Fastenal 4Q15 Earnings Call Notes

Fastenal’s (FAST) CEO Dan Florness on Q4 2015 Results

59 of our top 100 customers contracted in December of last year

“In the first quarter of this year, 72 of our top 100 customers grew. In the second quarter, that dropped to 63. In the third quarter that dropped to 56. In the fourth quarter, that dropped to 49. So in the fourth quarter, half of our top 100 customers grew and half contracted. In the month of December to amplify that a little bit, 41 of our top 100 customers grew and 59 contracted.”

A lot of companies are feeling pain

“We sell across the continent around the planet, most of our business is in North America and we sell to a lot of different industries. And when you start looking through the list, of lot of names that you recognize standout and you can see the pain they are feeling in their business.”

Before Christmas sales looked like they were trending flat and then in the ensuing days we saw that erode

“In the month of December, the Monday before Christmas looking at the numbers and consulting with a few of our folks internally about what they were seeing in the trends. And trends looked a lot like 2014 in that, the Monday before Christmas, I felt we had a very good chance of having sales being flat December to December. And in the ensuing days, the balance of that week and then the week between Christmas and New Year quickly saw that erode as customers were falling off in their business activity and we produced a number we reported this morning.”

January is trending positive though

“The start of January and again you could question the wisdom of making this commentary with — as of yesterday, our month of January is trending, it looks like there is a potential for us to be positive in the month of January.”

New CEO as of Jan 1

“I officially became CEO on January 1 of this year”

You can’t really tell a lot from November or December

” One thing I have always said over the years is the history in this business, for Fastenal’s business that is, the trends from January to October, the trends that really matter, November and December are months you go through, but history has said they’re never really indicative of anything. We saw some patterns in November and December. I thought they were worth noting, but I don’t think there is anything that we’ve learned in the last two months that tell us if it’s spreading, if it’s stabilized, other than what we saw with 10 days left in December and what we’re seeing in the first eight days or so of January.”

We try to share more when there’s uncertainty, but the month can change on a dime

“when there is more uncertainty, I do believe and I’ve always believed this that we have an obligation to maybe share a little more insight. And so we’re trying to share as much as we can, but always mindful of the fact that the month can change on a dime. One of the reasons we had never talked about January, in the January call, or we’ve done it very infrequently is that we’re always wrong. The question is how much, but I can’t say that we know anything about the contagion.”

Deflation has held pretty steady

“From the standpoint of the pressure on deflation, that’s holding pretty steady to what we were seeing in the third quarter. I wouldn’t say it’s gotten worse. I wouldn’t say it’s gotten better. So I would say that’s holding pretty steady’