Fastenal Company (NASDAQ:FAST) Q4 2019 Earnings Conference Call - Final Transcript

Jan 17, 2020 • 10:00 am ET

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Fastenal Company (NASDAQ:FAST) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] And our first question is coming from the line of Ryan Merkel with William Blair. Please proceed with your question.

Analyst
Ryan Merkel

Hey, thanks. Good morning guys.

Executive
Daniel L. Florness

Morning.

Executive
Holden Lewis

Morning.

Analyst
Ryan Merkel

So, first off, in terms of price capture, you said it was consistent with last quarter. So, I just want to confirm, does this mean pricing was up 90 basis points to 120 basis points. And then, sort of a related question, I recall that you thought you'd get some incremental price into fourth quarter. Did this not materialize and why was that if that's the case?

Executive
Daniel L. Florness

No. So, what I'd say is, if --the impact of price in the fourth quarter was probably in the neighborhood of 70 basis points to 100 basis points, which would have backed off a little bit from where Q3 was. But again, much as we saw much of the year that reflected having to grow above some increases from last year. If I look at the overall price level in our business in fourth quarter, it was slightly up from where we were in the third quarter. So, we look at the overall pricing activity from Q3 and for the most part, I would characterize Q4 as living up with our expectations as it relates to the price side.

Analyst
Ryan Merkel

Okay. So, the bottom line is, I was maybe picking up. There was maybe a little price pressure starting to materialize, but that doesn't seem to be the case just yet.

Executive
Daniel L. Florness

We aren't seeing price pressure materialize. Now, what we're commenting on has more to do with inflation. Remember, what we've said is we've had two things affecting us over the past 12 months. One was the generalized inflation. The second was the tariff and frankly the generalized inflation was a much more significant impact on us than the tariffs were. What we are seeing is, with some of the activity around tariffs of late, I mean, with the overall sort of slower demand level, some of those inflationary pressures that have been a part of our business for the past 12 months to 18 months have begun to moderate, but that shouldn't be read to suggest that we haven't maintained our pricing that we achieved in Q3 because we have.

Just to add a slight color to that, when I -- first off, there is always price pressure, that's a constant in life and it's intense now. If I -- but, I'd make that comment again any quarter. The one element that does exist in the fourth quarter, that does exist in the first quarter is keeping the facts straight in the confusion at a minimum. And what I mean by that is, we've talked in prior calls, and we've talked internally, continuously about the tariff and anti-dumping duties that are out in the marketplace. You have the 232 anti-dumping as it relates to steel and aluminum that was put in place. And then