Fastenal Company (FAST)’s Q4 and FY2014 Earnings Results Conference Call Transcript

Daniel L. Florness – Chief Financial Officer

Well, I think it’s really a function. If you look at the growth of the customers for the vending. You know they’ve been in a neighborhood of representing about 40% of our sales for that group of customers. Inches up a little every quarter but it’s been in upper 30s now, it’s approaching 40. The growth has been basically a 20% all year. I would say that the moderation of spread is really about the fact that the other 60% of our business, investments we made at the people at the store and at the district level. The rest of the business has lifted itself up. It isn’t so much. The gap has narrowed. It’s the performance of the other 60 that’s improved and it’s raised our company number. Because we’ve been basically at 20% growth in that group through the entire year.

Leland J. Hein – President & CEO

And part of that is that a little bit research in the Fastenal business. But like a year ago, The Fastenal business was almost seeing no growth at all. Bringing that growth back was basically does not come back through vending. It’s not vending business. It changes the mix a little bit but we’re business

Daniel L. Florness – Chief Financial Officer

And that business is about half of the sixty that isn’t vending.

Leland J. Hein – President & CEO

Yeah and that really influences the gap

Raymond Jane

Helpful.. Yeah and my follow up question. How do you look against a million dollar question. How do you look at gross margins here in 2015, both early on and for the year. I know you voyaged to 51% expectation. What are your thoughts around pricing in Fastenals and non-Fastenals and how realistic the 51 expectation should be in for the near term?

Daniel L. Florness – Chief Financial Officer

You know for the 51, I frankly don’t know. What I can tell you is I think that we’ve demonstrated with this quarter is, we can invest heavily in the business. We can manage the expenses, we want exactly the profit that can shine through on our profit growth. And we can do that without expansion of growth margin. And to me that’s the most critical. It’s a competitive market out there right now. Our mix as we talked on prior calls is not inherent to raising margin. If you’ve looked at growth drivers of our business. But the profitability on those growth drivers is great when it comes to the pretext fund.