Q4 2010 Earnings Call
January 18, 2011 10:00 am ET
Ellen Trester -
Willard Oberton - Chief Executive Officer, President and Executive Director
Daniel Florness - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer
Hamzah Mazari - Crédit Suisse AG
Adam Uhlman - Cleveland Research Company
Daniel Garofalo - Piper Jaffray Companies
Ryan Merkel - William Blair & Company L.L.C.
Robert Barry - Goldman Sachs & Company
David Manthey - Robert W. Baird & Co. Incorporated
Brent Rakers - Morgan Keegan & Company, Inc.
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Welcome to the Fastenal Co. 2010 Annual and Fourth Quarter Earnings Conference Call. This call will be hosted by Will Oberton, our Chief Executive Officer; and Dan Florness, our Chief Financial Officer.
The call will last for up to 45 minutes. The call will start with a general overview of our quarterly results and operations by Will and Dan, with the remainder of the time being open for questions and answers. Today's conference call is a proprietary Fastenal presentation and is being recorded by Fastenal. No recording, reproduction, transmission or distribution of today's call is permitted without Fastenal's consent. This call is being audio simulcast on the Internet via the Fastenal Investor Relations home page, investor.fastenal.com. A replay of the webcast will be available on the website until March 8, 2011 at midnight, Central Time.
As a reminder, today's conference call includes statements regarding the company's anticipated financial and operating results as well as other forward-looking statements based on current expectations as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may often be identified with words such as we expect, we anticipate, upcoming or similar indications of future expectations. It is important to note that the company's actual results may differ material from those anticipated. Information on factors that would cause actual results to differ material from these forward-looking statements are contained in the company's periodic filings with the Securities and Exchange Commission, and we encourage you to review those carefully. Investors are cautioned not to place undue reliance on such forward-looking statements, as there is no assurance that the matter contained in such statements will occur. Forward-looking statements are made as of today's date only, and we undertake no duty to update the information provided on this call.
Today, GlobeNewswire is experiencing technical difficulties posting our press release this morning. The 8-K filing on EDGAR has posted and is in available on our website. We're working with GlobeNewswire to resolve this issue as quickly as possible. I would now like to turn the call over to Will Oberton. Go ahead Mr. Oberton.
Thank you, Ellen, and thank you, everyone for joining us this morning. I probably report the numbers for the fourth quarter and for 2010. Starting out with sales growth, we grew our business by 17.6% for the entire year. For the quarter, we grew at 20.3%. We didn't see a little bit of softness in November, but it bounced back nicely in December and actually had a strong month from start to finish.
The positive things about our sales growth is that the growth is widespread. We're seeing good growth in almost all regions of the country, geographic areas. Our international businesses is doing very well. The business grew over 30% for the year, and we have a lot of good things going on in the international side. So we're very excited about that and about the good domestic growth.
As the company reported 44.8% pretax growth for 2010. And for the fourth quarter, we hit right at 50%. I'm very proud of those numbers. We've worked very hard at that. On the net earnings side, it was a little low because our tax rate was slightly higher for the year. We had 43.9% earnings growth for the year and 46.3% for the quarter, both solid numbers.
A lot of the earnings growth was driven because of the nice job we did on expense control. Our SG&A for the year overall expenses for the year were up 8.5%. For the quarter, it went a little higher at 15.1%. Dan is going to touch a little bit on that as we go into the call.
Some of the expenses that I was really excited about. On a non-payroll expense for the year was actually flat to down slightly. It was basically flat for the year. Really good job by the team working on everything we could do and working hard to control that.
With the payroll expense, we were only up 8.5% but that was driven by commissions and bonuses rebounding from our 2009 expenses. Other areas in the expense category that I think we did a very nice job on, the first would be distribution. Distribution expense is the closest expense we have related to the physical movement of product. You move more product, you move more weight, you spend more money. It's pretty straightforward. But our group worked really hard at implementing some new software, some new ideas, some better ways of doing business and it grew our business by 17%, and grew their expenses by less than 4% in the warehouse side of our business. And really proud of those numbers, so I left that at the end of the year and proud of the team that did that.