Fastenal Co 10-K/A, filed Feb 10, 2022
Fastenal Co (FAST)
10-K/A
2022-02-10
For: 2021-12-31
View Original
Added on
April 12, 2026
About this 10-K/A
Fastenal Co filed this 10-K/A on February 10, 2022, covering the fiscal year ended December 31, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________________
FORM 10-K/A
(Amendment No. 1)
(Mark One)
| Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the fiscal year ended December 31, 2021
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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(507 ) 454-5374
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act Yes o No x
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 x No o
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 x No o
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.
| x | 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. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No x
The aggregate market value of the Common Stock held by non-affiliates of the registrant as of June 30, 2021, the last business day of the registrant's most recently completed second fiscal quarter, was $29,835,146,952 , based on the closing price of the registrant's Common Stock on that date. For purposes of determining this number, all executive officers and directors of the registrant as of June 30, 2021 are considered to be affiliates of the registrant. This number is provided only for the purposes of this report on Form 10-K and does not represent an admission by either the registrant or any such person as to the status of such person.
As of January 21, 2022, the registrant had 575,550,072 shares of Common Stock issued and outstanding.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (this "Amendment") amends the original report on Form 10-K for the fiscal year ended December 31, 2021 filed by Fastenal Company (the "Company") on February 7, 2022 (the "Original Filing"). The sole purpose of this Amendment is (i) to include the Company's 2021 Annual Report to Shareholders (the "Annual Report") as Exhibit 99.1 in the Exhibit Index, which was omitted from the Exhibit Index to the Original Filing and (ii) to change Exhibit 10.4 to refer to the Company's Non-Employee Director Stock Option Plan, as amended and restated effective December 20, 2021. The Annual Report shall be deemed furnished, not filed, with the Securities and Exchange Commission in its entirety as no portions thereof are expressly incorporated by reference into the Original Filing.
Except as described above, this Amendment does not amend, update or change any other items or disclosures contained in the Original Filing, and accordingly, this Amendment does not reflect or purport to reflect any information or events occurring after the original filing date or modify or update those disclosures affected by subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Filing and the Company's other filings with the Securities and Exchange Commission.
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, this Amendment also includes as exhibits the certifications of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Because no financial statements have been included in this Amendment and this Amendment does not contain or amend any disclosure with respect to Items 307 and 308 of Regulation S-K, paragraphs 3, 4, and 5 have been omitted from such certifications. The Company is not including certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as no financial statements are being filed with this Amendment.
ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| a) | 1. Financial Statements: | ||||
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Earnings for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (KPMG LLP , Minneapolis, MN , Auditor Firm ID: 185 )
2. Financial Statement Schedules: | |||||
Schedule II—Valuation and Qualifying Accounts
3. Exhibits: | |||||
INDEX TO EXHIBITS
| Exhibit Number | Description of Document | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 4.1 | ||||||||
| 4.2 | ||||||||
| 4.3 | ||||||||
| 4.4 | ||||||||
| 4.5 | ||||||||
| 4.6 | ||||||||
| 4.7 | ||||||||
| 4.8 | ||||||||
| 10.1 | ||||||||
| 10.2 | ||||||||
| 10.3 | ||||||||
| 10.4 | ||||||||
| 10.5 | ||||||||
| 10.6 | ||||||||
| 10.7 | ||||||||
| Exhibit Number | Description of Document | |||||||
| 10.8 | ||||||||
| 10.9 | ||||||||
| 10.10 | ||||||||
| 10.11 | ||||||||
| 21 | ||||||||
| 23 | ||||||||
| 31 | ||||||||
| 31.3 | ||||||||
| 31.4 | ||||||||
| 32 | ||||||||
| 99.1 | ||||||||
| 101 | The following financial statements from the Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Earnings, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. | |||||||
| 104 | The cover page from the Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL. | |||||||
* Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 15(b).
Pursuant to the requirements of Section 13 or 15(d) 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.
| Date: | February 10, 2022 | |||||||
| FASTENAL COMPANY | ||||||||
| By | /s/ Holden Lewis | |||||||
| Holden Lewis, Executive Vice President and Chief Financial Officer | ||||||||
Exhibit 10.4
FASTENAL COMPANY
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(As amended and restated effective December 20, 2021)
This Plan is adopted and made by Fastenal Company, a Minnesota corporation with principal offices at Winona, Minnesota (the “Company”), for the benefit of the Non-Employee Directors of the Company.
1. Purpose.
The Fastenal Company Non-Employee Director Stock Option Plan (the “Plan”) is intended to more closely align the interests of the Company’s Non-Employee Directors with those of the Company’s shareholders by allowing for the grant of equity-based compensation to Non-Employee Directors in the form of options to acquire shares of the Company’s common stock and to enable each of the Company’s Non-Employee Directors to elect to receive awards of options to acquire shares of the Company’s common stock in lieu of some or all of the annual cash payments that the Director would otherwise be entitled to receive for service on the Company’s Board.
2. Definitions.
(a) “Administrator” means the Board or the committee appointed by the Board to administer the Plan, as specified in Section 10.
(b) “Board” means the Board of Directors of the Company.
(c) “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time. For purposes of the Plan, references to Sections of the Code shall be deemed to include any applicable regulations or interpretations thereunder and any successor or similar statutory provisions.
(d) “Company” means Fastenal Company, a Minnesota corporation, and any successor corporation.
(e) “Common Stock” means the Company’s $.01 par value common stock.
(f) “Employee” means an employee of the Company or a Subsidiary.
(g) “Exercise Price” means the specified price at which Shares subject to an Option may be purchased.
(h) “Fair Market Value” means the fair market value of a Share determined as follows:
(1) If the Shares are readily tradable on an established securities market (as determined under Code Section 409A), then Fair Market Value will be the closing sales price for a Share on the principal securities market on which it trades on the date for which it is being determined, or if no sale of Shares occurred on that date, on the next preceding date on which a sale of Shares occurred, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
(2) If the Shares are not then readily tradable on an established securities market (as determined under Code Section 409A), then Fair Market Value will be determined by the Administrator as the result of a reasonable application of a reasonable valuation method that satisfies the requirements of Code Section 409A.
(i) “Non-Employee Director” means a member of the Board who is not an Employee.
(j) “Option” means a right granted under the Plan to purchase a specified number of Shares at a specified price during a specified period of time. Each Option granted under the Plan will be a non-qualified stock option not intended to satisfy the requirements of Code Section 422.
(k) “Participant” means an individual to whom a then-outstanding Option has been granted under the Plan.
(l) “Reorganization” means a statutory merger, statutory consolidation or statutory share exchange involving the Company, a sale of all or substantially all of the assets of the Company, or a sale, pursuant to an agreement with the Company, of securities of the Company, any of which results in the Company not being the surviving or acquiring company, or in the Company becoming a wholly-owned subsidiary of another company after the effective date of the Reorganization.
(m) “Share” means a share of Common Stock, or such other securities or property as may become subject to an Option in lieu of or in addition to a Share pursuant to an adjustment as provided under Section 8 of the Plan.
(n) “Subsidiary” means a subsidiary corporation of the Company as defined in Section 424 of the Code.
3. Shares Subject to Options.
The aggregate number of authorized and unissued Shares for which Options may be granted and which may be purchased upon the exercise of Options granted under the Plan shall not exceed 5,000,000 (adjusted to reflect the two-for-one stock split effected in May 2019), subject to adjustment under the provisions of Section 8. In the event any Option shall, for any reason, terminate or expire or be forfeited or surrendered without having been exercised in full, the Plan’s share reserve as specified in the preceding sentence shall correspondingly be replenished. If the elections by Participants pursuant to Section 5 for any calendar year would otherwise involve a number of Shares that would exceed the number of Shares then available in the Plan’s share reserve, the Administrator will allocate to each Participant a ratable portion of the remaining number of Shares in the Plan’s share reserve, and the resulting Option awards shall be adjusted accordingly.
4. Participants.
All Non-Employee Directors shall be eligible to participate in the Plan. Non-Employee Directors who have received an Option award under the Plan and/or who timely elect to participate in accordance with Section 5 shall be Participants in the Plan.
5. Election to Receive an Option in Lieu of Cash.
(a) Making an Election. On or before any November 20, each Non-Employee Director may elect to receive an Option award under the Plan in lieu of some or all of certain cash payment amounts as specified by the Administrator (the “Annual Cash Payment”) that such Director would otherwise be entitled to receive for services as a Non-Employee Director of the Company during the calendar year commencing after the effective date of such election (an “Election”). A Non-Employee Director may elect to receive an Option award in lieu of any ten percent increment of an Annual Cash Payment amount between 10% and 100% of such payment amount. Any such Election shall be made by completing, signing and submitting to the Company the Election form approved for such purpose by the Administrator, and will be effective with respect to the Annual Cash Payment otherwise payable for services as a Non-Employee Director performed during the calendar year commencing after the completion of the Election. An Election must be made with respect to each calendar year by completing the Election form provided by the Administrator prior to end of the immediately preceding calendar year, and once an Election becomes effective as of the first day of a calendar year, such election shall be irrevocable for that calendar year,
(b) Grants Pursuant to an Election. For each calendar year during the term of this Plan and pursuant to the Election form, such Director will be granted an Option award hereunder on the date(s) specified by the Administrator during such calendar year (each, a “Grant Date”) on which some or all of the Annual Cash Payment would have been paid to the Non-Employee Director but for such Election.
6. Grant of Option Awards.
In addition to Options granted in connection with Elections made by Non-Employee Directors pursuant to Section 5, the Administrator has the authority to grant Options to Non-Employee Directors, at such times (each such date of grant, also a “Grant Date”), in such amounts and with such terms, provisions and conditions as it shall determine in its sole discretion. Each Option award pursuant to the Plan will be evidenced by a grant notification in the form approved by the Administrator (the “Grant Notification”).
7. Terms and Conditions of Option Awards. All Option awards granted under the Plan shall be subject to the following terms and conditions:
(a) Number of Option Shares. The number of Shares subject to each Option award will be determined: (i) by the Administrator with respect to Option awards granted by the Administrator not pursuant to an Election, and (ii) with respect to Option awards granted pursuant to an Election, by dividing (A) the portion of the Annual Cash Payment that a Participant would have received in cash on the Grant Date but for the Election by (B) the Black-Scholes value as of the Grant Date of each Share subject to the Option award, and rounding down to the nearest whole number.
(b) Exercise Price. The per Share Exercise Price of each Option award shall be determined and stated by the Administrator at the time of grant, but shall not be less than the Fair Market Value of a Share on the Grant Date of the Option award.
(c) Vesting and Exercisability. (i) With respect to Option awards granted pursuant to an Election, each such Option award will be fully vested and exercisable on its Grant Date; and (ii) with respect to Option awards granted by the Administrator not pursuant to an Election, each such Option award will have such vesting conditions and timing as the Administrator may determine.
(d) Period of Option. The expiration date with respect to each Option award shall be determined and stated by the Administrator at the time of grant.
(e) Transferability of Option Awards. During the lifetime of a Participant, only the Participant or the Participant’s guardian or legal representative may exercise an Option, and no Option may be sold, assigned, transferred, exchanged or encumbered, voluntarily or involuntarily, other than by will or the laws of descent and distribution. Any attempted transfer in violation of this Section 7(e) shall be of no effect. Any Option award held by a permitted transferee shall continue to be subject to the same terms and conditions that were applicable to that award immediately before the transfer thereof. For purposes of any provision of the Plan relating to notice to a Participant or to expiration of an Option upon termination of service of a Participant, the references to “Participant” shall mean the original grantee of an Option award and not any transferee.
(f) Shareholder Rights. Neither a Participant nor any permitted transferee of an Option shall have any of the rights of a shareholder of the Company until the Option has been exercised and the Shares purchased are properly issued to such Participant or transferee.
(g) Manner of Exercise Each exercise of an Option shall be in writing, in such form as the Administrator may prescribe, delivered to the Administrator or its designee, specifying the number of Shares being purchased and accompanied by payment of the Exercise Price for such Shares, by check payable to the Company or in such other manner as the Administrator may prescribe.
(h) Forfeiture For Breach of Obligations. Notwithstanding any other provision in this Plan, if a Participant violates any duty of loyalty owed to, or agreement with, the Company in any material respect, any outstanding Option held by such Participant shall be subject to immediate forfeiture in the discretion of the Board, and with respect to any Option that has been exercised by such Participant within a 12 month period prior to the occurrence of such violation, the Board may demand payment of and the Participant shall be liable to the Company for the difference between the aggregate Fair Market Value on the date of exercise of the Shares acquired upon such exercise and the aggregate Exercise Price of such Shares. The Participant shall pay such amount promptly upon demand by the Company.
8. Adjustments and Reorganizations.
(a) Adjustments for Changes in Capitalization. In the event of any equity restructuring (within the meaning of FASB ASC Topic 718) that causes the per share value of Shares to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary dividend, the Administrator shall make such adjustments as it deems equitable and appropriate to (i) the aggregate number and kind of Shares or other securities subject to the Plan, (ii) the number and kind of Shares or other securities subject to outstanding Option awards, and (iii) the Exercise Price of outstanding Option awards. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Administrator to prevent dilution or enlargement of rights of Participants. In either case, any such adjustment shall be conclusive and binding for all purposes of the Plan. No adjustment shall be made pursuant to this Section 8(a) in connection with the conversion of any convertible securities of the Company, or in a manner that would cause an Option to be subject to adverse tax consequences under Section 409A of the Code.
(b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, any Option granted under the Plan shall terminate as of a date to be fixed by the Administrator, provided that not less than 30 days written notice of the date so fixed shall be given to each Participant and each such Participant shall have the right during such period (but in no event beyond the expiration date of the applicable Option) to exercise each of his or her outstanding Options as to all or any part of the Shares covered thereby.
(c) Reorganization. In the event of a Reorganization, then:
(1) If there is no plan or agreement respecting the Reorganization (“Reorganization Agreement”) or if the Reorganization Agreement does not specifically provide for the change, conversion, or exchange of the Shares under outstanding and unexercised Options for securities of another corporation, then any Option granted under the Plan shall terminate as of a date to be fixed by the Administrator, provided that not less than 30 days written notice of the date so fixed shall be given to each Participant and each such Participant shall have the right during such period (but in no event beyond the expiration date of the applicable Option) to exercise each of his or her outstanding Options as to all or any part of the Shares covered thereby; or
(2) If there is a Reorganization Agreement and if the Reorganization Agreement specifically provides for the change, conversion, or exchange of the Shares under outstanding and unexercised Options for securities of another corporation, then the securities received on account of such Shares shall be subject to the Plan and then-outstanding Options, with such adjustments by the Administrator to the number and kind of securities subject to the then-outstanding Options as may be required or permitted by Section 8(a).
(d) Administrator Decisions Final. Adjustments and determinations under this Section 8 shall be made by the Administrator as specified herein, and its decisions as to what adjustments or determinations shall be made, and the extent thereof, shall be final, binding, and conclusive.
9. Restrictions on Issuing Shares.
The exercise of each Option and the issuance of Shares in connection therewith shall be subject to the condition that if at any time the Administrator shall determine in its discretion that the listing, registration, or qualification of any Shares otherwise deliverable upon such exercise upon the Nasdaq Global Select Market or other recognized national securities exchange or under any state or federal law, or that the consent or approval of any regulatory body, is necessary or desirable as a condition of, or in connection with, such exercise or the delivery or purchase of Shares pursuant thereto, then in any such event, such exercise shall not be effective unless such withholding, listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Administrator.
10. Administration of Plan.
(a) Administrator. The Plan shall be administered by the Compensation Committee of the Company. If the Administrator is such a committee, it shall report all actions taken by it to the Board. In administering the Plan, the Administrator shall be governed by and shall adhere to the provisions of the Plan. Subject to the foregoing, the Administrator may establish, amend or rescind rules to administer the Plan, interpret the Plan and any Grant Notification, reconcile any inconsistency, correct any defect or supply an omitted term in the Plan or any Grant Notification, and make all other determinations necessary or desirable for the administration of the Plan. All such actions and determinations shall be conclusively binding for all purposes and upon all persons. The Administrator may delegate non-discretionary administrative responsibilities in connection with the Plan to such persons as it deems advisable.
(b) Liability and Indemnification. To the greatest extent permitted by law, (i) no member or former member of the Administrator shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Option granted under the Plan, and (ii) the members or former members of the Administrator shall be entitled to indemnification by the Company against and from any loss incurred by such members by reason of any such actions and determinations.
11. Delivery of Shares and Proceeds.
Upon the exercise of an Option, the Administrator shall cause the purchased Shares to be issued by the Company’s transfer agent and a certificate or statement of issuance to be delivered to the Participant. The proceeds received from the sale of Shares pursuant to the exercise of Options granted under the Plan shall be the property of the Company, and shall be delivered to it promptly by the Administrator.
12. Amendment, Suspension, or Termination of Plan.
(a) Board’s Authority. Subject to Section 12(b), the Board may at any time suspend or terminate the Plan or may amend it from time to time in such respects as it may deem advisable in order that the Options granted thereunder may conform to any changes in the law or in any other respect which it may deem to be in the best interests of the Company. Unless the Plan shall theretofore have been terminated as provided herein, the Plan shall terminate when all available Shares have been granted and no granted Option is outstanding. No Option may be granted during any suspension or after the termination of the Plan. No amendment, suspension, or termination of the Plan shall, without a Participant’s consent, materially impair any of the rights or obligations under any outstanding Option theretofore granted to such Participant under the Plan, unless such action is necessary to comply with applicable law or stock exchange rules. A Participant’s consent to any amendment, suspension, or termination of the Plan or to any Option issued pursuant to the Plan shall be deemed to have been given if the Participant fails to object in writing within 15 days after written notice thereof, given in person or by certified mail sent to the Participant’s address contained in the records of the Company. To the extent considered necessary to comply with applicable provisions of law or the listing requirements of the Nasdaq Global Select Market or other applicable recognized national securities exchange, any such amendments to the Plan may be made subject to approval by the shareholders of the Company.
(b) No Option Repricing. Except as provided in Section 8(a), no Option award granted under the Plan may be (i) amended to decrease the exercise price thereof, (ii) cancelled in conjunction with the grant of any new Option award with a lower exercise price, (iii) cancelled in exchange for cash, other property or the grant of any other form of equity award at a time
when the per Share Exercise Price of the Option Award is greater than the current Fair Market Value of a Share, or (iv) otherwise subject to any action that would be treated under accounting rules as a “repricing” of such Option award, unless such action is first approved by the Company’s shareholders.
13. Adoption and Effective Date of Plan.
The Plan was approved and adopted by the Board on October 10, 2017, which is the effective date of the Plan, subject to approval of the Plan by the Company's shareholders. The Company's shareholders approved the Plan on April 24, 2018, the date of the Company’s 2018 annual meeting of shareholders. The Plan was amended effective December 20, 2021, by approval of the Board.
14. Other Provisions.
(a) Unfunded Plan. The Plan shall be unfunded and the Company shall not be required to segregate any assets that may at any time be represented by Option awards under the Plan. Neither the Company, its Subsidiaries, the Administrator, nor the Board shall be deemed to be a trustee of any amounts to be paid under the Plan nor shall anything contained in the Plan or any action taken pursuant to its provisions create or be construed to create a fiduciary relationship between the Company and/or its Subsidiaries, and a Participant. To the extent any person has or acquires a right to receive a payment in connection with an Option award under the Plan, this right shall be no greater than the right of an unsecured general creditor of the Company.
(b) Governing Law. To the extent that federal laws do not otherwise control, the Plan and all determinations made and actions taken pursuant to the Plan shall be governed by the laws of the State of Minnesota without regard to its conflicts-of-law principles and shall be construed accordingly.
(c) Severability. If any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
Exhibit 31.3
CERTIFICATIONS
I, Daniel L. Florness, certify that:
1.I have reviewed this Amendment No. 1 to Annual Report on Form 10-K/A of Fastenal Company; and
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
| Date: | February 10, 2022 | ||||||||||
| /s/ Daniel L. Florness | |||||||||||
| Daniel L. Florness | |||||||||||
| President and Chief Executive Officer | |||||||||||
| (Principal Executive Officer) | |||||||||||
Exhibit 31.4
CERTIFICATIONS
I, Holden Lewis, certify that:
1.I have reviewed this Amendment No 1. to Annual Report on Form 10-K/A of Fastenal Company; and
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
| Date: | February 10, 2022 | ||||||||||
| /s/ Holden Lewis | |||||||||||
| Holden Lewis | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
2 0 2 1 A N N U A L R E P O R T 9706829 2021 Annual Report | JH 2.22 | Printed in the USA 2021 ANNUAL REPORT 2 0 2 1 A N N U A L R E P O R T 97068 9 021 Annual Report | JH .22 | Printed in the USA 2021 ANNUAL REPORT
IN-MARKET SELLING LOCATIONS (including 1,416 Onsite locations) spanning 25 countries EMPLOYEES 71% directly serve our customers 3,209 of SERVICE, BY THE NUMBERS PEOPLE SOLUTIONSPROXIMITY DIFFERENTIATORS FASTENAL SCHOOL OF BUSINESS TRAININGS COMPLETED 17 hours of training per FT employee and 9 hours of training per PT employee (on average) 627,000 PRODUCTS MANUFACTURED, MODIFIED, OR REFURBISHED by our in-house manufacturing and industrial services divisions 377 Million CUSTOMER SITE EVALUATIONS PERFORMED by our Lean Solutions team to uncover sources of supply chain waste 944 OF PRODUCT TONNAGE SHIPS ON OUR INTERNAL TRUCKING FLEET reducing cost and enhancing service 90% OF OUR $1.5 BILLION IN INVENTORY IS STAGED LOCALLY for same-day fulfillment 57% HIGHLY-TRAINED SPECIALISTS engineering, safety, Lean Six Sigma, metalworking, construction, solutions, national accounts 520+ 43% OF TOTAL REVENUE comes from our Digital Footprint** OF TOTAL REVENUE comes from customers utilizing more than one of our sales channels and tools, with 68% of total revenue coming from customers utilizing four or more* 92% WEIGHTED FASTVEND/FASTBIN INSTALLATIONS (MEUs) and ~12,000 leased check-in/ check-out lockers (non-weighted) 92,874 SUPPLY CHAIN PROFESSIONALS dedicated to sourcing, quality, and logistics functions, including 70+ experts positioned outside North America 180+20,507 INSIDE BACK COVER: Directors | Executive Officers | Corporate Information * Sales channels and tools include branch, Onsite, Fastenal Managed Inventory (FMI), national accounts, and web. ** Our Digital Footprint is a combination of our sales through FMI Technology (FASTStock, FASTBin, and FASTVend) plus that portion of our eCommerce sales that do not represent billings of FMI services. Journey TABLE OF CONTENTS Letters to Shareholders and Employees 1-3 10-Year Selected Financial Data and Financial Highlights 4-5 Stock and Financial Data 6 Stock Performance Highlights 7 A Focus on Productive Growth 8 A For more than 50 years, Fastenal has been on a journey to impact an ever-greater span of the supply chain for industrial and construction supplies and, in turn, provide ever-greater value to our customers. As illustrated in the statistics below, today that means managing our customers’ inventory locally so they can step away from those burdens. It means providing solutions that help them reduce their total cost of ownership and operate more productively. Above all, it means ensuring a resilient and efficient supply chain – from the source, to the last mile, to the point of use – so they can keep their businesses moving full speed ahead in a volatile world.
SHAREHOLDER OF FASTENAL Thank you for being a Similar to prior years, we hope you find this annual report useful in understanding our business, our future, and most importantly, the “something special” that is the culture of the Blue Team. One year ago, we felt normalcy might be returning. New vaccines were arriving to help societies battle the pandemic, and the medical community was learning new methods to treat those afflicted with the virus. Unfortunately, things are rarely so simple. Societies are often underserved by those asked to lead and inform. We’re also subject to our own fears and biases, especially in times of stress. A virus created a generational challenge. At times, humanity has made it worse. Fortunately, we continue to find success as an organization, albeit not always in ways we expect. Holden Lewis, our chief financial officer, made an interesting comment a few months ago in a conversation with an investor. We were discussing the lower level of Onsite and FMI Technology signings during the pandemic period. (See lower right for descriptions of these and the other bolded terms on this page.) When asked about the cause, he explained customers sought our help in different ways during the last two years. In 2020, they asked for help keeping their employees and customers safe – this meant help with safety products. The Blue Team used our deep product knowledge, our extensive quality systems, and our vast supplier network to help customers find high-quality safety products. In 2021, supply chains were shattered, and the customer ask expanded to include more types of products. Our strength is finding solutions to these types of supply chain problems. During this period, we believe our opportunities fundamentally improved in two ways. First, we sold to a wider range of customers, adding new healthcare and government customers. This expanded marketplace is now familiar with the value of the Fastenal supply chain. Second, at the start of the pandemic, we closed the front doors to our local branches. (For background, we deliver most of our sales to customer facilities, so most of our product goes out the back door, so to speak.) We closed the front door to protect our employees and our customers. With the front door closed, and with customers quickly modifying their buying habits, we tweaked our existing branch format to create the Customer Service Branch (or CSB). We also developed a new branch format, the Customer Fulfillment Center (or CFC). These modified branch formats dovetail quite nicely with the needs of the marketplace, with our Onsite network, and with our distribution network. Our in-market servicing locations (CSBs, CFCs, and Onsite locations) are all complemented by our expanding Digital Footprint. We believe in transparency. Similar to last year, we felt it would be helpful to share a section from the Blue Team Report (the new name for our annual report to employees). The next two pages include the index and lead-in letter from the current report. As you can see from the index, there are a lot of great things going on at Fastenal. Similar to last year, the final item noted is an article by our founder, Bob Kierlin. Not surprising, Bob continues to actively support the Blue Team, even in retirement. We will always approach things in a simple way at Fastenal. Believe in people. Always strive to pursue a common goal: Growth Through Customer Service. And enhance our ability to serve by finding great people, asking them to join, and then giving them a reason to stay. Good luck in 2022, and thank you for your belief in the Blue Team at Fastenal. Go Blue! DANIEL L. FLORNESS President and Chief Executive Officer ONSITE A Fastenal servicing location dedicated to, and usually situated within, a customer facility. FMI TECHNOLOGY A suite of solutions to illuminate and efficiently manage customers’ planned product needs. Includes FASTStock (manual bin stock service enhanced with mobility technology), FASTBin (bin devices with embedded technology for remote inventory monitoring), and FASTVend (specialized devices providing access controls and asset and usage tracking, in addition to remote inventory monitoring). CSB Similar to our legacy branch model, there’s still a front room where walk-in customers (primarily contractors) can shop for products. The difference: a more targeted inventory profile and an industrial look and feel. CFC These branches function like “mini distribution centers,” with limited hours for will-call pickup, dense industrial shelving, and a lean market-based inventory strategy to support local supply chain needs. DIGITAL FOOTPRINT A combination of our sales through FMI Technology (see adjacent definition) plus that portion of our eCommerce sales that do not represent billings of FMI services. DEFINITIONS 2021 ANNUAL REPORT 1
For the runners in the crowd, you will get where I’m going with this line of thought. For the rest of you, let me share some things I’ve learned from a little internet research. (Hopefully the following information is accurate; you know, I read it on the internet, so it must be true.) The human body can store a finite amount of glycogen, and these reserves typically run out after about 18 to 20 miles of running. At this point, your ability to take in carbohydrates before (and during) the race, your ability to stay hydrated during the race, your body’s ability to convert fat and protein to energy (a very inefficient process), and your attitude dictate what happens over the last six to eight miles. Fortunately for most of us, this is not something we regularly encounter; however, we all know the feeling of pushing beyond what we thought was possible. After two years of the pandemic, we are approaching the 18 to 20 mile mark. And yes, we can complete this marathon. Last year, my letter centered on five (non- virus) storylines that stood out for 2020. These qualities shone through during the toughest days of the pandemic, and they bear repeating as we push toward the finish line. 1. We run faster (and learn faster) than anyone else. 2. We don’t fracture; we rally to support each other. 3. When we point a finger, it’s usually at ourselves. 4. We have the skill set to help others, and the confidence to stay focused. 5. We always build for the future. One year ago, we had multiple vaccines in the final stages of approval (this comment applies to the planet, not just one or several societies), and we were in the starting days of vaccine deployment across the globe. The world breathed a sigh of relief … yet twelve months later, our headlines are still dominated by the pandemic. Why? It might be an outgrowth of an endless 24/7 media cycle, which often serves not to inform but rather to inflame the anxieties of society; and perhaps it centers on four words: trust, arrogance, inclusion, and blame. These concepts often determine success or failure when tackling a problem, and they take on special meaning in the context of the Blue Team. When thinking of Trust within the Blue Team, the concept to emerge is a belief in everyone’s ability to put self and others in balance and to discover the best solution to a problem. When thinking of Arrogance within the Blue Team, the concept to emerge is its opposite: humility. We are self-aware enough to appreciate we are all “full of it” periodically; therefore, we listen to and share ideas with each other to discover the best solution to a problem. When thinking of Inclusion within the Blue Team, the concept to emerge is a belief in people. We believe in the intentions of others, we believe in each other, and we believe having a variety of different perspectives helps us discover the best solution to a problem. When thinking of Blame within the Blue Team, what emerges is a two-part question: Why does it matter, and how does it help? Instead of pointing fingers, we take steps to discover the best solution to the problem, then act accordingly. Sorry for the serious nature of this year’s letter. Perhaps we are all impacted by the lack of human contact in the last two years. AN EXCERPT FROM THE 2021 BLUE TEAM REPORT COMPLETING Marathon the Fastenal Wears a Crisis Well Holden Lewis EVP Insights Casey Miller, Bill Drazkowski & Jeff Watts The Next Chapter in an Amazing Success Story Kris Van Dalen Evolution of the Branch Sally Olson & Katy Pickett Another Year of International Success Jeff Watts & Our International RVPs Many Hands Worked Really Hard Will Roedeske & Walter Tate Embracing INNOVAtion Eric Rea Building the Blue Team Mel Skadson Predictive ROA Tool: Your Roadmap to Productive Growth Kim Stanislawski & Clint Coley A Hub Manager Perspective on LIFT Mike Estell Delivering a Better Direct-Ship Program Kirk Talmontas The Teamwork Behind the Machine Jeff Hicks & Our 2021 Solutions Top Performers Where Industry Meets Innovation Brooke Mlsna The Latest Tools in Our Technology Toolbox IT and FMI Technology Teams Government Opportunities Are All Around Us Kevin Fitzgerald Blue Team Sports Highlights Casey Severson Providing More Training to More People, More Often Pete Guidinger The ABCs of ESG Liz Carroll Congratulations to our 25-Year Employees Another Year of Accomplishments by the Blue Team Bob Kierlin I’m not a marathon runner. Okay, that’s probably not a surprise to anyone; however, a marathon seems like a good metaphor for what we’re all living through right now. Doesn’t it sometimes feel like we’re hitting a wall, energy is low, and every new step (or new day) is a repeating and energy-draining event? THIS YEAR’S ARTICLES & TOPICS 2
We are in this together – the Blue Team – and I personally miss the human side, the camaraderie of coming together. For a step on the lighter side, let’s get back to the marathon and the next leg (yes, pun intended) of the run. During the last two years, we have maintained our energy and our hydration by (1) learning new things, (2) creating safer work environments, (3) expanding how we go to market, and (4) modifying how we operate. All of these steps were taken to evolve how the Blue Team serves each other and the needs of the market tomorrow. Our expanding Digital Footprint is a great example. For background, our Digital Footprint is how we illuminate the supply chain for our customers and bring greater efficiency in the process. It includes eCommerce (transacting electronically using web verticals, eProcurement, etc.) and FMI Technology (Fastenal Managed Inventory): FASTStock, FASTBin, and FASTVend. To put this into context, we believe 85% of our customers’ spend could eventually become part of our Digital Footprint. Two years ago, it was about 36% of sales. (This is an estimate; the reporting from our pre-mobility scanning technology wasn’t as crisp as what we’re able to capture today through our FASTStock solution.) Twelve months ago, our Digital Footprint had expanded to about 37% of sales, and today it is 46%. The momentum with our Digital Footprint is strong, and the marketplace is very receptive to the change. In the first half of 2022, it should break 50%, and we expect it to exceed 60% by the end of the year. Achieving this potential is all about our willingness and attitude to drive the change. As you can appreciate, a large Digital Footprint provides incredible amounts of usage information – what is being used, where it’s being used, when it’s being used, and who’s using it. This knowledge allows us to be more strategic about planning our customers’ supply chains, about staging our supply chain assets (inventory and equipment), about where we pick and consolidate a customer’s order (think LIFTs, Local Inventory Fulfillment Terminals), about providing insight to our suppliers about expected needs, and about making suggested improvements. This knowledge also allows us to help make every customer’s supply chain more resilient and effective, and allows us to grow faster and serve more customers. Everyone wins in this scenario (well, everyone but our competitors). Growth creates opportunities, and these opportunities are filled through internal promotions because we learn and build our skill sets every day. Our Fastenal School of Business exists to serve you – please continue to prepare yourself in 2022. As in prior years, we celebrated some new milestones in 2021. Here’s a partial list: 1. We were named one of the safest companies by EHS Today magazine. 2. The Blue Team in Mexico and Singapore celebrated 20 years in business. 3. Our FMI Technology program hit new heights. FASTStock exceeded $550 million in annual sales, FASTBin broke $5 million in monthly sales in September, and FASTVend surpassed one billion vends in December. 4. Our company sales eclipsed $6 billion for the first time. 5. Our market capitalization (total shares outstanding x price per share) broke $30 billion in April. Within the Blue Team, I’m a more seasoned member. (That’s a nice way to say I’m old – 58.) I remember watching humans land and walk on the moon. I remember my grandmother talking about humans learning to fly during her lifetime. I witnessed space travel as it transitioned from fiction to possible to routine, and I also remember learning about Earth from the perspective of space. This started with verbal descriptions and books, then moved to visuals, first on my family’s old black and white television, later in full-color video. Bottom line, here is this beautiful blue planet – yep, it’s blue – and it serves as an incredible home for all of us. Please take care of each other in 2022, and please continue to take care of this beautiful planet. If you see ways for us to conserve resources, to operate more efficiently, or to bring ideas to the market, please speak up – your ideas and insights are valued. In the months to come, you will hear more about two sets of initials: ESG (environmental, social, and governance) and DEI (diversity, equity, and inclusion). These terms have become more common in recent years; however, the underlying concepts aren’t new to the Blue Team. That said, aligning them with our core values will feel forced as long as they’re associated with detached and cold terminology. During 2022, we will work to transition to more meaningful and energizing language – words we can all relate to within Fastenal. Some early suggestions have been to brand ESG as simply Being Blue and to brand DEI as A Reason to Stay. Again, these are just initial thoughts. We will be engaging with the Blue Team to find the best branding. This may include a survey or two to solicit feedback and ideas. Let me close by saying thank you. Thank you for preparing yourself to get through the wall our global society is going to keep hitting until we transition from a pandemic to an endemic. This will happen; if for no other reason, because humanity needs it to happen. We will learn to live and succeed in the new normal. At Fastenal, we will do it in part by Being Blue and by giving everyone A Reason to Stay. Good luck in 2022, DAN FLORNESS President & Chief Executive OfficerMarathon 2021 ANNUAL REPORT 3
Operating Results 2021 % Change 2020 2019 2018 2017 2016 2015 2014 2013 2012 Net sales $ 6,010.9 6.4% $5,647.3 $5,333.7 $4,965.1 $4,390.5 $3,962.0 $3,869.2 $3,733.5 $3,326.1 $3,133.6 Gross profit $ 2,777.2 8.2% 2,567.8 2,515.4 2,398.9 2,163.6 1,964.8 1,948.9 1,897.4 1,719.4 1,614.5 % of net sales 46.2% 45.5% 47.2% 48.3% 49.3% 49.6% 50.4% 50.8% 51.7% 51.5% Operating income $ 1,217.4 6.6% 1,141.8 1,057.2 999.2 881.8 795.8 828.8 787.6 712.7 673.7 % of net sales 20.3% 20.2% 19.8% 20.1% 20.1% 20.1% 21.4% 21.1% 21.4% 21.5% Net earnings $ 925.0 7.7% 859.1 790.9 751.9 578.6 499.4 516.4 494.2 448.6 420.5 % of net sales 15.4% 15.2% 14.8% 15.1% 13.2% 12.6% 13.3% 13.2% 13.5% 13.4% Basic net earnings per share $ 1.61 7.5% 1.50 1.38 1.31 1.00 0.86 0.89 0.83 0.76 0.71 Basic weighted average shares outstanding 574.8 0.2% 573.8 573.2 573.9 576.4 577.9 582.9 593.0 593.5 592.2 Diluted net earnings per share $ 1.60 7.4% 1.49 1.38 1.31 1.00 0.86 0.88 0.83 0.75 0.71 Diluted weighted average shares outstanding (1) 577.1 0.3% 575.7 574.4 574.3 576.7 578.3 584.1 594.6 595.4 594.3 Dividends and Common Stock Purchase Summary 2021 % Change 2020 2019 2018 2017 2016 2015 2014 2013 2012 Cash dividends paid $ 643.7 -19.9% $803.4 $498.6 $441.9 $369.1 $346.6 $327.1 $296.6 $237.5 $367.3 % of net earnings 69.6% 93.5% 63.0% 58.8% 63.8% 69.4% 63.3% 60.0% 52.9% 87.3% Cash dividends paid per share $ $1.12 -20.0% 1.40 0.87 0.77 0.64 0.60 0.56 0.50 0.40 0.62 Purchases of common stock $ - 52.0 - 103.0 82.6 59.5 292.9 52.9 9.1 - % of net earnings - 6.1% - 13.7% 14.3% 11.9% 56.7% 10.7% 2.0% - Common stock shares purchased - 1.6 - 4.0 3.8 3.2 14.2 2.4 0.4 - Average price paid per share $ - $32.54 - $25.75 $21.72 $18.58 $20.63 $22.06 $22.70 - Financial Position at Year End 2021 % Change 2020 2019 2018 2017 2016 2015 2014 2013 2012 Operational working capital assets (accounts receivable, net, and inventories) $ 2,423.8 15.0% $2,106.9 $2,108.1 $1,993.0 $1,700.7 $1,492.7 $1,381.6 $1,331.3 $1,198.4 $1,087.5 Net working capital (4) (current assets less current liabilities) $ 2,174.4 15.2% 1,886.9 1,912.5 1,878.8 1,584.8 1,445.1 1,291.6 1,207.9 1,168.6 1,082.5 Fixed capital (property and equipment, net) $ 1,019.2 -1.1% 1,030.7 1,023.2 924.8 893.6 899.7 818.9 763.9 654.9 516.4 Total assets (4) $ 4,299.0 8.4% 3,964.7 3,799.9 3,321.5 2,910.5 2,668.9 2,532.5 2,359.1 2,075.8 1,815.8 Total debt (current portion of debt and long-term debt) $ 390.0 -3.7% 405.0 345.0 500.0 415.0 390.0 365.0 90.0 - - Total stockholders' equity $ 3,042.2 11.3% 2,733.2 2,665.6 2,302.7 2,096.9 1,933.1 1,801.3 1,915.2 1,772.7 1,560.4 Cash Flow Summary 2021 % Change 2020 2019 2018 2017 2016 2015 2014 2013 2012 Net cash provided by operating activities (2) $ 770.1 -30.1% $1,101.8 $842.7 $674.2 $585.2 $519.9 $550.3 $501.5 $418.9 $406.4 % of net earnings 83.3% 128.3% 106.5% 89.7% 101.1% 104.1% 106.6% 101.5% 93.4% 96.6% Less capital expenditures, net $ (148.2) -5.9% (157.5) (239.8) (166.8) (112.5) (183.0) (145.3) (183.7) (201.6) (133.9) % of net sales 2.5% 2.8% 4.5% 3.4% 2.6% 4.6% 3.8% 4.9% 6.1% 4.3% Acquisitions and other $ (0.3) -99.8% (124.2) 0.1 (7.1) (66.8) (5.1) (35.3) (5.6) (0.1) (0.1) Free cash flow (3) $ 621.6 -24.2% 820.1 603.0 500.3 405.9 331.8 369.7 312.2 217.2 272.4 % of net earnings 67.2% 95.5% 76.2% 66.5% 70.2% 66.4% 71.6% 63.2% 48.4% 64.8% All information contained in this Annual Report reflects the 2-for-1 stock split in 2019. (1) Reflects impact of stock options issued by the company that were in-the-money and outstanding during the period. (2) Reflects the impact of Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting, adopted January 1, 2017. 10-YEAR SELECTED FINANCIAL DATA (Amounts in Millions Except Per Share Information) 4
Operating Results 2021 % Change 2020 2019 2018 2017 2016 2015 2014 2013 2012 Net sales $ 6,010.9 6.4% $5,647.3 $5,333.7 $4,965.1 $4,390.5 $3,962.0 $3,869.2 $3,733.5 $3,326.1 $3,133.6 Gross profit $ 2,777.2 8.2% 2,567.8 2,515.4 2,398.9 2,163.6 1,964.8 1,948.9 1,897.4 1,719.4 1,614.5 % of net sales 46.2% 45.5% 47.2% 48.3% 49.3% 49.6% 50.4% 50.8% 51.7% 51.5% Operating income $ 1,217.4 6.6% 1,141.8 1,057.2 999.2 881.8 795.8 828.8 787.6 712.7 673.7 % of net sales 20.3% 20.2% 19.8% 20.1% 20.1% 20.1% 21.4% 21.1% 21.4% 21.5% Net earnings $ 925.0 7.7% 859.1 790.9 751.9 578.6 499.4 516.4 494.2 448.6 420.5 % of net sales 15.4% 15.2% 14.8% 15.1% 13.2% 12.6% 13.3% 13.2% 13.5% 13.4% Basic net earnings per share $ 1.61 7.5% 1.50 1.38 1.31 1.00 0.86 0.89 0.83 0.76 0.71 Basic weighted average shares outstanding 574.8 0.2% 573.8 573.2 573.9 576.4 577.9 582.9 593.0 593.5 592.2 Diluted net earnings per share $ 1.60 7.4% 1.49 1.38 1.31 1.00 0.86 0.88 0.83 0.75 0.71 Diluted weighted average shares outstanding (1) 577.1 0.3% 575.7 574.4 574.3 576.7 578.3 584.1 594.6 595.4 594.3 Dividends and Common Stock Purchase Summary 2021 % Change 2020 2019 2018 2017 2016 2015 2014 2013 2012 Cash dividends paid $ 643.7 -19.9% $803.4 $498.6 $441.9 $369.1 $346.6 $327.1 $296.6 $237.5 $367.3 % of net earnings 69.6% 93.5% 63.0% 58.8% 63.8% 69.4% 63.3% 60.0% 52.9% 87.3% Cash dividends paid per share $ $1.12 -20.0% 1.40 0.87 0.77 0.64 0.60 0.56 0.50 0.40 0.62 Purchases of common stock $ - 52.0 - 103.0 82.6 59.5 292.9 52.9 9.1 - % of net earnings - 6.1% - 13.7% 14.3% 11.9% 56.7% 10.7% 2.0% - Common stock shares purchased - 1.6 - 4.0 3.8 3.2 14.2 2.4 0.4 - Average price paid per share $ - $32.54 - $25.75 $21.72 $18.58 $20.63 $22.06 $22.70 - Financial Position at Year End 2021 % Change 2020 2019 2018 2017 2016 2015 2014 2013 2012 Operational working capital assets (accounts receivable, net, and inventories) $ 2,423.8 15.0% $2,106.9 $2,108.1 $1,993.0 $1,700.7 $1,492.7 $1,381.6 $1,331.3 $1,198.4 $1,087.5 Net working capital (4) (current assets less current liabilities) $ 2,174.4 15.2% 1,886.9 1,912.5 1,878.8 1,584.8 1,445.1 1,291.6 1,207.9 1,168.6 1,082.5 Fixed capital (property and equipment, net) $ 1,019.2 -1.1% 1,030.7 1,023.2 924.8 893.6 899.7 818.9 763.9 654.9 516.4 Total assets (4) $ 4,299.0 8.4% 3,964.7 3,799.9 3,321.5 2,910.5 2,668.9 2,532.5 2,359.1 2,075.8 1,815.8 Total debt (current portion of debt and long-term debt) $ 390.0 -3.7% 405.0 345.0 500.0 415.0 390.0 365.0 90.0 - - Total stockholders' equity $ 3,042.2 11.3% 2,733.2 2,665.6 2,302.7 2,096.9 1,933.1 1,801.3 1,915.2 1,772.7 1,560.4 Cash Flow Summary 2021 % Change 2020 2019 2018 2017 2016 2015 2014 2013 2012 Net cash provided by operating activities (2) $ 770.1 -30.1% $1,101.8 $842.7 $674.2 $585.2 $519.9 $550.3 $501.5 $418.9 $406.4 % of net earnings 83.3% 128.3% 106.5% 89.7% 101.1% 104.1% 106.6% 101.5% 93.4% 96.6% Less capital expenditures, net $ (148.2) -5.9% (157.5) (239.8) (166.8) (112.5) (183.0) (145.3) (183.7) (201.6) (133.9) % of net sales 2.5% 2.8% 4.5% 3.4% 2.6% 4.6% 3.8% 4.9% 6.1% 4.3% Acquisitions and other $ (0.3) -99.8% (124.2) 0.1 (7.1) (66.8) (5.1) (35.3) (5.6) (0.1) (0.1) Free cash flow (3) $ 621.6 -24.2% 820.1 603.0 500.3 405.9 331.8 369.7 312.2 217.2 272.4 % of net earnings 67.2% 95.5% 76.2% 66.5% 70.2% 66.4% 71.6% 63.2% 48.4% 64.8% (3) Free cash flow is not a financial measure calculated in accordance with GAAP and is reconciled to the most closely comparable GAAP measure, net cash provided by operating activities, in the chart above, with the GAAP measure presented first under 'Cash Flow Summary.' We define free cash flow as net cash provided by operating activities less capital expenditures, net of proceeds from sale of property and equipment, less cash paid for acquisitions. (4) Reflects the impact of Accounting Standards Update 2016-02, Leases, adopted January 1, 2019. FINANCIAL HIGHLIGHTS 2021 ANNUAL REPORT 5
$30.1 ($318.9) ($148.2) ($643.7) $65.6 ($52.0) $60.0 $75.7 $85.0 0 $2.7 ($9.2) 2018201920202021 Net Debt (proceeds from debt obligations, less payments against debt obligations) Other (all other uses or proceeds from gross cash flow) Purchases of Common Stock Payments of Dividends Cash Paid for Acquisitions Capital Expenditures (purchases of property and equipment, less proceeds from sale of property and equipment) Net Working Capital (changes to operating assets and liabilities, net of acquisitions) ($3.7) ($441.9) ($103.0) ($166.8) ($262.4) ($498.6) ($155.0) ($239.8) ($121.9) ($157.5) ($125.0) ($803.4) ($15.0) * Gross cash flow and some of its uses, including net debt, are non-GAAP measures. The information below provides details on how we define and calculate these measures, which are derived from GAAP financial measures contained in our financial statements. As of January 21, 2022, there were approximately 1,000 record holders of our common stock, which includes nominees or broker dealers holding stock on behalf of an estimated 411,000 beneficial owners. In 2021 and 2020, we paid dividends per share totaling $1.12 and $1.40, respectively. On January 18, 2022, we announced a quarterly dividend of $0.31 per share to be paid on March 2, 2022 to shareholders of record at the close of business on February 2, 2022. Our board of directors intends to continue paying quarterly dividends; however, any future determination as to payment of dividends will depend upon the financial condition and results of operations of the company and such other factors as are deemed relevant by the board of directors. In 2021, we did not purchase any shares of our common stock. In 2020, we purchased 1,600,000 shares of our common stock at an average price of $32.54 per share. GROSS CASH FLOW (Dollar Amounts in Millions) USES OF GROSS CASH FLOW (Dollar Amounts in Millions) The following chart displays the daily closing sales price of our shares listed on the Nasdaq Stock Market for the last two years. 2020 Nasdaq: FAST 2021 2021 2020 2019 2018 Net Earnings 925.0 859.1 790.9 751.9 Depreciation & Amortization (depreciation of property and equipment, and amortization of intangible assets) 170.7 162.4 148.7 138.2 Gross Cash Flow * 1,095.7 1,021.5 939.6 890.1 2021 2020 $ $ STOCK AND FINANCIAL DATA $30.1 ($318.9) ($148.2) ($643.7) $65.6 ($52.0) $60.0 $75.7 $85.0 0 $2.7 ($9.2) 2018201920202021 Net Debt (proceeds from debt obligations, less payments against debt obligations) Other (all other uses or proceeds from gross cash flow) Purchases of Common Stock Payments of Dividends Cash Paid for Acquisitions Capital Expenditures (purchases of property and equipment, less proceeds from sale of property and equipment) Net Working Capital (changes to operating assets and liabilities, net of acquisitions) ($3.7) ($441.9) ($103.0) ($166.8) ($262.4) ($498.6) ($155.0) ($239.8) ($121.9) ($157.5) ($125.0) ($803.4) ($15.0) 6
(1) The share data represents past performance, which is no guarantee of future results. (2) Unless otherwise noted, the amounts on this page are presented in whole numbers versus millions as is prevalent in the remainder of this document. HISTORICAL STOCK PERFORMANCE INITIAL PUBLIC OFFERING (IPO) On August 20, 1987 (date of our initial public offering), 1,000 shares of our stock sold for $9,000. Approximately 34 years later, on December 31, 2021, those 1,000 shares, having split eight times, had become 192,000 shares worth $12,299,520, for a gain of approximately 23.7% compounded annually. In addition, the holder of these shares would have received $1,705,824 in dividends since August 20, 1987, for a total gain of approximately 24.1% compounded annually. TEN YEARS On December 31, 2011, 1,000 shares of our stock sold for $43,620. Ten years later, on December 31, 2021, those 1,000 shares, having split once, were 2,000 shares worth $128,120, for a gain of approximately 11.4% compounded annually. In addition, the holder of these shares would have received $14,960 in dividends since December 2011, for a total gain of approximately 12.6% compounded annually. FIVE YEARS On December 31, 2016, 1,000 shares of our stock sold for $46,980. Five years later, on December 31, 2021, those 1,000 shares, having split once, were 2,000 shares worth $128,120, for a gain of approximately 22.2% compounded annually. In addition, the holder of these shares would have received $9,600 in dividends since December 2016, for a total gain of approximately 24.0% compounded annually. DIVIDENDS We have paid dividends in every year since 1991, and quarterly dividends since 2011. In addition, Fastenal paid a special one-time dividend during December 2020, 2012, and 2008. A SIMPLE PHILOSOPHY Since going public in 1987, we have maintained a consistent focus on avoiding, if feasible, the potentially dilutive impact of our activities on our shareholders. To this end, we have grown our organization principally with internal cash flow, have supported the Fastenal Company and Subsidiaries 401(k) and Employee Stock Ownership Plan with stock purchased in the open market, and, since creating a stock option program in 2003, have periodically purchased common stock in the open market to, among other things, offset the potential impact of our stock option grants. We have purchased approximately 49.4 million shares since 2003 and have granted our employees options to purchase approximately 30.7 million shares. (Note: These amounts have been adjusted to reflect the impact of stock splits.) This has allowed us to balance internal investment with cash returns to shareholders. For example, in the last five years we have enjoyed total sales of $26,348 million and total pre-tax earnings of $5,244 million. During this same time period, we spent approximately $4,925 million to compensate a group of great employees, we supported our customers’ needs by adding approximately $931 million in operational working capital assets (accounts receivable, net, plus inventory) and by spending approximately $825 million in net capital expenditures (purchases of property and equipment, net of proceeds of sales), and we returned $2,994 million to our shareholders. The latter was principally through dividends (approximately $2,757 million), with the remainder through share purchases. A final point worth noting: We are an important element of the tax base in the many communities in which we operate. During the last five years, we have incurred approximately $1,339 million in income taxes, or approximately 25.5% of the pre-tax earnings noted above, and incurred or remitted approximately $1,275 million in employment taxes, $62 million in property taxes, $874 million in sales, use, and value-added taxes, and $5 million in other miscellaneous business-related taxes. This adds up to a total of approximately $3.6 billion in taxes funded in our communities. 1,000 shares ($9,000) invested on August 20, 1987 Value on December 31, 2021: $12,299,520 Stock Split STOCK PERFORMANCE HIGHLIGHTS (1), (2) 2021 ANNUAL REPORT 7
DIGITAL FOOTPRINT We’ve accelerated the development and deployment of our FMI Technology (Fastenal Managed Inventory) offering: FASTStock, FASTBin, and FASTVend. As a result, sales through FMI Technology and traditional eCommerce, collectively our “Digital Footprint,” have grown from an estimated 37.2% of company sales in 4Q20 to 46.4% of company sales in 4Q21. These technologies reduce cost and risk for customers by illuminating their inventory positions and usage activity. They also drive productivity for Fastenal by making product replenishment more proactive and efficient. As we look ahead, we believe our Digital Footprint will expand to approximately 85% of sales when we achieve $10 billion in annual revenue. LIFT Our deployment of Local Inventory Fulfillment Terminals (LIFTs) shifts responsibility for the replenishment of FMI devices from our in-market locations to regional micro-hubs. This increases our selling energy, and ultimately labor productivity, by increasing the proportion of time our sales personnel spend selling vs. servicing. We also enjoy a boost to our asset efficiency by consolidating FMI-related inventory into fewer locations. When we achieve $10 billion in annual sales, we believe our FMI program will generate $6.5 billion in revenue and 40% of those FMI sales will be serviced by LIFTs. BRANCHES We’re migrating U.S. branches from our traditional Customer Service Project (CSP) stocking model to our Customer Fulfillment Center (CFC) and Customer Service Branch (CSB) models. With these models, each location’s inventory is customized based on sales and market data. This includes removing lightly-sold and walk-in-oriented SKUs, improving asset efficiency. CFC locations (66.8% of our total U.S. branches at year-end 2021) are designed to reduce the amount of time branch personnel spend on smaller, retail-oriented customers so they can spend more time on larger local, regional, and national accounts, accelerating market share gains and improving labor productivity. We also anticipate this structure will enhance our occupancy leverage. GROSS PROFIT-TO-LABOR DOLLARS (In Millions) LABOR PRODUCTIVITY - U.S. BRANCHES SALES & OUR DIGITAL FOOTPRINT FMI SALES & LIFT FMI SALES SALES % OF SALES THRU LIFT % OF SALES THRU DIGITAL FOOTPRINT 2 0 2 1 2 0 2 1 E X P E C T A T I O N S E X P E C T A T I O N S F U T U R E F U T U R E In 2020 and 2021, the world faced successive waves of crises, from the initial shock of the pandemic and recession to a recovery marked by labor constraints, supply chain disruptions, and inflation in materials and transportation services. Against this backdrop, in 2021 the Blue Team did an outstanding job to produce 6.4% annual net sales growth. Over the same period, our pre-tax profit grew 6.6% and our margin expanded. We believe this productive growth is a product of investments we’ve made over the last two years in our technology, our supply chain, and our go-to-market strategy. Here’s a look at three examples. on PRODUCTIVE GROWTH FocusA $3.55 2017 2018 2019 2020 2021 $3.60 $3.65 $3.70 $3.75 $3.80 $3.85 $3.90 $3.95 $4.00 $4.05 42.7% $10 BILLION $6.5 BILLION $1.9 BILLION 2.5% 40% 85% $6 BILLION 8
DIRECTORS EXECUTIVE OFFICERS CORPORATE INFORMATION TRANSFER AGENT Equiniti Trust Company Mendota Heights, Minnesota FORM 10-K A copy of our 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission is available without charge to shareholders upon written request to Investor Relations at the address of our home office listed on this page. Copies of our latest press releases, unaudited supplemental company information, and monthly sales information are available at: https://investor.fastenal.com. HOME OFFICE Fastenal Company 2001 Theurer Boulevard Winona, Minnesota 55987-0978 Phone: 507-454-5374 I Fax: 507-453-8049 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP Minneapolis, Minnesota ANNUAL MEETING The annual meeting of shareholders will be at 10:00 a.m., Central Daylight Time, on Saturday, April 23, 2022, at the Remlinger Muscle Car Museum located at 3560 Service Drive, Winona, Minnesota. LEGAL COUNSEL Faegre Drinker Biddle & Reath LLP Minneapolis, Minnesota Chair of the Board; Retired President of North America Surface Transportation Division, C.H. Robinson Worldwide, Inc. President and Chief Executive Officer President and Chief Executive Officer, Fastenal Company Executive Vice President and Chief Financial Officer Vice President and Chief Financial Officer, A.L.M. Holding Company (construction and energy company) Executive Vice President - Sales Self-Employed Business Consultant; Retired Corporate Vice President and Chief Information Officer of Cargill, Incorporated Executive Vice President - Chief Accounting Officer and Treasurer Chief Financial Officer, First Citizens Bank Executive Vice President - International Sales Executive Vice President, Strategic Planning, Ecolab Inc. Senior Executive Vice President - Sales Senior Executive Vice President - Human Resources, Fastenal Company Senior Executive Vice President - Human Resources President of the Aftermarket, Parts, Garments, and Accessories Division of Polaris Inc. (recreational vehicle manufacturer) Executive Vice President - Manufacturing President and Chief Executive Officer of M.A. Mortenson Company (family-owned construction company) Senior Executive Vice President - Sales Operations Retired Senior Executive Vice President - Operations, Fastenal Company Senior Executive Vice President - Information Technology Director since 2009 Employee since 1996 Director since 2016 Employee since 2016 Director since 2009 Employee since 1995 Director since 2012 Employee since 1994 Director since 2021 Employee since 1996 Director since 2020 Employee since 1999 Director since 2000 Employee since 1988 Director since 2015 Employee since 1992 Director since 2016 Employee since 1999 Director since 2019 Employee since 1993 SCOTT A. SATTERLEE DANIEL L. FLORNESS DANIEL L. FLORNESS HOLDEN LEWIS MICHAEL J. ANCIUS WILLIAM J. DRAZKOWSKI RITA J. HEISE SHERYL A. LISOWSKI SARAH N. NIELSEN JEFFERY M. WATTS HSENGHUNG SAM HSU CHARLES S. MILLER REYNE K. WISECUP REYNE K. WISECUP STEPHEN L. EASTMAN JAMES C. JANSEN DANIEL L. JOHNSON TERRY M. OWEN NICHOLAS J. LUNDQUIST JOHN L. SODERBERG
2 0 2 1 A N N U A L R E P O R T 9706829 2021 Annual Report | JH 2.22 | Printed in the USA 2021 ANNUAL REPORT 1 A N N U A L R E P O R T 9706829 20 1 Annual Report | JH 2. 2 | Printed in the USA 2021 ANNUAL REPORT