What changed in this filing

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Item 1. Financial Statements

2022-04-18 compared with 2021-10-15 · 53 added, 78 removed, 283 unchanged (32% of the section changed)

3 unchanged sentences

(Amounts in millions except share information)

Assets September 30,

Assets March 31,

2022 December 31,

2 unchanged sentences

Trade accounts receivable, net of allowance for credit losses of $ 10.9 and $ 12.0 , respectively

1,071.6 900.2

Inventories 1,600.8 1,523.6

12 unchanged sentences

Current portion of operating lease liabilities 91.3 90.8

Income taxes payable 61.1 —

Total current liabilities 745.5 682.2

16 unchanged sentences

(Amounts in millions except earnings per share)

(Unaudited) (Unaudited)

Nine Months Ended

September 30, Three Months Ended

September 30,

2021 2020 2021 2020

Three Months Ended

Net sales $ 1,704.1 1,417.0

16 unchanged sentences

(Amounts in millions)

(Unaudited) (Unaudited)

Nine Months Ended

September 30, Three Months Ended

September 30,

2021 2020 2021 2020

Three Months Ended

Net earnings $ 269.6 210.6

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments (net of tax of $ 0.0 in 2022 and 2021)

( 8.4 ) ( 3.4 ) ( 10.8 ) 11.1

Comprehensive income $ 271.9 206.2

3 unchanged sentences

(Amounts in millions except per share information)

(Unaudited) (Unaudited)

Nine Months Ended

September 30, Three Months Ended

September 30,

2021 2020 2021 2020

Three Months Ended

Balance at beginning of period $ 5.8 5.7

3 unchanged sentences

Stock options exercised 3.9 6.6

Purchases of common stock — ( 52.0 ) — —

Stock-based compensation 1.5 1.5

4 unchanged sentences

Dividends paid in cash ( 178.4 ) ( 160.8 )

Translation adjustment upon merger of foreign subsidiary 0.9 —

Balance at end of period 3,063.0 2,739.4

Accumulated other comprehensive (loss) income

Accumulated other comprehensive income (loss)

Balance at beginning of period ( 30.7 ) ( 21.2 )

Other comprehensive (loss) income ( 8.4 ) ( 3.4 ) ( 10.8 ) 11.1

Other comprehensive income (loss) 2.3 ( 4.4 )

Balance at end of period ( 28.4 ) ( 25.6 )

5 unchanged sentences

(Amounts in millions)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net earnings $ 269.6 210.6

Adjustments to reconcile net earnings to net cash provided by operating activities, net of acquisition:

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation of property and equipment 41.2 39.3

Gain on sale of property and equipment ( 1.1 ) ( 1.1 )

Loss (gain) on sale of property and equipment 3.5 ( 0.6 )

Bad debt expense ( 0.3 ) ( 0.1 )

2 unchanged sentences

Amortization of intangible assets 2.7 2.7

Changes in operating assets and liabilities, net of acquisition:

Changes in operating assets and liabilities:

Trade accounts receivable ( 169.9 ) ( 82.1 )

9 unchanged sentences

Proceeds from sale of property and equipment 2.4 2.7

Cash paid for acquisition — ( 125.0 )

Other ( 0.1 ) 0.1

Net cash used in investing activities ( 33.2 ) ( 29.9 )

3 unchanged sentences

Proceeds from exercise of stock options 3.9 6.6

Purchases of common stock — ( 52.0 )

Payments of dividends ( 178.4 ) ( 160.8 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents 0.7 ( 2.5 )

Net increase in cash and cash equivalents 4.8 156.9

Net (decrease) increase in cash and cash equivalents ( 2.0 ) 88.2

Cash and cash equivalents at beginning of period 236.2 245.7

8 unchanged sentences

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

September 30, 2021 and 2020

March 31, 2022 and 2021

(1) Basis of Presentation

5 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Impact of COVID-19

The COVID-19 pandemic has likely influenced various trends the company is currently experiencing.

These include supply chain disruptions and labor shortages, the presence of certain pandemic-specific personal protective equipment (PPE) in our inventory (although certain categories such as 3-ply masks are depleting quickly), and a modest shift in our mix to include more safety products and government customers.

Evaluating the third quarter of 2021 is challenging given the dramatic impacts of the pandemic on the company in the year-earlier period.

However, in contrast to much of the preceding 12 to 18 months, we are currently seeing a narrower impact on our business related directly to the COVID-19 pandemic, as economic activity has recovered and customer and product mix has reverted back to close to pre-pandemic levels.

We believe current financial results are more reflective of traditional economic and marketplace dynamics than of pandemic-related issues such as facility restrictions, labor force illness, and PPE demand.

The primary exception to this normalization trend is in the signings of our Onsite and Fastenal Managed Inventory (FMI), which have yet to recover to pre-pandemic levels.

To the extent that COVID infections increase, as they did through the third quarter of 2021, this can, and is, either directly impacting or indirectly influencing access to customer facilities and decision-makers, and lengthens the sales cycle for certain of our solutions.

However, it is possible the COVID-19 pandemic, particularly in light of variant strains of the virus, could further impact our operations and the operations of our suppliers and vendors as a result of quarantines, facility closures, illnesses, and travel and logistics restrictions.

The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the resumption of high levels of infection and hospitalization, the resulting impact on our customers, suppliers, and vendors, the remedial actions and stimulus measures adopted by federal, state, and local governments, and to what extent normal economic and operating conditions are impacted.

The Company cannot reasonably estimate the future impact at this time.

Immaterial Revision

The prior period balances for additional paid-in capital and common stock have been updated in the Condensed Consolidated Statements of Stockholders' Equity to reflect the impact of an immaterial correction which reclassified $ 2.9 from additional paid-in capital to common stock in connection with the 2019 stock split.

Recently Issued Accounting Pronouncements

3 unchanged sentences

The guidance was effective upon issuance and may be applied prospectively to contract modifications made, hedging relationships entered into, and other transactions affected by reference rate reform, evaluated on or before December 31, 2022, beginning during the reporting period in which the guidance has been elected.

We do not have any receivables, hedging relationships, or lease agreements that reference LIBOR or another reference rate expected to be discontinued.

We are currently evaluating the impact of the new guidance on our condensed consolidated financial statements;

6 unchanged sentences

We recognize revenue by transferring 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

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

September 30, 2021 and 2020

by the customer.

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.

3 unchanged sentences

Revenues are attributable to countries based on the selling location from which the sale occurred.

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, 2022 and 2021

Disaggregation of Revenue

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

Nine-month Period Three-month Period

2021 2020 2021 2020

Our revenues related to the following geographic areas were as follows for the periods ended March 31:

Three-month Period

United States $ 1,431.7 1,187.8

3 unchanged sentences

Total revenues $ 1,704.1 1,417.0

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

Nine-month Period Three-month Period

2021 2020 2021 2020

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

Three-month Period

Manufacturing 71.2 % 68.0 %

2 unchanged sentences

100.0 % 100.0 %

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

Nine-month Period Three-month Period

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

Three-month Period

Type Introduced 2022 2021

13 unchanged sentences

(3) Stockholders' Equity

On October 11, 2021, our board of directors declared a quarterly dividend of $ 0.28 per sh a re of common stock to be paid in cash on November 23, 2021 to shareholders of record at the close of business on October 26, 2021.

Since 2011, we have paid

On April 12, 2022, our board of directors declared a quarterly dividend of $ 0.31 per share of common stock to be paid in cash on May 25, 2022 to shareholders of record at the close of business on April 27, 2022.

Since 2011, we have paid quarterly cash dividends, and in 2020, we paid a special cash dividend late in the year.

Our board of directors currently intends to continue paying quarterly cash dividends, provided that any future determination as to payment of dividends will depend on the financial condition and results of operations of the company and such other factors as are deemed relevant by the board of directors.

FASTENAL COMPANY AND SUBSIDIARIES

1 unchanged sentence

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

September 30, 2021 and 2020

quarterly cash dividends, and in 2020, we paid a special cash dividend late in the year.

March 31, 2022 and 2021

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:

3 unchanged sentences

Fourth quarter $ 0.28

Fourth quarter (special) $ 0.40

Total $ 0.62 $ 1.12

Stock Options

The following tables summarize the details of options granted under our stock option plans that were outstanding as of September 30, 2021, and the assumptions used to value these grants.

The following tables summarize the details of options granted under our stock option plans that were outstanding as of March 31, 2022, and the assumptions used to value these grants.

All such grants were effective at the close of business on the date of grant.

1 unchanged sentence

(Strike) Price Closing Stock Price on Date

of Grant September 30, 2021

of Grant March 31, 2022

Date of Grant Options

5 unchanged sentences

January 2, 2018 1,087,936 $ 27.50 $ 27.270 712,852 435,272

January 3, 2017 1,529,578 $ 23.50 $ 23.475 706,446 542,046

April 19, 2016 1,690,880 $ 23.00 $ 22.870 520,571 330,717

14 unchanged sentences

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

7 unchanged sentences

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

September 30, 2021 and 2020

March 31, 2022 and 2021

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.

5 unchanged sentences

Compensation expense equal to the grant date fair value is recognized for all of these awards over the vesting period.

The stock-based compensation expense for the nine-month periods ended September 30, 2021 and 2020 was $ 4.3 and $ 4.3 , respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of September 30, 2021 was $ 14.0 and is expected to be recognized over a weighted average period of 4.11 years.

The stock-based compensation expense for the three-month periods ended March 31, 2022 and 2021 was $ 1.5 and $ 1.5 , respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of March 31, 2022 was $ 18.5 and is expected to be recognized over a weighted average period of 4.56 years.

Any future changes in estimated forfeitures will impact this amount.

1 unchanged sentence

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

Nine-month Period Three-month Period

Three-month Period

Reconciliation 2022 2021

2 unchanged sentences

Diluted weighted average shares outstanding 577,618,806 576,546,969

Nine-month Period Three-month Period

Three-month Period

Summary of Anti-dilutive Options Excluded 2022 2021

2 unchanged sentences

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.

Translation Adjustment Upon Merger of Foreign Subsidiary

For the three months ended March 31, 2022, we recognized $ 0.9 of historical cumulative translation to retained earnings upon the merger of a foreign subsidiary.

(4) Income Taxes

1 unchanged sentence

We are no longer subject to income tax examinations by taxing authorities for taxable years before 2018 in the case of United States federal examinations, and with limited exceptions, before 2016 in the case of foreign, state, and local examinations.

During the first nine months of 2021, there were no material changes in unre cognized tax benefits.

During 2020, we deferred approxim ately $ 30.0 in payroll taxes as allowed under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), which was signed into law in March 2020 to help businesses navigate COVID-19 related challenges .

The deferred payroll taxes were paid during the third quarter of 2021.

During the first quarter of 2022, there were no material changes in unrecognized tax benefits.

(5) Operating Leases

5 unchanged sentences

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

September 30, 2021 and 2020

March 31, 2022 and 2021

(6) Debt Commitments

1 unchanged sentence

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

Average Interest Rate at September 30, 2021

Average Interest Rate at March 31, 2022

Debt Outstanding

Date September 30,

Date March 31,

2022 December 31,

Unsecured revolving credit facility 1.40 % November 30, 2023 $ — 25.0

Senior unsecured promissory notes payable, Series A 2.00 % July 20, 2021 — 40.0

Senior unsecured promissory notes payable, Series B 2.45 % July 20, 2022 35.0 35.0

19 unchanged sentences

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 $ 365.0 as of September 30, 2021.

We have issued senior unsecured promissory notes under our master note agreement (the Master Note Agreement) in the aggregate principal amount of $ 365.0 as of March 31, 2022.

Our aggregate borrowing capacity under the Master Note Agreement is $ 600.0 ;

5 unchanged sentences

The nature of our potential exposure to legal contingencies is described in our 2021 annual report on Form 10-K in Note 10 of the Notes to Consolidated Financial Statements.

As of September 30, 2021, there were no litigation matters that we consider to be probable or reasonably possible to have a material adverse outcome.

As of March 31, 2022, there were no litigation matters that we consider to be probable or reasonably possible to have a material adverse outcome.

FASTENAL COMPANY AND SUBSIDIARIES

1 unchanged sentence

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

September 30, 2021 and 2020

March 31, 2022 and 2021

(8) Subsequent Events

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements