fast-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023, or


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission file number 0-16125

FASTENAL COMPANY

(Exact name of registrant as specified in its charter)


Minnesota						41-0948415
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


2001 Theurer Boulevard, Winona, Minnesota						55987-1500
(Address of principal executive offices)						(Zip Code)


			(507) 454-5374
			(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $.01 per share	FAST	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ý No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of April 12, 2023, there were approximately 571,042,439 shares of the registrant's common stock outstanding.


		Page
PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Earnings	2

	Condensed Consolidated Statements of Comprehensive Income	3

	Condensed Consolidated Statements of Stockholders' Equity	4

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	6

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21

ITEM 4.	CONTROLS AND PROCEDURES	21

PART II	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	22

ITEM 1A.	RISK FACTORS	22

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22

ITEM 6.	EXHIBITS	22


	(Unaudited)
Assets	March 31, 2023		December 31, 2022
Current assets:
Cash and cash equivalents	$	239.8	230.1
Trade accounts receivable, net of allowance for credit losses of $6.1 and $8.3, respectively	1,149.8		1,013.2
Inventories	1,651.9		1,708.0
Prepaid income taxes	—		8.1
Other current assets	120.0		165.4
Total current assets	3,161.5		3,124.8

Property and equipment, net	1,003.5		1,010.0
Operating lease right-of-use assets	243.8		243.0
Other assets	168.2		170.8

Total assets	$	4,577.0	4,548.6

Liabilities and Stockholders' Equity
Current liabilities:
Current portion of debt	$	200.0	201.8
Accounts payable	266.8		255.0
Accrued expenses	229.2		241.1
Current portion of operating lease liabilities	91.4		91.9
Income taxes payable	75.8		—
Total current liabilities	863.2		789.8

Long-term debt	200.0		353.2
Operating lease liabilities	156.7		155.2
Deferred income taxes	84.0		83.7
Other long-term liabilities	2.5		3.5

Stockholders' equity:
Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding	—		—
Common stock: $0.01 par value, 800,000,000 shares authorized, 571,024,422 and 570,811,674 shares issued and outstanding, respectively	5.7		5.7
Additional paid-in capital	11.4		3.6
Retained earnings	3,314.0		3,218.7
Accumulated other comprehensive loss	(60.5)		(64.8)
Total stockholders' equity	3,270.6		3,163.2
Total liabilities and stockholders' equity	$	4,577.0	4,548.6


	(Unaudited)
	Three Months Ended March 31,
		2023		2022
Net sales		$	1,859.1	1,704.1

Cost of sales		1,009.1		910.8
Gross profit		850.0		793.3

Operating and administrative expenses		456.8		435.3
Operating income		393.2		358.0

Interest income		0.4		0.1
Interest expense		(3.9)		(2.4)

Earnings before income taxes		389.7		355.7

Income tax expense		94.6		86.1

Net earnings		$	295.1	269.6

Basic net earnings per share		$	0.52	0.47

Diluted net earnings per share		$	0.52	0.47

Basic weighted average shares outstanding		570.9		575.6

Diluted weighted average shares outstanding		572.6		577.6


	Three-month Period
		2023			2022
United States		$	1,558.7		1,431.7
% of revenues		83.8		%	84.0	%
Canada and Mexico		243.9			213.4
% of revenues		13.1		%	12.5	%
North America		1,802.6			1,645.1
% of revenues		96.9		%	96.5	%
All other foreign countries		56.5			59.0
% of revenues		3.1		%	3.5	%
Total revenues		$	1,859.1		1,704.1


		Three-month Period
Type	Introduced		2023		2022
Fasteners (1)	1967		33.6	%	34.3	%
Tools	1993		8.5	%	8.2	%
Cutting tools	1996		5.4	%	5.0	%
Hydraulics & pneumatics	1996		6.6	%	6.5	%
Material handling	1996		5.6	%	5.6	%
Janitorial supplies	1996		8.1	%	7.9	%
Electrical supplies	1997		4.6	%	4.4	%
Welding supplies	1997		4.0	%	3.7	%
Safety supplies	1999		20.4	%	21.0	%
Other			3.2	%	3.4	%
			100.0	%	100.0	%


	2023		2022
First quarter	$	0.35	$	0.31
Second quarter	$	0.35	$	0.31
Third quarter			$	0.31
Fourth quarter			$	0.31
Total	$	0.70	$	1.24


	Options Granted	Option Exercise Price		Closing Stock Price on Date of Grant		March 31, 2023
Date of Grant						Options Outstanding	Options Exercisable
January 3, 2023	1,071,943	$	48.00	$	47.400	1,062,367	70,562
January 3, 2022	713,438	$	62.00	$	61.980	666,921	53,355
January 4, 2021	741,510	$	48.00	$	47.650	654,243	244,108
January 2, 2020	902,263	$	38.00	$	37.230	744,467	382,024
January 2, 2019	1,316,924	$	26.00	$	25.705	900,545	559,781
January 2, 2018	1,087,936	$	27.50	$	27.270	658,540	527,626
January 3, 2017	1,529,578	$	23.50	$	23.475	651,325	547,059
April 19, 2016	1,690,880	$	23.00	$	22.870	478,231	356,861
April 21, 2015	1,786,440	$	21.00	$	20.630	322,855	247,151
April 22, 2014	1,910,000	$	28.00	$	25.265	30,298	30,298
Total	12,750,912					6,169,792	3,018,825


Date of Grant	Risk-free Interest Rate		Expected Life of Option in Years	Expected Dividend Yield		Expected Stock Volatility		Estimated Fair Value of Stock Option
January 3, 2023	4.0	%	5.00	2.6	%	29.58	%	$	11.62
January 3, 2022	1.3	%	5.00	1.7	%	28.52	%	$	13.68
January 4, 2021	0.4	%	5.00	2.0	%	29.17	%	$	9.57
January 2, 2020	1.7	%	5.00	2.4	%	25.70	%	$	6.81
January 2, 2019	2.5	%	5.00	2.9	%	23.96	%	$	4.40
January 2, 2018	2.2	%	5.00	2.3	%	23.45	%	$	5.02
January 3, 2017	1.9	%	5.00	2.6	%	24.49	%	$	4.20
April 19, 2016	1.3	%	5.00	2.6	%	26.34	%	$	4.09
April 21, 2015	1.3	%	5.00	2.7	%	26.84	%	$	3.68
April 22, 2014	1.8	%	5.00	2.0	%	28.55	%	$	4.79


	Three-month Period
Reconciliation		2023	2022
Basic weighted average shares outstanding		570,928,848	575,559,161
Weighted shares assumed upon exercise of stock options		1,703,741	2,059,645
Diluted weighted average shares outstanding		572,632,589	577,618,806


	Three-month Period
Summary of Anti-dilutive Options Excluded		2023		2022
Options to purchase shares of common stock		2,269,908		930,401
Weighted average exercise prices of options		$	52.17	58.40


	Three-month Period
		2023		2022
Manufacturing		74.6	%	71.2	%
Non-residential construction		9.3	%	10.4	%
Other		16.1	%	18.4	%
		100.0	%	100.0	%


	Average Interest Rate at March 31, 2023			Debt Outstanding
			Maturity Date	March 31, 2023		December 31, 2022
Unsecured revolving credit facility	5.85	%	September 28, 2027	$	70.0	225.0
Senior unsecured promissory notes payable, Series C	3.22	%	March 1, 2024	60.0		60.0
Senior unsecured promissory notes payable, Series D	2.66	%	May 15, 2025	75.0		75.0
Senior unsecured promissory notes payable, Series E	2.72	%	May 15, 2027	50.0		50.0
Senior unsecured promissory notes payable, Series F	1.69	%	June 24, 2023	70.0		70.0
Senior unsecured promissory notes payable, Series G	2.13	%	June 24, 2026	25.0		25.0
Senior unsecured promissory notes payable, Series H	2.50	%	June 24, 2030	50.0		50.0
Total				400.0		555.0
Less: Current portion of debt				(200.0)		(201.8)
Long-term debt				$	200.0	353.2

Outstanding letters of credit under unsecured revolving credit facility - contingent obligation				$	32.7	36.3


			Change Since:			Change Since:
	Q1 2023	Q4 2022	Q4 2022		Q1 2022	Q1 2022
In-market locations - absolute employee headcount	13,668	13,410	1.9	%	12,855	6.3	%
In-market locations - FTE employee headcount	12,219	12,017	1.7	%	11,644	4.9	%
Total absolute employee headcount	22,820	22,386	1.9	%	21,167	7.8	%
Total FTE employee headcount	20,262	19,854	2.1	%	18,958	6.9	%

Number of branch locations	1,660	1,683	-1.4	%	1,760	-5.7	%
Number of active Onsite locations	1,674	1,623	3.1	%	1,440	16.3	%
Number of in-market locations	3,334	3,306	0.8	%	3,200	4.2	%
Weighted FMI devices (MEU installed count)	104,673	102,151	2.5	%	94,425	10.9	%


	Three-month Period
		2023	2022
Branch openings		2	6
Branch closures, net of conversions		(25)	(39)

Onsite activations		84	57
Onsite closures, net of conversions		(33)	(33)


	DSR Change Three-month Period				% of Sales Three-month Period
	2023		2022		2023		2022
Fasteners	7.0	%	24.6	%	33.6	%	34.3	%
Safety supplies	5.7	%	15.3	%	20.4	%	21.0	%
Other	12.4	%	14.8	%	46.0	%	44.7	%