WASHINGTON, D.C. 20549

2001 Theurer Boulevard,


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

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

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

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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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 ~~definition~~the definitions of ~~“large~~"large accelerated ~~filer”~~filer", ~~“accelerated filer”~~"accelerated filer", ~~“smaller~~"smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

¨☐

Non-accelerated Filer

¨ ~~(Do not check if a smaller reporting company)~~

☐

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

~~Indicate the number~~As of October 11, 2023, there were approximately 571,413,165 shares ~~outstanding of each~~ of the ~~issuer's classes of~~registrant's common stock asoutstanding.

~~FASTENAL COMPANY~~

PART I — FINANCIAL INFORMATION

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in millions except share ~~and per share~~ information)

See accompanying Notes to Condensed Consolidated Financial Statements.

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(Amounts in millions except earnings per share)

See accompanying Notes to Condensed Consolidated Financial Statements.

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Amounts in millions)

See accompanying Notes to Condensed Consolidated Financial Statements.

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders' Equity

(Amounts in millions except per share information)

See accompanying Notes to Condensed Consolidated Financial Statements.

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Amounts in millions)

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in millions except share and per share information and where otherwise noted)

September 30, ~~2017~~2023 and ~~2016~~2022

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Fastenal Company and subsidiaries (collectively referred to as ~~the Company, Fastenal,~~'the company', 'Fastenal', or by terms such as ~~we, our,~~'we', 'our', or ~~us)~~'us') have been prepared in accordance with U.S. generally accepted accounting principles ~~('GAAP')~~(GAAP) for interim financial information. They do not include all information and footnotes required by U.S. GAAP for complete financial statements. However, except as described herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in our consolidated financial statements as of and for the year ended December 31, ~~2016.~~2022. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

~~Recently Adopted Accounting Pronouncements~~

~~Effective January 1, 2017, we adopted the~~ ~~Financial Accounting Standards Board ('FASB') Accounting Standards Update ('ASU') 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~. The standard simplifies several aspects of the accounting for employee share-based payment transactions, including accounting for income taxes, forfeitures, and statutory withholding requirements, as well as classification in the Condensed Consolidated Statements of Cash Flows. As a result of the adoption, on a prospective basis, for the nine and three month periods ended September 30, 2017, we recognized $0.5 and $0.0, respectively, of excess tax benefits from stock-based compensation as a discrete item in our income tax expense. Historically, these amounts were recorded as additional paid-in capital. Upon adoption, we elected to apply the change retrospectively to our Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016, which resulted in a reclassification of excess tax benefits from stock-based compensation of $5.5 offsetting cash flows used in financing activities to cash flows provided by operating activities. We elected not to change our policy on accounting for forfeitures and will continue to estimate a requisite forfeiture rate. Additional amendments to the accounting for income taxes and minimum statutory withholding requirements had no impact on our results of operations.

Recently Issued Accounting Pronouncements

~~In August 2015, the FASB issued ASU 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,~~ ~~which defers the effective date of ASU 2014-09 for~~We have implemented all entities by one year. This update is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods withinnew accounting pronouncements that ~~reporting period. ASU 2014-09 was to become effective for us beginning January 2017; however, ASU 2015-14 defers~~are in effect and that may impact our effective date until January 2018, which is when we plan to adopt this standard. The ASU permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The ASU also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required for customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. While we are still in the process of evaluating the effect of adoption on our consolidated financial statements and ~~are currently assessing our contracts with customers, we~~ do not ~~currently expect~~believe that there are any other new pronouncements that have been issued that might have a material impact on our financial position or results of ~~operations, cash flows~~operations.

Net sales include products and shipping and handling charges, net of estimates for product returns and any related sales incentives. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when or ~~financial position.~~as we satisfy our performance obligations under the contract. We recognize revenue by transferring control of the promised products to the customer, with the majority of revenue recognized at the point in time the customer obtains control of the products. We recognize revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer. We estimate product returns based on historical return rates. Using probability assessments, we estimate sales incentives expected to be paid over the term of the contract. The majority of our ~~revenue arrangements generally consist of~~contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to transfer promised goods or services. We anticipate we will expand our consolidated financial statement disclosures in order to comply with the ASU. We have not yet decided on our transition method upon adoption, but plan to select a transition method in the fourth quarter of 2017.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases, which introduces the recognition of lease assets and lease liabilities by lessees~~governmental authorities are accounted for those leases classified as operating leases under previous guidance. The update is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those reporting periods, with early adoption permitted. The guidance will be applied on a ~~modified retrospective~~net basis ~~with the earliest period presented. Based~~and therefore are excluded from net sales. Revenues are attributable to countries based on the ~~effective date, this guidance will apply beginning January 2019,~~selling location from which ~~is when we plan~~the sale occurred.

Disaggregation of Revenue

Our revenues related to ~~adopt this ASU.~~ ~~While we are still in~~ the ~~process of evaluating~~following geographic areas were as follows for the ~~effect of adoption on our consolidated financial statements and are currently assessing our leases,~~ we expect the adoption will lead to a material increase in the assets and liabilities recorded on our Condensed Consolidated Balance Sheets. As part of our assessment, we will need to determine the impact of lease extension provisions provided in our facility and vehicle leases, which will impact the amount of the right of use asset and lease liability recorded under the ASU.periods ended September 30:


	Nine-month Period					Three-month Period
	2023			2022		2023			2022
United States	$	4,675.0		4,445.1		$	1,544.6		1,516.7
% of revenues	83.7		%	84.1	%	83.7		%	84.1	%
Canada and Mexico	744.5			666.5		245.7			228.1
% of revenues	13.3		%	12.6	%	13.3		%	12.7	%
North America	5,419.5			5,111.6		1,790.3			1,744.8
% of revenues	97.0		%	96.7	%	97.0		%	96.8	%
All other foreign countries	168.6			173.4		55.6			57.6
% of revenues	3.0		%	3.3	%	3.0		%	3.2	%
Total revenues	$	5,588.1		5,285.0		$	1,845.9		1,802.4

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in millions except share and per share information and where otherwise noted)

September 30, ~~2017~~2023 and ~~2016~~2022

(Unaudited)

~~On March 31, 2017, we acquired certain assets and assumed certain liabilities~~The percentages of ~~Manufacturers Supply Company (‘Mansco’). Mansco, based in Hudsonville, Michigan, is a distributor of industrial and fastener supplies with a particularly strong~~our sales by end market position with commercial furniture original equipment manufacturers. As such, this acquisition gives us a presence in a market where we have not meaningfully contributed in the past, while providing Mansco with additional tools with which to service its customer base and reduce costs through economies of scale.

The total purchase price for this acquisition consisted of $57.9 paid in cash at closing, $0.8 paid in cash after closing pursuant to a post-closing purchase price adjustment, and a contingent consideration arrangement which requires us to pay the former owner up to a maximum of $2.5 (undiscounted) in cash after closing based on sales growth of the acquired business. The fair value of the contingent consideration arrangementwere as of September 30, 2017, estimated by applying the income approach, which is a Level 3 measurement under the fair value hierarchy, was $0.6. Assuming payment of $0.6 of the contingent consideration arrangement, the total consideration for the acquisition will be $59.3. We funded the purchase price for the acquisition with the proceeds from the issuance during the first quarter of 2017 of a new series of senior unsecured promissory notes under our master note agreement in the aggregate principal amount of $60.0.

~~The fair value of the assets acquired and liabilities assumed is summarized below.~~

Current assets $ 21.7
Property and equipment 0.9
Identifiable intangible assets 20.1
Current liabilities (1.8 )
Total identifiable net assets 40.9
Goodwill 18.4
Total fair value of assets acquired and liabilities assumed $ 59.3

The identifiable intangible assets consist mainly of the value of the customer relationships that were acquired and the goodwill consists largely of the synergies and economies of scale expected from combining the Mansco operations with our existing operations. The identifiable intangible assets and goodwill are deductible for income tax purposes.

~~The amount of net sales and net earnings of the acquired business included in our condensed consolidated statement of earnings~~follows for the periods ended September ~~30, 2017,~~30:


	Nine-month Period				Three-month Period
	2023		2022		2023		2022
Manufacturing	74.6	%	72.0	%	74.3	%	72.9	%
Non-residential construction	9.2	%	10.4	%	9.1	%	10.2	%
Other	16.2	%	17.6	%	16.6	%	16.9	%
	100.0	%	100.0	%	100.0	%	100.0	%

The percentages of our sales by product line were as follows for the periods ended September 30:


		Nine-month Period				Three-month Period
Type	Introduced	2023		2022		2023		2022
Fasteners (1)	1967	32.8	%	34.3	%	32.1	%	34.1	%
Tools	1993	8.5	%	8.3	%	8.5	%	8.4	%
Cutting tools	1996	5.3	%	5.0	%	5.2	%	5.0	%
Hydraulics & pneumatics	1996	6.7	%	6.6	%	6.7	%	6.6	%
Material handling	1996	5.6	%	5.7	%	5.6	%	5.6	%
Janitorial supplies	1996	8.3	%	8.0	%	8.5	%	8.1	%
Electrical supplies	1997	4.6	%	4.4	%	4.6	%	4.5	%
Welding supplies	1997	4.1	%	3.8	%	4.0	%	3.9	%
Safety supplies	1999	20.8	%	20.6	%	21.4	%	20.5	%
Other		3.3	%	3.3	%	3.4	%	3.3	%
		100.0	%	100.0	%	100.0	%	100.0	%

(1) The fasteners product line represents fasteners and miscellaneous supplies.

(3) Stockholders' Equity

On October 11, 2023, our board of directors declared a quarterly dividend of $0.35 per share of common stock to be paid in cash on November 24, 2023 to shareholders of record at the ~~pro forma net sales and net earnings~~close of business on October 26, 2023.

The following table presents the ~~combined entity had the acquisition occurred~~cash dividends either paid previously or declared by our board of directors for future payment on ~~January 1, 2016, are:~~a per share basis:


	2023		2022
First quarter	$	0.35	$	0.31
Second quarter	0.35		0.31
Third quarter	0.35		0.31
Fourth quarter	0.35		0.31
Total	$	1.40	$	1.24

Nine-month Period Three-month Period
2017 2016 2017 2016
Net sales $ 40.4
36.7
$ 13.4
12.7
Net earnings $ 4.6
3.7
$ 1.4
1.2
7

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in millions except share and per share information and where otherwise noted)

September 30, ~~2017~~2023 and ~~2016~~2022

(Unaudited)

~~(3) Stockholders' Equity~~

~~Dividends~~

On October 10, 2017, our board of directors declared a dividend of $0.32 per share of common stock. This dividend is to be paid in cash on November 22, 2017 to shareholders of record at the close of business on October 25, 2017. Since 2011, we have paid quarterly dividends. Our board of directors expects to continue paying quarterly dividends, provided the future determination as to payment of dividends will depend on the financial needs of the Company and such other factors as deemed relevant by the board of directors.

~~The following table presents the dividends either paid previously or declared by our board of directors for future payment on a per share basis:~~

2017 2016
First quarter $ 0.32
0.30
Second quarter 0.32
0.30
Third quarter 0.32
0.30
Fourth quarter 0.32
0.30
Total $ 1.28
1.20

Stock Options

The following tables summarize the details of options granted under our stock option ~~plan~~plans that were ~~still~~ outstanding as of September 30, ~~2017,~~2023, and the assumptions used to value ~~these~~those grants. All such grants were effective at the close of business on the date of grant.


	Options Granted	Option Exercise Price		Closing Stock Price on Date of Grant		September 30, 2023
Date of Grant						Options Outstanding	Options Exercisable
January 3, 2023	1,071,943	$	48.00	$	47.400	1,023,837	70,562
January 3, 2022	713,438	$	62.00	$	61.980	630,718	53,355
January 4, 2021	741,510	$	48.00	$	47.650	623,549	228,275
January 2, 2020	902,263	$	38.00	$	37.230	709,736	361,582
January 2, 2019	1,316,924	$	26.00	$	25.705	836,512	520,618
January 2, 2018	1,087,936	$	27.50	$	27.270	614,407	491,475
January 3, 2017	1,529,578	$	23.50	$	23.475	615,307	515,809
April 19, 2016	1,690,880	$	23.00	$	22.870	401,641	343,901
April 21, 2015	1,786,440	$	21.00	$	20.630	189,501	189,501
Total	10,840,912					5,645,208	2,775,078

Options
Granted

Option
Exercise
(Strike)
Price

Closing
Stock Price
on Date
of Grant
September 30, 2017
Date of Grant
Options
Outstanding

Options
Exercisable
January 3, 2017 764,789
$ 47.00
$ 46.95
725,542
—
April 19, 2016 845,440
$ 46.00
$ 45.74
757,522
—
April 21, 2015 893,220
$ 42.00
$ 41.26
700,746
—
April 22, 2014 955,000
$ 56.00
$ 50.53
572,500
116,250
April 16, 2013 205,000
$ 54.00
$ 49.25
104,250
57,250
April 17, 2012 1,235,000
$ 54.00
$ 49.01
957,938
776,103
April 19, 2011 410,000
$ 35.00
$ 31.78
72,550
47,550
April 20, 2010 530,000
$ 30.00
$ 27.13
107,800
82,800
April 21, 2009 790,000
$ 27.00
$ 17.61
221,650
221,650
Total 6,628,449
4,220,498
1,301,603

~~Table of Contents~~

~~FASTENAL COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions except share and per share information and where otherwise noted)~~

~~September 30, 2017 and 2016~~

~~(Unaudited)~~

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, 2017 1.9 % 5.00 2.6 % 24.49 % $ 8.40
April 19, 2016 1.3 % 5.00 2.6 % 26.34 % $ 8.18
April 21, 2015 1.3 % 5.00 2.7 % 26.84 % $ 7.35
April 22, 2014 1.8 % 5.00 2.0 % 28.55 % $ 9.57
April 16, 2013 0.7 % 5.00 1.6 % 37.42 % $ 12.66
April 17, 2012 0.9 % 5.00 1.4 % 39.25 % $ 13.69
April 19, 2011 2.1 % 5.00 1.6 % 39.33 % $ 11.20
April 20, 2010 2.6 % 5.00 1.5 % 39.10 % $ 8.14
April 21, 2009 1.9 % 5.00 1.0 % 38.80 % $ 3.64


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

All of the options in the tables above vest and become exercisable over a period of up to eight years. Generally, each option will terminate approximately ~~nine~~10 years after the grant date.

The fair value of each share-based option is estimated on the date of grant using a Black-Scholes valuation method that uses the assumptions listed above. The risk-free interest rate is based on the U.S. Treasury rate over the expected life of the option at the time of grant. The expected life is the average length of time over which we expect the employee groups will exercise their options, net of forfeitures, which is based on historical experience with similar grants. The dividend yield is estimated over the expected life of the option based on our current dividend payout, historical dividends paid, and expected future cash dividends. Expected stock volatilities are based on the movement of our stock price over the most recent historical period equivalent to the expected life of the option.

Compensation expense equal to the grant date fair value is recognized for all of these awards over the vesting period. The stock-based compensation expense for the nine-month periods ended September 30, ~~2017~~2023 and ~~2016~~2022 was ~~$4.0~~$5.6 and ~~$2.9,~~$4.4, respectively, while the third quarter of 2023 and 2022 was $1.8 and $1.4, respectively. Unrecognized stock-based compensation expense related to outstanding unvested stock options as of September 30, ~~2017~~2023 was ~~$15.9~~$18.6 and is expected to be recognized over a weighted average period of ~~4.37~~4.31 years. Any future changes in estimated forfeitures will impact this amount.

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in millions except share and per share information and where otherwise noted)

September 30, 2023 and 2022

(Unaudited)

Earnings Per Share

The following tables present a reconciliation of the denominators used in the computation of basic and diluted earnings per share and a summary of the options to purchase shares of common stock which were excluded from the diluted earnings per share calculation because they were anti-dilutive:


	Nine-month Period		Three-month Period
Reconciliation	2023	2022	2023	2022
Basic weighted average shares outstanding	571,145,110	574,667,188	571,368,442	573,019,381
Weighted shares assumed upon exercise of stock options	1,726,310	1,912,011	1,731,267	1,724,550
Diluted weighted average shares outstanding	572,871,420	576,579,199	573,099,709	574,743,931

Nine-month Period Three-month Period
Reconciliation 2017 2016 2017 2016
Basic weighted average shares outstanding 288,451,470
288,907,934
287,456,943
288,995,492
Weighted shares assumed upon exercise of stock options 140,104
227,908
121,100
154,114
Diluted weighted average shares outstanding 288,591,574
289,135,842
287,578,043
289,149,606


	Nine-month Period			Three-month Period				Nine-month Period			Three-month Period
Summary of Anti-dilutive Options Excluded	2017		2016	2017		2016	Summary of Anti-dilutive Options Excluded	2023		2022	2023		2022
Options to purchase shares of common stock	3,881,605		3,061,217	3,848,126		3,335,439	Options to purchase shares of common stock	1,831,551		1,343,160	1,598,463		1,340,567
Weighted average exercise price of options	$	49.21	50.17	$	49.18	49.67
Weighted average exercise prices of options							Weighted average exercise prices of options	$	53.05	55.23	$	53.65	55.22

Any dilutive impact summarized above related to periods when the average market price of our stock exceeded the exercise price of the potentially dilutive stock options then outstanding.

~~Table of Contents~~

~~FASTENAL COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions except share and per share information and where otherwise noted)~~

~~September 30, 2017 and 2016~~

~~(Unaudited)~~

~~Fastenal files~~We file income tax returns in the United States federal jurisdiction, all states, and various local and foreign jurisdictions. ~~With limited exceptions, we~~We are no longer subject to income tax examinations by taxing authorities for taxable years before ~~2015~~2020 in the case of United States federal ~~and foreign~~ examinations, and ~~2013~~with limited exception, before 2017 in the case of foreign, state, and local examinations.

As During the third quarter of ~~September 30, 2017 and 2016, liabilities recorded related to gross~~2023, the liability for unrecognized tax benefits ~~were $4.5 and $5.3, respectively. Included in these liabilities for gross unrecognized tax benefits is an immaterial amount for interest and penalties, both~~decreased $3.9 due to the lapse of statute of limitations, of which, ~~we classify as a component of income~~$3.8 impacted the effective tax ~~expense. We do not anticipate significant~~rate. There were no material changes in ~~total~~ unrecognized tax benefits during the ~~next twelve months.~~first half of 2023.

(5) Operating Leases

Certain operating leases for pick-up trucks contain residual value guarantee provisions which would generally become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value. The aggregate residual value guarantee related to these leases iswas approximately ~~$78.7.~~$109.0. We believe the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is ~~remote other than~~remote.

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in millions except share and per share information and where ~~we have established an accrual for estimated losses, which is immaterial at~~ otherwise noted)

September 30, ~~2017. To the extent our fleet contains vehicles we estimate will settle at a gain, such gains on these vehicles will be recognized when we sell the vehicle.~~2023 and 2022

(Unaudited)

(6) Debt Commitments

Credit Facility, Notes Payable, and Commitments

Debt obligations and letters of credit outstanding at the end of each period consisted of the following:

September 30, 2017 December 31, 2016
Outstanding loans under unsecured revolving credit facility $ 300.0
305.0
2.00% senior unsecured promissory note payable 40.0
40.0
2.45% senior unsecured promissory note payable 35.0
35.0
3.22% senior unsecured promissory note payable 60.0
—
Note payable under asset purchase agreement 5.0
10.0
Total debt 440.0
390.0
Less: Current portion of debt (8.0 ) (10.5 )
Long-term debt $ 432.0
379.5

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


	Average Interest Rate at September 30, 2023			Debt Outstanding
			Maturity Date	September 30, 2023		December 31, 2022
Unsecured revolving credit facility	6.35	%	September 28, 2027	$	—	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
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				260.0		555.0
Less: Current portion of debt				(60.0)		(201.8)
Long-term debt				$	200.0	353.2

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

Unsecured Revolving Credit Facility

We have ~~a $700.0~~an $835.0 committed unsecured revolving credit facility ~~('Credit Facility').~~(Credit Facility) with an uncommitted accordion option to increase the aggregate revolving commitment by an additional $365.0 for a total amount of $1,200.0. The Credit Facility includes a committed letter of credit subfacility of $55.0. ~~The commitments under the Credit Facility will expire (and any~~Any borrowings outstanding under the Credit Facility ~~will become due and payable) on March 10, 2020. In the next twelve months,~~for which we have the ability and intent to ~~repay a portion of~~pay using cash within the ~~outstanding loans using cash; therefore, we have~~next 12 months will be classified ~~this portion~~ as a current liability. The Credit Facility contains certain financial and other covenants, and our right to borrow under the Credit Facility is conditioned upon, among other things, our compliance with these covenants. We are currently in compliance with these covenants.

Borrowings under the Credit Facility generally bear interest at a rate per annum equal to ~~the London Interbank Offered Rate ('LIBOR') for interest periods of various lengths selected by us,~~Daily Simple SOFR plus a 0.10% spread adjustment plus 0.95%~~. Based on the interest periods we have chosen, our weighted per annum interest rate at September 30, 2017 was approximately 2.2%~~. We pay a commitment fee for the unused portion of the Credit Facility. This fee is either 0.10% or 0.125% per annum based on our usage of the Credit Facility.

~~Table of Contents~~

~~FASTENAL COMPANY AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Amounts in millions except share and per share information and where otherwise noted)~~

~~September 30, 2017 and 2016~~

~~(Unaudited)~~

Senior Unsecured Promissory Notes Payable

~~On July 20, 2016 (the 'Effective Date'), we entered into a~~We have issued senior unsecured promissory notes under our master note agreement (the ~~'Master~~Master Note Agreement') with certain institutional lenders, pursuant to which, during the period commencing on the Effective Date and ending three years thereafter, we may issue at our discretion in private placements, and the institutional lenders may purchase at their discretion, senior unsecured promissory notes of the Company (the 'Notes')Agreement) in the aggregate principal amount ~~outstanding from time~~of $260.0 as of September 30, 2023. Our aggregate borrowing capacity under the Master Note Agreement is $900.0; however, none of the institutional investors party to ~~time~~that agreement are committed to purchase notes thereunder. There is no amortization of upthese notes prior to ~~$200.0.~~their maturity date and interest is payable quarterly. The ~~Notes will bear~~notes currently issued under our Master Note Agreement, including the maturity date and fixed interest ~~at either a fixed~~ rate ~~or a floating rate based on LIBOR for an interest period~~per annum of ~~one, three, or six months. The Notes will mature no later than 12 years after the date~~each series of ~~issuance thereof,~~note, are contained in the ~~case of fixed rate Notes, or 10 years after the date of issuance thereof, in the case of floating rate Notes. All of the Notes will be prepayable at our option in whole or in part.~~table above. The Master Note Agreement contains certain financial and other ~~covenants. We~~covenants and we are currently in compliance with these covenants.

Three series of senior unsecured Notes are currently outstanding under the Master Note Agreement. The first series of Notes ('Series A'), was issued on the Effective Date, is in an aggregate principal amount of $40.0, is due and payable in full on July 20, 2021, and bears interest at a fixed rate of 2.00% per annum. The second series of Notes ('Series B'), was issued on the Effective Date, is in an aggregate principal amount of $35.0, is due and payable in full on July 20, 2022, and bears interest at a fixed rate of 2.45% per annum. The third series of Notes ('Series C'), was issued on March 1, 2017, is in an aggregate principal amount of $60.0, is due and payable in full on March 1, 2024, and bears interest at a fixed rate of 3.22% per annum. There is no amortization of these Notes prior to their maturity dates. Interest on the Notes is payable quarterly in arrears on January 20, April 20, July 20, and October 20 of each year. The carrying value of the Notes approximates fair value. The fair value was based on available external pricing data and current market rates for similar debt instruments, among other factors, which are classified as a Level 2 measurement under the fair value hierarchy.

~~Note Payable Under Asset Purchase Agreement~~

On December 7, 2015, we signed an agreement to purchase, effective January 2, 2017 ('Asset Purchase Effective Date'), certain assets related to the collection and management of certain portions of our business and financial data from Apex Industrial Technologies, LLC ('Apex'), a provider of automated point-of-use dispensing and supply chain technologies. The agreement includes a transition arrangement which requires us to assume responsibility for certain software that is licensed by Apex. The total consideration for the assets is $27.0, of which $12.0 was paid in cash in December 2015 in advance of the Asset Purchase Effective Date. The remaining $15.0 is payable in installments pursuant to an unsecured note. The first $5.0 installment was paid in December 2016, the second $5.0 installment was paid in June 2017, and the final installment of $5.0 will be paid in December 2017. The note bears interest at an annual rate of 0.56%. Interest on the unpaid principal balance of the note is due and payable on the last day of each calendar quarter.

(7) Legal Contingencies

The nature of our potential exposure to legal contingencies is described in our ~~2016~~2022 annual report on Form 10-K in Note 910 of the Notes to Consolidated Financial Statements. As of September 30, ~~2017,~~2023, there were no litigation matters that we consider to be probable or reasonably possible to have a material adverse outcome.

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in millions except share and per share information and where otherwise noted)

September 30, 2023 and 2022

(Unaudited)

(8) Subsequent Events

We evaluated all subsequent event activity and concluded that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the Notes to Condensed Consolidated Financial Statements, with the exception of the dividend declaration disclosed in Note 3 'Stockholders' Equity'.

Table of Contents

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

The following is management's discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Dollar amounts are stated in millions except for share and per share amounts and where otherwise noted. Throughout this document, percentage and dollar change calculations, which are based on non-rounded dollar values, may not be able to be recalculated using the dollar values in this document due to the rounding of those dollar values. References to daily sales rate (DSR) change may reflect either growth (positive) or contraction (negative) for the applicable period.

Business

Fastenal is a North American leader in the wholesale distribution of industrial and construction supplies. We distribute these supplies through a network of approximately ~~2,400 company-owned branches.~~3,400 in-market locations. Most of our customers are in the manufacturing and non-residential construction markets. The manufacturing market includes sales of products for both original equipment ~~manufacturers~~manufacturing (OEM), where our products are consumed in the final products of our customers, and ~~maintenance,~~manufacturing, repair and operations (MRO)., where our products are consumed to support the facilities and ongoing operations of our customers. The non-residential construction market includes general, electrical, plumbing, sheet metal, and road contractors. Other users of our products include farmers, truckers, railroads, oil exploration companies, oil production and refinement companies, mining companies, federal, state, and local governmental entities, schools, and certain retail trades. Geographically, our branches, Onsite locations, and customers are primarily located in North ~~America.~~America, though we continue to grow our non-North American presence as well.

Our motto is Growth ~~through~~Through Customer Service^® and our tagline is Where Industry Meets Innovation™.We are a customer- and growth-centric organization focused on identifying ~~'drivers'~~unique technologies, capabilities, and supply chain solutions that ~~will allow~~get us ~~to get~~ closer to our customers and reduce the total cost of their global supply chain. We believe this close-to-the-customer, 'high-touch, high-tech' partnership approach is differentiated in the marketplace and allows us to gain market share in what ~~we believe~~ remains a fragmented industrial distribution market. ~~Our growth drivers have evolved, and can be expected to continue to evolve, over time.~~

Executive Overview

~~Net sales increased $119.7, or 11.8%, in~~The following table presents a performance summary of our results of operations for the ~~third quarter~~ nine-month and three-month periods ended September 30, 2023 and 2022.


	Nine-month Period							Three-month Period
	2023			2022		Change		2023			2022		Change
Net sales	$	5,588.1		5,285.0		5.7	%	$	1,845.9		1,802.4		2.4	%
Business days	191			192				63			64
Daily sales	$	29.3		27.5		6.3	%	$	29.3		28.2		4.0	%
Gross profit	$	2,555.1		2,447.4		4.4	%	$	847.6		826.5		2.6	%
% of net sales	45.7		%	46.3	%			45.9		%	45.9	%
Operating and administrative expenses	$	1,380.2		1,326.7		4.0	%	$	460.9		447.3		3.0	%
% of net sales	24.7		%	25.1	%			25.0		%	24.8	%
Operating income	$	1,174.9		1,120.7		4.8	%	$	386.7		379.2		2.0	%
% of net sales	21.0		%	21.2	%			21.0		%	21.0	%
Earnings before income taxes	$	1,167.8		1,111.8		5.0	%	$	385.4		375.3		2.7	%
% of net sales	20.9		%	21.0	%			20.9		%	20.8	%
Net earnings	$	888.6		841.3		5.6	%	$	295.5		284.6		3.8	%
Diluted net earnings per share	$	1.55		1.46		6.3	%	$	0.52		0.50		4.1	%

Note – Daily sales are defined as the total net sales for the period divided by the number of business days (in the United States) in the period.

~~We continue to focus on our growth drivers. During the third quarter of 2017, we signed 42 new national account contracts (defined as new customer accounts with a multi-site contract). Additionally, we signed 81 new Onsite customer locations~~ ~~(defined as dedicated sales and service provided from within, or in close proximity to, the customer's facility)~~ an~~d 4,771 new industrial vending machines in the third quarter of 2017.~~

The table below summarizes our ~~branch~~absolute and ~~Onsite~~full time equivalent (FTE; based on 40 hours per week) employee ~~count and~~headcount, our ~~total employee count at the end of the periods presented, and changes in that count from the end of the prior periods~~investments related to ~~the end of the most recent period. The final three items below summarize our cumulative investments in branch~~in-market locations ~~Onsite locations, and industrial vending machines.~~

Change Since: Change Since:
Q3
2017 Q4
2016 Q4
2016 Q3
2016 Q3
2016
End of period total in-market units ⁽¹⁾ employee count
13,298
12,966
2.6 % 13,097
1.5 %
End of period total employee count 20,242
19,624
3.1 % 19,864
1.9 %

Number of public branch locations 2,418
2,503
-3.4 % 2,545
-5.0 %
Number of active Onsite locations 555
401
38.4 % 376
47.6 %
Number of in-market units ⁽¹⁾
2,973
2,904
2.4 % 2,921
1.8 %
Industrial vending machines (installed device count) ⁽²⁾
69,058
62,822
9.9 % 60,400
14.3 %
Ratio of industrial vending machines to in-market units 23:1
22:1
21:1

⁽¹⁾ ~~'In-market units' is defined~~(defined as the sum of the total number of ~~public~~ branch locations and the total number of active Onsite ~~locations.~~locations), and weighted Fastenal Managed Inventory (FMI) devices at the end of the periods presented and the percentage change compared to the end of the prior periods.

⁽²⁾ In February 2016, we signed an agreement to lease a significant number of industrial vending lockers to one of our customers. These devices do not generate product revenue and are excluded from the counts noted above.


			Change Since:			Change Since:			Change Since:
	Q3 2023	Q2 2023	Q2 2023		Q4 2022	Q4 2022		Q3 2022	Q3 2022
Total selling personnel - absolute employee headcount	16,261	16,302	-0.3	%	15,898	2.3	%	15,662	3.8	%
Total selling personnel - FTE employee headcount	14,750	14,993	-1.6	%	14,476	1.9	%	14,284	3.3	%
Total personnel - absolute employee headcount	22,862	22,913	-0.2	%	22,386	2.1	%	22,025	3.8	%
Total personnel - FTE employee headcount	20,284	20,631	-1.7	%	19,854	2.2	%	19,519	3.9	%

Number of branch locations	1,615	1,635	-1.2	%	1,683	-4.0	%	1,716	-5.9	%
Number of active Onsite locations	1,778	1,728	2.9	%	1,623	9.6	%	1,567	13.5	%
Number of in-market locations	3,393	3,363	0.9	%	3,306	2.6	%	3,283	3.4	%
Weighted FMI devices (MEU installed count)	110,191	107,115	2.9	%	102,151	7.9	%	99,409	10.8	%

During the last twelve months, we ~~have~~ increased our total FTE employee headcount by ~~201 people~~765. This reflects an increase in our ~~in-market units and 378 people in total. Our~~ total ~~headcount includes 123 people related to our Mansco acquisition. The remaining increase is mostly a function~~FTE selling personnel of ~~additions we have made~~466 to support ~~customer~~ growth in the ~~field~~marketplace and sales initiatives targeting customer acquisition. We had an increase in our distribution and transportation FTE personnel of 95 to support increased product throughput at our facilities and to expand our local inventory fulfillment terminals (LIFTs). We had an increase in our remaining FTE personnel of 204 that relates primarily to personnel investments in information technology, manufacturing, and operational support, such as purchasing and product development.

The table below summarizes the number of branches opened and closed, net of conversions, as well as ~~investments~~the number of Onsites activated and closed, net of conversions during the periods presented.


	Nine-month Period		Three-month Period
	2023	2022	2023	2022
Branch openings	8	11	3	3
Branch closures, net of conversions	(76)	(88)	(23)	(24)

Onsite activations	252	230	79	92
Onsite closures, net of conversions	(97)	(79)	(29)	(26)

In any period, the number of closings tends to reflect normal churn in our ~~growth drivers.~~

~~We opened 5 branches and closed 36 branches in~~business, whether due to redefining or exiting customer relationships, the ~~third quarter~~shutting or relocation of ~~2017. Additionally, two branches were converted from~~customer facilities that host our locations, or a ~~public branch to a non-public location.~~customer decision, as well as our ongoing review of underperforming locations. Our ~~branch~~in-market network forms the foundation of our business strategy, and we will continue to open or close ~~branches in 2017~~locations as is deemed necessary to sustain and improve our network, ~~and~~ support our growth ~~drivers.~~drivers, and manage our operating expenses.

Table of Contents

THIRD QUARTER OF 2023 VERSUS THIRD QUARTER OF 2022

Results of Operations

The following table sets forth condensed consolidated statement of earnings information (as a percentage of net sales) for the periods ended September 30:


	Three-month Period
	2023		2022
Net sales	100.0	%	100.0	%
Gross profit	45.9	%	45.9	%
Operating and administrative expenses	25.0	%	24.8	%
Operating income	21.0	%	21.0	%
Net interest expense	-0.1	%	-0.2	%
Earnings before income taxes	20.9	%	20.8	%

Note – Amounts may not foot due to rounding difference.

Nine-month Period Three-month Period
2017 2016 2017 2016
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Gross profit 49.4 % 49.5 % 49.1 % 49.3 %
Operating and administrative expenses 28.9 % 29.2 % 28.9 % 29.3 %
Gain on sale of property and equipment 0.0 % 0.0 % 0.0 % 0.0 %
Operating income 20.5 % 20.3 % 20.2 % 20.0 %
Net interest expense -0.2 % -0.2 % -0.2 % -0.2 %
Earnings before income taxes 20.4 % 20.2 % 20.0 % 19.9 %

Note – Amounts may not foot due to rounding difference.

~~Net~~ Sales

~~Note – Daily sales are defined as the total net sales for the period divided by the number of business days (in the United States) in the period.~~

The table below sets forth net sales and daily sales for the periods ended September 30, and changes in such sales from the prior period to the more recent period:


	Three-month Period
	2023			2022
Net sales	$	1,845.9		1,802.4
Percentage change	2.4		%	16.0	%
Business days	63			64
Daily sales	$	29.3		28.2
Percentage change	4.0		%	16.0	%
Daily sales impact of currency fluctuations	-0.1		%	-0.6	%

Nine-month Period Three-month Period
2017 2016 2017 2016
Net sales 3,302.0
3,014.1
1,132.8
1,013.1
Percentage change 9.6 % 2.3 % 11.8 % 1.8 %
Business days 191
192
63
64
Daily sales 17.3
15.7
18.0
15.8
Percentage change 10.1 % 1.8 % 13.6 % 1.8 %
Impact of currency fluctuations 0.0 % -0.4 % 0.3 % -0.1 %
Impact of acquisitions 0.9 % 0.7 % 1.3 % 0.6 %

~~The increases in net~~Net sales in the periods noted above for 2017 and 2016, were driven primarily by higher unit sales. Price was not a material factor in the third quarter and first nine months of 2017 compared to the same periods of 2016. The higher unit sales resulted primarily from two sources. The first is improvement in underlying market demand. We believe the improvement in general business activity is reflected in a number of metrics. For instance, the Purchasing Managers Index, published by the Institute for Supply Chain Management, averaged 57.0, 55.8, and 58.6 in the first, second, and third quarters of 2017, respectively, well above 49.8, 51.5, and 51.2 in the first, second, and third quarters of 2016, respectively. Readings above 50 are indicative of growing demand, and we believe this is favorably influencing our unit sales. Sales of fasteners, our most cyclical product line, continued to growincreased $43.5, or 2.4%, in the third quarter of 2017. We also experienced growth in sales to 64, 68, and 72 of our top 100 customers in the first, second, and third quarters of 2017, respectively. As recently as the fourth quarter of 2016, this count was 51. As business conditions strengthen, they tend to lift our net sales growth rates as well.

The second source is success within our growth initiatives. We signed 15,089 industrial vending machines during the first nine months of 2017, an increase of 5.5% over the first nine months of 2016. We signed 4,771 industrial vending machines during the third quarter of 2017, which was comparable2023 when compared to the third quarter of ~~2016. Though the current period did not exhibit unit growth, the mix of machines improved with increases~~2022. There was one fewer selling day in the ~~signings~~quarter relative to the prior year period and, taking this into consideration, our net daily sales growth increased 4.0% in the third quarter of ~~larger volume machines,~~2023 compared to the third quarter of 2022. We experienced higher unit sales in the third quarter of 2023 that was primarily due to growth at our Onsite locations, particularly those opened in the last two years. This more than offset the impact of softer end market demand on our manufacturing customers and lower revenues to construction and reseller customers. Foreign exchange negatively affected sales in the third quarter of 2023 by approximately 10 basis points.

The impact of product pricing on net sales in the third quarter of 2023 was modestly positive, consistent with historical trends, as compared to the impact of product pricing on net sales in the third quarter of 2022 of 550 to 580 basis points. Incremental pricing actions over the past twelve months have been of modest scope, resulting in mostly stable price levels through the third quarter of 2023.

Table of Contents

From a product standpoint, we have three categories: fasteners, safety supplies, and other products, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools. We experienced increasing divergence in the ~~FAST5000,~~performance of our fastener versus our non-fastener product lines in the third quarter of 2023, which we believe relates to two factors. First, fasteners are more heavily oriented toward production of final goods than maintenance, which results in greater susceptibility to weaker manufacturing end markets. Second, pricing for fasteners has decelerated at a faster pace than non-fastener products. The DSR change when compared to the same period in the prior year and ~~declines~~the percent of sales in ~~lower volume lockers. Further,~~the period were as follows:


	DSR Change Three-month Period				% of Sales Three-month Period
	2023		2022		2023		2022
Fasteners	-2.0	%	18.2	%	32.1	%	34.1	%
Safety supplies	9.2	%	12.4	%	21.4	%	20.5	%
Other	6.8	%	15.4	%	46.5	%	45.4	%

Our end markets consist of manufacturing, non-residential construction, reseller, and other, the latter of which includes government/education and transportation/warehousing. We continued to experience a significant divergence in the performance of our manufacturing end market versus our non-manufacturing end markets in the third quarter of 2023. We are growing relatively faster with key account customers, particularly Onsites, with significant managed spend where our service model and technology is particularly impactful, which disproportionately benefits manufacturing customers. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:


	DSR Change Three-month Period				% of Sales Three-month Period
	2023		2022		2023		2022
Heavy manufacturing	9.0	%	25.4	%	43.2	%	41.3	%
Other manufacturing	2.5	%	19.1	%	31.1	%	31.6	%
Non-residential construction	-7.2	%	5.2	%	9.1	%	10.2	%
Reseller	-6.9	%	3.7	%	5.8	%	6.5	%
Other end markets	8.1	%	-4.3	%	10.8	%	10.4	%

We report our customers in two categories: national accounts, which are customers with a multi-site contract, and non-national accounts, which include large regional customers, small local customers, and government customers. We continued to experience a significant divergence in the performance of our national account customers versus our non-national account customers, which relates to the relative growth of our sales through ~~our vending machines continued~~Onsite locations and larger, key accounts. The DSR change when compared to ~~grow at or near a double-digit pace during each~~the same period in the prior year and the percent of sales in the ~~first three quarters of 2017.~~ period were as follows:


	DSR Change Three-month Period				% of Sales Three-month Period
	2023		2022		2023		2022
National accounts	8.6	%	20.8	%	60.8	%	58.0	%
Non-national accounts	-1.9	%	9.9	%	39.2	%	42.0	%

Growth Drivers

•We signed ~~213~~93 new Onsite locations ~~during~~(defined as dedicated sales and service provided from within, or in proximity to, the ~~first nine months~~customer's facility) in the third quarter of ~~2017 and~~

2023, resulting in 268 year-to-date signings of new Onsite locations. We had ~~555~~1,778 active sites on September 30, ~~2017,~~2023, which represented an increase of ~~47.6% over~~13.5% from September 30, ~~2016. We signed 81 new~~2022. Daily sales through our Onsite locations, ~~during~~excluding sales transferred from branches to new Onsites, grew at a low double-digit rate in the third quarter of ~~2017, an increase of 97.6%~~2023 over the third quarter of ~~2016. We signed 136 new national account contracts~~2022. This growth is primarily due to contributions from Onsites activated and implemented in 2022 and 2023. Based on the signings in the first nine months of ~~2017; 42~~2023, we currently expect to sign approximately 350 new Onsite locations for the full year of ~~these were signed~~2023.

Table of Contents

•FMI Technology is comprised of our FASTStock℠ (scanned stocking locations), FASTBin® (infrared, RFID, and scaled bins), and FASTVend® (vending devices) offering. FASTStock's fulfillment processing technology is not embedded, is relatively less expensive and highly flexible in application, and delivered using our proprietary mobility technology. FASTBin and FASTVend incorporate highly efficient and powerful embedded data tracking and fulfillment processing technologies. Prior to 2021, we reported exclusively on the signings, installations, and sales of FASTVend. Beginning in the first quarter of 2021, we began disclosing certain statistics around our FMI offering. The first statistic is a weighted FMI® measure which combines the signings and installations of FASTBin and FASTVend in a standardized machine equivalent unit (MEU) based on the expected output of each type of device. We do not include FASTStock in this measurement because scanned stocking locations can take many forms, such as bins, shelves, cabinets, pallets, etc., that cannot be converted into a standardized MEU. The second statistic is revenue through FMI Technology which combines the sales through FASTStock, FASTBin, and FASTVend. A portion of the growth in sales experienced by FMI, particularly FASTStock and FASTBin, reflects the migration of products from less efficient non-digital stocking locations to more efficient, digital stocking locations.

The table below summarizes the signings and installations of, and sales through, our FMI devices.


	Three-month Period
	2023			2022		Change
Weighted FASTBin/FASTVend signings (MEUs)	5,969			5,187		15.1	%
Signings per day	95			81
Weighted FASTBin/FASTVend installations (MEUs; end of period)	110,191			99,409		10.8	%

FASTStock sales	$	234.2		215.9		8.5	%
% of sales	12.5		%	11.8	%
FASTBin/FASTVend sales	$	526.2		456.9		15.2	%
% of sales	28.2		%	25.1	%
FMI sales	$	760.4		672.8		13.0	%
FMI daily sales	$	12.1		10.5		14.8	%
% of sales	40.7		%	36.9	%

Our goal for weighted FASTBin and FASTVend device signings in 2023 remains between 23,000 to 25,000 MEUs.

•Our eCommerce business includes sales made through an electronic data interface (EDI), or other types of technical integrations, and through our web verticals. Daily sales through eCommerce grew 41.3% in the third quarter of ~~2017. Daily~~2023 and represented 24.5% of our total sales ~~from our national account customers grew 13.2%~~ in the ~~first nine months~~period.

Our digital products and services are comprised of ~~2017 over~~sales through FMI (FASTStock, FASTBin, and FASTVend) plus that proportion of our eCommerce sales that do not represent billings of FMI services (collectively, our Digital Footprint). We believe the ~~first nine months~~data that is created through our digital capabilities enhances product visibility, traceability, and control that reduces risk in operations and creates ordering and fulfillment efficiencies for both ourselves and our customers. As a result, we believe our opportunity to grow our business will be enhanced through the continued development and expansion of ~~2016, and grew 17.3%~~our digital capabilities.

Our Digital Footprint in the third quarter of ~~2017 over~~2023 represented 57.1% of our sales, an increase from 49.5% of sales in the third quarter of ~~2016.~~

~~Sales by Product Line~~

~~The approximate mix of sales from our fastener product line and from our other product lines was as follows for the periods ended September 30:~~

Nine-month Period Three-month Period
2017 2016 2017 2016
Fastener product line 35.8 % 36.9 % 35.6 % 36.1 %
Other product lines 64.2 % 63.1 % 64.4 % 63.9 %
100.0 % 100.0 % 100.0 % 100.0 %
2022.

Gross Profit

Our gross ~~profit,~~profit, as a percentage of net sales, was ~~49.4%~~unchanged at 45.9% in the ~~first nine months~~third quarter of ~~2017 and 49.5%~~2023 from 45.9% in the ~~first nine months~~third quarter of ~~2016. The~~2022. Customer and product mix had a negative effect on our gross profit percentage. We continued to experience relatively strong growth from Onsite customers and non-fastener products, each of which tend to have a lower gross profit percentage ~~for the first nine months of 2017 benefited from accelerating revenue growth rates, progress in~~than our ~~supply chain initiatives,~~business as ~~well as increased discipline in purchasing throughout the organization.~~a whole. This was offset by a ~~roughly 30 basis point drag owing~~number of favorable variables. First, we continue to ~~two elements of mix. The first was a change~~experience favorable freight costs, which reflects elevated domestic freight revenue leveraging what are relatively stable costs to support our captive fleet, lower expenses related to external freight providers, and lower fuel costs. Second, in product and customer mix. Fasteners, which is currently our largest single product line at approximately 35.8% of sales, is our highest gross profit product line due to the high transaction cost surrounding the sourcing and supply of the product for customers. Any reduction in the mix of our sales attributable to fasteners, and particularly maintenance fasteners, may negatively impact gross profit. Larger customers (for which National Accounts are a good proxy), whose more focused buying patterns allow us to offer them better pricing, also influence gross profit. Branches typically achieve higher average net sales disproportionately by growth in the non-fastener product lines and with large customers, causing gross profit margin to decline as average net sales grow. From the first nine months of 2016 to the first nine months of 2017, our daily sales of fastener products grew 6.9% (of which 2.5 percentage points were attributable to Mansco) while our daily sales of non-fastener products grew 12.1%. The relatively slower growth that we experienced in the first nine months of 2017 in our fastener product line combined with relatively faster growth in sales to our largest customers partially offset the gross profit improvement we otherwise experienced in the period. The second element of mix was driven by the acquisition of Mansco. Mansco products carry a lower gross profit product mix than the Company.

In the third quarter of ~~2017, our gross profit,~~2022 we had a $3.4 write-down of pandemic-related gloves that did not recur in the third quarter of 2023. Third, we experienced slightly positive price-cost. This reflects moderating product costs, as we took no meaningful pricing actions in the period, and an easy comparison, as it largely recaptures the price-cost deficit experienced in the third quarter of 2022.

Table of Contents

Operating Income

Our operating income, as a percentage of net sales, ~~declined to 49.1% from 49.3%~~was unchanged at 21.0% in the third quarter of 2016. Our gross profit over the period was adversely affected by roughly 30 to 40 basis points as a result of the same two elements of mix that affected the first nine months of 2017. We also believe the gross profit percentage was reduced by 10 to 20 basis points2023 from 21.0% in the period from hurricanes that affected our Caribbean, Southeastern United States, and Gulf regions, the disruptions from which reduced net sales and gross profit dollars and resulted in an increase in sales of lower margin products. As with the first nine months of 2017, these factors were offset by accelerating revenue growth rates and progress in supply chain initiatives. During the third quarter of 2017, our daily sales of fastener products grew 12.1% (of which 3.8 percentage points were attributable to Mansco) and daily sales of non-fastener products grew 14.6% when compared to the third quarter of 2016.2022.

Operating and Administrative Expenses

Our operating and administrative expenses, ~~(including a gain on the sale of property and equipment),~~ as a percentage of net sales, ~~improved~~increased to ~~28.9 %~~25.0% in the ~~first nine months~~third quarter of ~~2017~~2023 from ~~29.2%~~24.8% in the ~~first nine months~~third quarter of 2016. The primary contributor to this improvement was relatively modest growth in occupancy-related expenses. Though our employee-related expenses grew more quickly than our occupancy expenses, they also contributed to our leverage through the first nine months of 2017.

~~Our operating and administrative expenses (including a gain on the sale of property and equipment),~~2022. This largely reflects an increase, as a percentage of net sales, ~~improved to 28.9%~~ in the third quarter of 2017 from 29.3% in the third quarter of 2016. The primary contributors to this improvement were relatively lower growth in occupancy-related and selling transportation expenses. This was partially offset by sharper growth in employee-related expenses. The leverage achieved over ourother operating and administrative ~~expenses~~expenses. Our ability to leverage was ~~diminished~~adversely impacted by slow sales growth, which made it difficult to leverage spending on certain business initiatives and investments. Our ability to leverage was also limited by having one less selling day in the third quarter of ~~2017 versus~~2023 than we had in the third quarter of ~~2016.~~

~~The growth in employee-related, occupancy-related, and selling transportation expenses (the three largest components~~2022, as most of our operating expenses will not vary based on the number of selling days in a given period.

The percentage change in employee-related, occupancy-related, and all other operating and administrative ~~expenses)~~expenses compared to the same periods in the preceding year, is outlined in the table below.

Approximate Percentage of Total Operating and Administrative Expenses Nine-month Period Three-month Period
2017 2017
Employee-related expenses 65% to 70% 8.4 % 12.3 %
Occupancy-related expenses 15% to 20% 2.0 % 1.5 %
Selling transportation expenses 5% 8.4 % 2.7 %


	Approximate Percentage of Total Operating and Administrative Expenses	Three-month Period
		2023
Employee-related expenses	70% to 75%	1.6	%
Occupancy-related expenses	15% to 20%	3.7	%
All other operating and administrative expenses	10% to 15%	11.0	%

Employee-related expenses include: (1) payroll (which includes cash compensation, stock option expense, and profit sharing), (2) health care, (3) personnel development, and (4) social taxes. ~~Our employee-related~~

In the third quarter of 2023, our employee-related expenses increased inwhen compared to the nine-month period. This was related to: (1) higher bonuses and commissions due to growth in net sales and net earnings, as well as regulatory driven incremental compensation, (2) increased health care costs, (3)third quarter of 2022. We experienced an increase in ~~our~~employee base pay due to higher average FTE during the period and, to a lesser degree, higher average wages. We also experienced higher healthcare-related costs. This was partly offset by bonus and commission payments declining to reflect the impact of slower sales and profit ~~sharing contribution, (4) an increase in stock option expense, (5) an increase in full-time equivalent ('FTE') headcount related to efforts to support~~ growth ~~in our business, and (6)~~versus the ~~inclusion of Mansco personnel. The increase in the third quarter of 2017, when compared to the third quarter of 2016, was driven by items 1, 2, 5, and 6 noted above for the nine-month period.~~prior year.

The table below summarizes our FTE headcount at the end of the periods presented and ~~changes in such headcount from~~the percentage change compared to the end of the prior ~~periods~~periods:


			Change Since:			Change Since:
	Q3 2023	Q2 2023	Q2 2023		Q3 2022	Q3 2022
Total selling personnel (1)	14,750	14,993	-1.6	%	14,284	3.3	%
Distribution/Transportation personnel	2,984	3,053	-2.3	%	2,889	3.3	%
Manufacturing personnel	704	723	-2.6	%	671	4.9	%
Organizational support personnel (1)	1,846	1,862	-0.9	%	1,675	10.2	%
Total personnel	20,284	20,631	-1.7	%	19,519	3.9	%

(1) Of our Total Selling Personnel, 80%-85% are attached to ~~the end~~a specific in-market location. Organizational support personnel consists of: (1) Sales & Growth Driver Support personnel (approximately 35% of ~~the most recent period:~~

Change Since: Change Since:
Q3 Q4 Q4 Q3 Q3
2017 2016 2016 2016 2016
Branch and Onsite based FTE headcount 11,480
10,797
6.3 % 11,175
2.7 %
Total selling (includes branch and Onsite) 13,118
12,325
6.4 % 12,725
3.1 %
Distribution 2,502
2,330
7.4 % 2,449
2.2 %
Manufacturing 604
571
5.8 % 573
5.4 %
Administrative 1,105
1,039
6.4 % 1,064
3.9 %
Total 17,329
16,265
6.5 % 16,811
3.1 %
category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) Information Technology personnel (35% to 40% of category); and (3) Administrative Support personnel (25% to 30% of category), which includes human resources, Fastenal School of Business, accounting and finance, senior management, etc.

Occupancy-related expenses include: (1) building rent and depreciation, (2) building utility costs, (3) equipment related to our branches and distribution locations, and (4) industrial vending equipment and bins utilized as part of our FMI services (we consider ~~the vending equipment, excluding leased locker equipment,~~this hardware to be a logical extension of our ~~branch operation~~in-market operations and classify the depreciation and repair costs as occupancy ~~expense)~~expenses). The slight increase in occupancy-related expenses for the first nine months of 2017, when compared to the first nine months of 2016, was mainly driven by an increase in costs related to industrial vending equipment and an increase in automation equipment at our distribution centers. The slight increase in

In the third quarter of ~~2017,~~2023, our occupancy-related expenses increased when compared to the third quarter of ~~2016, was driven by~~2022. We continue to experience rising rent costs for our buildings due to inflation and upsizing of branches. At the same ~~factors~~time, slowing in the pace of branch closings is resulting in a moderating level of incremental cost reduction to offset these increases. We also had higher costs for FMI hardware as ~~the nine-month period~~we continue to expand our installed base of such hardware.

All other operating and ~~was only partly offset by a decrease in~~administrative expenses ~~related to a reduction in our public branch counts.~~

~~Our selling transportation expenses consist primarily of our branch fleet as most of the distribution fleet costs are included in cost of sales. These costs~~ include: (1) selling-related transportation, (2) information technology (IT) expenses, ~~for our fleet~~(3) general corporate expenses, which consists of ~~vehicles,~~legal expenses, general insurance expenses, travel and ~~(2) fuel expense. Selling transportation~~marketing expenses, for the first nine months of 2017 increased when compared to the first nine months of 2016. We increased the size of our field-based vehicle fleet which resulted in higher expenses. However, the larger impact was a 15.3% increase in fuel expense due to higher fuel pricesetc., and ~~consumption during the period. This was partially offset by improvements in gains on~~(4) sales of ~~leased vehicles. The increase~~property and equipment.

Table of Contents

Combined, all other operating and administrative expenses increased in thethird quarter of ~~2017,~~2023 when compared to the third quarter of ~~2016, was mainly driven by the~~2022. The increase in ~~the size of our field-based vehicle fleet.~~

~~Aside from these larger impacts, our~~other operating and administrative expenses ~~were also affected by increases in~~relates primarily to higher spending on information technology, ~~as well as the absence of supplier marketing incentives that existed in the first nine months of 2016 as part of our CSP 16 initiative.~~higher bad debt expense, and higher general insurance costs.

Net Interest Expense

Our net interest expense was ~~$6.2 in the first nine months of 2017 and $2.5~~$1.3 in the third quarter of ~~2017,~~2023, compared to ~~$4.4 in the first nine months of 2016 and $1.7~~$3.9 in the third quarter of ~~2016. These increases were mainly caused by~~2022. We had higher interest income, reflecting higher cash balances through the period and higher rates paid on those balances. We also had lower interest expense, reflecting lower average borrowings through the period, as well as slightly lower average interest ~~rates over both periods.~~

rates.

Income Taxes

~~Income~~We recorded income tax expense ~~as a percentage~~ of ~~earnings before income taxes, was approximately 36.6% in the first nine months of 2017 and 36.7%~~$89.9 in the third quarter of ~~2017, versus 36.8%~~2023, or 23.4% of earnings before income taxes. During the third quarter of 2023, the liability for unrecognized tax benefits decreased $3.9 due to the ~~first nine months~~lapse of ~~2016 and 36.9%~~statute of limitations, of which $3.8 impacted the effective tax rate. Income tax expense was $90.7 in the third quarter of ~~2016. The decline in the nine-month period resulted primarily from~~2022, or 24.2% of earnings before income taxes. We believe our ongoing tax rate, absent any discrete tax items or broader changes ~~in our reserve for uncertain~~to tax positions and the adoption of a new accounting standard (ASU 2016-09) in the first quarter of 2017. This standard addresses the accounting for excess tax benefits for share-based payments that were previously recorded in additional paid-in capital on the balance sheet and are now recognized in income tax expense on the income statement. Additional reductions arose from changes in our reserve for uncertain tax positions. A more detailed description of the impact of the adoption of ASU 2016-09 is included in Note 1 of the Notes to Condensed Consolidated Financial Statements.law, will be approximately 24.5%.

Net Earnings

Our net earnings during the ~~first nine months~~third quarter of ~~2017~~2023 were ~~$426.2,~~$295.5, an increase of ~~10.8% when compared to the first nine months of 2016. Our net earnings during the third quarter of 2017 were $143.1, an increase of 12.7%~~3.8% compared to the third quarter of ~~2016.~~2022. Our diluted net earnings per share were ~~$1.48~~$0.52 during the ~~first nine months~~third quarter of ~~2017 compared to $1.33 during the first nine months of 2016, and~~2023, which increased from $0.50 during the third quarter of ~~2017 compared to $0.44 during the third quarter of 2016.~~2022.

Liquidity and Capital Resources

Cash flow activity was as follows for the periods ended September 30:


	Nine-month Period						Three-month Period
	2017			2016			2023			2022		Change
Net cash provided by operating activities	$	455.9		386.9		Net cash provided by operating activities	$	388.1		257.9		50.5	%
Percentage of net earnings	107.0		%	100.6	%	Percentage of net earnings	131.3		%	90.6	%
Net cash used in investing activities	$	138.2		157.6		Net cash used in investing activities	$	43.0		44.5		-3.4	%
Percentage of net earnings						Percentage of net earnings	14.6		%	15.6	%
Net cash used in financing activities	$	301.2		214.4		Net cash used in financing activities	$	286.9		220.8		29.9	%

Net Cash Provided by Operating Activities

Net cash provided by operating activities increased $130.2 in the ~~first nine months~~third quarter of ~~2017 relative~~2023 when compared to the ~~first nine months~~third quarter of ~~2016, primarily due to our~~2022. The improvement in operating cash flow, as a percent of net earnings, reflects working capital being a source of cash in the third quarter of 2023, as opposed to a use of cash in the third quarter of 2022. This reflects the normalization of global supply chains versus the prior year and, to a lesser degree, slower business activity, which combine to reduce the rate of working capital expansion necessary to support our customers' growth.

The dollar and percentage change in accounts receivable, net, inventories, and ~~inventories from~~accounts payable as of September 30, ~~2016~~2023 when compared to September 30, ~~2017~~2022 were as follows:


	September 30:			Twelve-month Dollar Change		Twelve-month Percentage Change			September 30			Twelve-month Dollar Change		Twelve-month Percentage Change
	2017		2016	2017		2017			2023		2022	2023		2023
Accounts receivable, net	$	632.1	543.7	$	88.3	16.2	%	Accounts receivable, net	$	1,171.0	1,110.6	$	60.3	5.4	%
Inventories	1,047.0		966.9	80.1		8.3	%	Inventories	1,513.8		1,678.1	(164.3)		-9.8	%
Total	$	1,679.1	1,510.7	$	168.4	11.1	%
Trade working capital								Trade working capital	$	2,684.8	2,788.7	$	(104.0)	-3.7	%

Net sales in last two months	$	782.8	703.2	$	79.6	11.3	%
Accounts payable								Accounts payable	$	275.1	277.2	$	(2.0)	-0.7	%
Trade working capital, net								Trade working capital, net	$	2,409.7	2,511.5	$	(101.9)	-4.1	%

Net sales in last three months								Net sales in last three months	$	1,845.9	1,802.4	$	43.5	2.4	%

Note - Amounts may not foot due to rounding difference.

The increase in our accounts receivable balance in the third quarter of 2023 is primarily attributable to two factors. First, our receivables increased as a result of growth in sales to our ~~net accounts receivable~~customers. Second, we continue to experience a shift in our mix due to relatively stronger growth from ~~September 30, 2016~~national account customers, which tend to ~~September 30, 2017 was~~carry longer payment terms than our non-national account customers.

The decrease in our inventory balance in the third quarter of 2023 is primarily attributable ~~in part~~ to the ~~Mansco acquisition. Absent~~absence of supply disruptions from the prior year. Our response at the time was to deepen our inventory as a means of maintaining high service to our customers, particularly for imported inventory. Dissipation of these disruptions has allowed us to shorten our product ordering cycle. It is also likely that ~~receivables growth was broadly consistent with~~slower business activity is reducing the level of inventory our ~~net sales growth and was~~customers require us to maintain to meet their production needs.

The decrease in our accounts payable balance in the third quarter of 2023 is primarily attributable primarily to an increase in general business activity. In any given period and over time, the strong growth of our international business and of our large customer accounts can result in faster growth in receivables relative to net sales growth.

~~The most significant contributors~~ to the ~~increase~~dissipation of supply disruptions from the prior year. That allowed us to gradually begin to shorten our product ordering cycle and reduce the volume of product purchases in ~~inventory from September 30, 2016 to September 30, 2017 were~~ the ~~completion~~third quarter of 2023 versus the ~~CSP 16 rollout in 2016, increased demand, and the Mansco acquisition in 2017.~~third quarter of 2022.

Net Cash Used in Investing Activities

Net cash used in ~~investing~~investing activities decreased ~~from~~by $1.5 in the ~~first nine months~~third quarter of ~~2016~~2023 when compared to the ~~first nine months~~third quarter of ~~2017 primarily~~2022. This was due to ~~decreases in~~lower net capital expenditures ~~which was partially offset by~~(purchases of property and equipment, net of proceeds from sales of property and equipment) in the ~~cash paid for the Mansco acquisition.~~

~~During the first nine months~~third quarter of 2017, our net capital expenditures were $76.5 (or 17.9% of net earnings), which is a decrease of 51.4% from the first nine months of 2016. This reduction resulted from lower spending in 2017 to date related to: (1) vending equipment due2023 compared to the ~~2016 leased locker rollout,~~third quarter of 2022.

Our capital spending will typically fall into six categories: (1) purchases related to industrial vending, (2) ~~shelving~~purchases of property and ~~signage for the CSP 16 initiative in 2016, (3) the~~equipment related to expansion of ~~our~~and enhancements to distribution ~~fleet, and (4) timing associated with the addition of pickup trucks.~~

~~Capital expenditures in the first nine months of 2017 and 2016 consisted of: (1) the purchase of~~centers, (3) spending on software and hardware for our information processing systems, ~~(2)~~(4) the addition of fleet vehicles, ~~(3) the purchase of signage, shelving, and other fixed assets related to branch openings and~~(5) expansion, improvement or investment in ~~2016, our CSP 16 initiative, (4) the addition of manufacturing and warehouse equipment, including automation systems equipment, (5) the expansion or improvement of~~ certain owned or leased branch properties, and (6) ~~purchases related to industrial vending. Of these factors, items (1), (2), (4),~~the addition of manufacturing and ~~(6) had~~warehouse equipment. Proceeds from the ~~greatest impact to our capital expenditures in the first nine months of 2017. Disposals~~sales of property and equipment, ~~consisted of~~typically for the planned disposition of ~~certain~~ pick-up trucks as well as distribution vehicles and trailers in the normal course of ~~business.~~business, are netted against these purchases and additions. During the third quarter of 2023, our net capital expenditures were $42.9, which is a decrease from $44.4 in the third quarter of 2022.

Cash requirements for capital expenditures were satisfied from cash generated from operations, available cash and cash equivalents, our borrowing capacity, and the proceeds of disposals. ~~Our 2017~~For the full year of 2023, we expect our investment in property and equipment, net ~~capital expenditures spend expectation remains at approximately $127.0.~~of proceeds from sales, to be within a range of $180.0 to $190.0. This is a decline from our prior range of $210.0 to $230.0 reflecting a deferral of several distribution center-related projects. This new range represents an increase from $162.4 in 2022, due primarily to investments in fleet equipment to support our network of heavy trucks and an increase in spending on information technology.

Net Cash Used in Financing Activities

Net cash used in financing ~~activities~~activities increased $66.1 in the ~~first nine months~~third quarter of ~~2017 consisted~~2023 when compared to the third quarter of 2022. This is primarily related to a reduction in our debt obligations, versus an increase in our debt obligations in the ~~payment~~third quarter of 2022, which reflected strong operating cash generation in the period. This was only partly offset by a reduction in the third quarter of 2023 of total capital returned to shareholders compared to the third quarter of 2022.

During the third quarter of 2023, we returned $199.8 to our shareholders in the form of dividends, ~~purchases~~compared to the third quarter of 2022 when we returned $272.8 to our common stock, and payments against debt obligations, which were partially offset by proceeds from the exercise of stock options and proceeds from debt obligations, including the issuance of a new series of senior unsecured promissory notes under our master note agreementshareholders in the ~~aggregate principal amount~~form of $60.0. The notes bear interest at a fixed rate of 3.22% per annum and are due and payable in full on March 1, 2024, and were issued to fund the purchase price of the Mansco acquisition. Net cash used in financing activities in the first nine months of 2016 consisted of payments of dividends ($177.5) and purchases of our common stock ~~which were partially offset by proceeds from the exercise of stock options and borrowings.~~ ($95.3).

During the ~~first nine months~~third quarter of ~~2017,~~2023, we did not repurchase any of our common stock. During the third quarter of 2022, we purchased ~~1,900,000~~2,000,000 shares of our common stock at an average price of approximately ~~$43.43~~$47.68 per share. During the first nine months of 2016, we purchased 1,600,000 shares of our common stock at an average price of approximately $37.15 per share. On July 11, 2017, our board of directors authorized purchases by us of 5,000,000 shares of our common stock.

We ~~currently~~ have authority to purchase up to ~~4,400,000~~6,200,000 additional shares of our common stock under the July 12, 2022 authorization. This authorization does not have an expiration date.

Total debt on our balance sheet was $260.0 at the end of the third quarter of 2023, or 7.0% of total capital (the sum of stockholders' equity and total debt). This compares to $555.0, or 14.9% of total capital, at the end of the third quarter of 2022. This decrease is due to applying operating cash generated to the reduction of total borrowings on the balance sheet.

Our material cash requirements for known contractual obligations include capital expenditures, debt, and lease obligations, which are discussed in more detail earlier in this ~~authorization.~~ report in the Notes to Condensed Consolidated Financial Statements and in our 2022 annual report on Form 10-K.

An overview of our cash dividends paid or declared in ~~2017~~2023 and ~~2016~~2022 is contained in Note 3 of the Notes to Condensed Consolidated Financial Statements.

NINE MONTHS ENDED SEPTEMBER 30, 2023 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2022

Results of Operations

The following table sets forth condensed consolidated statement of earnings information (as a percentage of net sales) for the periods ended September 30:


	Nine-month Period
	2023		2022
Net sales	100.0	%	100.0	%
Gross profit	45.7	%	46.3	%
Operating and administrative expenses	24.7	%	25.1	%
Operating income	21.0	%	21.2	%
Net interest expense	-0.1	%	-0.2	%
Earnings before income taxes	20.9	%	21.0	%

Note – Amounts may not foot due to rounding difference.

The table below sets forth net sales and daily sales for the periods ended September 30, and changes in such sales from the prior period to the more recent period:


	Nine-month Period
	2023			2022
Net sales	$	5,588.1		5,285.0
Percentage change	5.7		%	18.0	%
Business days	191			192
Daily sales	$	29.3		27.5
Percentage Change	6.3		%	17.4	%
Daily sales impact of currency fluctuations	-0.4		%	-0.4	%

Net sales increased $303.1, or 5.7%, in the first nine months of 2023 when compared to the first nine months of 2022. There was one fewer selling day in the first nine months of 2023 relative to the prior year period and, taking this into consideration, our net daily sales growth increased 6.3% in the first nine months of 2023 compared to the first nine months of 2022. We experienced higher unit sales during the period that contributed to the increase in net sales in the period. This was primarily due to growth at our Onsite locations, with the strongest contribution from those sites opened in the last two years and a more modest contribution from more mature locations. This more than offset the impact of softer end market demand on our manufacturing customers and lower revenues to construction and reseller customers. Foreign exchange negatively affected sales in the first nine months of 2023 by approximately 40 basis points. We estimate that adverse weather in the first quarter of 2023 reduced our growth by approximately 10 basis points during the nine-month period.

The overall impact of product pricing on net sales was 190 to 220 basis points during the first nine months of 2023. While product pricing has been positive throughout 2023, the impact was greatest in the first two quarters of the period. This reflects the carryover of broad actions taken in the first quarter of 2022 and targeted actions taken in the first quarter of 2023 to mitigate the effects of higher transportation and material costs for our products, as well as the impact of general inflationary conditions in the marketplace over the past twelve months. The impact of product pricing on net sales was 600 to 630 basis points during the first nine months of 2022.

From a product standpoint, we have three categories: fasteners, safety supplies, and other products, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools. In the first nine months of 2023, fastener daily sales grew at a slower rate than our other product categories, which we believe relates to two factors. First, fasteners are more heavily oriented toward production of final goods than maintenance, which results in greater susceptibility to weaker manufacturing end markets. Second, pricing for fasteners has decelerated at a faster pace than non-fastener products. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:


	DSR Change Nine-month Period				% of Sales Nine-month Period
	2023		2022		2023		2022
Fasteners	1.6	%	21.2	%	32.8	%	34.3	%
Safety supplies	7.6	%	13.8	%	20.8	%	20.6	%
Other	9.6	%	15.7	%	46.4	%	45.1	%

Our end markets consist of manufacturing, non-residential construction, reseller, and other, the latter of which includes government/education and transportation/warehousing. We continued to experience a significant divergence in the performance of our manufacturing end market versus our non-manufacturing end markets in the first nine months of 2023. We are growing relatively faster with key account customers, particularly Onsites, with significant managed spend where our service model and technology is particularly impactful, which disproportionately benefits manufacturing customers. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:


	DSR Change Nine-month Period				% of Sales Nine-month Period
	2023		2022		2023		2022
Heavy manufacturing	13.1	%	26.1	%	43.2	%	40.7	%
Other manufacturing	6.5	%	19.5	%	31.3	%	31.3	%
Non-residential construction	-6.2	%	9.8	%	9.2	%	10.4	%
Reseller	-7.1	%	4.2	%	5.9	%	6.7	%
Other end markets	1.5	%	0.9	%	10.4	%	10.9	%

We report our customers in two categories: national accounts, which are customers with a multi-site contract, and non-national accounts, which include large regional customers, small local customers, and government customers. We continued to experience a significant divergence in the performance of our national account customers versus our non-national account customers, which relates to the relative growth of our sales through Onsite locations and larger, key accounts. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:


	DSR Change Nine-month Period				% of Sales Nine-month Period
	2023		2022		2023		2022
National accounts	10.8	%	22.1	%	59.8	%	57.5	%
Non-national accounts	0.6	%	11.6	%	40.2	%	42.5	%

The table below summarizes the signings and installations of, and sales through, our FMI devices.


	Nine-month Period
	2023			2022		Change
Weighted FASTBin/FASTVend signings (MEUs)	18,664			16,005		16.6	%
Signings per day	98			83
Weighted FASTBin/FASTVend installations (MEUs; end of period)	110,191			99,409		10.8	%

FASTStock sales	$	708.6		621.7		14.0	%
% of sales	12.5		%	11.6	%
FASTBin/FASTVend sales	$	1,550.6		1,302.2		19.1	%
% of sales	27.4		%	24.4	%
FMI sales	$	2,259.2		1,923.9		17.4	%
FMI daily sales	$	11.8		10.0		18.0	%
% of sales	39.9		%	36.0	%

Daily sales through eCommerce grew 44.6% in the first nine months of 2023 and represented 23.2% of our total revenues in the period.

Our Digital Footprint in the first nine months of 2023 represented 55.5% of our sales, an increase from 48.2% of sales in the first nine months of 2022.

In the first nine months of 2023, our gross profit, as a percentage of net sales, declined to 45.7% from 46.3% in the first nine months of 2022. The change in our gross profit percentage primarily reflected three items. First, customer and product mix reduced our gross profit percentage. We continued to experience relatively strong growth from Onsite customers and non-fastener products, each of which tend to have a lower gross profit percentage than our business as a whole. This impact widened on a sequential basis. Second, higher organizational/overhead costs reduced our gross profit percentage, primarily due to higher inbound freight costs and working capital needs being relieved from inventory and generating higher period costs. Third, favorable freight expenses partially offset the negative impacts of mix and organizational/overhead costs. This reflected strong domestic freight revenue over the period, which leveraged what are relatively stable costs to support our captive fleet, lower expenses related to external freight providers, and lower fuel costs.

Our operating income, as a percentage of net sales, declined to 21.0% in the first nine months of 2023 from 21.2% in the first nine months of 2022. The operating leverage we achieved during the period was not sufficient to offset the decline in our gross profit percentage.

Operating and Administrative Expenses

Our operating and administrative expenses, as a percentage of net sales, improved to 24.7% in the first nine months of 2023 from 25.1% in the first nine months of 2022. This is due to a decline, as a percentage of net sales, in payroll-related expenses.

The percentage change in employee-related, occupancy-related, and all other operating and administrative expenses compared to the same periods in the preceding year, is outlined in the table below.


	Approximate Percentage of Total Operating and Administrative Expenses	Nine-month Period
		2023
Employee-related expenses	70% to 75%	2.8	%
Occupancy-related expenses	15% to 20%	5.4	%
All other operating and administrative expenses	10% to 15%	9.6	%

In the first nine months of 2023, our employee-related expenses increased when compared to the first nine months of 2022. We experienced an increase in employee base pay due to higher average FTE and average wages during the period, as well as higher healthcare costs and, to a lesser degree, profit sharing costs. This was only partly offset by a decrease in bonus and commission payments reflecting the impact of slower sales and profit growth versus the prior year.

The table below summarizes our FTE headcount at the end of the periods presented and the percentage change compared to the end of the prior period:


			Change Since:
	Q3 2023	Q4 2022	Q4 2022
Total selling personnel (1)	14,750	14,476	1.9	%
Distribution/Transportation personnel	2,984	2,971	0.4	%
Manufacturing personnel	704	696	1.1	%
Organizational support personnel (1)	1,846	1,711	7.9	%
Total personnel	20,284	19,854	2.2	%

(1) Of our Total Selling Personnel, 80%-85% are attached to a specific in-market location. Organizational support personnel consists of: (1) Sales & Growth Driver Support personnel (approximately 35% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) Information Technology personnel (35% to 40% of category); and (3) Administrative Support personnel (25% to 30% of category), which includes human resources, Fastenal School of Business, accounting and finance, senior management, etc.

In the first nine months of 2023, our occupancy-related expenses increased when compared to the first nine months of 2022. The most significant contributor to this increase was higher cost for FMI hardware as we continue to expand our installed base of such hardware. We also have experienced rising rent costs for our buildings due to inflation and the upsizing of branches, even as the slowing pace of branch closings is resulting in a moderating level of incremental cost reduction to offset these increases.

Combined, all other operating and administrative expenses increased in the first nine months of 2023 when compared to the first nine months of 2022. The increase in other operating and administrative expenses relates primarily to higher spending on information technology, higher general insurance costs, increased expenses for travel and supplies, and higher bad debt expense.

Net Interest Expense

Our net interest expense was $7.1 in the first nine months of 2023, compared to $8.9 in the first nine months of 2022. We had higher interest income, reflecting higher cash balances through the period and higher rates paid on those balances. We also had lower interest expense, reflecting lower average borrowings through the period, as well as slightly lower average interest rates.

We recorded income tax expense of $279.2 in the first nine months of 2023, or 23.9% of earnings before income taxes. During the third quarter of 2023, the liability for unrecognized tax benefits decreased $3.9 due to the lapse of statute of limitations, of which $3.8 impacted the effective tax rate. Income tax expense was $270.5 in the first nine months of 2022, or 24.3% of earnings before income taxes.

Our net earnings during the first nine months of 2023 were $888.6, an increase of 5.6% when compared to the first nine months of 2022. Our diluted net earnings per share were $1.55 during the first nine months of 2023, which increased from $1.46 during the first nine months of 2022.

Liquidity and Capital Resources

Cash flow activity was as follows for the periods ended September 30:


	Nine-month Period
	2023			2022		Change
Net cash provided by operating activities	$	1,078.7		639.1		68.8	%
Percentage of net earnings	121.4		%	76.0	%
Net cash used in investing activities	$	128.2		121.6		5.4	%
Percentage of net earnings	14.4		%	14.5	%
Net cash used in financing activities	$	879.1		506.2		73.7	%

Net Cash Provided by Operating Activities

Net cash provided by operating activities increased by $439.6 in the first nine months of 2023 when compared to the first nine months of 2022. The improvement in operating cash flow, as a percent of net earnings, reflects working capital being a source of cash in the first nine months of 2023, as opposed to a significant use of cash in the first nine months of 2022. This reflects the normalization of global supply chains versus the prior year and, to a lesser degree, slower business activity, which combine to reduce the working capital necessary to support our customers' growth.

Net Cash Used in Investing Activities

Net cash used in investing activities increased by $6.6 in the first nine months of 2023 when compared to the first nine months of 2022. This was primarily due to an increase in net capital expenditures (purchases of property and equipment, net of proceeds from sales of property and equipment) in the first nine months of 2023 compared to in the first nine months of 2022.

During the first nine months of 2023, our net capital expenditures were $127.7, which is an increase from $120.9 in the first nine months of 2022. For the full year of 2023, we expect our investment in property and equipment, net of proceeds from sales, to be within a range of $180.0 to $190.0. This is a decline from our prior range of $210.0 to $230.0 reflecting a deferral of several distribution center-related projects. This new range represents an increase from $162.4 in 2022, due primarily to investments in fleet equipment to support our network of heavy trucks and an increase in spending on information technology.

Net Cash Used in Financing Activities

Net cash used in financing activities increased by $372.9 in the first nine months of 2023 when compared to the first nine months of 2022. This is primarily related to a reduction in our debt obligations, versus an increase in our debt obligations in the first nine months of 2022, which reflected strong operating cash generation in the period. This was only partly offset by a reduction in the first nine months of 2023 of total capital returned to shareholders compared to the first nine months of 2022.

During the first nine months of 2023, we returned $599.5 to our shareholders in the form of dividends, compared to the first nine months of 2022 when we returned $679.0 to our shareholders in the form of dividends ($534.4) and purchases of our common stock ($144.6).

During the first nine months of 2023, we did not repurchase any of our common stock. During the first nine months of 2022, we purchased 3,000,000 shares of our common stock at an average price of approximately $48.22 per share.

Critical Accounting Policies and Estimates – A discussion of our critical accounting policies and estimates is contained in our ~~2016~~2022 annual report on Form 10-K.

Recently Issued and Adopted Accounting Pronouncements – A description of recently issued and adopted accounting pronouncements, if any, is contained in Note 1 of the Notes to Condensed Consolidated Financial Statements.

~~Certain Contractual Obligations –~~ A discussion of the nature and amount of certain of our contractual obligations is contained in our 2016 annual report on Form 10-K. That portion of total debt outstanding under our Credit Facility and notes payable classified as long-term, and the maturity of that debt, is described earlier in Note 6 of the Notes to Condensed Consolidated Financial Statements.

Certain Risks and Uncertainties – Certain statements contained in this document do not relate strictly to historical or current facts. As such, they are considered 'forward-looking statements' that provide current expectations or forecasts of future events. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of terminology such as anticipate, believe, should, estimate, expect, intend, may, will, plan, goal, project, hope, trend, target, opportunity, and similar words or expressions, or by references to typical outcomes. Any statement that is not a purely historical fact, including estimates, projections, ~~future~~ trends, and the outcome of events that have not yet occurred, is a forward-looking statement. Our forward-looking statements generally relate to our expectations and beliefs regarding the business environment in which we operate, our projections of future performance, our perceived marketplace opportunities, ~~and~~ our strategies, goals, mission and ~~vision.~~vision, our expectations related to future capital expenditures, future tax rates, future inventory levels, pricing, Onsite and weighted FMI device signings, the impact of inflation on our cost of goods or operating costs, the impact of price increases on overall sales growth or margin performance, and our ability to grow our business through the enhancement of sales through our Digital Footprint. You should understand that forward-looking statements involve a variety of risks and uncertainties, known and unknown, and may be affected by inaccurate assumptions. Consequently, no forward-looking statement can be guaranteed and actual results may vary materially. Factors that could cause our actual results to differ from those discussed in the forward-looking statements include, but are not limited to, economic downturns, weakness in the manufacturing or commercial construction industries, competitive pressure on selling prices, changes in our current mix of products, customers, or geographic locations, changes in our average branch size, changes in our purchasing patterns, changes in customer needs, changes in fuel or commodity prices, inclement weather, changes in foreign currency exchange rates, difficulty in adapting our business model to different foreign business environments and the challenges of operating in foreign business environments, failure to accurately predict the market potential of our business strategies, the introduction or expansion of new business strategies,

weak acceptance or adoption of our ~~vending~~FMI offering or Onsite business models, increased competition in ~~industrial vending~~FMI or Onsite, ~~distribution,~~ difficulty in maintaining installation quality as our ~~industrial vending~~FMI business expands, the leasing to customers of a significant number of additional ~~industrial vending machines,~~FMI devices, the failure to meet our goals and expectations regarding branch openings, branch closings, or expansion of our ~~industrial vending~~FMI offering or Onsite operations, changes in the implementation objectives of our business strategies, challenges in developing and expanding our digital capabilities, difficulty in hiring, relocating, training, or retaining qualified personnel, difficulty in controlling operating expenses, difficulty in collecting receivables or accurately predicting future inventory needs, dramatic changes in sales trends, changes in supplier production lead times, changes in our cash position or our need to make capital expenditures, credit market volatility, changes in tax law or the impact of any such changes on future tax rates, changes in tariffs or the impact of any such changes on our financial results, changes in the availability or price of commercial real estate, changes in the nature, price, or availability of distribution, supply chain, or other technology (including software licensed from third parties) and services related to that technology, cyber-security incidents, potential liability and reputational damage that can arise if our products are defective, difficulties measuring the contribution of price increases on sales growth, acts of war, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission, including our most recent annual and quarterly reports. Each forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any such statement to reflect events or circumstances arising after such date.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISKS~~RISK

We are exposed to certain market risks from changes in foreign currency exchange rates, commodity steel pricing, commodity energy prices, and interest rates. Changes in these factors cause fluctuations in our earnings and cash flows. We evaluate and manage exposure to these market risks as follows:

Import shipping costs – We import a significant quantity of our products, particularly fasteners and private label products, from foreign suppliers, primarily in Asia. As a result, we incur costs related to shipping charges, duties, harbor fees, and sundry other expenses involved in the movement of product for sale in North America and our other global locations. These costs are embedded in our product values, and significant fluctuations can affect our product gross profit depending on what mitigating actions might be taken. The most significant contributor to these fluctuations is the cost of overseas shipping containers. During the first nine months of 2023, the cost of overseas shipping containers was below the prior year. We estimate the effect on our net earnings related to import shipping costs was $15.0 to $20.0 in the first nine months of 2023.

Commodity steel prices – We buy and sell various types of steel products; these products consist primarily of different types of fasteners and related hardware. We are exposed to the impacts of commodity steel pricing and our related ability to pass through the impacts to our end customers. During the first nine months of 2023, the price of steel as reflected in many market indexes was below the prior year, though in most cases price levels have been stable and the rate of decline is moderating. Due to our long supply chain, changes in the cost of steel can take a number of quarters to be reflected in our financial results. Further, the cost of the raw material is generally a small part of the total value of the steel products that we sell, which can also diminish the impact of cost changes for the raw material. We estimate the effect on our net earnings related to commodity steel prices was immaterial in the first nine months of 2023.

Commodity energy prices – We have market risk for changes in prices of oil, gasoline, diesel fuel, natural gas, and electricity. As reflected in many market indexes, energy prices during the first nine months of 2023 were generally below prior year levels, which contributed to lower costs for fuel consumed in our vehicles and lower utility costs at our facilities. Total direct fuel consumption is a relatively minor cost to the company and, as a result, we estimate the effect on our net earnings related to commodity energy prices was immaterial in the first nine months of 2023.

Fossil fuels are also often a key feedstock for chemicals and plastics that comprise a key raw material for many products that we sell. During the first nine months of 2023, prices for fossil fuels were generally below prior year levels. The cost of the raw material is generally a small part of the total value of the products that we sell, which can diminish the impact of cost changes for the raw material. As a result, we estimate the effect on our net earnings related to materials for which fossil fuels are a feedstock was immaterial in the first nine months of 2023.

Foreign currency exchange rates – Foreign currency fluctuations can affect our net investments, our operations in countries other than the U.S., and earnings denominated in foreign currencies. Historically, our primary exchange rate exposure ishas been with the Canadian dollar against the United States dollar. Our estimated net earnings exposure for foreign currency exchange rates was not material ~~at the end of the period.~~

~~Commodity steel pricing~~ ~~– We buy and sell various types of steel products; these products consist primarily of different types of threaded fasteners. In~~in the first nine months of ~~2017, we have seen some inflation in overall steel pricing. We are exposed to the impacts of commodity steel pricing and our related ability to pass through the impacts to our end customers.~~

~~Commodity energy prices~~ –2023. We have ~~market~~not historically hedged our foreign currency risk ~~for~~given that exposure to date has not been material. We estimate the effect on our sales and net earnings related to changes in ~~prices~~foreign exchange rates was $20.6 and immaterial, respectively, in the first nine months of gasoline, diesel fuel, natural gas, and electricity; however, this risk is mitigated in part by our ability to pass freight costs to our customers, the efficiency of our trucking distribution network, and the ability, over time, to manage our occupancy costs related to the heating and cooling of our facilities through better efficiency.2023.

Interest rates - Loans under our Credit Facility bear interest at floating ~~rates tied to LIBOR.~~rates. As a result, changes in ~~LIBOR~~such rates can affect our operating results and liquidity to the extent we do not have effective interest rate swap arrangements in place. We have not historically used interest rate swap arrangements to hedge the variable interest rates under our Credit Facility. A 1%one percentage point increase ~~in LIBOR~~to our floating rate debt in the first nine months of ~~2017~~2023 would have resulted in approximately ~~$2.1~~$0.5 of additional interest expense. A description of our Credit Facility is contained in Note 6 of the Notes to Condensed Consolidated Financial Statements.

ITEM 4 — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures – As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the ~~'Securities~~Securities Exchange ~~Act')~~Act)). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including the principal executive officer and principal financial officer, to allow for timely decisions regarding disclosure.

Changes in Internal Control Over Financial Reporting– There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

A description of our legal proceedings, if any, is contained in Note 7 of the Notes to Condensed Consolidated Financial Statements. The description of legal proceedings, if any, in Note 7 is incorporated herein by reference.

ITEM 1A — RISK FACTORS

The significant factors known to us that could materially adversely affect our business, financial condition, or operating results are described in Item 2 of Part I above and in our most recently filed annual report on Form 10-K under Forward-Looking Statements and Item 1A – Risk Factors. ~~There has been no material change in those risk factors.~~

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Issuer Purchases of Equity Securities

The table below sets forth information regarding purchases of our common stock during the third quarter of ~~2017:~~2023:

(a) (b) (c) (d)
Period
Total Number of
Shares
Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)
Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs (1)
July 1-31, 2017 600,000 $43.03 600,000 4,400,000
August 1-31, 2017 0 $0.00 0 4,400,000
September 1-30, 2017 0 $0.00 0 4,400,000
Total 600,000 $43.03 600,000 4,400,000


	(a)		(b)		(c)		(d)
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 1-31, 2023		0		$0.00		0		6,200,000
August 1-31, 2023		0		$0.00		0		6,200,000
September 1-30, 2023		0		$0.00		0		6,200,000
Total		0		$0.00		0		6,200,000



(1)			~~On July 11, 2017, our board of directors established a new authorization for us to repurchase up to 5,000,000 shares of our common stock.~~ As of September 30, ~~2017,~~2023, we had remaining authority to repurchase ~~4,400,000~~6,200,000 shares under ~~this~~the July 12, 2022 authorization. This authorization does not have an expiration date.

ITEM 5 — OTHER INFORMATION

None of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act) adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Securities Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fiscal quarter ended September 30, 2023.


Exhibit Number		Description of Document

~~Exhibit Number~~3.1		~~Description of Document~~

~~3.1~~	Restated Articles of Incorporation of Fastenal Company, as amended (incorporated by reference to Exhibit 3.1 to Fastenal Company's Form ~~10-Q for the quarter ended March 31, 2012 (file no. 000-16125))~~8-K dated as of April 22, 2019)

3.2		Restated By-Laws of Fastenal Company (incorporated by reference to Exhibit 3.2 to Fastenal Company's Form 8-K dated as of ~~October 15, 2010 (file no. 000-16125))~~January 17, 2019)

31		Certifications under Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32		Certification under Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

~~101.INS~~101		~~XBRL Instance Document~~The following financial statements from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Earnings, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.

~~101.SCH~~104		~~XBRL Taxonomy Extension Schema Document~~The cover page from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL.

~~101.CAL~~	~~XBRL Taxonomy Calculation Linkbase Document~~

~~101.DEF~~	~~XBRL Taxonomy Definition Linkbase Document~~

~~101.LAB~~	~~XBRL Taxonomy Label Linkbase Document~~

~~101.PRE~~	~~XBRL Taxonomy Presentation Linkbase Document~~


					FASTENAL COMPANY


			~~FASTENAL COMPANY~~


Date: October ~~16, 2017~~17, 2023	By:			/s/ Holden Lewis
					Holden Lewis
					Senior Executive Vice President and Chief Financial Officer
					(Principal Financial Officer)



Date: October ~~16, 2017~~17, 2023		By:			/s/ Sheryl A. Lisowski
					Sheryl A. Lisowski
					~~Controller,~~Executive Vice President - Chief Accounting Officer and Treasurer
					~~Treasurer (Duly~~(Duly Authorized Officer and Principal Accounting Officer)



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)


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


			Page
PART I		FINANCIAL INFORMATION

~~Class~~ ITEM 1.		FINANCIAL STATEMENTS	~~Outstanding at October 10, 2017~~
~~Common Stock, par value $.01 per share~~	~~287,390,374~~



	~~Page No.~~
~~Part I Financial Information:~~

Condensed Consolidated Balance Sheets ~~as of September 30, 2017 and December 31, 2016~~	1

		Condensed Consolidated Statements of Earnings ~~for the nine months and three months ended September 30, 2017 and 2016~~	2

		Condensed Consolidated Statements of Comprehensive Income ~~for the nine months and three months ended September 30, 2017 and 2016~~	3

		Condensed Consolidated Statements of Stockholders' Equity	4

		Condensed Consolidated Statements of Cash Flows ~~for the nine months ended September 30, 2017 and 2016~~	45

		Notes to Condensed Consolidated Financial Statements	56

~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~ITEM 2.		11MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12

~~Quantitative and Qualitative Disclosures About Market Risks~~ITEM 3.		18QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26

~~Controls and Procedures~~ITEM 4.		18CONTROLS AND PROCEDURES	26

~~Part~~PART II ~~Other Information:~~		OTHER INFORMATION

~~Legal Proceedings~~ITEM 1.		18LEGAL PROCEEDINGS	27

~~Risk Factors~~ITEM 1A.		18RISK FACTORS	27

~~Unregistered Sales of Equity Securities and Use of Proceeds~~ITEM 2.		19UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES	27

~~Exhibits~~ITEM 5.		19OTHER INFORMATION	27

ITEM 6.		EXHIBITS	28



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



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


	(Unaudited)						(Unaudited)
Assets	September 30, 2017			December 31, 2016		Assets	September 30, 2023		December 31, 2022
Current assets:						Current assets:
Cash and cash equivalents	$	133.4		112.7		Cash and cash equivalents	$	297.5	230.1
Trade accounts receivable, net of allowance for doubtful accounts of $11.4 and $11.2, respectively	632.1			499.7
Trade accounts receivable, net of allowance for credit losses of $6.6 and $8.3, respectively						Trade accounts receivable, net of allowance for credit losses of $6.6 and $8.3, respectively	1,171.0		1,013.2
Inventories	1,047.0			993.0		Inventories	1,513.8		1,708.0
Prepaid income taxes	—			12.9		Prepaid income taxes	15.3		8.1
Other current assets	117.7			102.5		Other current assets	150.0		165.4
Total current assets	1,930.2			1,720.8		Total current assets	3,147.6		3,124.8

Property and equipment, net	889.3			899.7		Property and equipment, net	1,011.7		1,010.0
Operating lease right-of-use assets						Operating lease right-of-use assets	274.0		243.0
Other assets	82.1			48.4		Other assets	163.3		170.8

Total assets	$	2,901.6		2,668.9		Total assets	$	4,596.6	4,548.6

Liabilities and Stockholders' Equity						Liabilities and Stockholders' Equity
Current liabilities:						Current liabilities:
Current portion of debt	$	8.0		10.5		Current portion of debt	$	60.0	201.8
Accounts payable	147.1			108.8		Accounts payable	275.1		255.0
Accrued expenses	198.7			156.4		Accrued expenses	235.8		241.1
Income taxes payable	6.6			—
Current portion of operating lease liabilities						Current portion of operating lease liabilities	97.0		91.9
Total current liabilities	360.4			275.7		Total current liabilities	667.9		789.8

Long-term debt	432.0			379.5		Long-term debt	200.0		353.2
Deferred income tax liabilities	82.9			80.6
Operating lease liabilities						Operating lease liabilities	181.9		155.2
Deferred income taxes						Deferred income taxes	79.3		83.7
Other long-term liabilities						Other long-term liabilities	0.9		3.5

Stockholders' equity:						Stockholders' equity:
Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding	—			—		Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding	—		—
Common stock: $0.01 par value, 400,000,000 shares authorized, 287,383,174 and 289,161,924 shares issued and outstanding, respectively	2.9			2.9
Common stock: $0.01 par value, 800,000,000 shares authorized, 571,404,311 and 570,811,674 shares issued and outstanding, respectively						Common stock: $0.01 par value, 800,000,000 shares authorized, 571,404,311 and 570,811,674 shares issued and outstanding, respectively	5.7		5.7
Additional paid-in capital	1.3			37.4		Additional paid-in capital	24.6		3.6
Retained earnings	2,050.2			1,940.1		Retained earnings	3,507.8		3,218.7
Accumulated other comprehensive loss	(28.1		)	(47.3	)	Accumulated other comprehensive loss	(71.5)		(64.8)
Total stockholders' equity	2,026.3			1,933.1		Total stockholders' equity	3,466.6		3,163.2
Total liabilities and stockholders' equity	$	2,901.6		2,668.9		Total liabilities and stockholders' equity	$	4,596.6	4,548.6


	(Unaudited)			(Unaudited)
	Nine Months Ended September 30,			Three Months Ended September 30,
	2023		2022	2023		2022
Common stock
Balance at beginning of period	$	5.7	5.8	$	5.7	5.8
Balance at end of period	5.7		5.8	5.7		5.8
Additional paid-in capital
Balance at beginning of period	3.6		96.2	19.9		55.7
Stock options exercised	15.4		7.8	2.9		2.0
Purchases of common stock	—		(105.6)	—		(56.3)
Stock-based compensation	5.6		4.4	1.8		1.4
Balance at end of period	24.6		2.8	24.6		2.8
Retained earnings
Balance at beginning of period	3,218.7		2,970.9	3,412.1		3,171.6
Net earnings	888.6		841.3	295.5		284.6
Cash dividends paid	(599.5)		(534.4)	(199.8)		(177.5)
Translation adjustment upon merger of foreign subsidiary	—		0.9	—		—
Purchases of common stock	—		(39.0)	—		(39.0)
Balance at end of period	3,507.8		3,239.7	3,507.8		3,239.7
Accumulated other comprehensive loss
Balance at beginning of period	(64.8)		(30.7)	(56.9)		(54.4)
Other comprehensive loss	(6.7)		(56.4)	(14.6)		(32.7)
Balance at end of period	(71.5)		(87.1)	(71.5)		(87.1)
Total stockholders' equity	$	3,466.6	3,161.2	$	3,466.6	3,161.2

Cash dividends paid per share of common stock	$	1.05	0.93	$	0.35	0.31



Current assets	$	21.7
Property and equipment	0.9
Identifiable intangible assets	20.1
Current liabilities	(1.8		)
Total identifiable net assets	40.9
Goodwill	18.4
Total fair value of assets acquired and liabilities assumed	$	59.3



	Options Granted	Option Exercise (Strike) Price		Closing Stock Price on Date of Grant		September 30, 2017
Date of Grant	Options Granted	Option Exercise (Strike) Price		Closing Stock Price on Date of Grant		Options Outstanding	Options Exercisable
January 3, 2017	764,789	$	47.00	$	46.95	725,542	—
April 19, 2016	845,440	$	46.00	$	45.74	757,522	—
April 21, 2015	893,220	$	42.00	$	41.26	700,746	—
April 22, 2014	955,000	$	56.00	$	50.53	572,500	116,250
April 16, 2013	205,000	$	54.00	$	49.25	104,250	57,250
April 17, 2012	1,235,000	$	54.00	$	49.01	957,938	776,103
April 19, 2011	410,000	$	35.00	$	31.78	72,550	47,550
April 20, 2010	530,000	$	30.00	$	27.13	107,800	82,800
April 21, 2009	790,000	$	27.00	$	17.61	221,650	221,650
Total	6,628,449					4,220,498	1,301,603



	September 30, 2017			December 31, 2016
Outstanding loans under unsecured revolving credit facility	$	300.0		305.0
2.00% senior unsecured promissory note payable	40.0			40.0
2.45% senior unsecured promissory note payable	35.0			35.0
3.22% senior unsecured promissory note payable	60.0			—
Note payable under asset purchase agreement	5.0			10.0
Total debt	440.0			390.0
Less: Current portion of debt	(8.0		)	(10.5	)
Long-term debt	$	432.0		379.5

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



			Change Since:			Change Since:
	Q3 2017	Q4 2016	Q4 2016		Q3 2016	Q3 2016
End of period total in-market units ⁽¹⁾ employee count	13,298	12,966	2.6	%	13,097	1.5	%
End of period total employee count	20,242	19,624	3.1	%	19,864	1.9	%

Number of public branch locations	2,418	2,503	-3.4	%	2,545	-5.0	%
Number of active Onsite locations	555	401	38.4	%	376	47.6	%
Number of in-market units ⁽¹⁾	2,973	2,904	2.4	%	2,921	1.8	%
Industrial vending machines (installed device count) ⁽²⁾	69,058	62,822	9.9	%	60,400	14.3	%
Ratio of industrial vending machines to in-market units	23:1	22:1			21:1