UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~June 30, 2023,~~March 31, 2024, or


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

For the transition period from __________ to __________

Commission file number 0-16125

FASTENAL COMPANY

(Exact name of registrant as specified in its charter)


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


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


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

Not Applicable

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

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


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

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

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

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

Large Accelerated Filer

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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

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

As of ~~July 12, 2023,~~April 10, 2024, there were approximately ~~571,333,004~~572,547,449 shares of the registrant's common stock outstanding.

Table of Contents

FASTENAL COMPANY

INDEX

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in millions except share information)

(Unaudited)

Assets

June 30,
2023

December 31,
2022

March 31,
2024

December 31,
2023

Current assets:

Cash and cash equivalents

243.6

230.1

Trade accounts receivable, net of allowance for credit losses of $6.5 and $8.3, respectively

1,171.6

1,013.2

Cash and cash equivalents

Trade accounts receivable, net of allowance for credit losses of $4.8 and $6.4, respectively

Inventories

1,565.4

1,708.0

Prepaid income taxes

14.7

8.1

Other current assets

141.7

165.4

Total current assets

3,137.0

3,124.8

Property and equipment, net

1,010.3

1,010.0

Property and equipment, net

Operating lease right-of-use assets

263.7

243.0

Other assets

165.8

170.8

Total assets

4,576.8

4,548.6

Total assets

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of debt

150.0

201.8

Accounts payable

262.0

255.0

Accrued expenses

229.5

241.1

Current portion of operating lease liabilities

95.1

91.9

Income taxes payable

Total current liabilities

736.6

789.8

Long-term debt

200.0

353.2

Operating lease liabilities

173.3

155.2

Deferred income taxes

84.3

83.7

Other long-term liabilities

1.8

3.5

Stockholders' equity:

Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding

—

Common stock: $0.01 par value, 800,000,000 shares authorized, 571,288,830 and 570,811,674 shares issued and outstanding, respectively

5.7

Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding

Common stock: $0.01 par value, 800,000,000 shares authorized, 572,525,495 and 571,982,367 shares issued and outstanding, respectively

Additional paid-in capital

19.9

3.6

Retained earnings

3,412.1

3,218.7

Accumulated other comprehensive loss

(56.9)

(64.8)

Total stockholders' equity

3,380.8

3,163.2

Total liabilities and stockholders' equity

4,576.8

4,548.6

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of ~~Earnings~~Income

(Amounts in millions except ~~earnings~~income per share)


		(Unaudited)				(Unaudited)
		Six Months Ended June 30,				Three Months Ended June 30,
					(Unaudited)
					(Unaudited)
					(Unaudited)
				Three Months Ended March 31,						Three Months Ended March 31,
		2023			2022	2023		2022	2024		2023
Net sales	Net sales	$	3,742.2		3,482.6	$	1,883.1	1,778.6

Cost of sales	Cost of sales	2,034.7			1,861.7	1,025.6		951.0
Gross profit	Gross profit	1,707.5			1,620.9	857.5		827.6

Operating and administrative expenses		919.4			879.5	462.6		444.2
Selling, general, and administrative expenses
Selling, general, and administrative expenses
Selling, general, and administrative expenses
Operating income	Operating income	788.1			741.4	394.9		383.4

Interest income	Interest income	1.0			0.1	0.6		0.1
Interest income
Interest income
Interest expense	Interest expense	(6.8)			(5.0)	(2.9)		(2.8)

Earnings before income taxes		782.3			736.5	392.6		380.7
Income before income taxes

Income tax expense	Income tax expense	189.2			179.8	94.6		93.6
Income tax expense
Income tax expense
Net income

Net earnings		$	593.1		556.7	$	298.0	287.1

Basic net earnings per share		$	1.04		0.97	$	0.52	0.50

Diluted net earnings per share		$	1.04		0.96	$	0.52	0.50
Basic net income per share
Basic net income per share
Basic net income per share
Diluted net income per share

Basic weighted average shares outstanding	Basic weighted average shares outstanding	571.0			575.5	571.1		575.5

Basic weighted average shares outstanding
Basic weighted average shares outstanding
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	572.8			577.5	572.9		577.4

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Amounts in millions)

(Unaudited) (Unaudited)
Six Months Ended
June 30, Three Months Ended
June 30,
2023 2022 2023 2022
Net earnings $ 593.1 556.7 $ 298.0 287.1
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (net of tax of $0.0 in 2023 and 2022) 7.9 (23.7) 3.6 (26.0)
Comprehensive income $ 601.0 533.0 $ 301.6 261.1


	(Unaudited)
	Three Months Ended March 31,
		2024		2023
Net income		$	297.7	295.1
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (net of tax of $0.0 in 2024 and 2023)		(11.9)		4.3
Comprehensive income		$	285.8	299.4

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders' Equity

(Amounts in millions except per share information)


		(Unaudited)					(Unaudited)
		Six Months Ended June 30,					Three Months Ended June 30,
		2023			2022		2023		2022
					(Unaudited)
					(Unaudited)
					(Unaudited)
				Three Months Ended March 31,						Three Months Ended March 31,
						2024					2024	2023
Common stock	Common stock
Balance at beginning of period
Balance at beginning of period
Balance at beginning of period	Balance at beginning of period	$	5.7		5.8		$	5.7	5.8
Balance at end of period	Balance at end of period	5.7			5.8		5.7		5.8
Additional paid-in capital	Additional paid-in capital
Balance at beginning of period	Balance at beginning of period	3.6			96.2		11.4		101.6
Balance at beginning of period
Balance at beginning of period
Stock options exercised	Stock options exercised	12.5			5.8		6.6		1.9
Purchases of common stock		—			(49.3)		—		(49.3)
Stock-based compensation	Stock-based compensation	3.8			3.0		1.9		1.5
Balance at end of period	Balance at end of period	19.9			55.7		19.9		55.7
Retained earnings	Retained earnings
Balance at beginning of period	Balance at beginning of period	3,218.7			2,970.9		3,314.0		3,063.0
Net earnings		593.1			556.7		298.0		287.1
Balance at beginning of period
Balance at beginning of period
Net income
Cash dividends paid	Cash dividends paid	(399.7)			(356.9)		(199.9)		(178.5)
Translation adjustment upon merger of foreign subsidiary		—			0.9		—		—
Balance at end of period	Balance at end of period	3,412.1			3,171.6		3,412.1		3,171.6
Accumulated other comprehensive income (loss)
Accumulated other comprehensive (loss) income
Balance at beginning of period	Balance at beginning of period	(64.8)			(30.7)		(60.5)		(28.4)
Other comprehensive income (loss)		7.9			(23.7)		3.6		(26.0)
Balance at beginning of period
Balance at beginning of period
Other comprehensive (loss) income
Balance at end of period	Balance at end of period	(56.9)			(54.4)		(56.9)		(54.4)
Total stockholders' equity	Total stockholders' equity	$	3,380.8		3,178.7		$	3,380.8	3,178.7

Cash dividends paid per share of common stock	Cash dividends paid per share of common stock	$	0.70		0.62		$	0.35	0.31
Cash dividends paid per share of common stock
Cash dividends paid per share of common stock

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Amounts in millions)


		(Unaudited)			(Unaudited)
				(Unaudited)
				(Unaudited)
				(Unaudited)
		Six Months Ended June 30,			Three Months Ended June 30,			Three Months Ended March 31,
		2023		2022	2023		2022		2024	2023
Cash flows from operating activities:	Cash flows from operating activities:
Net earnings		$	593.1	556.7	$	298.0	287.1
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net income
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment	Depreciation of property and equipment	84.0		82.4	42.2		41.2
(Gain) loss on sale of property and equipment		(1.2)		2.3	(0.6)		(1.2)
Bad debt expense		0.2		0.4	1.6		0.7
Depreciation of property and equipment
Depreciation of property and equipment
Gain on sale of property and equipment
Bad debt recoveries
Deferred income taxes	Deferred income taxes	0.6		0.5	0.3		(0.5)
Stock-based compensation	Stock-based compensation	3.8		3.0	1.9		1.5
Amortization of intangible assets	Amortization of intangible assets	5.4		5.4	2.7		2.7
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:
Trade accounts receivable
Trade accounts receivable
Trade accounts receivable	Trade accounts receivable	(155.0)		(209.3)	(21.3)		(39.4)
Inventories	Inventories	145.6		(150.6)	87.9		(74.2)
Other current assets	Other current assets	23.7		58.9	(21.7)		(1.8)
Accounts payable	Accounts payable	9.9		58.7	1.4		1.9
Accrued expenses	Accrued expenses	(11.3)		(29.6)	0.6		0.5
Income taxes	Income taxes	(6.6)		2.0	(90.5)		(67.6)
Other	Other	(1.6)		0.4	(0.4)		0.3
Net cash provided by operating activities	Net cash provided by operating activities	690.6		381.2	302.1		151.2

Cash flows from investing activities:	Cash flows from investing activities:
Cash flows from investing activities:
Cash flows from investing activities:
Purchases of property and equipment
Purchases of property and equipment
Purchases of property and equipment	Purchases of property and equipment	(89.6)		(83.0)	(55.9)		(47.5)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	4.8		6.5	2.0		4.1
Other	Other	(0.4)		(0.6)	(0.3)		(0.5)
Net cash used in investing activities	Net cash used in investing activities	(85.2)		(77.1)	(54.2)		(43.9)

Cash flows from financing activities:	Cash flows from financing activities:
Cash flows from financing activities:
Cash flows from financing activities:
Proceeds from debt obligations
Proceeds from debt obligations
Proceeds from debt obligations	Proceeds from debt obligations	635.0		695.0	405.0		460.0
Payments against debt obligations	Payments against debt obligations	(840.0)		(580.0)	(455.0)		(320.0)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	12.5		5.8	6.6		1.9
Purchases of common stock		—		(49.3)	—		(49.3)
Cash dividends paid	Cash dividends paid	(399.7)		(356.9)	(199.9)		(178.5)
Net cash used in financing activities	Net cash used in financing activities	(592.2)		(285.4)	(243.3)		(85.9)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	0.3		(7.0)	(0.8)		(7.7)
Effect of exchange rate changes on cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	13.5		11.7	3.8		13.7
Net increase in cash and cash equivalents
Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period
Cash and cash equivalents at beginning of period
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	230.1		236.2	239.8		234.2
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	243.6	247.9	$	243.6	247.9

Supplemental information:	Supplemental information:
Supplemental information:
Supplemental information:
Cash paid for interest
Cash paid for interest
Cash paid for interest	Cash paid for interest	$	8.2	5.0	$	3.1	2.7
Net cash paid for income taxes	Net cash paid for income taxes	$	193.7	175.4	$	184.0	160.2
Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities	$	64.3	55.6	$	38.4	31.7

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)

~~June 30,~~March 31, 2024 and 2023 ~~and 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', or by terms such as 'we', 'our', or 'us') have been prepared in accordance with U.S. generally accepted accounting principles (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, ~~2022.~~2023. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Beginning in the first quarter of 2024, references to 'net earnings','operating and administrative expenses', and 'earnings before income taxes' have been revised in our condensed consolidated financial statements and financial reports, including this quarterly report on Form 10-Q, to 'net income', 'selling, general, and administrative (SG&A) expenses', and 'income before income taxes', respectively.

Recently Issued Accounting Pronouncements

~~We have implemented~~In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280. The enhanced disclosure requirements include: title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances. This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. This change will apply retrospectively to all periods presented.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which establishes new ~~accounting pronouncements that are~~income tax disclosure requirements in ~~effect~~addition to modifying and ~~that may impact our~~eliminating certain existing requirements. The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid. This change is effective for annual periods beginning after December 15, 2024. This change will apply on a prospective basis to annual financial statements ~~and do not 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.~~for periods beginning after the effective date. However, retrospective application in all prior periods presented is permitted.

(2) Revenue

Revenue Recognition

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 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 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 governmental authorities are accounted for on a net basis and therefore are excluded from net sales. ~~Revenues are attributable to countries based on the selling location from which the sale occurred.~~

~~Disaggregation of Revenue~~

~~Our revenues related to the following geographic areas were as follows for the periods ended June 30:~~

Six-month Period Three-month Period
2023 2022 2023 2022
United States $ 3,130.4 2,928.4 $ 1,571.7 1,496.7
% of revenues 83.6 % 84.1 % 83.5 % 84.2 %
Canada and Mexico 498.8 438.4 254.9 225.0
% of revenues 13.3 % 12.6 % 13.5 % 12.7 %
North America 3,629.2 3,366.8 1,826.6 1,721.7
% of revenues 96.9 % 96.7 % 97.0 % 96.9 %
All other foreign countries 113.0 115.8 56.5 56.9
% of revenues 3.1 % 3.3 % 3.0 % 3.1 %
Total revenues $ 3,742.2 3,482.6 $ 1,883.1 1,778.6

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)

~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~

(Unaudited)

Disaggregation of Revenue

Revenues are attributable to countries based on the selling location from which the sale occurred. Our revenues related to the following geographic areas were as follows for the periods ended March 31:


	Three-month Period
		2024			2023
United States		$	1,578.9		1,558.7
% of revenues		83.3		%	83.8	%
Canada and Mexico		255.6			243.9
% of revenues		13.5		%	13.1	%
North America		1,834.5			1,802.6
% of revenues		96.8		%	96.9	%
All other foreign countries		60.6			56.5
% of revenues		3.2		%	3.1	%
Total revenues		$	1,895.1		1,859.1

The percentages of our sales by end market were as follows for the periods ended ~~June 30:~~March 31:


		Six-month Period					Three-month Period
		2023		2022			2023		2022
				Three-month Period
				Three-month Period
				Three-month Period
						2024											2024			2023
Manufacturing	Manufacturing	74.7	%	71.5	%		74.8	%	71.8	%	Manufacturing	75.0	%	74.6	%
Non-residential construction	Non-residential construction	9.2	%	10.5	%		9.2	%	10.7	%	Non-residential construction	8.5	%	9.3	%
Other	Other	16.1	%	18.0	%		16.0	%	17.5	%	Other	16.5	%	16.1	%
		100.0	%	100.0	%		100.0	%	100.0	%
						100.0										100.0		%	100.0		%

The percentages of our sales by product line were as follows for the periods ended ~~June 30:~~March 31:


			Six-month Period					Three-month Period
					Three-month Period
					Three-month Period
					Three-month Period
Type	Type	Introduced	2023		2022			2023		2022		Type	Introduced	2024				2023
Fasteners (1)	Fasteners (1)	1967	33.1	%	34.4	%		32.6	%	34.6	%	Fasteners (1)	1967	31.5	%			33.6	%
Tools	Tools	1993	8.5	%	8.2	%		8.5	%	8.2	%	Tools	1993	8.6	%			8.5	%
Cutting tools	Cutting tools	1996	5.4	%	5.0	%		5.5	%	5.0	%	Cutting tools	1996	5.3	%			5.4	%
Hydraulics & pneumatics	Hydraulics & pneumatics	1996	6.7	%	6.6	%		6.8	%	6.7	%	Hydraulics & pneumatics	1996	6.7	%			6.6	%
Material handling	Material handling	1996	5.6	%	5.7	%		5.6	%	5.7	%	Material handling	1996	5.5	%			5.6	%
Janitorial supplies	Janitorial supplies	1996	8.2	%	7.9	%		8.3	%	8.0	%	Janitorial supplies	1996	8.5	%			8.1	%
Electrical supplies	Electrical supplies	1997	4.6	%	4.3	%		4.7	%	4.3	%	Electrical supplies	1997	4.6	%			4.6	%
Welding supplies	Welding supplies	1997	4.1	%	3.8	%		4.1	%	3.8	%	Welding supplies	1997	4.2	%			4.0	%
Safety supplies	Safety supplies	1999	20.5	%	20.7	%		20.7	%	20.3	%	Safety supplies	1999	21.6	%			20.4	%
Other	Other		3.3	%	3.4	%		3.2	%	3.4	%	Other				3.5	%			3.2	%
			100.0	%	100.0	%		100.0	%	100.0	%
							100.0															100.0	%	100.0	%

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

~~(3) Stockholders' Equity~~

~~Dividends~~

On July 12, 2023, our board of directors declared a quarterly dividend of $0.35 per share of common stock to be paid in cash on August 24, 2023 to shareholders of record at the close of business on July 27, 2023.

~~The following table presents the cash dividends either paid previously or declared by our board of directors for future payment on 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 0.31
Total $ 1.05 $ 1.24

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)

~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~

(Unaudited)

(3) Stockholders' Equity

Dividends

On April 10, 2024, our board of directors declared a quarterly dividend of $0.39 per share of common stock to be paid in cash on May 23, 2024 to shareholders of record at the close of business on April 25, 2024.

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


	2024		2023
First quarter	$	0.39	$	0.35
Second quarter	0.39		0.35
Third quarter			0.35
Fourth quarter			0.35
Fourth quarter (special)			0.38
Total	$	0.78	$	1.78

Stock Options

The following tables summarize the details of options granted under our stock option plans that were outstanding as of ~~June 30, 2023,~~March 31, 2024, and the assumptions used to value 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				June 30, 2023				Options Granted	Option Exercise Price	Closing Stock Price on Date of Grant		March 31, 2024
Date of Grant	Date of Grant								Options Outstanding			Options Exercisable	Date of Grant					Options Outstanding		Options Exercisable
January 2, 2024
January 3, 2023	January 3, 2023	1,071,943			$	48.00			$	47.400		1,046,851		70,562
January 3, 2022	January 3, 2022	713,438	$	62.00			$	61.980			656,520		53,355
January 4, 2021	January 4, 2021	741,510	$	48.00			$	47.650			637,416		234,203
January 2, 2020	January 2, 2020	902,263	$	38.00			$	37.230			727,427		370,152
January 2, 2019	January 2, 2019	1,316,924	$	26.00			$	25.705			862,003		534,009
January 2, 2018	January 2, 2018	1,087,936	$	27.50			$	27.270			636,123		506,029
January 3, 2017	January 3, 2017	1,529,578	$	23.50			$	23.475			627,243		523,609
April 19, 2016	April 19, 2016	1,690,880	$	23.00			$	22.870			446,559		386,293
April 21, 2015	April 21, 2015	1,786,440	$	21.00			$	20.630			212,347		212,347
Total	Total	10,840,912									5,852,489		2,890,559

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

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)

March 31, 2024 and 2023

(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 2, 2024	3.8	%	5.00	2.2	%	28.44	%	$	15.87
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 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 ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2024 and 2023 was $2.0 and ~~2022 was $3.8 and $3.0, respectively, while the second quarter of 2023 and 2022 was~~ $1.9, ~~and $1.5,~~ respectively. Unrecognized stock-based compensation expense related to outstanding unvested stock options as of ~~June 30, 2023~~March 31, 2024 was ~~$20.6~~$24.8 and is expected to be recognized over a weighted average period of ~~4.49~~4.62 years. Any future changes in estimated forfeitures will impact this amount.

Income Per Share

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


	Three-month Period
Reconciliation		2024	2023
Basic weighted average shares outstanding		572,339,493	570,928,848
Weighted shares assumed upon exercise of stock options		1,751,214	1,703,741
Diluted weighted average shares outstanding		574,090,707	572,632,589


	Three-month Period
Summary of Anti-dilutive Options Excluded		2024		2023
Options to purchase shares of common stock		958,569		2,269,908
Weighted average exercise prices of options		$	63.55	52.17

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)

~~June 30,~~March 31, 2024 and 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:

Six-month Period Three-month Period
Reconciliation 2023 2022 2023 2022
Basic weighted average shares outstanding 571,033,444 575,510,253 571,138,039 575,462,097
Weighted shares assumed upon exercise of stock options 1,724,032 1,998,786 1,752,121 1,940,124
Diluted weighted average shares outstanding 572,757,476 577,509,039 572,890,160 577,402,221

Six-month Period Three-month Period
Summary of Anti-dilutive Options Excluded 2023 2022 2023 2022
Options to purchase shares of common stock 2,244,555 1,350,936 1,866,320 1,354,464
Weighted average exercise prices of options $ 52.17 55.20 $ 52.96 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.~~

(4) Income Taxes

We file income tax returns in the United States federal jurisdiction, all states, and various local and foreign jurisdictions. We are no longer subject to income tax examinations by taxing authorities for taxable years before ~~2019~~2020 in the case of United States federal examinations, and with limited exception, before ~~2017~~2018 in the case of foreign, state, and local examinations. During the first ~~six months~~quarter of ~~2023,~~2024, there were no material changes in unrecognized tax benefits.

(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 was approximately ~~$94.6.~~$125.8. We believe the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is 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 otherwise noted)~~

~~June 30, 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:


		Average Interest Rate at June 30, 2023						Debt Outstanding
				Maturity Date			June 30, 2023			December 31, 2022
	Average Interest Rate at March 31, 2024											Average Interest Rate at March 31, 2024		Debt Outstanding
					Maturity Date								Maturity Date	March 31, 2024	December 31, 2023
Unsecured revolving credit facility	Unsecured revolving credit facility	6.10	%			September 28, 2027		$	90.0		225.0
Senior unsecured promissory notes payable, Series C	Senior unsecured promissory notes payable, Series C	3.22	%			March 1, 2024		60.0			60.0
Senior unsecured promissory notes payable, Series D	Senior unsecured promissory notes payable, Series D	2.66	%			May 15, 2025		75.0			75.0
Senior unsecured promissory notes payable, Series E	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	Senior unsecured promissory notes payable, Series G	2.13	%			June 24, 2026		25.0			25.0
Senior unsecured promissory notes payable, Series H	Senior unsecured promissory notes payable, Series H	2.50	%			June 24, 2030		50.0			50.0
Total	Total							350.0			555.0
Less: Current portion of debt	Less: Current portion of debt							(150.0)			(201.8)
Long-term debt	Long-term debt							$	200.0		353.2

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

Unsecured Revolving Credit Facility

We have an $835.0 committed unsecured revolving 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. Any borrowings outstanding under the Credit Facility for which we have the ability and intent to pay using cash within the next 12 months will be classified 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 Daily Simple SOFR plus a 0.10% spread adjustment plus 0.95%. 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)

March 31, 2024 and 2023

(Unaudited)

Senior Unsecured Promissory Notes Payable

We have issued senior unsecured promissory notes under our master note agreement (the Master Note Agreement) in the aggregate principal amount of ~~$260.0~~$200.0 as of ~~June 30, 2023.~~March 31, 2024. Our aggregate borrowing capacity under the Master Note Agreement is $900.0; however, none of the institutional investors party to that agreement are committed to purchase notes thereunder. There is no amortization of these notes prior to their maturity date and interest is payable quarterly. The notes currently issued under our Master Note Agreement, including the maturity date and fixed interest rate per annum of each series of note, are contained in the table above. The Master Note Agreement contains certain financial and other covenants and we are currently in compliance with these covenants.

(7) Legal Contingencies

The nature of our potential exposure to legal contingencies is described in our ~~2022~~2023 annual report on Form 10-K in Note 10 of the Notes to Consolidated Financial Statements. As of ~~June 30, 2023,~~March 31, 2024, 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)~~

~~June 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 and should be read in conjunction with the 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 more than ~~3,300~~3,400 in-market locations. ~~Most of our~~Our largest end market is manufacturing. Sales to these customers ~~are in the manufacturing and non-residential construction markets. The manufacturing market~~ includes ~~sales of~~ products for both original equipment manufacturing (OEM), where our products are consumed in the final products of our customers, and manufacturing, repair, and operations (MRO), where our products are consumed to support the facilities and ongoing operations of our customers. ~~The~~We also service general and commercial contractors in non-residential ~~construction market includes general, electrical, plumbing, sheet metal, and road contractors. Other users of our products include~~end markets as well as 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, though we continue to grow our non-North American presence as well.

Our motto is Growth Through Customer Service® and our tagline is Where Industry Meets Innovation™. We are a customer- and growth-centric organization focused on identifying unique technologies, capabilities, and supply chain solutions that get us 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 remains a fragmented industrial distribution market.

Executive Overview

The following table presents a performance summary of our results of operations for the ~~six-month and~~ three-month periods ended ~~June 30, 2023~~March 31, 2024 and ~~2022~~2023.




		Six-month Period							Three-month Period								Three-month Period
		2023			2022		Change		2023			2022		Change				2024			2023			Change
Net sales	Net sales	$	3,742.2		3,482.6		7.5	%	$	1,883.1		1,778.6		5.9	%	Net sales		$	1,895.1	1,859.1		1,859.1	1.9		1.9	%
Business days	Business days	128			128				64			64
Daily sales	Daily sales	$	29.2		27.2		7.5	%	$	29.4		27.8		5.9	%
Daily sales
Daily sales																		$	29.6		29.0			1.9	%
Gross profit	Gross profit	$	1,707.5		1,620.9		5.3	%	$	857.5		827.6		3.6	%	Gross profit		$	861.6	850.0		850.0	1.4		1.4	%
% of net sales	% of net sales	45.6		%	46.5	%			45.5		%	46.5	%
Operating and administrative expenses		$	919.4		879.5		4.5	%	$	462.6		444.2		4.1	%
Selling, general, and administrative expenses
Selling, general, and administrative expenses
Selling, general, and administrative expenses																		$	471.4		456.8			3.2	%
% of net sales	% of net sales	24.6		%	25.3	%			24.6		%	25.0	%
Operating income	Operating income	$	788.1		741.4		6.3	%	$	394.9		383.4		3.0	%
Operating income
Operating income																		$	390.2		393.2			-0.8	%
% of net sales	% of net sales	21.1		%	21.3	%			21.0		%	21.6	%
Earnings before income taxes		$	782.3		736.5		6.2	%	$	392.6		380.7		3.1	%
Income before income taxes
Income before income taxes
Income before income taxes																		$	389.8		389.7			0.0	%
% of net sales	% of net sales	20.9		%	21.2	%			20.9		%	21.4	%
Net earnings		$	593.1		556.7		6.6	%	$	298.0		287.1		3.8	%
Diluted net earnings per share		$	1.04		0.96		7.4	%	$	0.52		0.50		4.6	%
Net income
Net income
Net income																		$	297.7		295.1			0.9	%
Diluted net income per share																Diluted net income per share		$	0.52		0.52			0.6	%
																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.
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.
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.

Table of Contents

The table below summarizes our absolute and full time equivalent (FTE; based on 40 hours per week) employee headcount, our investments related to in-market locations (defined as the sum of the total number of branch locations and the total number of active Onsite 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.


				Change Since:
				Change Since:
				Change Since:																										Change Since:
	Q1 2024															Q1 2024							Q4 2023		Q4 2023							Q1 2023		Q1 2023
Selling personnel - absolute employee headcount												Selling personnel - absolute employee headcount	16,764					16,512			1.5		%				16,178			3.6		%
Selling personnel - FTE employee headcount												Selling personnel - FTE employee headcount	15,102					15,070			0.2		%				14,704			2.7		%
Total personnel - absolute employee headcount												Total personnel - absolute employee headcount	23,695					23,201			2.1		%				22,820			3.8		%
Total personnel - FTE employee headcount												Total personnel - FTE employee headcount	20,935					20,721			1.0		%				20,262			3.3		%
				Change Since:			Change Since:			Change Since:
		Q2 2023	Q1 2023			Q4 2022			Q2 2022
In-market locations - absolute employee headcount		13,668	13,668	0.0	%	13,410	1.9	%	13,134	4.1	%
In-market locations - FTE employee headcount		12,380	12,219	1.3	%	12,017	3.0	%	12,039	2.8	%
Total absolute employee headcount		22,913	22,820	0.4	%	22,386	2.4	%	21,629	5.9	%
Total FTE employee headcount		20,631	20,262	1.8	%	19,854	3.9	%	19,523	5.7	%

Number of branch locations
Number of branch locations
Number of branch locations	Number of branch locations	1,635	1,660	-1.5	%	1,683	-2.9	%	1,737	-5.9	%	1,592		1,597			1,597			-0.3	-0.3	%				1,660			-4.1	-4.1	%
Number of active Onsite locations	Number of active Onsite locations	1,728	1,674	3.2	%	1,623	6.5	%	1,501	15.1	%	Number of active Onsite locations	1,872		1,822				1,822			2.7	2.7	%				1,674			11.8	11.8	%
Number of in-market locations	Number of in-market locations	3,363	3,334	0.9	%	3,306	1.7	%	3,238	3.9	%	Number of in-market locations	3,464		3,419				3,419			1.3	1.3	%				3,334			3.9	3.9	%
Weighted FMI devices (MEU installed count)	Weighted FMI devices (MEU installed count)	107,115	104,673	2.3	%	102,151	4.9	%	96,872	10.6	%	Weighted FMI devices (MEU installed count)	115,653		113,138				113,138			2.2	2.2	%				104,673			10.5	10.5	%

During the last twelve months, we increased our total FTE employee headcount by ~~1,108.~~673. This reflects an increase in our ~~in-market and non-in-market~~total FTE selling ~~FTE employee headcount~~personnel of ~~655~~398 to support growth in the marketplace and sales initiatives targeting customer acquisition. We had an increase in our distribution ~~center~~and transportation FTE ~~employee headcount~~personnel of ~~181~~158 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 ~~employee headcount~~personnel of ~~272~~117 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 the number of Onsites activated and closed, net of conversions during the periods presented.


		Six-month Period				Three-month Period
		2023	2022			2023	2022
				Three-month Period
				Three-month Period
				Three-month Period
					2024			2024	2023
Branch openings	Branch openings	5	8			3	2
Branch closures, net of conversions	Branch closures, net of conversions	(53)	(64)			(28)	(25)

Onsite activations	Onsite activations	173	138			89	81
Onsite activations
Onsite activations
Onsite closures, net of conversions	Onsite closures, net of conversions	(68)	(53)			(35)	(20)

In any period, the number of closings tends to reflect normal churn in our business, whether due to redefining or exiting customer relationships, the shutting or relocation of customer facilities that host our locations, or a customer decision, as well as our ongoing review of underperforming locations. Our in-market network forms the foundation of our business ~~strategy,~~strategy. In recent years, we have seen a gradual increase in our in-market locations. This has reflected significant growth in Onsites and, to a lesser degree, international branches, which has more than overcome a meaningful decline in our traditional branch network from a strategic rationalization that aligned our physical footprint with changes in our business strategies. Branch closures may occur in the future to reflect normal churn in our business, but the strategic rationalization has concluded. As a result, we ~~will~~expect to see an increase in the rate of in-market location growth as Onsites continue to ~~open~~increase while our traditional branch network remains stable or ~~close locations as is deemed necessary~~grows moderately to sustain and improve our network and support our growth ~~drivers, and manage our operating expenses.~~drivers.

Table of Contents

~~SECOND~~FIRST QUARTER OF ~~2023~~2024 VERSUS ~~SECOND~~FIRST QUARTER OF ~~2022~~2023

Results of Operations

The following table sets forth condensed consolidated ~~statement~~statements of ~~earnings~~income information (as a percentage of net sales) for the periods ended ~~June 30:~~March 31:


		Three-month Period
	Three-month Period									Three-month Period
		2023		2022			2024		2023
Net sales	Net sales	100.0	%	100.0	%	Net sales	100.0	%	100.0	%
Gross profit	Gross profit	45.5	%	46.5	%	Gross profit	45.5	%	45.7	%
Operating and administrative expenses		24.6	%	25.0	%
Selling, general, and administrative expenses						Selling, general, and administrative expenses	24.9	%	24.6	%
Operating income	Operating income	21.0	%	21.6	%	Operating income	20.6	%	21.2	%
Net interest expense	Net interest expense	-0.1	%	-0.2	%	Net interest expense	0.0	%	-0.2	%
Earnings before income taxes		20.9	%	21.4	%
Income before income taxes						Income before income taxes	20.6	%	21.0	%

Note – Amounts may not foot due to rounding difference.	Note – Amounts may not foot due to rounding difference.
Note – Amounts may not foot due to rounding difference.
Note – Amounts may not foot due to rounding difference.

Sales

The table below sets forth net sales and daily sales for the periods ended ~~June 30,~~March 31, and changes in such sales from the prior period to the more recent period:


		Three-month Period						Three-month Period
		2023			2022			2024		2023
Net sales	Net sales	$	1,883.1		1,778.6
Percentage change	Percentage change	5.9		%	18.0	%	Percentage change	1.9	%	9.1	%
Business days	Business days	64			64
Daily sales	Daily sales	$	29.4		27.8
Percentage change	Percentage change	5.9		%	18.0	%	Percentage change	1.9	%	9.1	%
Daily sales impact of currency fluctuations	Daily sales impact of currency fluctuations	-0.4		%	-0.5	%	Daily sales impact of currency fluctuations	0.0	%	-0.7	%

Net sales increased ~~$104.6,~~$36.1, or ~~5.9%~~1.9%, in the ~~second~~first quarter of ~~2023~~2024 when compared to the ~~second~~first quarter of ~~2022.~~2023. The ~~number~~effect of ~~business days were~~adverse weather in the ~~same~~first quarter of 2024 was a reduction in ~~both periods.~~ sales by 35 to 55 basis points as compared to a reduction in sales in the first quarter of 2023 by 20 to 40 basis points, resulting in a net negative impact from adverse weather in the first quarter of 2024 of 10 to 30 basis points. The effect of foreign exchange on sales was not material in the first quarter of 2024 as compared to negatively affecting sales in the first quarter of 2023 by approximately 70 basis points.

We ~~experienced~~experienced higher unit sales in the ~~second~~first quarter of ~~2023 that contributed to the increase in net sales in the period. This was~~2024 primarily due to growth ~~at our~~with larger customers and Onsite locations ~~particularly those~~ opened in the last two years ~~which more than offset lower revenues in construction and reseller end markets related~~. The impact of product pricing was not material to ~~the execution of our go-to-market branch strategy. Foreign exchange negatively affected~~net sales in the ~~second~~first quarter of ~~2023 by approximately 40 basis points.~~

~~The~~2024, as compared to the impact of product pricing on net sales in the ~~second~~first quarter of 2023 ~~was 190~~of 290 to ~~220~~320 basis ~~points compared to the second quarter of 2022. This largely reflects the impact of general inflationary conditions in the marketplace~~points. Incremental pricing actions over the past twelve months ~~and the carryover of targeted actions taken~~have been modest in scope, resulting in mostly stable price levels through the first quarter of ~~2023 to address gross margin pressure for non-fastener and non-safety products. The impact~~2024.

Table of ~~product~~ ~~pricing on net sales in the second quarter of 2022 was 660 to 690 basis points.~~Contents

From a product standpoint, we have three categories: fasteners (including fasteners used in original equipment manufacturing (OEM) and maintenance, repair, and operations (MRO), safety supplies, and other product lines, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools. We continued to experience a divergence in the performance of our fastener versus our non-fastener product lines in the first quarter of 2024, which we believe relates to three factors. First, fasteners are more heavily oriented toward production of final goods than maintenance, which results in greater susceptibility to periods of weaker industrial production. Second, pricing for fasteners has decelerated at a faster pace than non-fastener products. Third, while the rate of outgrowth has slowed relative to what we experienced during the final two months of 2023, we continued to experience relatively faster growth with our retailer-oriented customers due to market share gains, product mix, and easier comparisons. This factor primarily benefited our safety product line. 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
Fasteners 0.0% 21.2 % 32.6 % 34.6 %
Safety supplies 7.9 % 13.8 % 20.7 % 20.3 %
Other 9.8 % 17.0 % 46.7 % 45.1 %


	DSR Change Three-month Period				% of Sales Three-month Period
	2024		2023		2024		2023
OEM fasteners	-4.0	%	12.6	%	19.6	%	20.8	%
MRO fasteners	-5.1	%	-1.1	%	11.9	%	12.8	%
Total fasteners	-4.4	%	7.0	%	31.5	%	33.6	%
Safety supplies	8.3	%	5.7	%	21.6	%	20.4	%
Other product lines	3.9	%	12.4	%	46.9	%	46.0	%

~~Table of Contents~~

~~Our~~From an end ~~markets consist of~~market standpoint, we have five categories: heavy manufacturing, other manufacturing, non-residential construction, reseller, and other, the latter of which includes ~~resellers,~~ government/education and transportation/~~warehousing.~~warehousing. We continued to experience a divergence in the performance of our manufacturing end market versus our non-manufacturing end markets in the first quarter of 2024, although the scale of that divergence has continued to narrow. These trends reflect a number of factors. First, we are growing relatively faster with key account customers with significant managed spend where our service model and technology is particularly impactful, which disproportionately benefits manufacturing customers. At the same time, this benefit has been increasingly offset by weakening end markets. Second, while our non-residential and reseller end markets remain relatively weak, they are beginning to come across easier comparisons in the preceding periods. Third, while the rate of outgrowth has slowed relative to what we experienced during the final two months of 2023, we continued to experience relatively faster growth with our retailer-oriented customers due to market share gains, product mix, and easier comparisons. This factor primarily benefited our other product lines. 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
Manufacturing 10.4% 23.1% 74.8% 71.8%
Non-residential construction -8.8% 10.8% 9.2% 10.7%
Other -3.2% 4.7% 16.0% 17.5%


	DSR Change Three-month Period				% of Sales Three-month Period
	2024		2023		2024		2023
Heavy manufacturing	2.7	%	17.6	%	43.4	%	43.1	%
Other manufacturing	2.5	%	10.2	%	31.6	%	31.5	%
Total manufacturing	2.6	%	14.4	%	75.0	%	74.6	%
Non-residential construction	-6.6	%	-2.4	%	8.5	%	9.3	%
Reseller	-2.5	%	-5.7	%	5.7	%	6.0	%
Other end markets	7.7	%	-3.6	%	10.8	%	10.1	%

We report our customers in two categories: national accounts, which are customers with significant revenue potential and a national, multi-site contract, and non-national accounts, which include large regional customers, small local customers, and government ~~customers. Sales~~customers. We continued to ~~most~~experience a significant divergence in the performance of our national account customers ~~grew in~~versus our non-national account customers, which relates to the ~~second quarter of 2023 over the prior year, as our sales grew at 73~~relative growth of our ~~Top 100 national account customers. The~~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
Three-month Period % of Sales
Three-month Period
2023 2022 2023 2022
National Accounts 10.3 % 22.9 % 59.3 % 57.3 %
Non-National Accounts 0.2 % 12.2 % 40.7 % 42.7 %


	DSR Change Three-month Period				% of Sales Three-month Period
	2024		2023		2024		2023
National accounts	6.3	%	13.6	%	62.0	%	59.2	%
Non-national accounts	-4.5	%	3.4	%	38.0	%	40.8	%

Table of Contents

Growth Drivers

•We signed 86102 new Onsite locations (defined as dedicated sales and service provided from within, or in proximity to, the customer's facility) in the ~~second~~first quarter of ~~2023, resulting in 175 year-to-date signings of new Onsite locations.~~2024. We had ~~1,728~~1,872 active sites on ~~June 30, 2023,~~March 31, 2024, which represented an increase of ~~15.1%~~11.8% from ~~June 30, 2022.~~March 31, 2023. Daily sales through our Onsite locations, excluding sales transferred from branches to new Onsites, grew at a ~~high-teens~~low single-digit rate in the ~~second~~first quarter of ~~2023~~2024 over the ~~second~~first quarter of ~~2022.~~2023. This growth is due to contributions from Onsites activated and implemented in ~~2022~~2024 and 2023, as well as ~~continued growth from~~an increase in revenues per location among our ~~older~~more mature locations. These factors were only partly offset by Onsite ~~locations. Based on the~~closures. Our goal for Onsite signings in ~~the first six months of 2023, we currently expect to sign approximately 350 new Onsite locations for the full year of 2023, which is adjusted from our original goal of~~2024 remains between 375 to 400.

•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~~sales 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.

~~Table of Contents~~

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


		Three-month Period
		2023			2022		Change
	Three-month Period																				Three-month Period
	2024														2024					2023					Change
Weighted FASTBin/FASTVend signings (MEUs)	Weighted FASTBin/FASTVend signings (MEUs)	6,794			5,490		23.8	%	Weighted FASTBin/FASTVend signings (MEUs)		6,726			5,902				5,902		14.0			14.0	%
Signings per day	Signings per day	106			86
Weighted FASTBin/FASTVend installations (MEUs; end of period)	Weighted FASTBin/FASTVend installations (MEUs; end of period)	107,115			96,872		10.6	%
Weighted FASTBin/FASTVend installations (MEUs; end of period)
Weighted FASTBin/FASTVend installations (MEUs; end of period)											115,653						104,673					10.5	%

FASTStock sales
FASTStock sales
FASTStock sales	FASTStock sales	$	237.7		207.3		14.7	%	$	239.8			236.7			236.7			1.3			1.3	%
% of sales	% of sales	12.5		%	11.5	%
FASTBin/FASTVend sales	FASTBin/FASTVend sales	$	520.6		433.3		20.2	%
FASTBin/FASTVend sales
FASTBin/FASTVend sales											$	556.9					503.7					10.6	%
% of sales	% of sales	27.3		%	24.1	%
FMI sales
FMI sales
FMI sales	FMI sales	$	758.3		640.6		18.4	%	$	796.7			740.4			740.4			7.6			7.6	%
FMI daily sales	FMI daily sales	$	11.8		10.0		18.4	%	FMI daily sales		$	12.4		11.6				11.6		7.6			7.6	%
% of sales	% of sales	39.8		%	35.6	%

Our goal for weighted FASTBin and FASTVend device signings in ~~2023~~2024 remains between ~~23,000~~26,000 to ~~25,000~~28,000 MEUs.

•Our eCommerce business includes sales made through ~~an electronic data interface (EDI),~~EDI, or other types of technical integrations, and through our web verticals. Daily sales through eCommerce grew ~~44.7%~~33.6% in the ~~second~~first quarter of ~~2023~~2024 and represented ~~23.3%~~28.6% of our total sales in the period.

Our digital products and services are comprised of 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 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 our digital capabilities.

Our Digital Footprint in the ~~second~~first quarter of ~~2023~~2024 represented ~~55.3%~~59.2% of our sales, an increase from ~~47.9%~~54.1% of sales in the ~~second~~first quarter of ~~2022.~~2023.

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Gross Profit

Our gross profit, as a percentage of net sales, ~~declined~~decreased to 45.5% in the ~~second q~~first qu~~uarter~~arter of ~~2023~~2024 from ~~46.5%~~45.7% in the ~~second~~first quarter of ~~2022. The change in our~~2023. Our gross profit percentage ~~primarily reflected three items. First,~~was negatively affected by customer and product ~~mix reduced our gross profit percentage. We continued to experience~~mix. This reflects relatively ~~strong~~stronger growth from large customers, including Onsite customers, and non-fastener products, each of which tend to have a lower gross profit percentage than our business as a ~~whole. This~~whole. The negative impact ~~widened on~~of mix was partly offset by a ~~sequential basis.~~couple of trends. First, we continue to experience modestly positive price-cost, reflecting easing product cost, the absence of meaningful pricing actions by us in the period, and an easy comparison versus the price-cost deficit experienced in the first quarter of 2023. Second, we had ~~higher~~favorable leverage of organizational/overhead costs, primarily due to higher inbound freight costs and working capital needs being relieved from inventory and generating higher period costs. Third, freight expenses were favorable, partially offsetting the negative impactsgreater utilization of ~~mix and organizational/overhead costs. This favorable impact reflects record~~ domestic ~~freight revenue leveraging what are relatively stable costs~~transportation resources as we move more product to support ~~our captive fleet, lower expenses related to external freight providers, and lower fuel costs. The impact of price/cost was immaterial to our gross profit percentage in the second quarter of 2023.~~current stocking levels.

~~Operating Income~~

Our operating income, as a percentage of net sales, decreased to 21.0% in the second quarter of 2023 from 21.6% in the second quarter of 2022. The operating leverage we achieved in the second quarter of 2023 was not sufficient to offset the decline in our gross profit percentage.

~~Table of Contents~~

~~Operating and Administrative~~SG&A Expenses

Our ~~operating and administrative~~SG&A expenses, as a percentage of net sales, ~~improved~~increased to 24.9% in the first quarter of 2024 from 24.6% in the ~~second~~first quarter of ~~2023 from 25.0%~~2023. We continue to focus on limiting growth in our headcount and improving the balance of full-time and part-time employees in our workforce. We still deleveraged our employee-related expenses as a result of slower growth in sales in the ~~second~~first quarter of ~~2022. This reflected a decline, as a percentage of net sales, in employee-related expenses partly offset by an increase, as a percentage of net sales, in occupancy-related expenses.~~2024.

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


	Approximate Percentage of Total ~~Operating and Administrative~~SG&A Expenses	Three-month Period
		~~2023~~2024
Employee-related expenses	70% to 75%	~~2.5~~3.9	%
Occupancy-related expenses	15% to 20%	~~9.5~~0.0	%
All other ~~operating and administrative~~SG&A expenses	10% to 15%	~~7.3~~3.5	%

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.

In the ~~second~~first quarter of ~~2023,~~2024, our employee-related expenses increased when compared to the ~~second~~first quarter of ~~2022.~~2023. We experienced an increase in employee base pay due to higher average FTE and higher average wages during the period, ~~and, to a lesser degree, higher average wages. Bonus~~as well as an increase in employee health care costs. This was only partly offset by lower bonus and commission payments ~~decreased~~ reflecting ~~the impact of~~ slower sales and profit growth versus the ~~prior year. We also experienced higher healthcare-related costs.~~first quarter of 2023.

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

Change
Since: Change
Since:
Q2
2023 Q1
2023 Q1
2023 Q2
2022 Q2
2022
In-market locations (branches & Onsites) 12,380 12,219 1.3 % 12,039 2.8 %
Non-in-market selling 2,613 2,485 5.2 % 2,299 13.7 %
Selling subtotal 14,993 14,704 2.0 % 14,338 4.6 %
Distribution/Transportation 3,053 3,029 0.8 % 2,872 6.3 %
Manufacturing 723 714 1.3 % 672 7.6 %
Organizational support personnel (1)
1,862 1,815 2.6 % 1,641 13.5 %
Non-selling subtotal 5,638 5,558 1.4 % 5,185 8.7 %
Total 20,631 20,262 1.8 % 19,523 5.7 %


			Change Since:			Change Since:
	Q1 2024	Q4 2023	Q4 2023		Q1 2023	Q1 2023
Selling personnel (1)	15,102	15,070	0.2	%	14,704	2.7	%
Distribution/Transportation personnel	3,187	3,095	3.0	%	3,029	5.2	%
Manufacturing personnel	715	697	2.6	%	714	0.1	%
Organizational support personnel (2)	1,931	1,859	3.9	%	1,815	6.4	%
Total personnel	20,935	20,721	1.0	%	20,262	3.3	%

~~(1)~~ Organizational support personnel consists of: (1) Sales & Growth Driver Support personnel (35% to 40% 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.


(1)			Of our Selling Personnel, 80%-85% are attached to a specific in-market location.
(2)			Organizational support personnel consists of: (1) Sales & Growth Driver Support personnel (35% to 40% 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 (20% to 25% 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 FMI services (we consider ~~the vending equipment, excluding leased locker equipment,~~this hardware to be a logical extension of our in-market operations and classify the depreciation and repair costs as occupancy expenses).

In the ~~second~~first quarter of ~~2023,~~2024, our occupancy-related expenses ~~increased~~were flat when compared to the ~~second~~first quarter of ~~2022. This increase largely reflects higher costs for FMI hardware~~2023. We had lower depreciation expense as we ~~continue~~have had a large number of vending machines and certain of our hub automation equipment reach the end of their depreciable lives relative to ~~expand our installed base~~the first quarter of ~~such hardware,~~2023. This was offset by slightly higher facility ~~costs, including utilities, and higher maintenance expenses.~~expense.

Table of Contents

All other ~~operating and administrative~~SG&A expenses include: (1) selling-related transportation, (2) information technology (IT) expenses, (3) general corporate expenses, which consists of legal expenses, general insurance expenses, travel and marketing expenses, etc., and (4) sales of property and equipment.

Combined, all other ~~operating and administrative~~SG&A expenses increased in the ~~second~~first quarter of ~~2023~~2024 when compared to the ~~second~~first quarter of ~~2022.~~2023. The increase in other ~~operating and administrative~~SG&A expenses ~~relates~~is primarily ~~to higher~~a result of modest increases in spending on information technology and ~~expenses for travel~~higher lease costs in our selling-related vehicle fleet due to an increase in the mix of larger truck types and ~~supplies. This was partly offset by lower fuel costs related~~higher prices on newer vehicles.

Operating Income

Our operating income, as a percentage of net sales, decreased to ~~our local truck fleet.~~

~~Table~~20.6% in the first quarter of ~~Contents~~

2024 from 21.2% in the first quarter of 2023.

Net Interest ~~Expense~~

~~Our~~We had net interest expense ~~was $2.3~~of $0.4 in the ~~second~~first quarter of ~~2023,~~2024, compared to ~~$2.7~~net interest expense of $3.5 in the ~~second~~first quarter of ~~2022. Lower~~2023. We had higher interest income, reflecting higher average cash balances through the period, particularly in January and February, and higher rates earned on those balances. We had lower interest expense, reflecting lower average borrowings ~~over~~through the ~~period were only partially offset by higher average interest rates paid on those borrowings.~~period.

Income Taxes

We recorded income tax expense of ~~$94.6~~$92.1 in the ~~second~~first quarter of ~~2023,~~2024, or ~~24.1%~~23.6% of ~~earnings~~income before income taxes. Income tax expense was ~~$93.6~~$94.6 in the ~~second~~first quarter of ~~2022,~~2023, or ~~24.6%~~24.3% of ~~earnings~~income before income taxes. We believe our ongoing tax rate, absent any discrete tax items or broader changes to tax law, will be approximately 24.5%. Our tax rate in the first quarter of 2024 was below our expected ongoing tax rate due to the tax benefits associated with the exercise of stock options during the quarter.

Net ~~Earnings~~Income

Our net ~~earnings~~income during the ~~second~~first quarter of ~~2023 were $298.0,~~2024 was $297.7, an increase of ~~3.8%~~0.9% compared to the ~~second~~first quarter of ~~2022.~~2023. Our diluted net ~~earnings~~income per share ~~were~~was $0.52 during the ~~second~~first quarter of ~~2023,~~2024, which ~~increased~~was unchanged from ~~$0.50~~$0.52 during the ~~second~~first quarter of ~~2022.~~2023.

Liquidity and Capital Resources

Cash flow activity was as follows for the periods ended ~~June 30:~~March 31:


		Three-month Period								Three-month Period
		2023			2022		Change			2024			2023			Change
Net cash provided by operating activities	Net cash provided by operating activities	$	302.1		151.2		99.8	%	Net cash provided by operating activities	$	335.6	388.5		388.5	-13.6		-13.6	%
Percentage of net earnings		101.4		%	52.7	%
Percentage of net income
Net cash used in investing activities	Net cash used in investing activities	$	54.2		43.9		23.5	%
Percentage of net earnings		18.2		%	15.3	%
Net cash used in investing activities
Net cash used in investing activities										$	48.4		31.0			56.1	%
Percentage of net income
Net cash used in financing activities	Net cash used in financing activities	$	243.3		85.9		183.2	%
Net cash used in financing activities
Net cash used in financing activities										$	267.4		348.9			-23.4	%

Net Cash Provided by Operating Activities

Net cash provided by operating activities ~~increased $150.9~~decreased $52.9 in the ~~second~~first quarter of ~~2023~~2024 when compared to the ~~second~~first quarter of ~~2022.~~ 2023. The ~~improvement~~decrease in operating cash flow, as a percent of net ~~earnings,~~income, reflects ~~working capital~~our operating assets and liabilities being a ~~reduced~~modest use of cash in the ~~second~~first quarter of ~~2023~~2024 versus a source of cash in the first quarter of 2023. Inventory was a smaller source of cash in the first quarter of 2024 relative to the ~~second~~preceding period as the pace of inventory reduction slowed as the process of rightsizing stocking levels to reflect smoother supply chains is substantially complete. We also had relatively less favorable accruals for wages, reflecting the softer growth and earnings environment. Our rate of conversion of net income into operating cash flow in the first quarter of ~~2022. Global supply chains~~2024 is broadly consistent with what we have ~~normalized versus~~achieved on average in the ~~prior year, which has reduced~~first quarter over the ~~rate~~last five years.

Table of ~~working capital expansion necessary to support our customers' growth.~~Contents

The dollar and percentage change in accounts receivable, net, inventories, and accounts payable as of ~~June 30, 2023~~March 31, 2024 when compared to ~~June 30, 2022~~March 31, 2023 were as follows:


		June 30			Twelve-month Dollar Change		Twelve-month Percentage Change			March 31					Twelve-month Dollar Change		Twelve-month Percentage Change
		2023		2022	2023		2023			2024			2023								2024
Accounts receivable, net	Accounts receivable, net	$	1,171.6	1,103.9	$	67.7	6.1	%	Accounts receivable, net	$	1,213.2	1,149.8		1,149.8		$		$	63.4	5.5			5.5		%
Inventories	Inventories	1,565.4		1,665.2	(99.8)		-6.0	%	Inventories	1,496.3		1,651.9		1,651.9		(155.6)			(155.6)		-9.4			-9.4		%
Trade working capital	Trade working capital	$	2,737.0	2,769.1	$	(32.1)	-1.2	%	Trade working capital	$	2,709.5	2,801.7		2,801.7		$		$	(92.2)	-3.3			-3.3		%

Accounts payable	Accounts payable	$	262.0	291.8	$	(29.9)	-10.2	%
Accounts payable
Accounts payable										$	276.0		266.8				$	9.2				3.4	%
Trade working capital, net	Trade working capital, net	$	2,475.0	2,477.3	$	(2.2)	-0.1	%	Trade working capital, net	$	2,433.5	2,534.9		2,534.9		$		$	(101.4)	-4.0			-4.0		%

Net sales in last three months	Net sales in last three months	$	1,883.1	1,778.6	$	104.6	5.9	%
Net sales in last three months
Net sales in last three months										$	1,895.1		1,859.1				$	36.1				1.9	%

Note - Amounts may not foot due to rounding difference.

The increase in our accounts receivable balance in the ~~second~~first quarter of ~~2023 is~~2024 was primarily attributable to two factors. First, our receivables increased as a result of growth in sales to our customers. Second, we continue to experience a shift in our mix due to relatively stronger growth from national account customers, which tend to carry longer payment terms than our non-national account customers. ~~These factors were partly offset by improved receivables quality.~~

The decrease in our inventory balance in the ~~second~~first quarter of ~~2023 is~~2024 primarily ~~attributable~~reflects progress made over the last twelve months to reduce inventory following the ~~absence~~normalization of the supply chain after the disruptions ~~from~~experienced in 2022. We responded to that event by deepening inventory to support customer growth, and the ~~prior year. Our response at~~process of rightsizing our stock can be protracted given the ~~time was to deepen~~quantity of imported product we source. We have also experienced modest deflation in 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.~~

~~Table of Contents~~

The ~~decrease~~increase in our accounts payable balance in the ~~second~~first quarter of ~~2023 is~~2024 was primarily attributable to ~~the dissipation of supply disruptions from the prior year. That allowed us to gradually begin to shorten~~ our product ~~ordering cycle and reduce~~purchases increasing to support the ~~volume~~growth in our business. The growth in our accounts payable balance is above the growth in our sales reflecting re-stocking of ~~product purchases in~~certain products that were depleted to support certain customer needs during the ~~second~~fourth quarter of ~~2023 versus~~2023. It also reflects the ~~second~~timing of the Good Friday holiday, as our purchasing activities remained steady relative to slower sales at the end of the first quarter of ~~2022.~~2024.

Net Cash Used in Investing Activities

Net cash used in ~~investing~~investing activities increased by ~~$10.3~~$17.4 in the ~~second~~first quarter o~~f 2023~~of 2024 when compared to the ~~second~~first quarter of ~~2022. This~~2023. This was due to higher net capital expenditures (purchases of property and equipment, net of proceeds from sales of property and equipment) in the ~~second~~first quarter of ~~2023~~2024 compared to the ~~second~~first quarter of ~~2022.~~2023.

Our capital spending ~~will typically fall~~typically falls into six categories: (1) purchases related to ~~industrial vending,~~FMI hardware, (2) purchases of property and equipment related to expansion of and enhancements to distribution centers, (3) spending on software and hardware for our information processing systems, (4) the addition of fleet vehicles, (5) expansion, improvement or investment in certain owned or leased branch properties, and (6) the addition of manufacturing and warehouse equipment. Proceeds from the sales of property and equipment, typically for the planned disposition of pick-up trucks as well as distribution vehicles and trailers in the normal course of business, are netted against these purchases and additions. During the ~~second~~first quarter of ~~2023,~~2024, our net capital expenditures were ~~$53.9,~~$48.3, which iswas an increase from ~~$43.4~~$30.9 in the ~~second~~first quarter of ~~2022.~~2023. This was primarily due to an increase in spending for facility construction and upgrades, as well as higher vehicle spending reflecting the timing of deliveries from our suppliers.

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.During the full year of ~~2023,~~2024, we continue to expect our investment in property and equipment, net of proceeds from sales, to be within a range of ~~$210.0~~$225.0 to ~~$230.0,~~$245.0, increasing from ~~$162.4~~$160.6 in ~~2022.~~2023. This increase ~~for the full year of 2023~~ reflects ~~primarily: (1) higher property-related~~ spending ~~on upgrades~~ to ~~and~~complete our Utah distribution center, investments in ~~automation of certain facilities, the beginning of construction of~~picking technology and equipment in our hubs and branches, higher outlays for FMI hardware reflecting our higher targeted signings and a ~~distribution center~~slight build in ~~Utah,~~device inventory, and ~~investment in materials to facilitate our branch conversion projects; (2) investments in fleet equipment to support our network of heavy trucks; and (3)~~ an increase in spending on information technology. ~~We expect our spending to trend toward the low end~~

Table of ~~this range as a result of generally slower business activity.~~Contents

Net Cash Used in Financing Activities

Net cash used in financing ~~acti~~ac~~vities increased $157.4~~tivities decreased $81.5 in the ~~second~~first quarter of ~~2023~~2024 when compared to the ~~second~~first quarter of ~~2022.~~2023. This iswas primarily ~~related~~due to ~~a reduction in our~~ debt ~~obligations, versus an increase in our debt obligations in the second quarter of 2022, which reflected strong operating cash generation in the period. This more than offset a~~ reduction in the ~~second~~first quarter of 2024 being significantly lower than in the first quarter of 2023 ~~of total~~owing to smaller outstanding debt balances. This was only partly offset by an increase in capital returned to shareholders ~~compared to~~through dividends in the ~~second quarter of 2022.~~period.

During the ~~second~~first quarter of ~~2023,~~2024, we returned ~~$199.9~~$223.2 to our shareholders in the form of dividends, compared to the ~~second~~first quarter of ~~2022~~2023 when we returned ~~$227.8~~$199.8 to our shareholders in the form of ~~dividends ($178.5) and purchases of our common stock ($49.3).~~

~~During the second quarter of 2023, we~~dividends. We did not repurchase any of our common ~~stock. During the second quarter of 2022, we purchased 1,000,000 shares of our common~~ stock ~~at an average price of approximately $49.29 per share.~~in either period.

We have authority to purchase up to 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 ~~$350.0~~$200.0 at the end of the ~~second~~first quarter of ~~2023,~~2024, or ~~9.4%~~5.5% of total capital (the sum of stockholders' equity and total debt). This compares to ~~$505.0,~~$400.0, or ~~13.7%~~10.9% of total capital, at the end of the ~~second~~first quarter of ~~2022. This decrease is~~2023. The higher level of debt carried in the first quarter of 2023 was due to ~~applying operating~~having used our revolver to finance working capital to mitigate supply chain constraints. With the supply chain normalizing, we have been able to reduce layers of working capital and generate cash ~~generation~~flow to lower our level of indebtedness in the ~~reduction~~first quarter of ~~total borrowings on the balance sheet.~~2024.

Our material cash requirements for known contractual obligations include capital expenditures, debt, and lease obligations, each of which are discussed in more detail earlier in this report in the Notes to Condensed Consolidated Financial Statements and in our ~~2022~~2023 annual report on Form 10-K.

An overview of our cash dividends paid or declared in ~~2023~~2024 and ~~2022~~2023 is contained in Note 3 of the Notes to Condensed Consolidated Financial Statements.

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~~SIX MONTHS ENDED JUNE 30, 2023 VERSUS SIX MONTHS ENDED JUNE 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 June 30:~~

Six-month Period
2023 2022
Net sales 100.0 % 100.0 %
Gross profit 45.6 % 46.5 %
Operating and administrative expenses 24.6 % 25.3 %
Operating income 21.1 % 21.3 %
Net interest expense -0.2 % -0.1 %
Earnings before income taxes 20.9 % 21.2 %
Note – Amounts may not foot due to rounding difference.

~~Sales~~

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

Six-month Period
2023 2022
Net sales $ 3,742.2 3,482.6
Percentage change 7.5 % 19.1 %
Business days 128 128
Daily sales $ 29.2 27.2
Percentage Change 7.5 % 18.1 %
Daily sales impact of currency fluctuations -0.5 % -0.3 %

Net sales increased $259.6, or 7.5%, in the first six months of 2023 when compared to the first six months of 2022. The number of business days were the same in both periods. 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, particularly those opened in the last two years, which more than offset lower revenues in construction and reseller end markets related to the execution of our go-to-market branch strategy. Foreign exchange negatively affected sales in the first six months of 2023 by approximately 50 basis points. We estimate that adverse weather reduced our growth by approximately 10 basis points during the six-month period.

The overall impact of product pricing on net sales was 240 to 270 basis points during the first six months of 2023. 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. T~~he impact of product pricing on net sales was 620 to 650 basis points during the first~~ ~~six~~ ~~months of~~ ~~2022~~.

From a product standpoint, we have three categories: fasteners, safety supplies, and other product lines, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools. 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
Six-month Period
% of Sales
Six-month Period
2023 2022 2023 2022
Fasteners 3.4 % 22.8 % 33.1 % 34.4 %
Safety supplies 6.8 % 14.5 % 20.5 % 20.7 %
Other 11.1 % 15.9 % 46.4 % 44.9 %

~~Table of Contents~~

Our end markets consist of manufacturing, non-residential construction, and other, the latter of which includes resellers, government/education, and transportation/warehousing. 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
Six-month Period
% of Sales
Six-month Period
2023 2022 2023 2022
Manufacturing 12.3% 23.5% 74.7% 71.5%
Non-residential construction -5.7% 12.3% 9.2% 10.5%
Other -3.8% 3.9% 16.1% 18.0%

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. Sales to most of our national account customers grew in the first six months of 2023 over the prior year, as our sales grew at 76 of our Top 100 national account 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
Six-month Period
% of Sales
Six-month Period
2023 2022 2023 2022
National Accounts 12.0 % 22.8 % 59.3 % 57.2 %
Non-National Accounts 1.8 % 12.6 % 40.7 % 42.8 %

~~Growth Drivers~~

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

Six-month Period
2023 2022 Change
Weighted FASTBin/FASTVend signings (MEUs) 12,695 10,818 17.4 %
Signings per day 99 85
Weighted FASTBin/FASTVend installations (MEUs; end of period) 107,115 96,872 10.6 %
FASTStock sales $ 474.4 405.8 16.9 %
% of sales 12.5 % 11.5 %
FASTBin/FASTVend sales $ 1,024.3 845.3 21.2 %
% of sales 27.0 % 24.0 %
FMI sales $ 1,498.7 1,251.1 19.8 %
FMI daily sales $ 11.7 9.8 19.8 %
% of sales 39.6 % 35.5 %

~~Daily sales through~~ ~~eCommerce grew 46.5% in the first six months of 2023 and represented 22.6% of our total revenues in the period.~~

~~Our Digital Footprint in the first six months of 2023 represented 54.7% of our sales, an increase from 47.5% of sales in~~ ~~the first~~ ~~six~~ ~~months of 2022.~~

~~Table of Contents~~

~~Gross Profit~~

~~In the first six months of 2023, our gross profit, as a percentage of net sales, declined to 45.6% from 46.5% in the first six months of~~ ~~2022~~. The change in our gross profit percentage primarily reflected four 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, we had higher organizational/overhead costs, primarily due to higher inbound freight costs and working capital needs being relieved from inventory and generating higher period costs. Third, lower product margins in certain of our other products, a result of elevated costs and supply chain normalization for products with lower supply chain visibility, produced some gross profit margin pressure. Fourth, freight expenses were favorable, partially offsetting the negative impacts of mix, organizational/overhead costs, and price/cost. This was from shipping costs related to importing product from overseas suppliers being below prior year levels, the reduced volume of containers being imported from overseas suppliers, and record domestic freight revenue leveraging what are relatively stable costs to support our captive fleet.

~~Operating Income~~

~~Our operating income, as a percentage of net sales, declined to 21.1% in the first six months of 2023 from 21.3% in the first six months of~~ ~~2022. The operating leverage we achieved in the second quarter of 2023 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 24.6% in the first six months of 2023 from 25.3% in the first six months of~~ ~~2022. This is due to a decline, as a percentage of net sales, in payroll-related expenses.~~

Th~~e 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~~	~~Six-month Period~~
		~~2023~~
~~Employee-related expenses~~	~~70% to 75%~~	~~3.4~~	%
~~Occupancy-related expenses~~	~~15% to 20%~~	~~6.3~~	%
~~All other operating and administrative expenses~~	~~10% to 15%~~	~~8.9~~	%

In the first six months of 2023, our employee-related expenses increased when compared to the first six months of 2022. We experienced an increase in employee base pay due to higher average FTE and average wages during the period. Bonus and commission payments decreased reflecting the impact of slower sales and profit growth versus the prior year. We also experienced higher healthcare costs and, to a lesser degree, profit sharing costs.

~~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:
Q2
2023 Q4
2022 Q4
2022
In-market locations (branches & Onsites) 12,380 12,017 3.0 %
Non-in-market selling 2,613 2,459 6.3 %
Selling subtotal 14,993 14,476 3.6 %
Distribution/Transportation 3,053 2,971 2.8 %
Manufacturing 723 696 3.9 %
Organizational support personnel (1)
1,862 1,711 8.8 %
Non-selling subtotal 5,638 5,378 4.8 %
Total 20,631 19,854 3.9 %

~~Table of Contents~~

In the first six months of 2023, our occupancy-related expenses increased when compared to the first six months of 2022. This was primarily related to an increase in expenses for FMI technology to support growth in our business, as well as higher costs to maintain and upgrade facility equipment.

~~Combined, all other operating and administrative expenses increased in the first six months of 2023 when compared to the first six months of~~ ~~2022~~. The increase in other operating and administrative expenses relates primarily to higher spending on information technology, expenses for travel and supplies, and higher general insurance costs. This was partly offset by lower fuel costs related to our local truck fleet.

~~Net Interest Expense~~

~~Our net interest expense was $5.8 in the first six months of 2023, compared to $4.9 in the first six months of~~ ~~2022. This increase was due to slightly lower average borrowings during the period being more than offset by higher average interest rates paid on those borrowings.~~

~~Income Taxes~~

~~We recorded income tax expense of $189.2 in the first six months of 2023, or 24.2% of earnings before income taxes. Income tax expense was $179.8 in the first six months of~~ ~~2022, or 24.4% of earnings before income taxes.~~

~~Net Earnings~~

~~Our net earnings during the first six months of 2023 were $593.1, an increase of 6.6% when compared to the first six months of~~ ~~2022. Our diluted net earnings per share were $1.04 during the first six months of 2023, which increased from $0.96 during the first six months of~~ ~~2022~~.

~~Liquidity and Capital Resources~~

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

Six-month Period
2023 2022 Change
Net cash provided by operating activities $ 690.6 381.2 81.2 %
Percentage of net earnings 116.4 % 68.5 %
Net cash used in investing activities $ 85.2 77.1 10.5 %
Percentage of net earnings 14.4 % 13.8 %
Net cash used in financing activities $ 592.2 285.4 107.5 %

~~Net Cash Provided by Operating Activities~~

Net cash provided by operating activities increased by $309.4 in the first six months of 2023 when compared to the first six months of 2022. The improvement in operating cash flow, as a percent of net earnings, reflects working capital being a reduced use of cash in the first six months of 2023 relative to the first six months of 2022. Global supply chains have normalized versus the prior year, which has reduced the rate of working capital expansion necessary to support our customers' growth.

~~Net Cash Used in Investing Activities~~

~~Net~~ cash used in investing activities increased by $8.1 in the first six months of 2023 when compared to the first six months of 2022. This was primarily due to a slight decline in proceeds from sales of property and equipment in the first six months of 2023 compared to in the first six months of 2022.

During the first six months of 2023, our net capital expenditures were $84.8, which is an increase from $76.5 in the first six months of 2022. During the full year of 2023, we continue to expect our investment in property and equipment, net of proceeds from sales, to be within a range of $210.0 to $230.0, increasing from $162.4 in 2022. This increase for the full year of 2023 reflects primarily: (1) higher property-related spending on upgrades to and investments in automation of certain facilities, the beginning of construction of a distribution center in Utah, and investment in materials to facilitate our branch conversion projects; (2) investments in fleet equipment to support our network of heavy trucks; and (3) an increase in spending on information technology. We expect our spending to trend toward the low end of this range as a result of generally slower business activity.

~~Table of Contents~~

~~Net Cash Used in Financing Activities~~

~~Net cash used in financing activities increased by $306.8 in the first six months of 2023~~ ~~when compared to the first~~ ~~six~~ ~~months of 2022.~~ This is primarily related to a reduction in our debt obligations, versus an increase in our debt obligations in the first six months of 2022, which reflected strong operating cash generation in the period.

During the first six months of 2023, we returned $399.7 to our shareholders in the form of dividends, compared to the first six months of 2022 when we returned $406.2 to our shareholders in the form of dividends ($356.9) and purchases of our common stock ($49.3).

During the first six months of 2023, we did not repurchase any of our common stock. During the first six months of 2022, we purchased 1,000,000 shares of our common stock at an average price of approximately $49.29 per share.

Critical Accounting Policies and Estimates – A discussion of our critical accounting policies and estimates is contained in our ~~2022~~2023 annual report on Form 10-K. There have been no material changes from the critical accounting policies and estimates disclosed in our 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 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, 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, our strategies, goals, mission and vision, our expectations related to future capital expenditures, future investment in property and equipment, 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,~~SG&A expenses, 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 FMI offering or Onsite business models, increased competition in FMI or Onsite, difficulty in maintaining installation quality as our FMI business expands, the leasing to customers of a significant number of additional FMI devices, the failure to meet our goals and expectations regarding branch openings, branch closings, or expansion of our 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~~SG&A expenses, including FTE growth, difficulty in collecting receivables or accurately predicting future inventory needs, dramatic changes in sales trends, changes in supplier production lead times, the rate at which our supply chain normalizes, 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.

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ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET 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~~income and cash flows. We evaluate and manage exposure to these market risks as follows:

~~Foreign currency exchange rates~~Import shipping costs – ~~Foreign currency~~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 ~~net investments,~~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, although the timing of any impact can be affected by the length of our ~~operations~~supply chain, contractually agreed upon rates, or differences in ~~countries other than~~rates between routes. We estimate the U.S., and earnings denominated in foreign currencies. Historically, our primary exchange rate exposure has been with the Canadian dollar against the United States dollar. Our estimated net earnings exposure for foreign currency exchange rates was not material in the first six months of 2023. We have not historically hedged our foreign currency risk given that exposure to date has not been material. In the first six months of 2023, changes in foreign currency exchange rates decreased our reported net sales by $19.9 with the estimated effect on our net ~~earnings being immaterial.~~income related to import shipping costs was a favorable $5.0 to $10.0 in the first quarter of 2024.

Commodity steel ~~pricing~~prices – We buy and sell various types of steel products; these products consist primarily of different types of ~~threaded~~ fasteners and related ~~hardware.~~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 ~~six months~~quarter of ~~2023,~~2024, the price of steel as reflected in many market indexes was at or slightly below the prior year. 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~~income related to commodity steel prices was immaterial in the first ~~six months~~quarter of ~~2023.~~2024.

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 ~~six months~~quarter of ~~2023~~2024 were ~~generally~~at or slightly below the prior year, ~~levels,~~ which contributed to slightly 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, ~~estimated~~we estimate the effect on our net ~~earnings exposure~~income related to ~~changes in~~ commodity energy prices was immaterial in the first ~~six months~~quarter of ~~2023.~~2024.

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 ~~six months~~quarter of ~~2023,~~2024, prices for fossil fuels were generally ~~below~~stable with 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 ~~estimated~~ net ~~earnings exposure for~~income related to materials for which fossil fuels are a feedstock was immaterial in the first ~~six months~~quarter of ~~2023.~~2024.

Foreign currency exchange rates – Foreign currency fluctuations can affect our net investments, our operations in countries other than the U.S., and income denominated in foreign currencies. Our primary exchange rate exposure has traditionally been with the Canadian dollar against the United States dollar, and we have not historically hedged our foreign currency risk given that exposure to date has not been material. Changes in foreign exchange rates were immaterial for the first quarter of 2024.

Interest rates - Loans under our Credit Facility bear interest at floating rates. As a result, changes in 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 one percentage point increase to our floating rate debt in the first ~~six months~~quarter of ~~2023~~2024 would have resulted in approximately ~~$0.5~~$0.1 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 Exchange 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.

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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~~There have been no material changes from the risk 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~~Item 1 A, Risk Fa ctorsof our most recently filed annual report on Form ~~10-K under~~ ~~Forward-Looking Statements~~ ~~and~~ ~~Item 1A – Risk Factors~~.10-K.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The table below sets forth information regarding purchases of our common stock during the ~~second~~first quarter of ~~2023:~~2024:

(a)

(b)

(c)

(d)

(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)

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)

April 1-30, 2023

$0.00

6,200,000

May 1-31, 2023

$0.00

6,200,000

June 1-30, 2023

$0.00

6,200,000

January 1-31, 2024

February 1-29, 2024

March 1-31, 2024

Total

$0.00

6,200,000

Total


(1)			As of ~~June 30, 2023,~~March 31, 2024, we had remaining authority to repurchase 6,200,000 shares under 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 March 31, 2024.

ITEM 6 — EXHIBITS

INDEX TO EXHIBITS


Exhibit Number						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 8-K dated as of April 22, 2019)

3.2						Restated By-Laws of Fastenal Company dated as of February 2, 2024 (incorporated by reference to Exhibit 3.2 to Fastenal Company's ~~Form 8-K dated as of January 17, 2019)~~10-K for fiscal year ended December 31, 2023)

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						The following financial statements from the ~~Quarterly Report~~quarterly report on Form 10-Q for the quarter ended ~~June 30, 2023,~~March 31, 2024, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of ~~Earnings,~~Income, (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.

104						The cover page from the ~~Quarterly Report~~quarterly report on Form 10-Q for the quarter ended ~~June 30, 2023,~~March 31, 2024, formatted in Inline XBRL.

2623

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		FASTENAL COMPANY


Date: ~~July 18, 2023~~April 16, 2024	By:	/s/ Holden Lewis
		Holden Lewis
		Senior Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)



Date: ~~July 18, 2023~~April 16, 2024	By:	/s/ Sheryl A. Lisowski
		Sheryl A. Lisowski
		Executive Vice President - Chief Accounting Officer and Treasurer
		(Duly Authorized Officer and Principal Accounting Officer)

2724


		Page
PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of ~~Earnings~~Income	2

	Condensed Consolidated Statements of Comprehensive Income	3

	Condensed Consolidated Statements of Stockholders' Equity	4

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	6

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

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2522

ITEM 4.	CONTROLS AND PROCEDURES	2522

PART II	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	2623

ITEM 1A.	RISK FACTORS	2623

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2623

ITEM 5.	OTHER INFORMATION	23

ITEM 6.	EXHIBITS	2623


	DSR Change Six-month Period				% of Sales Six-month Period
	2023		2022		2023		2022
Fasteners	3.4	%	22.8	%	33.1	%	34.4	%
Safety supplies	6.8	%	14.5	%	20.5	%	20.7	%
Other	11.1	%	15.9	%	46.4	%	44.9	%