At the beginning of the year, I had told you how Fastenal (Nasdaq: FAST) is expanding its vending machine footprint to grab market share. Its unique idea of setting up a mini-store in a customer's factory or workshop set the trend for a fast-growing business.

Recently, the company posted earnings for the first quarter of 2012, which prompted me to review this trend. The results showed some interesting insights.

Quick quarter
 During the quarter, Fastenal's revenue was 20% higher from the year-ago period. This is slightly better than peer W.W. Grainger (NYSE: GWW), which posted a 16% increase in sales. Fastenal earned $0.34 per share during the quarter, slightly lower than the $0.35 per share estimated by analysts. But if you look beyond the narrow miss, which was probably the result of high fuel prices, what stands out is the 26% growth in the company's profits as compared to last year.

As noted earlier, in October 2011, the company's profits continued to record a quarterly growth rate higher than 25%, consistently higher than its sales growth. This means that Fastenal is excellent at converting its revenue into earnings.

What made money during this quarter was the products used in industrial production, while there was a noticeable softness in demand for maintenance and upkeep-related goods. Now let's take a look at how the company is expanding.

Growing
 At the end of last year, Fastenal had installed 7,500 vending machines across its customers' locations. In the past quarter, this number has increased to 9,798 machines, growing by an impressive 30%. Although these vending machines account for merely 16% of the company's total sales, they are a fast-growing business by itself.

Fastenal also plans to increase its store count at the rate of 4% to 6% this year, as compared to a five-year average store opening rate of 3% to 8%. Apart from the fact that the vending machines have by themselves made the entire process much more consumer friendly, opening fewer stores saves on capital expenditure as well. At the same time, the company expects to draw in more customers through these store openings.

Opening stores and increasing vending machine installations certainly count as important factors for the company's expansion. But what gives a true picture of Fastenal's success is the growth in its same-store sales (or stores which have been open for more than two years), as it excludes revenue from stores that have opened or shut during that period. During the quarter, Fastenal's same-store sales increased by 17.8%, which reflects strength in its existing businesses.

The Foolish bottom line
 With a healthy dividend yield of 1.4%, Fastenal sure seems like a good package overall. The company is not just dependant on its high-growth vending machine business, but is also seeking benefits by opening new stores, along with improving performance of its existing ones. No wonder then that over the past 10 years, Fastenal's dividend payouts have grown at an annual average rate of 50%.

It is important to keep a track of Fastenal to see if its boosts payments even further, which is why I suggest you add Fastenal to your free watchlist.

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