼。

Yes. Section -- so this is basically a question about tariffs on Asian steel, I believe, which could encompass some of our products. The -- and effectively, a decision on whether or not to enact those sort of tariffs continue to get punted, and I think at this point, the expectation is maybe a decision comes next year, early next year. What I would tell you is I think that if the costs to procure steel products and fasteners go up because of an act like that, then they would go up for everybody, Fastenal as well as our competitors, and given that it's difficult to procure a lot of product domestically at this point. And so the typical response would be to try to pass that through the customers, and we expect that the industry would probably take that action if something like that were to occur. But we're watching it. Nothing has been decided on it, to our knowledge. And if something is, then we'll react appropriately.

是的。部分——所以這基本上是一個關於亞洲鋼鐵關稅的問題，我認為，這可能包括我們的一些產品。事實上，是否實施這類關稅的決定一直被一再推遲，我認為目前來看，預計可能會在明年年初做出決定。我想說的是，如果因為這樣的法案導致採購鋼鐵產品和緊固件的成本上升，那麼所有人的成本都會上升，包括 Fastenal 和我們的競爭對手，而且目前在國內採購很多產品都很困難。因此，典型的應對措施是試圖將成本轉嫁給消費者，我們預期如果發生類似的事情，整個產業可能會採取這種行動。但我們正在密切關注。據我們所知，目前還沒有就此做出任何決定。如果真有什麼問題，我們會做出相對應的反應。

All right. And just a quick follow-up. Could you give us a sense of how much your current business is government and how that's trending, including any exposure to state versus federal?

好的。還有一個後續問題。您能否簡要介紹您目前與政府相關的業務量以及發展趨勢，包括與州政府和聯邦政府的業務往來情況？

Our government business is probably about 4% of our total revenue. It's almost entirely state and local. We really don't do a lot with federal. By the way, that's one reason when people want to talk about sort of the recovery element after a storm, we don't necessarily have that sort of FEMA and federal government connection that perhaps some other distributors may have. But ours is primarily state and local. It's growing well for us. What I would tell you is it's probably a small enough piece of our business that we wouldn't be a proxy for the market. But the last couple of quarters, we've had some nice wins. We have some energy that we're putting into the state and local government business, and we think it's -- that's providing some benefit to us. But yes, it's about 4% of our revenue.

我們的政府業務大概佔總收入的4%。幾乎完全由州和地方政府負責。我們和聯邦政府的合作並不多。順便說一句，這也是為什麼當人們想談論風暴後的復原工作時，我們不一定像其他一些分銷商那樣與聯邦緊急事務管理署 (FEMA) 和聯邦政府有聯繫的原因之一。但我們主要依靠州和地方政府。它在我們這裡長得很好。我想說的是，這在我們業務中所佔的份額可能很小，所以我們不能代表整個市場。但最近幾個季度，我們取得了一些不錯的勝利。我們投入了一些精力到州和地方政府事務中，我們認為這為我們帶來了一些好處。是的，這大約占我們收入的 4%。

Our next question comes from the line of Matt Duncan of Stephens.

我們的下一個問題來自史蒂芬斯隊的馬特鄧肯。

The first question I've got is just, Holden, if you look at the -- or Dan, either one, if you look at the top 100 customers, you've got some where you're not growing and some are declining double digits. Just curious what end markets those customers are serving. Is there a common theme among them? And do you see an opportunity to maybe see growth pick up even further if some of those customers do return to growth here?

我的第一個問題是，霍爾頓，或者丹，你們倆都可以，如果你看一下前 100 位客戶，你會發現有些客戶沒有成長，有些客戶甚至出現了兩位數的下滑。只是好奇這些客戶服務的終端市場是什麼。它們之間是否存在共同的主題？如果部分客戶恢復成長，您是否認為有機會看到成長進一步加速？

Yes. The -- well, if I look particularly at sort of where September was, there is -- within that top 100, I'll tell you, there are not many categories that are declining. And the 1 or 2 that are -- there's only 1 or 2 companies in each. And so I'm not sure if that's particularly indicative. So as I said, I think that the performance for the most part has been pretty uniform across our end markets. Now, obviously, the largest piece of those 100 is going to be in manufacturing, and that's doing really well, but it's relatively -- there's growth across our landscape, frankly. I would say if I look at trends, I think that the E&C, the engineering and construction business, has gotten

是的。嗯，如果我特別看一下九月份的情況，在前 100 名中，我可以告訴你，下降的類別並不多。而那一兩家──每家都只有一兩家公司。所以我不確定這是否有特別的指示意義。正如我所說，我認為我們各個終端市場的整體表現相當一致。顯然，這 100 個產業中佔比最大的將是製造業，而且製造業發展得非常好，但相對而言——坦白說，我們整個產業都在成長。我認為，如果從趨勢來看，工程和建築業（E&C）已經取得了長足的進步。

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questions, but I see we are at 9:45. I have a

還有一些問題，但我看到現在是9點45分。我有一個

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the incremental margin because we're expanding our team, we're expanding our distribution capabilities, we're expanding the expenses of the business. But generally speaking, a high piece of the gross profit dollars flow through. The -- if I look at the expansion of incentive comp -- and Holden was taking a little broader brush when he is looking at his 25% number. If I look at the expansion of incentive comp at the branch, support and leadership levels across the company, our expansion of incentive comp consumed about 11% of our incremental margin. History has shown that number is probably in a more typical year -- probably not at 5% but probably in that 7% to 8% neighborhood. So to Ryan Merkel's earlier question, there's probably about 3 points of incremental margin that are absent this year because of the expansion of incentive comp that wouldn't be there next year because it's already reloaded. I hope that it clarified that point.

利潤率的提升是因為我們的團隊在擴大，我們的分銷能力正在擴大，業務支出也在增加。但總的來說，很大一部分毛利會流向客戶。——如果我看一下激勵薪酬的擴張——霍爾頓在考慮他的 25% 這個數字時，採取了更廣泛的視角。如果我看一下公司各分公司、支援部門和領導層激勵薪酬的擴張情況，就會發現激勵薪酬的擴張消耗了我們約 11% 的增量利潤。歷史數據表明，這個數字可能更接近正常年份——可能不會是 5%，但可能會在 7% 到 8% 之間。所以，對於 Ryan Merkel 之前提出的問題，今年可能缺少大約 3 個百分點的增量利潤，這是因為激勵性薪酬的擴大，而明年就不會出現這種情況，因為激勵性薪酬已經重新發放了。我希望這能澄清這一點。

I see we're at 9:45. So again, I want to thank everybody for participating in the call today. I hope you find this exchange useful in your understanding of Fastenal business. And again, to the Fastenal team, nice quarter, everybody. Thanks.

我看到現在是9點45分。再次感謝大家今天參加電話會議。希望這次交流能幫助您更了解 Fastenal 的業務。再次向 Fastenal 團隊致敬，大家這季都很棒。謝謝。

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

女士們、先生們，感謝各位參加今天的會議。今天的節目到此結束。你們可以斷開連結了。祝大家今天過得愉快。