Fastenal 4Q16 Earnings Call Notes

posted in: Notes | 0

Fastenal’s (FAST) CEO Dan Florness on Q4 2016 Results

Upbeat finish to a tough year

“First off we had an upbeat finish to a tough year. Secondly, I believe we’ve changed the trends of our business. Third, I believe we’ve improved the health of our business.”

Holden Lewis

General industrial companies are still challenged, but more enthusiasm especially in oil and gas

“On the second question, where we saw the most encouraging signs I would say would have been in the process industries and we go about this a couple of ways. We listen to our Regional Vice Presidents and what they’re seeing in the marketplace and then we look at our top 100 accounts to get a sense of which areas are doing well, which ones are not and what I would tell you is, the general industrial companies on our lists, they’re still challenged. That’s been the case most of the year and I’m not sure that I saw or have heard any meaningful difference in the fourth quarter as it relates to general industrial firms. As it relates to the process industries, I would tell you that a lot of those including oil and gas looked better among our top 100 and then if you sort of listen to some of our RVPs talk about energy there definitely is more of an enthusiasm and some more encouraging facts on the ground in those regions that are heavier in oil and gas. ”

40-45% of COGS are derived from overseas

“So what we have said is that we think that 40% to 45% of our COGS are probably derived from overseas. I don’t know what the competitor, how he is defining the number. I will tell you that of that 40% to 45% not all of that is directly sourced, obviously have a significant operation with passcode that directly sources product, but that does not rise to near the level of 40% to 45%. So the number that we use includes not only the directly sourced, but also that product that we may buy domestically, but ultimately is sourced from an overseas customer.”