Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
FORM 10-Q
(Mark One)
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
    For the quarterly period ended March 31,September 30, 2023, or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
    For the transition period from __________ to __________                   
Commission file number 0-16125
 FASTENAL COMPANY
(Exact name of registrant as specified in its charter)
Minnesota 41-0948415
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
2001 Theurer Boulevard, Winona, Minnesota55987-1500
(Address of principal executive offices)(Zip Code)
(507) 454-5374
(Registrant's telephone number, including area code)


Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $.01 per shareFASTThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.)    Yes  ý    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ý  Accelerated Filer 
Non-accelerated Filer   Smaller Reporting Company 
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  ý
As of April 12,October 11, 2023, there were approximately 571,042,439571,413,165 shares of the registrant's common stock outstanding.


Table of Contents
FASTENAL COMPANY
INDEX
 
 Page



Table of Contents
PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS
FASTENAL COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in millions except share information)
(Unaudited)(Unaudited)
AssetsAssetsMarch 31,
2023
December 31,
2022
AssetsSeptember 30,
2023
December 31,
2022
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$239.8 230.1 Cash and cash equivalents$297.5 230.1 
Trade accounts receivable, net of allowance for credit losses of $6.1 and $8.3, respectively1,149.8 1,013.2 
Trade accounts receivable, net of allowance for credit losses of $6.6 and $8.3, respectivelyTrade accounts receivable, net of allowance for credit losses of $6.6 and $8.3, respectively1,171.0 1,013.2 
InventoriesInventories1,651.9 1,708.0 Inventories1,513.8 1,708.0 
Prepaid income taxesPrepaid income taxes— 8.1 Prepaid income taxes15.3 8.1 
Other current assetsOther current assets120.0 165.4 Other current assets150.0 165.4 
Total current assetsTotal current assets3,161.5 3,124.8 Total current assets3,147.6 3,124.8 
Property and equipment, netProperty and equipment, net1,003.5 1,010.0 Property and equipment, net1,011.7 1,010.0 
Operating lease right-of-use assetsOperating lease right-of-use assets243.8 243.0 Operating lease right-of-use assets274.0 243.0 
Other assetsOther assets168.2 170.8 Other assets163.3 170.8 
Total assetsTotal assets$4,577.0 4,548.6 Total assets$4,596.6 4,548.6 
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityLiabilities and Stockholders' Equity
Current liabilities:Current liabilities:Current liabilities:
Current portion of debtCurrent portion of debt$200.0 201.8 Current portion of debt$60.0 201.8 
Accounts payableAccounts payable266.8 255.0 Accounts payable275.1 255.0 
Accrued expensesAccrued expenses229.2 241.1 Accrued expenses235.8 241.1 
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities91.4 91.9 Current portion of operating lease liabilities97.0 91.9 
Income taxes payable75.8 — 
Total current liabilitiesTotal current liabilities863.2 789.8 Total current liabilities667.9 789.8 
Long-term debtLong-term debt200.0 353.2 Long-term debt200.0 353.2 
Operating lease liabilitiesOperating lease liabilities156.7 155.2 Operating lease liabilities181.9 155.2 
Deferred income taxesDeferred income taxes84.0 83.7 Deferred income taxes79.3 83.7 
Other long-term liabilitiesOther long-term liabilities2.5 3.5 Other long-term liabilities0.9 3.5 
Stockholders' equity:Stockholders' equity:Stockholders' equity:
Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstandingPreferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding— — Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding— — 
Common stock: $0.01 par value, 800,000,000 shares authorized, 571,024,422 and 570,811,674 shares issued and outstanding, respectively5.7 5.7 
Common stock: $0.01 par value, 800,000,000 shares authorized, 571,404,311 and 570,811,674 shares issued and outstanding, respectivelyCommon stock: $0.01 par value, 800,000,000 shares authorized, 571,404,311 and 570,811,674 shares issued and outstanding, respectively5.7 5.7 
Additional paid-in capitalAdditional paid-in capital11.4 3.6 Additional paid-in capital24.6 3.6 
Retained earningsRetained earnings3,314.0 3,218.7 Retained earnings3,507.8 3,218.7 
Accumulated other comprehensive lossAccumulated other comprehensive loss(60.5)(64.8)Accumulated other comprehensive loss(71.5)(64.8)
Total stockholders' equityTotal stockholders' equity3,270.6 3,163.2 Total stockholders' equity3,466.6 3,163.2 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$4,577.0 4,548.6 Total liabilities and stockholders' equity$4,596.6 4,548.6 
See accompanying Notes to Condensed Consolidated Financial Statements.

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FASTENAL COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Amounts in millions except earnings per share)
(Unaudited)(Unaudited)(Unaudited)
Three Months Ended
March 31,
Nine Months Ended
September 30,
Three Months Ended
September 30,
20232022 2023202220232022
Net salesNet sales$1,859.1 1,704.1 Net sales$5,588.1 5,285.0 $1,845.9 1,802.4 
Cost of salesCost of sales1,009.1 910.8 Cost of sales3,033.0 2,837.6 998.3 975.9 
Gross profitGross profit850.0 793.3 Gross profit2,555.1 2,447.4 847.6 826.5 
Operating and administrative expensesOperating and administrative expenses456.8 435.3 Operating and administrative expenses1,380.2 1,326.7 460.9 447.3 
Operating incomeOperating income393.2 358.0 Operating income1,174.9 1,120.7 386.7 379.2 
Interest incomeInterest income0.4 0.1 Interest income1.8 0.4 0.8 0.2 
Interest expenseInterest expense(3.9)(2.4)Interest expense(8.9)(9.3)(2.1)(4.1)
Earnings before income taxesEarnings before income taxes389.7 355.7 Earnings before income taxes1,167.8 1,111.8 385.4 375.3 
Income tax expenseIncome tax expense94.6 86.1 Income tax expense279.2 270.5 89.9 90.7 
Net earningsNet earnings$295.1 269.6 Net earnings$888.6 841.3 $295.5 284.6 
Basic net earnings per shareBasic net earnings per share$0.52 0.47 Basic net earnings per share$1.56 1.46 $0.52 0.50 
Diluted net earnings per shareDiluted net earnings per share$0.52 0.47 Diluted net earnings per share$1.55 1.46 $0.52 0.50 
Basic weighted average shares outstandingBasic weighted average shares outstanding570.9 575.6 Basic weighted average shares outstanding571.1 574.7 571.4 573.0 
Diluted weighted average shares outstandingDiluted weighted average shares outstanding572.6 577.6 Diluted weighted average shares outstanding572.9 576.6 573.1 574.7 
See accompanying Notes to Condensed Consolidated Financial Statements.


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FASTENAL COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Amounts in millions)
(Unaudited)(Unaudited)(Unaudited)
Three Months Ended
March 31,
Nine Months Ended
September 30,
Three Months Ended
September 30,
20232022 2023202220232022
Net earningsNet earnings$295.1 269.6 Net earnings$888.6 841.3 $295.5 284.6 
Other comprehensive income, net of tax:
Other comprehensive loss, net of tax:Other comprehensive loss, net of tax:
Foreign currency translation adjustments (net of tax of $0.0 in 2023 and 2022)Foreign currency translation adjustments (net of tax of $0.0 in 2023 and 2022)4.3 2.3 Foreign currency translation adjustments (net of tax of $0.0 in 2023 and 2022)(6.7)(56.4)(14.6)(32.7)
Comprehensive incomeComprehensive income$299.4 271.9 Comprehensive income$881.9 784.9 $280.9 251.9 
See accompanying Notes to Condensed Consolidated Financial Statements.


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FASTENAL COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
(Amounts in millions except per share information)
(Unaudited)(Unaudited)(Unaudited)
Three Months Ended
March 31,
Nine Months Ended
September 30,
Three Months Ended
September 30,
202320222023202220232022
Common stockCommon stockCommon stock
Balance at beginning of periodBalance at beginning of period$5.7 5.8 Balance at beginning of period$5.7 5.8 $5.7 5.8 
Balance at end of periodBalance at end of period5.7 5.8 Balance at end of period5.7 5.8 5.7 5.8 
Additional paid-in capitalAdditional paid-in capitalAdditional paid-in capital
Balance at beginning of periodBalance at beginning of period3.6 96.2 Balance at beginning of period3.6 96.2 19.9 55.7 
Stock options exercisedStock options exercised5.9 3.9 Stock options exercised15.4 7.8 2.9 2.0 
Purchases of common stockPurchases of common stock— (105.6)— (56.3)
Stock-based compensationStock-based compensation1.9 1.5 Stock-based compensation5.6 4.4 1.8 1.4 
Balance at end of periodBalance at end of period11.4 101.6 Balance at end of period24.6 2.8 24.6 2.8 
Retained earningsRetained earningsRetained earnings
Balance at beginning of periodBalance at beginning of period3,218.7 2,970.9 Balance at beginning of period3,218.7 2,970.9 3,412.1 3,171.6 
Net earningsNet earnings295.1 269.6 Net earnings888.6 841.3 295.5 284.6 
Cash dividends paidCash dividends paid(199.8)(178.4)Cash dividends paid(599.5)(534.4)(199.8)(177.5)
Translation adjustment upon merger of foreign subsidiaryTranslation adjustment upon merger of foreign subsidiary— 0.9 Translation adjustment upon merger of foreign subsidiary— 0.9 — — 
Purchases of common stockPurchases of common stock— (39.0)— (39.0)
Balance at end of periodBalance at end of period3,314.0 3,063.0 Balance at end of period3,507.8 3,239.7 3,507.8 3,239.7 
Accumulated other comprehensive income (loss)
Accumulated other comprehensive lossAccumulated other comprehensive loss
Balance at beginning of periodBalance at beginning of period(64.8)(30.7)Balance at beginning of period(64.8)(30.7)(56.9)(54.4)
Other comprehensive income4.3 2.3 
Other comprehensive lossOther comprehensive loss(6.7)(56.4)(14.6)(32.7)
Balance at end of periodBalance at end of period(60.5)(28.4)Balance at end of period(71.5)(87.1)(71.5)(87.1)
Total stockholders' equityTotal stockholders' equity$3,270.6 3,142.0 Total stockholders' equity$3,466.6 3,161.2 $3,466.6 3,161.2 
Cash dividends paid per share of common stockCash dividends paid per share of common stock$0.35 0.31 Cash dividends paid per share of common stock$1.05 0.93 $0.35 0.31 
See accompanying Notes to Condensed Consolidated Financial Statements.


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FASTENAL COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in millions)
(Unaudited)(Unaudited)(Unaudited)
Three Months Ended
March 31,
Nine Months Ended
September 30,
Three Months Ended
September 30,
20232022 2023202220232022
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net earningsNet earnings$295.1 269.6 Net earnings$888.6 841.3 $295.5 284.6 
Adjustments to reconcile net earnings to net cash provided by operating activities:Adjustments to reconcile net earnings to net cash provided by operating activities:Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of property and equipmentDepreciation of property and equipment41.8 41.2 Depreciation of property and equipment126.1 123.8 42.1 41.4 
(Gain) loss on sale of property and equipment(Gain) loss on sale of property and equipment(0.6)3.5 (Gain) loss on sale of property and equipment(2.7)1.2 (1.5)(1.1)
Bad debt recoveries(1.4)(0.3)
Bad debt expense (recoveries)Bad debt expense (recoveries)1.4 (0.9)1.2 (1.3)
Deferred income taxesDeferred income taxes0.3 1.0 Deferred income taxes(4.4)4.3 (5.0)3.8 
Stock-based compensationStock-based compensation1.9 1.5 Stock-based compensation5.6 4.4 1.8 1.4 
Amortization of intangible assetsAmortization of intangible assets2.7 2.7 Amortization of intangible assets8.0 8.1 2.6 2.7 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Trade accounts receivableTrade accounts receivable(133.7)(169.9)Trade accounts receivable(159.5)(222.9)(4.5)(13.6)
InventoriesInventories57.7 (76.4)Inventories191.7 (176.9)46.1 (26.3)
Other current assetsOther current assets45.4 60.7 Other current assets15.4 15.9 (8.3)(43.0)
Accounts payableAccounts payable8.5 56.8 Accounts payable21.7 44.1 11.8 (14.6)
Accrued expensesAccrued expenses(11.9)(30.1)Accrued expenses(4.7)(15.9)6.6 13.7 
Income taxesIncome taxes83.9 69.6 Income taxes(7.2)5.3 (0.6)3.3 
OtherOther(1.2)0.1 Other(1.3)7.3 0.3 6.9 
Net cash provided by operating activitiesNet cash provided by operating activities388.5 230.0 Net cash provided by operating activities1,078.7 639.1 388.1 257.9 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Purchases of property and equipmentPurchases of property and equipment(33.7)(35.5)Purchases of property and equipment(136.5)(131.0)(46.9)(48.0)
Proceeds from sale of property and equipmentProceeds from sale of property and equipment2.8 2.4 Proceeds from sale of property and equipment8.8 10.1 4.0 3.6 
OtherOther(0.1)(0.1)Other(0.5)(0.7)(0.1)(0.1)
Net cash used in investing activitiesNet cash used in investing activities(31.0)(33.2)Net cash used in investing activities(128.2)(121.6)(43.0)(44.5)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Proceeds from debt obligationsProceeds from debt obligations230.0 235.0 Proceeds from debt obligations790.0 1,390.0 155.0 695.0 
Payments against debt obligationsPayments against debt obligations(385.0)(260.0)Payments against debt obligations(1,085.0)(1,225.0)(245.0)(645.0)
Proceeds from exercise of stock optionsProceeds from exercise of stock options5.9 3.9 Proceeds from exercise of stock options15.4 7.8 2.9 2.0 
Purchases of common stockPurchases of common stock— (144.6)— (95.3)
Cash dividends paidCash dividends paid(199.8)(178.4)Cash dividends paid(599.5)(534.4)(199.8)(177.5)
Net cash used in financing activitiesNet cash used in financing activities(348.9)(199.5)Net cash used in financing activities(879.1)(506.2)(286.9)(220.8)
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents1.1 0.7 Effect of exchange rate changes on cash and cash equivalents(4.0)(16.0)(4.3)(9.0)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents9.7 (2.0)Net increase (decrease) in cash and cash equivalents67.4 (4.7)53.9 (16.4)
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period230.1 236.2 Cash and cash equivalents at beginning of period230.1 236.2 243.6 247.9 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$239.8 234.2 Cash and cash equivalents at end of period$297.5 231.5 $297.5 231.5 
Supplemental information:Supplemental information:Supplemental information:
Cash paid for interestCash paid for interest$5.1 2.3 Cash paid for interest$10.3 9.2 $2.1 4.2 
Net cash paid for income taxesNet cash paid for income taxes$9.7 15.2 Net cash paid for income taxes$288.0 257.3 $94.3 81.9 
Leased assets obtained in exchange for new operating lease liabilitiesLeased assets obtained in exchange for new operating lease liabilities$25.9 23.9 Leased assets obtained in exchange for new operating lease liabilities$96.3 74.0 $32.0 18.4 
See accompanying Notes to Condensed Consolidated Financial Statements.

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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,September 30, 2023 and 2022
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Fastenal Company and subsidiaries (collectively referred to as 'the company', 'Fastenal', or by terms such as 'we', 'our', or 'us') have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. They do not include all information and footnotes required by U.S. GAAP for complete financial statements. However, except as described herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in our consolidated financial statements as of and for the year ended December 31, 2022. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
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.
(2) Revenue
Revenue Recognition
Net sales include products and shipping and handling charges, net of estimates for product returns and any related sales incentives. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when or as we satisfy our performance obligations under the contract. We recognize revenue by transferring control of the promised products to the customer, with the majority of revenue recognized at the point in time the customer obtains control of the products. We recognize revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer. We estimate product returns based on historical return rates. Using probability assessments, we estimate sales incentives expected to be paid over the term of the contract. The majority of our contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Revenues are attributable to countries based on the selling location from which the sale occurred.
Disaggregation of Revenue
Our revenues related to the following geographic areas were as follows for the periods ended March 31:September 30:
Three-month PeriodNine-month PeriodThree-month Period
202320222023202220232022
United StatesUnited States$1,558.7 1,431.7 United States$4,675.0 4,445.1 $1,544.6 1,516.7 
% of revenues% of revenues83.8 %84.0 %% of revenues83.7 %84.1 %83.7 %84.1 %
Canada and MexicoCanada and Mexico243.9 213.4 Canada and Mexico744.5 666.5 245.7 228.1 
% of revenues% of revenues13.1 %12.5 %% of revenues13.3 %12.6 %13.3 %12.7 %
North AmericaNorth America1,802.6 1,645.1 North America5,419.5 5,111.6 1,790.3 1,744.8 
% of revenues% of revenues96.9 %96.5 %% of revenues97.0 %96.7 %97.0 %96.8 %
All other foreign countriesAll other foreign countries56.5 59.0 All other foreign countries168.6 173.4 55.6 57.6 
% of revenues% of revenues3.1 %3.5 %% of revenues3.0 %3.3 %3.0 %3.2 %
Total revenuesTotal revenues$1,859.1 1,704.1 Total revenues$5,588.1 5,285.0 $1,845.9 1,802.4 

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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,September 30, 2023 and 2022
(Unaudited)
The percentages of our sales by end market were as follows for the periods ended March 31:September 30:
Three-month PeriodNine-month PeriodThree-month Period
202320222023202220232022
ManufacturingManufacturing74.6 %71.2 %Manufacturing74.6 %72.0 %74.3 %72.9 %
Non-residential constructionNon-residential construction9.3 %10.4 %Non-residential construction9.2 %10.4 %9.1 %10.2 %
OtherOther16.1 %18.4 %Other16.2 %17.6 %16.6 %16.9 %
100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %
The percentages of our sales by product line were as follows for the periods ended March 31:September 30:
Three-month PeriodNine-month PeriodThree-month Period
TypeTypeIntroduced20232022TypeIntroduced2023202220232022
Fasteners (1)
Fasteners (1)
196733.6 %34.3 %
Fasteners (1)
196732.8 %34.3 %32.1 %34.1 %
ToolsTools19938.5 %8.2 %Tools19938.5 %8.3 %8.5 %8.4 %
Cutting toolsCutting tools19965.4 %5.0 %Cutting tools19965.3 %5.0 %5.2 %5.0 %
Hydraulics & pneumaticsHydraulics & pneumatics19966.6 %6.5 %Hydraulics & pneumatics19966.7 %6.6 %6.7 %6.6 %
Material handlingMaterial handling19965.6 %5.6 %Material handling19965.6 %5.7 %5.6 %5.6 %
Janitorial suppliesJanitorial supplies19968.1 %7.9 %Janitorial supplies19968.3 %8.0 %8.5 %8.1 %
Electrical suppliesElectrical supplies19974.6 %4.4 %Electrical supplies19974.6 %4.4 %4.6 %4.5 %
Welding suppliesWelding supplies19974.0 %3.7 %Welding supplies19974.1 %3.8 %4.0 %3.9 %
Safety suppliesSafety supplies199920.4 %21.0 %Safety supplies199920.8 %20.6 %21.4 %20.5 %
OtherOther3.2 %3.4 %Other3.3 %3.3 %3.4 %3.3 %
100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %
(1) The fasteners product line represents fasteners and miscellaneous supplies.
(3) Stockholders' Equity
Dividends
On April 12,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 May 25,November 24, 2023 to shareholders of record at the close of business on April 27,October 26, 2023.
The following table presents the cash dividends either paid previously or declared by our board of directors for future payment on a per share basis:
2023202220232022
First quarterFirst quarter$0.35 $0.31 First quarter$0.35 $0.31 
Second quarterSecond quarter$0.35 $0.31 Second quarter0.35 0.31 
Third quarterThird quarter$0.31 Third quarter0.35 0.31 
Fourth quarterFourth quarter$0.31 Fourth quarter0.35 0.31 
TotalTotal$0.70 $1.24 Total$1.40 $1.24 

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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,September 30, 2023 and 2022
(Unaudited)
Stock Options
The following tables summarize the details of options granted under our stock option plans that were outstanding as of March 31,September 30, 2023, and the assumptions used to value those grants. All such grants were effective at the close of business on the date of grant.
Options
Granted
Option Exercise
Price
Closing Stock Price on Date
of Grant
March 31, 2023 Options
Granted
Option Exercise
Price
Closing Stock Price on Date
of Grant
September 30, 2023
Date of GrantDate of GrantOptions
Outstanding
Options
Exercisable
Date of GrantOptions
Outstanding
Options
Exercisable
January 3, 2023January 3, 20231,071,943 $48.00 $47.400 1,062,367 70,562 January 3, 20231,071,943 $48.00 $47.400 1,023,837 70,562 
January 3, 2022January 3, 2022713,438 $62.00 $61.980 666,921 53,355 January 3, 2022713,438 $62.00 $61.980 630,718 53,355 
January 4, 2021January 4, 2021741,510 $48.00 $47.650 654,243 244,108 January 4, 2021741,510 $48.00 $47.650 623,549 228,275 
January 2, 2020January 2, 2020902,263 $38.00 $37.230 744,467 382,024 January 2, 2020902,263 $38.00 $37.230 709,736 361,582 
January 2, 2019January 2, 20191,316,924 $26.00 $25.705 900,545 559,781 January 2, 20191,316,924 $26.00 $25.705 836,512 520,618 
January 2, 2018January 2, 20181,087,936 $27.50 $27.270 658,540 527,626 January 2, 20181,087,936 $27.50 $27.270 614,407 491,475 
January 3, 2017January 3, 20171,529,578 $23.50 $23.475 651,325 547,059 January 3, 20171,529,578 $23.50 $23.475 615,307 515,809 
April 19, 2016April 19, 20161,690,880 $23.00 $22.870 478,231 356,861 April 19, 20161,690,880 $23.00 $22.870 401,641 343,901 
April 21, 2015April 21, 20151,786,440 $21.00 $20.630 322,855 247,151 April 21, 20151,786,440 $21.00 $20.630 189,501 189,501 
April 22, 20141,910,000 $28.00 $25.265 30,298 30,298 
TotalTotal12,750,912 6,169,792 3,018,825 Total10,840,912 5,645,208 2,775,078 

Date of GrantDate of GrantRisk-free
Interest Rate
Expected Life of
Option in Years
Expected
Dividend
Yield
Expected
Stock
Volatility
Estimated Fair
Value of Stock
Option
Date of GrantRisk-free
Interest Rate
Expected Life of
Option in Years
Expected
Dividend
Yield
Expected
Stock
Volatility
Estimated Fair
Value of Stock
Option
January 3, 2023January 3, 20234.0 %5.002.6 %29.58 %$11.62 January 3, 20234.0 %5.002.6 %29.58 %$11.62 
January 3, 2022January 3, 20221.3 %5.001.7 %28.52 %$13.68 January 3, 20221.3 %5.001.7 %28.52 %$13.68 
January 4, 2021January 4, 20210.4 %5.002.0 %29.17 %$9.57 January 4, 20210.4 %5.002.0 %29.17 %$9.57 
January 2, 2020January 2, 20201.7 %5.002.4 %25.70 %$6.81 January 2, 20201.7 %5.002.4 %25.70 %$6.81 
January 2, 2019January 2, 20192.5 %5.002.9 %23.96 %$4.40 January 2, 20192.5 %5.002.9 %23.96 %$4.40 
January 2, 2018January 2, 20182.2 %5.002.3 %23.45 %$5.02 January 2, 20182.2 %5.002.3 %23.45 %$5.02 
January 3, 2017January 3, 20171.9 %5.002.6 %24.49 %$4.20 January 3, 20171.9 %5.002.6 %24.49 %$4.20 
April 19, 2016April 19, 20161.3 %5.002.6 %26.34 %$4.09 April 19, 20161.3 %5.002.6 %26.34 %$4.09 
April 21, 2015April 21, 20151.3 %5.002.7 %26.84 %$3.68 April 21, 20151.3 %5.002.7 %26.84 %$3.68 
April 22, 20141.8 %5.002.0 %28.55 %$4.79 
All of the options in the tables above vest and become exercisable over a period of up to eight years. Generally, each option will terminate approximately 10 years after the grant date.
The fair value of each share-based option is estimated on the date of grant using a Black-Scholes valuation method that uses the assumptions listed above. The risk-free interest rate is based on the U.S. Treasury rate over the expected life of the option at the time of grant. The expected life is the average length of time over which we expect the employee groups will exercise their options, net of forfeitures, which is based on historical experience with similar grants. The dividend yield is estimated over the expected life of the option based on our current dividend payout, historical dividends paid, and expected future cash dividends. Expected stock volatilities are based on the movement of our stock price over the most recent historical period equivalent to the expected life of the option.
Compensation expense equal to the grant date fair value is recognized for all of these awards over the vesting period. The stock-based compensation expense for the 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. Any future changes in estimated forfeitures will impact this amount.

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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,September 30, 2023 and 2022
(Unaudited)
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 three-month periods ended March 31, 2023 and 2022 was $1.9 and $1.5, respectively. Unrecognized stock-based compensation expense related to outstanding unvested stock options as of March 31, 2023 was $22.3 and is expected to be recognized over a weighted average period of 4.67 years. Any future changes in estimated forfeitures will impact this amount.
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:
Three-month Period Nine-month PeriodThree-month Period
ReconciliationReconciliation20232022Reconciliation2023202220232022
Basic weighted average shares outstandingBasic weighted average shares outstanding570,928,848 575,559,161 Basic weighted average shares outstanding571,145,110 574,667,188 571,368,442 573,019,381 
Weighted shares assumed upon exercise of stock optionsWeighted shares assumed upon exercise of stock options1,703,741 2,059,645 Weighted shares assumed upon exercise of stock options1,726,310 1,912,011 1,731,267 1,724,550 
Diluted weighted average shares outstandingDiluted weighted average shares outstanding572,632,589 577,618,806 Diluted weighted average shares outstanding572,871,420 576,579,199 573,099,709 574,743,931 
Three-month Period Nine-month PeriodThree-month Period
Summary of Anti-dilutive Options ExcludedSummary of Anti-dilutive Options Excluded20232022Summary of Anti-dilutive Options Excluded2023202220232022
Options to purchase shares of common stockOptions to purchase shares of common stock2,269,908 930,401 Options to purchase shares of common stock1,831,551 1,343,160 1,598,463 1,340,567 
Weighted average exercise prices of optionsWeighted average exercise prices of options$52.17 58.40 Weighted average exercise prices of options$53.05 55.23 $53.65 55.22 
Any dilutive impact summarized above related to periods when the average market price of our stock exceeded the exercise price of the potentially dilutive stock options then outstanding.
(4) Income Taxes
We file income tax returns in the United States federal jurisdiction, all states, and various local and foreign jurisdictions. We are no longer subject to income tax examinations by taxing authorities for taxable years before 20192020 in the case of United States federal examinations, and with limited exception, before 2017 in the case of foreign, state, and local examinations. During the firstthird quarter of 2023, therethe 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.benefits during the first half of 2023.
(5) Operating Leases
Certain operating leases for pick-up trucks contain residual value guarantee provisions which would generally become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value. The aggregate residual value guarantee related to these leases was approximately $87.4.$109.0. We believe the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is remote.

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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,September 30, 2023 and 2022
(Unaudited)
(6) Debt Commitments
Credit Facility, Notes Payable, and Commitments
Debt obligations and letters of credit outstanding at the end of each period consisted of the following:
Average Interest Rate at March 31, 2023Debt OutstandingAverage Interest Rate at September 30, 2023Debt Outstanding
Maturity
Date
March 31,
2023
December 31,
2022
Maturity
Date
September 30,
2023
December 31,
2022
Unsecured revolving credit facilityUnsecured revolving credit facility5.85 %September 28, 2027$70.0 225.0 Unsecured revolving credit facility6.35 %September 28, 2027$— 225.0 
Senior unsecured promissory notes payable, Series CSenior unsecured promissory notes payable, Series C3.22 %March 1, 202460.0 60.0 Senior unsecured promissory notes payable, Series C3.22 %March 1, 202460.0 60.0 
Senior unsecured promissory notes payable, Series DSenior unsecured promissory notes payable, Series D2.66 %May 15, 202575.0 75.0 Senior unsecured promissory notes payable, Series D2.66 %May 15, 202575.0 75.0 
Senior unsecured promissory notes payable, Series ESenior unsecured promissory notes payable, Series E2.72 %May 15, 202750.0 50.0 Senior unsecured promissory notes payable, Series E2.72 %May 15, 202750.0 50.0 
Senior unsecured promissory notes payable, Series FSenior unsecured promissory notes payable, Series F1.69 %June 24, 202370.0 70.0 Senior unsecured promissory notes payable, Series F1.69 %June 24, 2023— 70.0 
Senior unsecured promissory notes payable, Series GSenior unsecured promissory notes payable, Series G2.13 %June 24, 202625.0 25.0 Senior unsecured promissory notes payable, Series G2.13 %June 24, 202625.0 25.0 
Senior unsecured promissory notes payable, Series HSenior unsecured promissory notes payable, Series H2.50 %June 24, 203050.0 50.0 Senior unsecured promissory notes payable, Series H2.50 %June 24, 203050.0 50.0 
TotalTotal400.0 555.0 Total260.0 555.0 
Less: Current portion of debt Less: Current portion of debt(200.0)(201.8) Less: Current portion of debt(60.0)(201.8)
Long-term debtLong-term debt$200.0 353.2 Long-term debt$200.0 353.2 
Outstanding letters of credit under unsecured revolving credit facility - contingent obligationOutstanding letters of credit under unsecured revolving credit facility - contingent obligation$32.7 36.3 Outstanding letters of credit under unsecured revolving credit facility - contingent obligation$32.7 36.3 
Unsecured Revolving Credit Facility
We have an $835.0 committed unsecured revolving credit facility (Credit Facility) with an uncommitted accordion option to increase the aggregate revolving commitment by an additional $365.0 for a total amount of $1,200.0. The Credit Facility includes a committed letter of credit subfacility of $55.0. Any borrowings outstanding under the Credit Facility for which we have the ability and intent to pay using cash within the next 12 months will be classified as a current liability. The Credit Facility contains certain financial and other covenants, and our right to borrow under the Credit Facility is conditioned upon, among other things, our compliance with these covenants. We are currently in compliance with these covenants.
Borrowings under the Credit Facility generally bear interest at a rate per annum equal to Daily Simple SOFR plus a 0.10% spread adjustment plus 0.95%. We pay a commitment fee for the unused portion of the Credit Facility. This fee is either 0.10% or 0.125% per annum based on our usage of the Credit Facility.
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 $330.0$260.0 as of March 31,September 30, 2023. Our aggregate borrowing capacity under the Master Note Agreement is $900.0; however, none of the institutional investors party to that agreement are committed to purchase notes thereunder. There is no amortization of these notes prior to their maturity date and interest is payable quarterly. The notes currently issued under our Master Note Agreement, including the maturity date and fixed interest rate per annum of each series of note, are contained in the table above. The Master Note Agreement contains certain financial and other covenants and we are currently in compliance with these covenants.
(7) Legal Contingencies
The nature of our potential exposure to legal contingencies is described in our 2022 annual report on Form 10-K in Note 10 of the Notes to Consolidated Financial Statements. As of March 31,September 30, 2023, there were no litigation matters that we consider to be probable or reasonably possible to have a material adverse outcome.
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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,September 30, 2023 and 2022
(Unaudited)
(8) Subsequent Events
We evaluated all subsequent event activity and concluded that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the Notes to Condensed Consolidated Financial Statements, with the exception of the dividend declaration disclosed in Note 3 'Stockholders' Equity'.

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ITEM 2 — MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Dollar amounts are stated in millions except for share and per share amounts and where otherwise noted. Throughout this document, percentage and dollar change calculations, which are based on non-rounded dollar values, may not be able to be recalculated using the dollar values in this document due to the rounding of those dollar values. References to daily sales rate (DSR) change may reflect either growth (positive) or contraction (negative) for the applicable period.
Business
Fastenal is a North American leader in the wholesale distribution of industrial and construction supplies. We distribute these supplies through a network of over 3,300approximately 3,400 in-market locations. Most of our customers are in the manufacturing and non-residential construction markets. The manufacturing market includes sales of products for both original equipment manufacturing (OEM), where our products are consumed in the final products of our customers, and manufacturing, repair and operations (MRO), where our products are consumed to support the facilities and ongoing operations of our customers. The non-residential construction market includes general, electrical, plumbing, sheet metal, and road contractors. Other users of our products include farmers, truckers, railroads, oil exploration companies, oil production and refinement companies, mining companies, federal, state, and local governmental entities, schools, and certain retail trades. Geographically, our branches, Onsite locations, and customers are primarily located in North America, though we continue to grow our non-North American presence as well.
Our motto is Growth Through Customer Service® and our tagline is Where Industry Meets Innovation. We are a customer- and growth-centric organization focused on identifying unique technologies, capabilities, and supply chain solutions that get us closer to our customers and reduce the total cost of their global supply chain. We believe this close-to-the-customer, 'high-touch, high-tech' partnership approach is differentiated in the marketplace and allows us to gain market share in what remains a fragmented industrial distribution market.
Executive Overview
The following table presents a performance summary of our results of operations for the nine-month and three-month periods ended March 31,September 30, 2023 and 2022.
 Three-month Period
 20232022Change
Net sales$1,859.1 1,704.1 9.1 %
Business days64 64 
Daily sales$29.0 26.6 9.1 %
Gross profit$850.0 793.3 7.2 %
 % of net sales45.7 %46.6 %
Operating and administrative expenses$456.8 435.3 5.0 %
% of net sales24.6 %25.5 %
Operating income$393.2 358.0 9.8 %
 % of net sales21.2 %21.0 %
Earnings before income taxes$389.7 355.7 9.6 %
 % of net sales21.0 %20.9 %
Net earnings$295.1 269.6 9.5 %
Diluted net earnings per share$0.52 0.47 10.4 %


 Nine-month PeriodThree-month Period
 20232022Change20232022Change
Net sales$5,588.1 5,285.0 5.7 %$1,845.9 1,802.4 2.4 %
Business days191 192 63 64 
Daily sales$29.3 27.5 6.3 %$29.3 28.2 4.0 %
Gross profit$2,555.1 2,447.4 4.4 %$847.6 826.5 2.6 %
 % of net sales45.7 %46.3 %45.9 %45.9 %
Operating and administrative expenses$1,380.2 1,326.7 4.0 %$460.9 447.3 3.0 %
% of net sales24.7 %25.1 %25.0 %24.8 %
Operating income$1,174.9 1,120.7 4.8 %$386.7 379.2 2.0 %
 % of net sales21.0 %21.2 %21.0 %21.0 %
Earnings before income taxes$1,167.8 1,111.8 5.0 %$385.4 375.3 2.7 %
 % of net sales20.9 %21.0 %20.9 %20.8 %
Net earnings$888.6 841.3 5.6 %$295.5 284.6 3.8 %
Diluted net earnings per share$1.55 1.46 6.3 %$0.52 0.50 4.1 %
Note – Daily sales are defined as the total net sales for the period divided by the number of business days (in the United States) in the period.








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The table below summarizes our absolute and full time equivalent (FTE; based on 40 hours per week) employee headcount, our investments related to in-market locations (defined as the sum of the total number of branch locations and the total number of active Onsite locations), and weighted Fastenal Managed Inventory (FMI) devices at the end of the periods presented and the percentage change compared to the end of the prior periods.
Change
Since:
Change
Since:
Change
Since:
Change
Since:
Change
Since:
Q1
2023
Q4
2022
Q1
2022
Q3
2023
Q2
2023
Q4
2022
Q3
2022
In-market locations - absolute employee headcount
13,668 13,410 1.9 %12,855 6.3 %
In-market locations - FTE employee headcount12,219 12,017 1.7 %11,644 4.9 %
Total absolute employee headcount22,820 22,386 1.9 %21,167 7.8 %
Total FTE employee headcount20,262 19,854 2.1 %18,958 6.9 %
Total selling personnel - absolute employee headcountTotal selling personnel - absolute employee headcount16,261 16,302 -0.3 %15,898 2.3 %15,662 3.8 %
Total selling personnel - FTE employee headcountTotal selling personnel - FTE employee headcount14,750 14,993 -1.6 %14,476 1.9 %14,284 3.3 %
Total personnel - absolute employee headcountTotal personnel - absolute employee headcount22,862 22,913 -0.2 %22,386 2.1 %22,025 3.8 %
Total personnel - FTE employee headcountTotal personnel - FTE employee headcount20,284 20,631 -1.7 %19,854 2.2 %19,519 3.9 %
Number of branch locationsNumber of branch locations1,660 1,683 -1.4 %1,760 -5.7 %Number of branch locations1,615 1,635 -1.2 %1,683 -4.0 %1,716 -5.9 %
Number of active Onsite locationsNumber of active Onsite locations1,674 1,623 3.1 %1,440 16.3 %Number of active Onsite locations1,778 1,728 2.9 %1,623 9.6 %1,567 13.5 %
Number of in-market locationsNumber of in-market locations3,334 3,306 0.8 %3,200 4.2 %Number of in-market locations3,393 3,363 0.9 %3,306 2.6 %3,283 3.4 %
Weighted FMI devices (MEU installed count)Weighted FMI devices (MEU installed count)104,673 102,151 2.5 %94,425 10.9 %Weighted FMI devices (MEU installed count)110,191 107,115 2.9 %102,151 7.9 %99,409 10.8 %
During the last twelve months, we increased our total FTE employee headcount by 1,304.765. This reflects an increase in our in-market and non-in-markettotal FTE selling FTE employee headcountpersonnel of 863466 to support growth in the marketplace and sales initiatives targeting customer acquisition. We had an increase in our distribution centerand transportation FTE employee headcountpersonnel of 17395 to support increased product throughput at our facilities and to expand our local inventory fulfillment terminals (LIFTs). We had an increase in our remaining FTE employee headcountpersonnel of 268204 that relates primarily to personnel investments in information technology, manufacturing, and operational support, such as purchasing and product development.
The table below summarizes the number of branches opened and closed, net of conversions, as well as the number of Onsites activated and closed, net of conversions during the periods presented.
Three-month PeriodNine-month PeriodThree-month Period
202320222023202220232022
Branch openingsBranch openingsBranch openings11 
Branch closures, net of conversionsBranch closures, net of conversions(25)(39)Branch closures, net of conversions(76)(88)(23)(24)
Onsite activationsOnsite activations84 57 Onsite activations252 230 79 92 
Onsite closures, net of conversionsOnsite closures, net of conversions(33)(33)Onsite closures, net of conversions(97)(79)(29)(26)
In any period, the number of closings tends to reflect normal churn in our business, whether due to redefining or exiting customer relationships, the shutting or relocation of customer facilities that host our locations, or a customer decision, as well as our ongoing review of underperforming locations. Our in-market network forms the foundation of our business strategy, and we will continue to open or close locations as is deemed necessary to sustain and improve our network, support our growth drivers, and manage our operating expenses.
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FIRSTTHIRD QUARTER OF 2023 VERSUS FIRSTTHIRD QUARTER OF 2022
Results of Operations
The following table sets forth condensed consolidated statement of earnings information (as a percentage of net sales) for the periods ended March 31:September 30:
Three-month PeriodThree-month Period
20232022 20232022
Net salesNet sales100.0 %100.0 %Net sales100.0 %100.0 %
Gross profitGross profit45.7 %46.6 %Gross profit45.9 %45.9 %
Operating and administrative expensesOperating and administrative expenses24.6 %25.5 %Operating and administrative expenses25.0 %24.8 %
Operating incomeOperating income21.2 %21.0 %Operating income21.0 %21.0 %
Net interest expenseNet interest expense-0.2 %-0.1 %Net interest expense-0.1 %-0.2 %
Earnings before income taxesEarnings before income taxes21.0 %20.9 %Earnings before income taxes20.9 %20.8 %
Note – Amounts may not foot due to rounding difference.Note – Amounts may not foot due to rounding difference.Note – Amounts may not foot due to rounding difference.
Net Sales
Note – Daily sales are defined as the total net sales for the period divided by the number of business days (in the United States) in the period. The table below sets forth net sales and daily sales for the periods ended March 31,September 30, and changes in such sales from the prior period to the more recent period:
Three-month Period Three-month Period
20232022 20232022
Net salesNet sales$1,859.1 1,704.1 Net sales$1,845.9 1,802.4 
Percentage changePercentage change9.1 %20.3 %Percentage change2.4 %16.0 %
Business daysBusiness days64 64 Business days63 64 
Daily salesDaily sales$29.0 26.6 Daily sales$29.3 28.2 
Percentage changePercentage change9.1 %18.4 %Percentage change4.0 %16.0 %
Daily sales impact of currency fluctuationsDaily sales impact of currency fluctuations-0.7 %-0.1 %Daily sales impact of currency fluctuations-0.1 %-0.6 %
Net sales increased $155.0,$43.5, or 9.1%2.4%, in the firstthird quarter of 2023 when compared to the firstthird quarter of 2022. The numberThere was one fewer selling day in the quarter relative to the prior year period and, taking this into consideration, our net daily sales growth increased 4.0% in the third quarter of business days were2023 compared to the same in both periods. third quarter of 2022. We experienced higher unit sales in the firstthird quarter of 2023 that contributedwas primarily due to the increase in net salesgrowth at our Onsite locations, particularly those opened in the period.last two years. This was due to further growth in underlying demand in markets tied to industrial capital goods and commodities, which more than offset a modest contraction forthe impact of softer end market demand on our manufacturing customers and lower revenues to construction supplies.and reseller customers. Foreign exchange negatively affected sales in the firstthird quarter of 2023 by approximately 7010 basis points, while adverse weather impacts in February 2023 negatively affected sales in the first quarter of 2023 by 20 to 40 basis points.
The impact of product pricing on net sales in the firstthird quarter of 2023 was 290 to 320 basis pointsmodestly positive, consistent with historical trends, as compared to the first quarter of 2022. The increase reflects carryover from broad pricing actions taken in the prior year designed to mitigate marketplace inflation for our products and services and, to a lesser degree, targeted actions in the first quarter of 2023 intended to address gross margin pressure for our non-fastener and non-safety products. Spot prices in the marketplace for many inputs remained below prior year levels, though in many cases they were at or above levels experienced in the fourth quarter of 2022. The combination of good demand, more stable cost trends, and our long supply chain for imported fasteners and certain non-fastener products produced stable price levels for our products. The impact of product pricing on net sales in the firstthird quarter of 2022 wasof 550 to 580 to 610 basis points. Incremental pricing actions over the past twelve months have been of modest scope, resulting in mostly stable price levels through the third quarter of 2023.
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From a product standpoint, we have three categories: fasteners, safety supplies, and other product lines,products, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools. We experienced increasing divergence in the performance of our fastener versus our non-fastener product lines in the third quarter of 2023, which we believe relates to two factors. First, fasteners are more heavily oriented toward production of final goods than maintenance, which results in greater susceptibility to weaker manufacturing end markets. Second, pricing for fasteners has decelerated at a faster pace than non-fastener products. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
DSR Change
Three-month Period
% of Sales
Three-month Period
DSR Change
Three-month Period
% of Sales
Three-month Period
20232022202320222023202220232022
FastenersFasteners7.0 %24.6 %33.6 %34.3 %Fasteners-2.0 %18.2 %32.1 %34.1 %
Safety suppliesSafety supplies5.7 %15.3 %20.4 %21.0 %Safety supplies9.2 %12.4 %21.4 %20.5 %
OtherOther12.4 %14.8 %46.0 %44.7 %Other6.8 %15.4 %46.5 %45.4 %
Our end markets consist of manufacturing, non-residential construction, reseller, and other, the latter of which includes resellers, government/education and transportation/warehousing. We continued to experience a significant divergence in the performance of our manufacturing end market versus our non-manufacturing end markets in the third quarter of 2023. We are growing relatively faster with key account customers, particularly Onsites, with significant managed spend where our service model and technology is particularly impactful, which disproportionately benefits manufacturing customers. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
DSR Change
Three-month Period
% of Sales
Three-month Period
2023202220232022
Manufacturing14.4% 23.9% 74.6% 71.2% 
Non-residential construction-2.4% 14.1% 9.3% 10.4% 
Other-4.4% 3.2% 16.1% 18.4% 
DSR Change
Three-month Period
% of Sales
Three-month Period
2023202220232022
Heavy manufacturing9.0 %25.4 %43.2 %41.3 %
Other manufacturing2.5 %19.1 %31.1 %31.6 %
Non-residential construction-7.2 %5.2 %9.1 %10.2 %
Reseller-6.9 %3.7 %5.8 %6.5 %
Other end markets8.1 %-4.3 %10.8 %10.4 %
We report our customers in two categories: national accounts, which are customers with a multi-site contract, and non-national accounts, which include large regional customers, small local customers, and government customers. SalesWe continued to mostexperience a significant divergence in the performance of our national account customers grew inversus our non-national account customers, which relates to the first quarterrelative growth of 2023 over the prior year, as our sales grew at 82 of our Top 100 national account customers.through Onsite locations and larger, key accounts. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
DSR Change
Three-month Period
% of Sales
Three-month Period
2023202220232022
National Accounts13.6 %22.8 %59.2 %57.1 %
Non-National Accounts3.4 %13.0 %40.8 %42.9 %
DSR Change
Three-month Period
% of Sales
Three-month Period
2023202220232022
National accounts8.6 %20.8 %60.8 %58.0 %
Non-national accounts-1.9 %9.9 %39.2 %42.0 %
Growth Drivers
We signed 8993 new Onsite locations (defined as dedicated sales and service provided from within, or in proximity to, the customer's facility) in the firstthird quarter of 2023.2023, resulting in 268 year-to-date signings of new Onsite locations. We had 1,6741,778 active sites on March 31,September 30, 2023, which represented an increase of 16.3%13.5% from March 31,September 30, 2022. Daily sales through our Onsite locations, excluding sales transferred from branches to new Onsites, grew roughly 20%at a low double-digit rate in the firstthird quarter of 2023 over the firstthird quarter of 2022. This growth is primarily due to contributions from Onsites activated and implemented overin 2022 and 2023. Based on the last twelve months, as well as continued growth from our older Onsite locations. Our goal for Onsite signings in the first nine months of 2023, remains between 375we currently expect to 400.sign approximately 350 new Onsite locations for the full year of 2023.
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FMI Technology is comprised of our FASTStock (scanned stocking locations), FASTBin® (infrared, RFID, and scaled bins), and FASTVend® (vending devices) offering. FASTStock's fulfillment processing technology is not embedded, is relatively less expensive and highly flexible in application, and delivered using our proprietary mobility technology. FASTBin and FASTVend incorporate highly efficient and powerful embedded data tracking and fulfillment processing technologies. Prior to 2021, we reported exclusively on the signings, installations, and sales of FASTVend. Beginning in the first quarter of 2021, we began disclosing certain statistics around our FMI offering. The first statistic is a weighted FMI® measure which combines the signings and installations of FASTBin and FASTVend in a standardized machine equivalent unit (MEU) based on the expected output of each type of device. We do not include FASTStock in this measurement because scanned stocking locations can take many forms, such as bins, shelves, cabinets, pallets, etc., that cannot be converted into a standardized MEU. The second statistic is revenue through FMI Technology which combines the sales through FASTStock, FASTBin, and FASTVend. A portion of the growth in sales experienced by FMI, particularly FASTStock and FASTBin, reflects the migration of products from less efficient non-digital stocking locations to more efficient, digital stocking locations.

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The table below summarizes the signings and installations of, and sales through, our FMI devices.
Three-month PeriodThree-month Period
20232022Change20232022Change
Weighted FASTBin/FASTVend signings (MEUs)Weighted FASTBin/FASTVend signings (MEUs)5,902 5,329 10.8 %Weighted FASTBin/FASTVend signings (MEUs)5,969 5,187 15.1 %
Signings per daySignings per day92 83 Signings per day95 81 
Weighted FASTBin/FASTVend installations (MEUs; end of period)Weighted FASTBin/FASTVend installations (MEUs; end of period)104,673 94,425 10.9 %Weighted FASTBin/FASTVend installations (MEUs; end of period)110,191 99,409 10.8 %
FASTStock salesFASTStock sales$236.7 198.5 19.3 %FASTStock sales$234.2 215.9 8.5 %
% of sales% of sales12.6 %11.5 %% of sales12.5 %11.8 %
FASTBin/FASTVend salesFASTBin/FASTVend sales$503.7 412.0 22.2 %FASTBin/FASTVend sales$526.2 456.9 15.2 %
% of sales% of sales26.8 %23.9 %% of sales28.2 %25.1 %
FMI salesFMI sales$740.4 610.5 21.3 %FMI sales$760.4 672.8 13.0 %
FMI daily salesFMI daily sales$11.6 9.5 21.3 %FMI daily sales$12.1 10.5 14.8 %
% of sales% of sales39.4 %35.4 %% of sales40.7 %36.9 %
Our goal for weighted FASTBin and FASTVend device signings in 20232023 remains between 23,000 to 25,000 MEUs.MEUs.
Our eCommerce business includes sales made through an electronic data interface (EDI), or other types of technical integrations, and through our web verticals. Daily sales through eCommerce grew 48.7%41.3% in the firstthird quarter of 2023 and represented 21.9%24.5% of our total sales in the period.
Our digital products and services are comprised of sales through FMI (FASTStock, FASTBin, and FASTVend) plus that proportion of our eCommerce sales that do not represent billings of FMI services (collectively, our Digital Footprint). We believe the data that is created through our digital capabilities enhances product visibility, traceability, and control that reduces risk in operations and creates ordering and fulfillment efficiencies for both ourselves and our customers. As a result, we believe our opportunity to grow our business will be enhanced through the continued development and expansion of our digital capabilities.
Our Digital Footprint in the firstthird quarter of 2023 represented 54.1%57.1% of our sales, an increase from 47.0%49.5% of sales in the firstthird quarter of 2022.
Gross Profit
Our gross profit, as a percentage of net sales, declined to 45.7%was unchanged at 45.9% in the firstthird quarter of 2023 from 46.6%45.9% in the firstthird quarter of 2022. The change in Customer and product mix had a negative effect on our gross profit percentage primarily reflected four items. First, customer and product mix reduced our gross margin percentage. We experiencedcontinued to experience relatively strong growth from Onsite customers and non-fastener products, each of which tend to have a lower gross marginprofit percentage than our business as a whole. This impact widened slightly onwas offset by a sequential basis. Second, lower product margins in certainnumber of our other product categories reduced our gross margin percentage. The combination of elevated costs and normalization of product availability for less frequently sold, often non-standard products where there is less visibility into the supply chain has produced some gross margin pressure. We took actions in the first quarter of 2023favorable variables. First, we continue to begin to address these pressures. Third, we had higher organizational/overhead costs, primarily due to higher inboundexperience favorable freight costs, and working capital needs being relieved from inventory and generating higher period costs. Fourth, freight expenses were favorable, partially offsetting the negative impacts of mix, product gross margin pressure, and organizational/overhead costs. This favorable impact was from costs related to importing product from overseas suppliers being below prior year levels, the volume of containers being imported from overseas suppliers being lower, and recordwhich reflects elevated domestic freight revenue leveraging what are relatively stable costs to support our captive fleet.fleet, lower expenses related to external freight providers, and lower fuel costs. Second, in the third quarter of 2022 we had a $3.4 write-down of pandemic-related gloves that did not recur in the third quarter of 2023. Third, we experienced slightly positive price-cost. This reflects moderating product costs, as we took no meaningful pricing actions in the period, and an easy comparison, as it largely recaptures the price-cost deficit experienced in the third quarter of 2022.
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Operating Income
Our operating income, as a percentage of net sales, increased to 21.2%was unchanged at 21.0% in the firstthird quarter of 2023 from 21.0% in the firstthird quarter of 2022. This was due to improved operating expense leverage, which more than offset the decline in our gross profit percentage.
Operating and Administrative Expenses
Our operating and administrative expenses, as a percentage of net sales, fellincreased to 24.6%25.0% in the firstthird quarter of 2023 from 25.5%24.8% in the firstthird quarter of 2022. This reflected declines,largely reflects an increase, as a percentage of net sales, in employee-relatedother operating and occupancy-relatedadministrative expenses.
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Table Our ability to leverage was adversely impacted by slow sales growth, which made it difficult to leverage spending on certain business initiatives and investments. Our ability to leverage was also limited by having one less selling day in the third quarter of Contents
2023 than we had in the third quarter of 2022, as most of our operating expenses will not vary based on the number of selling days in a given period.
The percentage change in employee-related, occupancy-related, and all other operating and administrative expenses compared to the same periods in the preceding year, is outlined in the table below.
Approximate Percentage of Total Operating and Administrative ExpensesThree-month Period
2023
Employee-related expenses70% to 75%4.41.6 %
Occupancy-related expenses15% to 20%3.43.7 %
All other operating and administrative expenses10% to 15%10.711.0 %
Employee-related expenses include: (1) payroll (which includes cash compensation, stock option expense, and profit sharing), (2) health care, (3) personnel development, and (4) social taxes.
In the firstthird quarter of 2023, our employee-related expenses increased when compared to the firstthird quarter of 2022. We experienced an increase in employee base pay due to higher average FTE during the period and, to a lesser degree, higher average wages. BonusWe also experienced higher healthcare-related costs. This was partly offset by bonus and commission payments decreased reflectingdeclining to reflect the impact of slower sales and profit growth versus the prior year. We also experienced higher profit sharing costs.
The table below summarizes our FTE headcount at the end of the periods presented and the percentage change compared to the end of the prior periods:
Change
Since:
Change
Since:
Q1
2023
Q4
2022
Q4
2022
Q1
2022
Q1
2022
In-market locations (branches & Onsites)12,219 12,017 1.7 %11,644 4.9 %
Non-in-market selling2,485 2,459 1.1 %2,197 13.1 %
Selling subtotal14,704 14,476 1.6 %13,841 6.2 %
Distribution/Transportation3,029 2,971 2.0 %2,856 6.1 %
Manufacturing714 696 2.6 %656 8.8 %
Organizational support personnel (1)
1,815 1,711 6.1 %1,605 13.1 %
Non-selling subtotal5,558 5,378 3.3 %5,117 8.6 %
Total20,262 19,854 2.1 %18,958 6.9 %
Change
Since:
Change
Since:
Q3
2023
Q2
2023
Q2
2023
Q3
2022
Q3
2022
Total selling personnel (1)
14,750 14,993 -1.6 %14,284 3.3 %
Distribution/Transportation personnel2,984 3,053 -2.3 %2,889 3.3 %
Manufacturing personnel704 723 -2.6 %671 4.9 %
Organizational support personnel (1)
1,846 1,862 -0.9 %1,675 10.2 %
Total personnel20,284 20,631 -1.7 %19,519 3.9 %
(1) Of our Total Selling Personnel, 80%-85% are attached to a specific in-market location. Organizational support personnel consists of: (1) Sales & Growth Driver Support personnel (35% to 40%(approximately 35% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) Information Technology personnel (35% to 40% of category); and (3) Administrative Support personnel (25% to 30% of category), which includes human resources, Fastenal School of Business, accounting and finance, senior management, etc.
Occupancy-related expenses include: (1) building rent and depreciation, (2) building utility costs, (3) equipment related to our branches and distribution locations, and (4) industrial vending equipment and bins utilized as part of our FMI services (we consider the vending equipment, excluding leased locker equipment,this hardware to be a logical extension of our in-market operations and classify the depreciation and repair costs as occupancy expenses).
In the firstthird quarter of 2023, our occupancy-related expenses increased when compared to the firstthird quarter of 2022. This increase largely reflectsWe continue to experience rising rent costs for our buildings due to inflation and upsizing of branches. At the same time, slowing in the pace of branch closings is resulting in a moderating level of incremental cost reduction to offset these increases. We also had higher costs for FMI hardware as we continue to expand our installed base of such hardware. This was partly offset by slightly lower facility expenses as a result of further branch consolidation and lower utility costs.
All other operating and administrative expenses include: (1) selling-related transportation, (2) information technology (IT) expenses, (3) general corporate expenses, which consists of legal expenses, general insurance expenses, travel and marketing expenses, etc., and (4) sales of property and equipment.
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Combined, all other operating and administrative expenses increased in the firstthird quarter of 2023 when compared to the firstthird quarter of 2022. The increase in other operating and administrative expenses relates primarily to higher spending on information technology, increased general insurance costs, and higher spending on travel expenses and supplies. This was only partly offset by lower product movement and fuel costs for our local truck fleet, reduced bad debt expense, and higher profits on sales of assets.general insurance costs.
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Net Interest Expense
Our net interest expense was $3.5$1.3 in the firstthird quarter of 2023, compared to $2.3$3.9 in the firstthird quarter of 2022. This increase was due toWe had higher average debtinterest income, reflecting higher cash balances through the period and higher rates paid on those balances. We also had lower interest expense, reflecting lower average borrowings through the period, as well as slightly lower average interest rates on those borrowings during the period.rates.
Income Taxes
We recorded income tax expense of $94.6$89.9 in the firstthird quarter of 2023, or 24.3%23.4% of earnings before income taxes. 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. Income tax expense was $86.1$90.7 in the firstthird quarter of 2022, or 24.2% of earnings before income taxes. We believe our ongoing tax rate, absent any discrete tax items or broader changes to tax law, will be approximately 24.5%.
Net Earnings
Our net earnings during the firstthird quarter of 2023 were $295.1,$295.5, an increase of 9.5%3.8% compared to the firstthird quarter of 2022. Our diluted net earnings per share were $0.52 during the firstthird quarter of 2023, which increased from $0.47$0.50 during the firstthird quarter of 2022.
Liquidity and Capital Resources
Cash flow activity was as follows for the periods ended March 31:September 30:
Three-month Period Three-month Period
20232022Change 20232022Change
Net cash provided by operating activitiesNet cash provided by operating activities$388.5 230.0 68.9 %Net cash provided by operating activities$388.1 257.9 50.5 %
Percentage of net earningsPercentage of net earnings131.7 %85.3 %Percentage of net earnings131.3 %90.6 %
Net cash used in investing activitiesNet cash used in investing activities$31.0 33.2 -6.6 %Net cash used in investing activities$43.0 44.5 -3.4 %
Percentage of net earningsPercentage of net earnings10.5 %12.3 %Percentage of net earnings14.6 %15.6 %
Net cash used in financing activitiesNet cash used in financing activities$348.9 199.5 74.9 %Net cash used in financing activities$286.9 220.8 29.9 %
Percentage of net earnings118.2 %74.0 %
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $130.2 in the third quarter of 2023 when compared to the third quarter of 2022. The improvement in operating cash flow, as a percent of net earnings, is due toreflects working capital being a source of cash in the firstthird quarter of 2023, versus working capital beingas opposed to a significant use of cash in the firstthird quarter of 2022. GlobalThis reflects the normalization of global supply chains have normalized versus the prior year resulting inand, to a reduction inlesser degree, slower business activity, which combine to reduce the amountrate of working capital expansion necessary to keep on hand to support our customers' growth.
The dollar and percentage change in accounts receivable, net, inventories, and accounts payable as of March 31,September 30, 2023 when compared to March 31,September 30, 2022 were as follows:
March 31Twelve-month Dollar ChangeTwelve-month Percentage Change September 30Twelve-month Dollar ChangeTwelve-month Percentage Change
2023202220232023 2023202220232023
Accounts receivable, netAccounts receivable, net$1,149.8 1,071.6 $78.2 7.3 %Accounts receivable, net$1,171.0 1,110.6 $60.3 5.4 %
InventoriesInventories1,651.9 1,600.8 51.1 3.2 %Inventories1,513.8 1,678.1 (164.3)-9.8 %
Trade working capitalTrade working capital$2,801.7 2,672.4 $129.3 4.8 %Trade working capital$2,684.8 2,788.7 $(104.0)-3.7 %
Accounts payableAccounts payable$266.8 289.9 $(23.2)-8.0 %Accounts payable$275.1 277.2 $(2.0)-0.7 %
Trade working capital, netTrade working capital, net$2,534.9 2,382.5 $152.5 6.4 %Trade working capital, net$2,409.7 2,511.5 $(101.9)-4.1 %
Net sales in last three monthsNet sales in last three months$1,859.1 1,704.1 $155.0 9.1 %Net sales in last three months$1,845.9 1,802.4 $43.5 2.4 %
Note - Amounts may not foot due to rounding difference.
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The increase in our accounts receivable balance in the firstthird quarter of 2023 is primarily attributable to two factors. First, our receivables increasedincreased as a result of expanding business activity and resulting growth in sales to our customers' sales.customers. Second, we continue to experience a shift in our mix due to relatively stronger growth from national account customers, which tend to carry longer payment terms than our non-national account customers.
The increasedecrease in our inventory balance in the firstthird quarter of 2023 is primarily attributable to supporting the improved business activity of our customers. We were able to provide this support even while growing inventory at a slower rate than sales. This
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reflects the absence of supply disruptions from the prior year that we managed by deepeningyear. Our response at the time was to deepen our inventory especiallyas a means of maintaining high service to our customers, particularly for imported inventory, and whichinventory. Dissipation of these disruptions has allowed us to begin gradually shorteningshorten our product ordering cycle. It is also likely that slower business activity is reducing the level of inventory our customers require us to maintain to meet their production needs.
The decrease in our accounts payable balance in the firstthird quarter of 2023 is primarily attributable to the dissipation of supply disruptions from thethe prior year. That allowed us to gradually begin to shorten our product ordering cycle and reduce the volume of product purchases in the firstthird quarter of 2023 versus the firstthird quarter of 2022.
Net Cash Used in Investing Activities
Net cash used in investinginvesting activities decreased by $2.2$1.5 in the firstthird quarter ofof 2023 when compared to the firstthird quarter of 2022. ThisThis was due to slightly lower purchasesnet capital expenditures (purchases of property and equipment, net of proceeds from the salesales of property and equipment,equipment) in the firstthird quarter of 2023 compared to the firstthird quarter of 2022.
Our capital spending will typically fall into six categories: (1) purchases related to industrial vending, (2) purchases of property and equipment related to expansion of and enhancements to distribution centers, (3) spending on software and hardware for our information processing systems, (4) the addition of fleet vehicles, (5) expansion, improvement or investment in certain owned or leased branch properties, and (6) the addition of manufacturing and warehouse equipment. Proceeds from the sales of property and equipment, typically for the planned disposition of pick-up trucks as well as distribution vehicles and trailers in the normal course of business, are netted against these purchases and additions. During the firstthird quarter of 2023, our net capital expenditures (purchases of property and equipment net of proceeds from sales of property and equipment) were $30.9,$42.9, which is a decrease from $33.1$44.4 in the firstthird quarter of 2022.
Cash requirements for capital expenditures were satisfied from cash generated from operations, available cash and cash equivalents, our borrowing capacity, and the proceeds of disposals. DuringFor the full year of 2023, we continue to expect our investment in property and equipment, net of proceeds offrom sales, to be within a rangerange of $180.0 to $190.0. This is a decline from our prior range of $210.0 to $230.0 increasreflecting a deferral of several distribution center-related projingects. This new range represents an increase from $162.4 in 2022. This increase reflects primarily: (1) higher property-related spending on upgrades2022, due primarily to and investments in automation of certain facilities, the beginning of construction of a distribution center in Utah, and investment in materials to facilitate our branch conversion projects; (2) investments in fleet equipment to support our network of heavy trucks;trucks and (3) an increase in spending on information technology.In addition to capital expenditures, material cash requirements for known contractual obligations include debt and lease obligations which are discussed in more detail earlier in this report in the Notes to Condensed Consolidated Financial Statements and in our 2022 annual report on Form 10-K.
Net Cash Used in Financing Activities
Net cash used in financing actiacvitiestivities increased $149.4$66.1 in the firstthird quarter of 2023 when compared to the firstthird quarter of 2022. This is primarily related to a reduction in our debt obligations, versus an increase in our debt obligations in the third quarter of 2022, which reflected strong operating cash generation in the period and,period. This was only partly offset by a reduction in the third quarter of 2023 of total capital returned to a lesser degree, an increase in cash used for dividend payments.shareholders compared to the third quarter of 2022.
During the firstthird quarter of 2023, we returned $199.8 in dividends to our shareholders in the form of dividends, compared to the firstthird quarter of 2022 when we returned $178.4$272.8 to our shareholders in dividends. Wethe form of dividends ($177.5) and purchases of our common stock ($95.3).
During the third quarter of 2023, we did not repurchase any of our common stock. During the third quarter of 2022, we purchased 2,000,000 shares of our common stock in either period.at an average price of approximately $47.68 per share.
We have authority to purchase up to 6,200,000 additional shares of our common stock under the July 12, 2022 authorization. This authorization does not have an expiration date.
Total debt on our balance sheet was $400.0$260.0 at the end of the firstthird quarter of 2023, or 10.9%7.0% of total capital (the sum of stockholders' equity and total debt). This compares to $365.0,$555.0, or 10.4%14.9% of total capital, at the end of the firstthird quarter of 2022. This increasedecrease is fromdue to applying operating cash generated to the repurchasereduction of $237.8 oftotal borrowings on the balance sheet.
Our material cash requirements for known contractual obligations include capital expenditures, debt, and lease obligations, which are discussed in more detail earlier in this report in the Notes to Condensed Consolidated Financial Statements and in our common stock over the past twelve months.2022 annual report on Form 10-K.
An overview of our cash dividends paid or declared in 2023 and 2022 is contained in Note 3 of the Notes to Condensed Consolidated Financial Statements.


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NINE MONTHS ENDED SEPTEMBER 30, 2023 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2022
Results of Operations
The following table sets forth condensed consolidated statement of earnings information (as a percentage of net sales) for the periods ended September 30:
Nine-month Period
 20232022
Net sales100.0 %100.0 %
Gross profit45.7 %46.3 %
Operating and administrative expenses24.7 %25.1 %
Operating income21.0 %21.2 %
Net interest expense-0.1 %-0.2 %
Earnings before income taxes20.9 %21.0 %
Note – Amounts may not foot due to rounding difference.
Sales
The table below sets forth net sales and daily sales for the periods ended September 30, and changes in such sales from the prior period to the more recent period:
 Nine-month Period
 20232022
Net sales$5,588.1 5,285.0 
Percentage change5.7 %18.0 %
Business days191 192 
Daily sales$29.3 27.5 
Percentage Change6.3 %17.4 %
Daily sales impact of currency fluctuations-0.4 %-0.4 %
Net sales increased $303.1, or 5.7%, in the first nine months of 2023 when compared to the first nine months of 2022. There was one fewer selling day in the first nine months of 2023 relative to the prior year period and, taking this into consideration, our net daily sales growth increased 6.3% in the first nine months of 2023 compared to the first nine months of 2022. We experienced higher unit sales during the period that contributed to the increase in net sales in the period. This was primarily due to growth at our Onsite locations, with the strongest contribution from those sites opened in the last two years and a more modest contribution from more mature locations. This more than offset the impact of softer end market demand on our manufacturing customers and lower revenues to construction and reseller customers. Foreign exchange negatively affected sales in the first nine months of 2023 by approximately 40 basis points. We estimate that adverse weather in the first quarter of 2023 reduced our growth by approximately 10 basis points during the nine-month period.
The overall impact of product pricing on net sales was 190 to 220 basis points during the first nine months of 2023. While product pricing has been positive throughout 2023, the impact was greatest in the first two quarters of the period. This reflects the carryover of broad actions taken in the first quarter of 2022 and targeted actions taken in the first quarter of 2023 to mitigate the effects of higher transportation and material costs for our products, as well as the impact of general inflationary conditions in the marketplace over the past twelve months. The impact of product pricing on net sales was 600 to 630 basis points during the first nine months of 2022.
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From a product standpoint, we have three categories: fasteners, safety supplies, and other products, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools. In the first nine months of 2023, fastener daily sales grew at a slower rate than our other product categories, which we believe relates to two factors. First, fasteners are more heavily oriented toward production of final goods than maintenance, which results in greater susceptibility to weaker manufacturing end markets. Second, pricing for fasteners has decelerated at a faster pace than non-fastener products. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
DSR Change
Nine-month Period
% of Sales
Nine-month Period
2023202220232022
Fasteners1.6 %21.2 %32.8 %34.3 %
Safety supplies7.6 %13.8 %20.8 %20.6 %
Other9.6 %15.7 %46.4 %45.1 %
Our end markets consist of manufacturing, non-residential construction, reseller, and other, the latter of which includes government/education and transportation/warehousing. We continued to experience a significant divergence in the performance of our manufacturing end market versus our non-manufacturing end markets in the first nine months of 2023. We are growing relatively faster with key account customers, particularly Onsites, with significant managed spend where our service model and technology is particularly impactful, which disproportionately benefits manufacturing customers. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
DSR Change
Nine-month Period
% of Sales
Nine-month Period
2023202220232022
Heavy manufacturing13.1 %26.1 %43.2 %40.7 %
Other manufacturing6.5 %19.5 %31.3 %31.3 %
Non-residential construction-6.2 %9.8 %9.2 %10.4 %
Reseller-7.1 %4.2 %5.9 %6.7 %
Other end markets1.5 %0.9 %10.4 %10.9 %
We report our customers in two categories: national accounts, which are customers with a multi-site contract, and non-national accounts, which include large regional customers, small local customers, and government customers. We continued to experience a significant divergence in the performance of our national account customers versus our non-national account customers, which relates to the relative growth of our sales through Onsite locations and larger, key accounts. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
DSR Change
Nine-month Period
% of Sales
Nine-month Period
2023202220232022
National accounts10.8 %22.1 %59.8 %57.5 %
Non-national accounts0.6 %11.6 %40.2 %42.5 %
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Growth Drivers
The table below summarizes the signings and installations of, and sales through, our FMI devices.
Nine-month Period
20232022Change
Weighted FASTBin/FASTVend signings (MEUs)18,664 16,005 16.6 %
Signings per day98 83 
Weighted FASTBin/FASTVend installations (MEUs; end of period)110,191 99,409 10.8 %
FASTStock sales$708.6 621.7 14.0 %
% of sales12.5 %11.6 %
FASTBin/FASTVend sales$1,550.6 1,302.2 19.1 %
% of sales27.4 %24.4 %
FMI sales$2,259.2 1,923.9 17.4 %
FMI daily sales$11.8 10.0 18.0 %
% of sales39.9 %36.0 %
Daily sales through eCommerce grew 44.6% in the first nine months of 2023 and represented 23.2% of our total revenues in the period.
Our Digital Footprint in the first nine months of 2023 represented 55.5% of our sales, an increase from 48.2% of sales in the first nine months of 2022.
Gross Profit
In the first nine months of 2023, our gross profit, as a percentage of net sales, declined to 45.7% from 46.3% in the first nine months of 2022. The change in our gross profit percentage primarily reflected three items. First, customer and product mix reduced our gross profit percentage. We continued to experience relatively strong growth from Onsite customers and non-fastener products, each of which tend to have a lower gross profit percentage than our business as a whole. This impact widened on a sequential basis. Second, higher organizational/overhead costs reduced our gross profit percentage, primarily due to higher inbound freight costs and working capital needs being relieved from inventory and generating higher period costs. Third, favorable freight expenses partially offset the negative impacts of mix and organizational/overhead costs. This reflected strong domestic freight revenue over the period, which leveraged what are relatively stable costs to support our captive fleet, lower expenses related to external freight providers, and lower fuel costs.
Operating Income
Our operating income, as a percentage of net sales, declined to 21.0% in the first nine months of 2023 from 21.2% in the first nine months of 2022. The operating leverage we achieved during the period was not sufficient to offset the decline in our gross profit percentage.
Operating and Administrative Expenses
Our operating and administrative expenses, as a percentage of net sales, improved to 24.7% in the first nine months of 2023 from 25.1% in the first nine months of 2022. This is due to a decline, as a percentage of net sales, in payroll-related expenses.
The percentage change in employee-related, occupancy-related, and all other operating and administrative expenses compared to the same periods in the preceding year, is outlined in the table below.
Approximate Percentage of Total Operating and Administrative ExpensesNine-month Period
2023
Employee-related expenses70% to 75%2.8 %
Occupancy-related expenses15% to 20%5.4 %
All other operating and administrative expenses10% to 15%9.6 %
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In the first nine months of 2023, our employee-related expenses increased when compared to the first nine months of 2022. We experienced an increase in employee base pay due to higher average FTE and average wages during the period, as well as higher healthcare costs and, to a lesser degree, profit sharing costs. This was only partly offset by a decrease in bonus and commission payments reflecting the impact of slower sales and profit growth versus the prior year.
The table below summarizes our FTE headcount at the end of the periods presented and the percentage change compared to the end of the prior period:
Change
Since:
Q3
2023
Q4
2022
Q4
2022
Total selling personnel (1)
14,750 14,476 1.9 %
Distribution/Transportation personnel2,984 2,971 0.4 %
Manufacturing personnel704 696 1.1 %
Organizational support personnel (1)
1,846 1,711 7.9 %
Total personnel20,284 19,854 2.2 %
(1) Of our Total Selling Personnel, 80%-85% are attached to a specific in-market location. Organizational support personnel consists of: (1) Sales & Growth Driver Support personnel (approximately 35% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) Information Technology personnel (35% to 40% of category); and (3) Administrative Support personnel (25% to 30% of category), which includes human resources, Fastenal School of Business, accounting and finance, senior management, etc.
In the first nine months of 2023, our occupancy-related expenses increased when compared to the first nine months of 2022. The most significant contributor to this increase was higher cost for FMI hardware as we continue to expand our installed base of such hardware. We also have experienced rising rent costs for our buildings due to inflation and the upsizing of branches, even as the slowing pace of branch closings is resulting in a moderating level of incremental cost reduction to offset these increases.
Combined, all other operating and administrative expenses increased in the first nine months of 2023 when compared to the first nine months of 2022. The increase in other operating and administrative expenses relates primarily to higher spending on information technology, higher general insurance costs, increased expenses for travel and supplies, and higher bad debt expense.
Net Interest Expense
Our net interest expense was $7.1 in the first nine months of 2023, compared to $8.9 in the first nine months of 2022. We had higher interest income, reflecting higher cash balances through the period and higher rates paid on those balances. We also had lower interest expense, reflecting lower average borrowings through the period, as well as slightly lower average interest rates.
Income Taxes
We recorded income tax expense of $279.2 in the first nine months of 2023, or 23.9% of earnings before income taxes. 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. Income tax expense was $270.5 in the first nine months of 2022, or 24.3% of earnings before income taxes.
Net Earnings
Our net earnings during the first nine months of 2023 were $888.6, an increase of 5.6% when compared to the first nine months of 2022. Our diluted net earnings per share were $1.55 during the first nine months of 2023, which increased from $1.46 during the first nine months of 2022.
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Liquidity and Capital Resources
Cash flow activity was as follows for the periods ended September 30:
 Nine-month Period
 20232022Change
Net cash provided by operating activities$1,078.7 639.1 68.8 %
Percentage of net earnings121.4 %76.0 %
Net cash used in investing activities$128.2 121.6 5.4 %
Percentage of net earnings14.4 %14.5 %
Net cash used in financing activities$879.1 506.2 73.7 %
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased by $439.6 in the first nine months of 2023 when compared to the first nine months of 2022. The improvement in operating cash flow, as a percent of net earnings, reflects working capital being a source of cash in the first nine months of 2023, as opposed to a significant use of cash in the first nine months of 2022. This reflects the normalization of global supply chains versus the prior year and, to a lesser degree, slower business activity, which combine to reduce the working capital necessary to support our customers' growth.
Net Cash Used in Investing Activities
Net cash used in investing activities increased by $6.6 in the first nine months of 2023 when compared to the first nine months of 2022. This was primarily due to an increase in net capital expenditures (purchases of property and equipment, net of proceeds from sales of property and equipment) in the first nine months of 2023 compared to in the first nine months of 2022.
During the first nine months of 2023, our net capital expenditures were $127.7, which is an increase from $120.9 in the first nine months of 2022. For the full year of 2023, we expect our investment in property and equipment, net of proceeds from sales, to be within a range of $180.0 to $190.0. This is a decline from our prior range of $210.0 to $230.0 reflecting a deferral of several distribution center-related projects. This new range represents an increase from $162.4 in 2022, due primarily to investments in fleet equipment to support our network of heavy trucks and an increase in spending on information technology.
Net Cash Used in Financing Activities
Net cash used in financing activities increased by $372.9 in the first nine months of 2023 when compared to the first nine months of 2022. This is primarily related to a reduction in our debt obligations, versus an increase in our debt obligations in the first nine months of 2022, which reflected strong operating cash generation in the period. This was only partly offset by a reduction in the first nine months of 2023 of total capital returned to shareholders compared to the first nine months of 2022.
During the first nine months of 2023, we returned $599.5 to our shareholders in the form of dividends, compared to the first nine months of 2022 when we returned $679.0 to our shareholders in the form of dividends ($534.4) and purchases of our common stock ($144.6).
During the first nine months of 2023, we did not repurchase any of our common stock. During the first nine months of 2022, we purchased 3,000,000 shares of our common stock at an average price of approximately $48.22 per share.

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Critical Accounting Policies and Estimates – A discussion of our critical accounting policies and estimates is contained in our 2022 annual report on Form 10-K.
Recently Issued and Adopted Accounting Pronouncements – A description of recently issued and adopted accounting pronouncements, if any, is contained in Note 1 of the Notes to Condensed Consolidated Financial Statements.
Certain Risks and Uncertainties – Certain statements contained in this document do not relate strictly to historical or current facts. As such, they are considered 'forward-looking statements' that provide current expectations or forecasts of future events. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of terminology such as anticipate, believe, should, estimate, expect, intend, may, will, plan, goal, project, hope, trend, target, opportunity, and similar words or expressions, or by references to typical outcomes. Any statement that is not a purely historical fact, including estimates, projections, trends, and the outcome of events that have not yet occurred, is a forward-looking statement. Our forward-looking statements generally relate to our expectations and beliefs regarding the business environment in which we operate, our projections of future performance, our perceived marketplace opportunities, our strategies, goals, mission and vision, and our expectations related to future capital expenditures, future tax rates, future inventory levels, pricing, Onsite and weighted FMI device signings, the impact of inflation on our cost of goods or operating costs, and the impact of price increases on overall sales growth or margin performance.performance, and our ability to grow our business through the enhancement of sales through our Digital Footprint. You should understand that forward-looking statements involve a variety of risks and uncertainties, known and unknown, and may be affected by inaccurate assumptions. Consequently, no forward-looking statement can be guaranteed and actual results may vary materially. Factors that could cause our actual results to differ from those discussed in the forward-looking statements include, but are not limited to, economic downturns, weakness in the manufacturing or commercial construction industries, competitive pressure on selling prices, changes in our current mix of products, customers, or geographic locations, changes in our average branch size, changes in our purchasing patterns, changes in customer needs, changes in fuel or commodity prices, inclement weather, changes in foreign currency exchange rates, difficulty in adapting our business model to different foreign business environments and the challenges of operating in foreign business environments, failure to accurately predict the market potential of our business strategies, the introduction or expansion of new business strategies, weak acceptance or adoption of our FMI offering or Onsite business models, increased competition in FMI or Onsite, difficulty in maintaining installation quality as our FMI business expands, the leasing to customers of a significant number of additional FMI devices, the failure to meet our goals and expectations regarding branch openings, branch closings, or expansion of our FMI offering or Onsite operations, changes in the implementation objectives of our business strategies, challenges in developing and expanding our digital capabilities, difficulty in hiring, relocating, training, or retaining qualified personnel, difficulty in controlling operating expenses, difficulty in collecting receivables or accurately predicting future inventory needs, dramatic changes in sales trends, changes in supplier production lead times, changes in our cash position or our need to make capital expenditures, credit market volatility, changes in tax law or the impact of any such changes on future tax rates, changes in tariffs or the impact of any such changes on our financial results, changes in the availability or price of commercial real estate, changes in the nature, price, or availability of distribution, supply chain, or other technology (including software licensed from third parties) and services related to that technology, cyber-security incidents, potential liability and reputational damage that can arise if our products are defective, difficulties measuring the contribution of price increases on sales growth, acts of war, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission, including our most recent annual and quarterly reports. Each forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any such statement to reflect events or circumstances arising after such date.
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ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks from changes in foreign currency exchange rates, commodity steel pricing, commodity energy prices, and interest rates. Changes in these factors cause fluctuations in our earnings and cash flows. We evaluate and manage exposure to these market risks as follows:
Import shipping costs – We import a significant quantity of our products, particularly fasteners and private label products, from foreign suppliers, primarily in Asia. As a result, we incur costs related to shipping charges, duties, harbor fees, and sundry other expenses involved in the movement of product for sale in North America and our other global locations. These costs are embedded in our product values, and significant fluctuations can affect our product gross profit depending on what mitigating actions might be taken. The most significant contributor to these fluctuations is the cost of overseas shipping containers. During the first nine months of 2023, the cost of overseas shipping containers was below the prior year. We estimate the effect on our net earnings related to import shipping costs was $15.0 to $20.0 in the first nine months of 2023.
Commodity steel prices – We buy and sell various types of steel products; these products consist primarily of different types of fasteners and related hardware. We are exposed to the impacts of commodity steel pricing and our related ability to pass through the impacts to our end customers. During the first nine months of 2023, the price of steel as reflected in many market indexes was below the prior year, though in most cases price levels have been stable and the rate of decline is moderating. Due to our long supply chain, changes in the cost of steel can take a number of quarters to be reflected in our financial results. Further, the cost of the raw material is generally a small part of the total value of the steel products that we sell, which can also diminish the impact of cost changes for the raw material. We estimate the effect on our net earnings related to commodity steel prices was immaterial in the first nine months of 2023.
Commodity energy prices – We have market risk for changes in prices of oil, gasoline, diesel fuel, natural gas, and electricity. As reflected in many market indexes, energy prices during the first nine months of 2023 were generally below prior year levels, which contributed to lower costs for fuel consumed in our vehicles and lower utility costs at our facilities. Total direct fuel consumption is a relatively minor cost to the company and, as a result, we estimate the effect on our net earnings related to commodity energy prices was immaterial in the first nine months of 2023.
Fossil fuels are also often a key feedstock for chemicals and plastics that comprise a key raw material for many products that we sell. During the first nine months of 2023, prices for fossil fuels were generally below prior year levels. The cost of the raw material is generally a small part of the total value of the products that we sell, which can diminish the impact of cost changes for the raw material. As a result, we estimate the effect on our net earnings related to materials for which fossil fuels are a feedstock was immaterial in the first nine months of 2023.
Foreign currency exchange rates – Foreign currency fluctuations can affect our net investments, our operations in countries other than the U.S., and earnings denominated in foreign currencies. Historically, our primary exchange rate exposure has been with the Canadian dollar against the United States dollar. Our estimated net earnings exposure for foreign currency exchange rates was not material in the first quarternine months of 2023. We have not historically hedged our foreign currency risk given that exposure to date has not been material. In the first quarter of 2023, changes in foreign currency exchange rates decreased our reported net sales by $12.5 with the estimated effect on our net earnings being immaterial.
Commodity steel pricing – We buy and sell various types of steel products; these products consist primarily of different types of threaded fasteners and related hardware. We are exposed to the impacts of commodity steel pricing and our related ability to pass through the impacts to our end customers. During the first quarter of 2023, the price of steel as reflected in many market indexes was below the prior year, although in many cases they were above the levels experienced in the fourth quarter of 2022. Due to our long supply chain, changes that we experienced in the first quarter of 2023 do not immediately impact our earnings results. In fact, we were not able to fully compensate for higher costs through higher prices in the first quarter of 2023, resulting in a modestly negative impact to our gross margin percentage in the period. We estimate the effect on our sales and net earnings was immaterial in the first quarter of 2023.
Commodity energy prices – We have market risk for changes in prices of oil, gasoline, diesel fuel, natural gas, and electricity. As reflected in many market indexes, energy prices during the first quarter of 2023 were generally at or below prior year levels, which contributed to relatively stable costs for fuel consumed in our vehicles and lower utility costs at our facilities. Total direct fuel consumption is a relatively minor cost to the company and, as a result, estimated net earnings exposure related to changes in commodity energy pricesforeign exchange rates was $20.6 and immaterial, respectively, in the first quarternine months of 2023.
Fossil fuels are also often a key feedstock for chemicals and plastics that comprise a key raw material for many products that we sell. During the first quarter of 2023, prices for fossil fuels were generally at or below prior year levels. Due to long supply chains, changes that we experienced in the first quarter of 2023 do not immediately impact our earnings results. As a result, in the first quarter of 2023 our estimated net earnings exposure for materials for which fossil fuels are feedstock was immaterial.
Interest rates - Loans under our Credit Facility bear interest at floating rates. As a result, changes in such rates can affect our operating results and liquidity to the extent we do not have effective interest rate swap arrangements in place. We have not historically used interest rate swap arrangements to hedge the variable interest rates under our Credit Facility. A one percentage point increase to our floating rate debt in the first quarternine months of 2023 would have resulted in approximately $0.3$0.5 of additional interest expense. A description of our Credit Facility is contained in Note 6 of the Notes to Condensed Consolidated Financial Statements.
ITEM 4 — CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures – As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Securities Exchange Act)). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including the principal executive officer and principal financial officer, to allow for timely decisions regarding disclosure.
Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1 — LEGAL PROCEEDINGS
A description of our legal proceedings, if any, is contained in Note 7 of the Notes to Condensed Consolidated Financial Statements. The description of legal proceedings, if any, in Note 7 is incorporated herein by reference.
ITEM 1A — RISK FACTORS
The significant factors known to us that could materially adversely affect our business, financial condition, or operating results are described in Item 2 of Part I above and in our most recently filed annual report on Form 10-K under Forward-Looking Statements and Item 1A – Risk Factors.
ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES, AND USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Issuer Purchases of Equity Securities
The table below sets forth information regarding purchases of our common stock during the firstthird quarter of 2023:
(a)(b)(c)(d)
PeriodTotal Number of
Shares
Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)
Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs (1)
January 1-31, 20230$0.0006,200,000
February 1-28, 20230$0.0006,200,000
March 1-31, 20230$0.0006,200,000
Total0$0.0006,200,000
(a)(b)(c)(d)
PeriodTotal Number of
Shares
Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)
Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs (1)
July 1-31, 20230$0.0006,200,000
August 1-31, 20230$0.0006,200,000
September 1-30, 20230$0.0006,200,000
Total0$0.0006,200,000
(1)As of March 31,September 30, 2023, we had remaining authority to repurchase 6,200,000 shares under the July 12, 2022 authorization. This authorization does not have an expiration date.
ITEM 5 — OTHER INFORMATION
None of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act) adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Securities Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fiscal quarter ended September 30, 2023.
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ITEM 6 — EXHIBITS
INDEX TO EXHIBITS
Exhibit NumberDescription of Document
3.1
3.2
10.1
31
32
101The following financial statements from the Quarterly Report on Form 10-Q for the quarter ended March 31,September 30, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Earnings, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
104The cover page from the Quarterly Report on Form 10-Q for the quarter ended March 31,September 30, 2023, formatted in Inline XBRL.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  FASTENAL COMPANY
Date: April 18,October 17, 2023By: /s/ Holden Lewis
 Holden Lewis
Senior Executive Vice President and Chief Financial Officer
 (Principal Financial Officer)
Date: April 18,October 17, 2023By: /s/ Sheryl A. Lisowski
 Sheryl A. Lisowski
Executive Vice President - Chief Accounting Officer and Treasurer
 (Duly Authorized Officer and Principal Accounting Officer)
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