10-KPeriod: FY2009

FASTENAL CO Annual Report, Year Ended Dec 31, 2009

Filed February 9, 2010For Securities:FAST

Summary

Fastenal Company's 2009 10-K filing reveals a company navigating the challenging economic environment of that year. Net sales saw a significant decrease of 17.5% to $1.93 billion compared to 2008, largely due to contractions in its manufacturing and non-residential construction customer segments. Despite the sales decline, the company demonstrated resilience by managing operating and administrative expenses effectively, which decreased by 12.6% through headcount reductions and cost controls. This allowed Fastenal to maintain a strong operational cash flow of $306 million, enabling continued dividend payments and share repurchases. The company's strategic focus, the 'pathway to profit' initiative, aimed at increasing store sales and improving margins by adding outside sales personnel, experienced delays due to the economic downturn. Fastenal anticipates returning to its historical store opening rates in the latter half of 2010, demonstrating a forward-looking approach. The acquisition of Holo-Krome in late 2009 was a minor event in the financial reporting year but suggests a strategy for product line expansion. Overall, the filing indicates a company focused on cost management and operational efficiency during a difficult economic period, with a commitment to shareholder returns through dividends and share buybacks.

Financial Highlights

48 data points
Beta

Revenue

$1.93B

50.9% Gross Margin

Net Income

$184.36M

9.6% Net Margin

EPS (Diluted)

$0.15

Total Assets

$1.33B

Cash & Equivalents

$164.85M

Free Cash Flow

$253.53M

Financial Statements
Beta
Revenue$1.93B
Cost of Revenue$946.89M
Gross Profit$983.43M
SG&A Expenses$686.79M
Operating Income$295.79M
Net Income$184.36M
EPS (Basic)$0.15
EPS (Diluted)$0.15
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Net sales declined by 17.5% in 2009 to $1.93 billion, impacted by a significant slowdown in manufacturing and construction sectors.
  • 2Operating and administrative expenses were reduced by 12.6% through headcount management and cost controls, demonstrating effective expense management.
  • 3The company generated strong operating cash flow of $306 million in 2009, providing financial flexibility.
  • 4Fastenal plans to resume its historical store opening rate (7%-10%) in the second half of 2010, indicating confidence in future growth despite current economic conditions.
  • 5The 'pathway to profit' strategy, focused on increasing per-store sales and profitability, has been delayed by 24-30 months due to the economic downturn.
  • 6The company repurchased 1.1 million shares of common stock in 2009 and continued its dividend payments, showing a commitment to shareholder returns.
  • 7A small acquisition of Holo-Krome was completed in December 2009, adding to the company's product offerings.

Frequently Asked Questions

The economic downturn significantly impacted Fastenal's sales, leading to a 17.5% decrease in 2009 compared to 2008. Sales to manufacturing customers decreased by 18.8% and non-residential construction business by 19.4% for the year. However, the company managed its operating and administrative expenses effectively, reducing them by 12.6%, which helped mitigate the impact on profitability and maintain strong operating cash flow.

Fastenal's 'pathway to profit' strategy, which involves slowing new store openings to invest in outside sales personnel and improve per-store sales and margins, was impacted by the economic slowdown. The company plans to return to its historical store opening rate (7-10%) in the latter half of 2010. They aim to increase average store sales and capture operating leverage to enhance profitability.

Fastenal focused on expense management, including a reduction in headcount and operating costs, which led to a 12.6% decrease in operating and administrative expenses. The company also generated strong operating cash flow ($306 million) and managed its capital expenditures, reducing them to $52.5 million in 2009. They continued to pay dividends and repurchase shares, demonstrating financial discipline and commitment to shareholders.

The acquisition of certain assets of Holo-Krome, a domestic manufacturer of socket products, was completed in December 2009. This was a small, all-cash transaction that did not have a material impact on Fastenal's 2009 financial results and was not expected to have a significant impact on sales in 2010, suggesting it was a strategic addition to their product line.