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Fastenal Company Reports 2012 Fourth Quarter And Annual Earnings

Stocks in this article: FAST

The last several years have seen meaningful swings in the cost of diesel fuel and gasoline – During the first, second, third, and fourth quarters of 2012, our total vehicle fuel costs were approximately $10.6, $10.8, $10.8, and $10.3 million, respectively. During the first, second, third, and fourth quarters of 2011, our total vehicle fuel costs were approximately $8.6, $10.5, $9.8, and $9.8 million, respectively. The changes resulted from variations in fuel costs, variations in the service levels provided to our stores from our distribution centers, changes in the number of vehicles at our store locations, and changes in the number of other sales centered vehicles as a result of store openings and the expansion of our non-store sales force. These fuel costs include the fuel utilized in our distribution vehicles (semi-tractors, straight trucks, and sprinter trucks) which is recorded in cost of sales and the fuel utilized in our store delivery and other sales centered vehicles which is included in operating and administrative expenses (the split in the last several years has been approximately 50:50 between distribution and store and other sales centered use). 

The average per gallon fuel costs (in actual dollars) and the percentage change (on a year-over-year basis) for the last three years was as follows:

  Per gallon average price Q1 Q2 Q3 Q4 Annual Average 1
2012 price          
Diesel fuel  $ 3.92 3.98 3.88 4.05 3.96
Gasoline  $ 3.53 3.73 3.61 3.53 3.60
           
2011 price          
Diesel fuel  $ 3.60 4.04 3.90 3.87 3.85
Gasoline  $ 3.22 3.78 3.62 3.37 3.50
           
2010 price          
Diesel fuel  $ 2.89 3.06 2.96 3.14 3.01
Gasoline  $ 2.68 2.80 2.71 2.84 2.76
           
Per gallon price change Q1 Q2 Q3 Q4 Annual 1
           
2012 change          
Diesel fuel 8.9% -1.5% -0.5% 4.7% 2.9%
Gasoline 9.6% -1.3% -0.3% 4.7% 2.9%
           
2011 change          
Diesel fuel 24.6% 32.0% 31.8% 23.2% 27.9%
Gasoline 20.1% 35.0% 33.6% 18.7% 26.8%

1 Average of the four quarterly figures contained in the table.

Income taxes Incomes taxes, as a percentage of earnings before income taxes, were approximately 37.6% and 37.8% for 2012 and 2011, respectively.  As our international business and profits grow over time, the lower income tax rates in those jurisdictions, relative to the United States, have begun to lower our effective tax rate. 

OPERATIONAL WORKING CAPITAL:

The year-over-year comparison and the related dollar and percentage changes related to accounts receivable and inventories were as follows:

  Balance at December 31: Twelve Month Dollar Change Twelve Month Percentage Change
  2012 2011 2010 2012 2011 2012 2011
Accounts receivable, net  $ 372,159 338,594 270,133 33,565 68,461 9.9% 25.3%
Inventories  $ 715,383 646,152 557,369 69,231 88,783 10.7% 15.9%
Operational working capital 1  $ 1,087,542 984,746 827,502 102,796 157,244 10.4% 19.0%
               
Sales in last two months  $ 468,696 451,069 370,582 17,627 80,487 3.9% 21.7%

The growth in accounts receivable noted above was driven by our sales growth in the final two months of the period. The strong growth in recent years with our international business and with large customer accounts has created some difficulty with managing the growth of accounts receivable relative to the growth in sales. This was exaggerated by the short month in December 2012 versus 2011 (19 business days versus 21 days) and due to a drop off in payment activity due to Christmas Day and New Year's Day falling on a Tuesday resulting in a number of our customers being shut down for the last full week of December. We saw a similar short month impact in September 2012. Also as indicated above, our sales in the last two months of the year grew from 2011 to 2012 by 3.9%; however, our daily sales growth in the last two months of 2012 was 9.1% which resulted in increased year end receivables. 

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