Fastenal Co. (FAST), a wholesaler and retailer of industrial and construction supplies, Tuesday, reported lower fourth-quarter profit, hurt by lower sales and a loss on sale of property and equipment. On a per share basis, earnings missed analysts' forecast by a penny.
The company's fourth-quarter net earnings were $44.54 million or $0.30 per share, compared with $62.54 million or $0.42 per share last year. The year-over-year decline in earnings was 28.8%.
On average, 10 analysts polled by Thomson Reuters expected the company to report earnings of $0.31 per share for the quarter. Analysts' estimates typically exclude special items.
Quarterly net sales declined 12.5% to $476.75 million from $544.96 million in the prior-year quarter. Seven analysts had a consensus revenue estimate of $479.38 million for the quarter.
In the preceding third quarter, the Winona, Minnesota-based company reported net earnings of $47.59 million or $0.32 per share, on sales of $489.34 million.
According to the company, the weakened economy continues to have a substantial impact on its business, negatively affecting its sales, particularly related to its industrial production business and non-residential construction business.
In the fourth quarter, the company's non-residential construction business and sales to manufacturing customers declined approximately 24.7% and 10.1%, respectively. Although the remaining businesses produced better results as a group, those didn't have enough impact to offset the manufacturing and construction impact, Fastenal noted.
The industrial and construction supplies provider also incurred a loss of $60 thousands in the quarter on the sale of property and equipment, compared with a gain of $32 thousands in the prior-year period.
Fastenal also stated that average per gallon fuel costs reached $2.70 for diesel fuel and $2.54 for gasoline in the fourth quarter. Per gallon percentage changes for diesel fuel and gasoline were a decline of 13.2% and an increase of 2%, respectively.
For fiscal 2009, the company earned $184.36 million or $1.24 per share, down from $279.71 million or $1.88 per share a year ago. Full-year revenues were $1.93 billion, 17.5% lower than $2.34 billion reported in the previous year. Analysts projected full-year earnings of $1.25 per share with revenue estimate of $1.93 billion.
Fastenal opened 69 new stores in 2009, an increase of 3% since December 31, 2008. The company also closed ten store locations in 2009 and converted one location to a customer only type. As of December 31, 2009, Fastenal had 2,369 stores.
Based on the assumption of a stable economy, the company plans to continue to increase the rate of store openings, with the goal of resuming its historical rate of openings of 7% to 10% in the second half of 2010.
Fastenal stated that on December 18, 2009, it purchased certain assets of a domestic manufacturer of socket product, a type of fastener. The business has an established name, 'Holo-Krome' and has a good depth of knowledge with its approximately 90 employees. The company believes this business will be a good addition to serving the needs of its customers. Fastenal also said the acquisition is not expected to have a material impact on its overall sales in 2010.
The company has declared its first 2010 dividend of $0.40 per share, the payment of which will occur in late February 2010.
Among peers, Melville, New York-based MSC Industrial Direct Co., Inc. (MSM) has reported a decrease in net profit for the first quarter of fiscal 2010, reflecting a drop in sales. The company's net earnings were $31.42 million or $0.50 per share, compared with $45.10 million or $0.72 per share in the prior-year quarter. Net sales slumped to $384.82 million from $433.02 million in the first quarter of fiscal 2009.
Another rival, W.W. Grainger, Inc. (GWW) is set to announce its fourth-quarter results on January 26. The company has projected fourth-quarter earnings in the range of $1.13 - $1.23 per share on sales that are expected in a range of down 2% to up 1%. Meanwhile, Wall Street analysts are looking for earnings of $1.24 per share on sales of $1.59 billion.
For fiscal 2009, W.W. Grainger sees earnings per share of $5.10 to $5.20 on sales that are expected to decline 9% to 10%. The earnings estimate excludes the $0.37 per share gain attributable to becoming the majority shareholder of MonotaRO Co., Ltd in September. For the full-year 2009, analysts expect earnings of $5.22 per share on revenues of $6.20 billion.
FAST is trading at $45.32 on the NYSE, down $0.54 or 1.18%, on a volume of 2.08 million shares.
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