The Fastenal Company, Winona, MN, had sales of $470 million in the third quarter ended Sept. 30, 2006, an increase of 16.9% over the same period in 2005. Profit increased 17.8% to $54.1 million.
Sales for the first nine months totaled $1.36 billion, an increase of 19.4% over the same period in 2005. Profit increased 20.2% to $153 million.
During the first nine months of 2006, Fastenal opened 201 new sites (Fastenal opened 184 new sites in the first nine months of 2005). These 201 new sites represent an additional 11.5% stores since Dec. 31, 2005. There were 1,956 sites on Sept. 30, 2006, an increase of 13.9% over Sept. 30, 2005.
During 2005 and the first nine months of 2006, Fastenal has implemented several initiatives: (1) a new freight model, (2) tactical changes to our working capital model, and (3) an expanded store model called CSP2.
“The freight model represents a focused effort to haul a higher percentage of our products utilizing the Fastenal trucking network and to charge freight more consistently in our various operating units. This initiative positively impacted the latter two-thirds of 2005 and the first nine months of 2006 despite the fact we experienced year-over-year increases of approximately 31.7% and 21.8%, respectively, in per gallon diesel fuel costs. The diesel fuel per gallon did soften in September as our average price per gallon dropped below $2.90,” Fastenal reported.
Fastenal also made changes to its working capital model include the establishment of a central call center for accounts receivable collection and the establishment of financial business rules for the purchasing of products outside the standard stocking model at the store. The CSP2 store model represents an expansion of the core stocking items and sales personnel in an existing store with the goal of driving additional product sales to existing customers, target customers, and specific geographic areas within established markets. During the first nine months of 2006, 135 stores were converted to the CSP2 format. This resulted in 165 stores converted to the CSP2 format since the third quarter of 2005.
Fastenal’s vehicle fuel costs averaged about $1,248, $1,500, and $1,677 per month in the first, second, and third quarters of 2005, respectively. During the first, second, and third quarters of 2006, vehicle fuel costs have averaged approximately $1,864, $2,096 and $2,150 per month, respectively. These increases result from rising fuel costs, the freight initiative discussed earlier, and the increase in sales and store locations.
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