U.S. industry continues to decline, industry outlook deteriorates severely

If a company changes three CEOs in nine months, it may not be in great shape, which is what Fastenal, the largest fastener company in the United States, is facing. The story begins with Fastenal reporting poor third-quarter revenue and net income. In fact, it is not difficult to understand why the company is under pressure. The drop in oil prices has created enormous difficulties for energy-related companies, which is the explanation given by Credit Suisse in a September report, when the company's sales fell year-on-year for the first time since 2009: Not surprisingly, Fastenal believes that the industry outlook has deteriorated, especially in September month. In fact, the company's September sales declined year-over-year for the first time since 2009. As the dollar strengthened, Fastenal noted that oil and natural gas prices fell and heavy industry struggled. Of Fastenal's top 100 largest enterprise customers, 44 saw revenue declines. Among the 44 companies with declining revenue, 32 companies experienced a decline in marketing of more than 10%, and 17 companies experienced a decline of more than 25%. Fastenal does not expect any improvement in the industrial environment in the next few quarters, believing that the industry has entered a recession. Fastenal is so convinced that the industry is in a recession that WilliamBlair analyst Ryan Merkel accidentally calls the company's new CEO Daniel Florness annoyed that 'the industry is not in recession': , which is quite surprising, and I think it means a lot to everyone. But if we step back and quantify some of the difficulties, of course I don't expect you to agree with those points. But in my view, oil and gas companies could be down 30% this year, which could have a 3% impact on company sales. What will be the impact of changes in exports? I think it has a bigger impact on the company, but you told me that the exchange rate has a 1% impact on the company's revenue. Florness: Yes, a combination of things led to a decline in the company's revenue. First, the premise of the question is that the sales environment for all industrial companies is not 'recession-free.' We— Merkel: I agree. I agree with you on this. Florness: The whole industrial environment is in recession - I don't care what other people say because no one knows this market better than we do. You know, we're reaching 250,000 active customers a month. In the third quarter, 44 of our 100 largest customers experienced revenue declines. In that segment, we didn't lose any business, their payout was negative. In some cases, our expenses were negative because their business was so bad and therefore negatively impacted us. Among the 44 companies with declining revenue, 32 companies experienced a decline in marketing of more than 10%, and 17 companies experienced a decline of more than 25%. This is a sign of a recessionary environment. Financial blog ZeroHedge commented that two key conclusions can be drawn from Florness's rebuttal: 1. The industry sector is in recession. 2. In any case, don't tell Florness that the company's poor performance has nothing to do with the poor industrial environment of the U.S. economy.