What changed in this filing

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Item 1. Financial Statements

2024-04-16 compared with 2023-10-17 · 81 added, 91 removed, 256 unchanged (40% of the section changed)

3 unchanged sentences

(Amounts in millions except share information)

Assets September 30,

Assets March 31,

2024 December 31,

17 unchanged sentences

Current portion of operating lease liabilities 97.4 96.2

Income taxes payable 57.0 —

Total current liabilities 637.9 661.3

15 unchanged sentences

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(Amounts in millions except earnings per share)

(Unaudited) (Unaudited)

Nine Months Ended

September 30, Three Months Ended

September 30,

2023 2022 2023 2022

Condensed Consolidated Statements of Income

(Amounts in millions except income per share)

Three Months Ended

Net sales $ 1,895.1 1,859.1

1 unchanged sentence

Gross profit 861.6 850.0

Operating and administrative expenses 1,380.2 1,326.7 460.9 447.3

Selling, general, and administrative expenses 471.4 456.8

Operating income 390.2 393.2

1 unchanged sentence

Interest expense ( 2.0 ) ( 3.9 )

Earnings before income taxes 1,167.8 1,111.8 385.4 375.3

Income before income taxes 389.8 389.7

Income tax expense 92.1 94.6

Net earnings $ 888.6 841.3 $ 295.5 284.6

Basic net earnings per share $ 1.56 1.46 $ 0.52 0.50

Diluted net earnings per share $ 1.55 1.46 $ 0.52 0.50

Net income $ 297.7 295.1

Basic net income per share $ 0.52 0.52

Diluted net income per share $ 0.52 0.52

Basic weighted average shares outstanding 572.3 570.9

4 unchanged sentences

(Amounts in millions)

(Unaudited) (Unaudited)

Nine Months Ended

September 30, Three Months Ended

September 30,

2023 2022 2023 2022

Net earnings $ 888.6 841.3 $ 295.5 284.6

Other comprehensive loss, net of tax:

Three Months Ended

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)

( 6.7 ) ( 56.4 ) ( 14.6 ) ( 32.7 )

Comprehensive income $ 285.8 299.4

3 unchanged sentences

(Amounts in millions except per share information)

(Unaudited) (Unaudited)

Nine Months Ended

September 30, Three Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended

Balance at beginning of period $ 5.7 5.7

3 unchanged sentences

Stock options exercised 15.8 5.9

Purchases of common stock — ( 105.6 ) — ( 56.3 )

Stock-based compensation 2.0 1.9

2 unchanged sentences

Balance at beginning of period 3,356.9 3,218.7

Net earnings 888.6 841.3 295.5 284.6

Net income 297.7 295.1

Cash dividends paid ( 223.2 ) ( 199.8 )

Translation adjustment upon merger of foreign subsidiary — 0.9 — —

Purchases of common stock — ( 39.0 ) — ( 39.0 )

Balance at end of period 3,431.4 3,314.0

Accumulated other comprehensive loss

Accumulated other comprehensive (loss) income

Balance at beginning of period ( 54.8 ) ( 64.8 )

Other comprehensive loss ( 6.7 ) ( 56.4 ) ( 14.6 ) ( 32.7 )

Other comprehensive (loss) income ( 11.9 ) 4.3

Balance at end of period ( 66.7 ) ( 60.5 )

5 unchanged sentences

(Amounts in millions)

(Unaudited) (Unaudited)

Nine Months Ended

September 30, Three Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended

Cash flows from operating activities:

Net earnings $ 888.6 841.3 $ 295.5 284.6

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

Net income $ 297.7 295.1

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

Depreciation of property and equipment 40.2 41.8

(Gain) loss on sale of property and equipment ( 2.7 ) 1.2 ( 1.5 ) ( 1.1 )

Bad debt expense (recoveries) 1.4 ( 0.9 ) 1.2 ( 1.3 )

Gain on sale of property and equipment ( 0.6 ) ( 0.6 )

Bad debt recoveries ( 0.9 ) ( 1.4 )

Deferred income taxes 0.8 0.3

19 unchanged sentences

Proceeds from exercise of stock options 15.8 5.9

Purchases of common stock — ( 144.6 ) — ( 95.3 )

Cash dividends paid ( 223.2 ) ( 199.8 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 4.0 ) 1.1

Net increase (decrease) in cash and cash equivalents 67.4 ( 4.7 ) 53.9 ( 16.4 )

Net increase in cash and cash equivalents 15.8 9.7

Cash and cash equivalents at beginning of period 221.3 230.1

8 unchanged sentences

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

September 30, 2023 and 2022

March 31, 2024 and 2023

(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.

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 all new accounting pronouncements that are in effect and that may impact our 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.

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 income tax disclosure requirements in addition to modifying and 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 for periods beginning after the effective date.

However, retrospective application in all prior periods presented is permitted.

Revenue Recognition

8 unchanged sentences

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.

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

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

2023 2022 2023 2022

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

United States $ 1,578.9 1,558.7

7 unchanged sentences

Total revenues $ 1,895.1 1,859.1

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

September 30, 2023 and 2022

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

Nine-month Period Three-month Period

2023 2022 2023 2022

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

Three-month Period

Manufacturing 75.0 % 74.6 %

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 2024 2023

11 unchanged sentences

100.0 % 100.0 %

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

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

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

(3) Stockholders' Equity

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

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:

3 unchanged sentences

Fourth quarter 0.35

Fourth quarter (special) 0.38

Total $ 0.78 $ 1.78

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

September 30, 2023 and 2022

Stock Options

The following tables summarize the details of options granted under our stock option plans that were outstanding as of September 30, 2023, and the assumptions used to value those grants.

The following tables summarize the details of options granted under our stock option plans that were outstanding as of 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.

1 unchanged sentence

Price Closing Stock Price on Date

of Grant September 30, 2023

of Grant March 31, 2024

Date of Grant Options

7 unchanged sentences

January 2, 2018 1,087,936 $ 27.50 $ 27.270 478,526 401,032

January 3, 2017 1,529,578 $ 23.50 $ 23.475 384,629 340,307

April 19, 2016 1,690,880 $ 23.00 $ 22.870 167,712 111,980

1 unchanged sentence

Total 11,655,824 5,177,879 2,520,144

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

Date of Grant Risk-free

11 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

9 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, 2023 and 2022 was $ 5.6 and $ 4.4 , respectively, while the third quarter of 2023 and 2022 was $ 1.8 and $ 1.4 , respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of September 30, 2023 was $ 18.6 and is expected to be recognized over a weighted average period of 4.31 years.

The stock-based compensation expense for the three-month periods ended March 31, 2024 and 2023 was $ 2.0 and $ 1.9 , respectively.

Unrecognized stock-based compensation expense related to outstanding unvested stock options as of March 31, 2024 was $ 24.8 and is expected to be recognized over a weighted average period of 4.62 years.

Any future changes in estimated forfeitures will impact this amount.

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

September 30, 2023 and 2022

Earnings Per Share

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

Nine-month Period Three-month Period

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

2 unchanged sentences

Diluted weighted average shares outstanding 574,090,707 572,632,589

Nine-month Period Three-month Period

Three-month Period

Summary of Anti-dilutive Options Excluded 2024 2023

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.

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

(4) Income Taxes

1 unchanged sentence

We are no longer subject to income tax examinations by taxing authorities for taxable years before 2020 in the case of United States federal examinations, and with limited exception, before 2018 in the case of foreign, state, and local examinations.

During the third quarter of 2023, the liability for unrecognized tax benefits decreased $ 3.9 due to the lapse of statute of limitations, of which, $ 3.8 impacted the effective tax rate.

There were no material changes in unrecognized tax benefits during the first half of 2023.

During the first quarter of 2024, there were no material changes in unrecognized tax benefits.

(5) Operating Leases

2 unchanged sentences

We believe the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is remote.

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

September 30, 2023 and 2022

(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, 2023

Average Interest Rate at March 31, 2024

Debt Outstanding

Date September 30,

Date March 31,

2024 December 31,

3 unchanged sentences

Senior unsecured promissory notes payable, Series E 2.72 % May 15, 2027 50.0 50.0

Senior unsecured promissory notes payable, Series F 1.69 % June 24, 2023 — 70.0

Senior unsecured promissory notes payable, Series G 2.13 % June 24, 2026 25.0 25.0

13 unchanged sentences

This fee is either 0.10 % or 0.125 % per annum based on our usage of the Credit Facility.

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

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 as of September 30, 2023.

We have issued senior unsecured promissory notes under our master note agreement (the Master Note Agreement) in the aggregate principal amount of $ 200.0 as of March 31, 2024.

Our aggregate borrowing capacity under the Master Note Agreement is $ 900.0 ;

5 unchanged sentences

The nature of our potential exposure to legal contingencies is described in our 2023 annual report on Form 10-K in Note 10 of the Notes to Consolidated Financial Statements.

As of September 30, 2023, there were no litigation matters that we consider to be probable or reasonably possible to have a material adverse outcome.

FASTENAL COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

September 30, 2023 and 2022

As of March 31, 2024, there were no litigation matters that we consider to be probable or reasonably possible to have a material adverse outcome.

(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