fast-20230630

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, 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, there were approximately 571,333,004 shares of the registrant's common stock outstanding.

Table of Contents

FASTENAL COMPANY

INDEX


		Page
PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Earnings	2

	Condensed Consolidated Statements of Comprehensive Income	3

	Condensed Consolidated Statements of Stockholders' Equity	4

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	6

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

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25

ITEM 4.	CONTROLS AND PROCEDURES	25

PART II	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	26

ITEM 1A.	RISK FACTORS	26

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26

ITEM 6.	EXHIBITS	26

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
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
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
Operating lease right-of-use assets	263.7		243.0
Other assets	165.8		170.8

Total assets	$	4,576.8	4,548.6

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
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		5.7
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

(Amounts in millions except earnings per share)


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

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

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

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

Earnings before income taxes	782.3		736.5	392.6		380.7

Income tax expense	189.2		179.8	94.6		93.6

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 weighted average shares outstanding	571.0		575.5	571.1		575.5

Diluted weighted average shares outstanding	572.8		577.5	572.9		577.4

See accompanying Notes to Condensed Consolidated Financial Statements.

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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

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
Common stock
Balance at beginning of period	$	5.7	5.8	$	5.7	5.8
Balance at end of period	5.7		5.8	5.7		5.8
Additional paid-in capital
Balance at beginning of period	3.6		96.2	11.4		101.6
Stock options exercised	12.5		5.8	6.6		1.9
Purchases of common stock	—		(49.3)	—		(49.3)
Stock-based compensation	3.8		3.0	1.9		1.5
Balance at end of period	19.9		55.7	19.9		55.7
Retained earnings
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
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	3,412.1		3,171.6	3,412.1		3,171.6
Accumulated other comprehensive income (loss)
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 end of period	(56.9)		(54.4)	(56.9)		(54.4)
Total stockholders' equity	$	3,380.8	3,178.7	$	3,380.8	3,178.7

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

See accompanying Notes to Condensed Consolidated Financial Statements.

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FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Amounts in millions)


	(Unaudited)			(Unaudited)
	Six Months Ended June 30,			Three Months Ended June 30,
	2023		2022	2023		2022
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:
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
Deferred income taxes	0.6		0.5	0.3		(0.5)
Stock-based compensation	3.8		3.0	1.9		1.5
Amortization of intangible assets	5.4		5.4	2.7		2.7
Changes in operating assets and liabilities:
Trade accounts receivable	(155.0)		(209.3)	(21.3)		(39.4)
Inventories	145.6		(150.6)	87.9		(74.2)
Other current assets	23.7		58.9	(21.7)		(1.8)
Accounts payable	9.9		58.7	1.4		1.9
Accrued expenses	(11.3)		(29.6)	0.6		0.5
Income taxes	(6.6)		2.0	(90.5)		(67.6)
Other	(1.6)		0.4	(0.4)		0.3
Net cash provided by operating activities	690.6		381.2	302.1		151.2

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

Cash flows from financing activities:
Proceeds from debt obligations	635.0		695.0	405.0		460.0
Payments against debt obligations	(840.0)		(580.0)	(455.0)		(320.0)
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	(399.7)		(356.9)	(199.9)		(178.5)
Net cash used in financing activities	(592.2)		(285.4)	(243.3)		(85.9)

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

SEC Form 10-Q filed by Fastenal Company