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Fastenal Settles Government Dispute; 2010 Sales Grow 20.3%

Fastenal reports fourth-quarter and full-year results.
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Fourth-quarter sales for Fastenal Company (Nasdaq: FAST), No. 9 on MDM's list of the top 40 industrial distributors, were up 20.3 percent to $573.8 million. 2010 sales were up 17.6 percent to $2.3 billion, with $265.4 million in profit.

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Growth was widespread geographically, according to Fastenal. International business grew more than 30 percent.

Earnings growth for the year was largely due to expense control, Will Oberton, CEO, said in a conference call this morning. Payroll expense was up 8.5 percent due mostly to commissions and bonuses, while non-payroll expense was flat this year.

The industrial distributor opened 27 new stores in the fourth quarter, and 127 new stores overall in 2010.

Fastenal also reported recently that it has settled its contract dispute with the U.S. government. The distributor will pay $6.25 million in the settlement. The dispute arose out of an audit conducted by the General Services Administration Office of Inspector General in 2005-2006 that suggested the company had potentially overcharged government customers under the contract. The government also alleged Fastenal had not complied with certain pricing and product requirement provisions.

In a news release, the distributor said: "We have communicated our disagreement with the audit report, and have participated in several meetings and discussions with the OIG and DOJ on these disputed issues during the past several years.

… We continue to believe that we have complied with our obligations under the GSA contract in all material respects."

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