Fastenal (FAST) 10-K risk factor changes: FY2021 vs FY2020

Company [added: Specific] Risks

Still, information systems are vulnerable to natural disasters, power losses, unauthorized access, [removed: telecommunication failures, and other problems.]

We develop and update processes and maintain systems in an effort to try to prevent [removed: this from occurring] [added: such unauthorized access,] and have established and maintained disclosure controls and procedures that would permit us to make accurate and timely disclosures of any material event, including any cyber security [removed: event, but the development and maintenance of these processes and systems are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.][added: event.]

In recent years, we have increased the resources devoted to our growth drivers, including FMI, Onsites, national accounts, digital [added: solutions, and our international operations.]

While we have taken steps to build momentum in the growth drivers of our business, we cannot assure you those steps will lead to sales [removed: growth and, due to the COVID-19 pandemic, our growth drivers did not contribute meaningfully to higher sales in 2020.][added: growth.]

For example, the portion of our sales attributable to fasteners has been decreasing for approximately [removed: twenty] [added: twenty-five] years.

[removed: In addition,] [added: For instance, in 2020, our gross profit margin declined significantly] as [removed: a result of] the [removed: COVID-19 pandemic, our sales were impacted by surge] [added: pandemic generated significant] sales of [removed: pandemic-related supplies,] [added: certain products,] such as PPE and [removed: other safety-related products] [added: sanitizer,] that have traditionally lower gross profit margins.

[removed: Customer] [added: Setting aside these or other unusual circumstances, however, customer] and product mix have contributed to the decline in our gross profit percentage over [removed: time, including in 2020 and 2019,] [added: time] and will likely continue to affect our gross profit percentage [removed: in 2021 and beyond.][added: into the foreseeable future.]

[removed: Downward] [added: Other variables that could cause our gross margin to decline include downward] pressure on sales prices, changes in the volume or timing of our orders, [removed: and] [added: and/or] an inability to pass higher product costs on to [removed: customers could also cause our gross profit percentage to fluctuate or decline.][added: customers.]

Our competitive advantage in [added: FMI Solutions, which includes] industrial vending [removed: (FAST Vend)] [added: (FASTVend)] and bin stock [removed: (FAST Stock] [added: (FASTStock] and [removed: FAST Bin)] [added: FASTBin)] tools could be eliminated and, in the case of [removed: FAST Vend,] [added: FASTVend,] the loss of key suppliers of equipment and services could be impactful and result in failure to deploy devices. We believe we have a competitive advantage in industrial vending and bin stock due to our hardware and software, our local branch presence (allowing us to service devices and bins more [removed: rapidly),] [added: rapidly and with less burden on] our [added: customers), our] depth of products that lend themselves to being dispensed through industrial vending devices or bin stocks, and, in North America, our distribution strength.

In addition, we currently rely on a limited number of suppliers for the vending devices used in our [removed: FAST Vend] [added: FASTVend] platform.

In addition, [added: as we experienced in 2020 and 2021,] our ability to [removed: expand deployment of] [added: deploy] our [removed: industrial vending and bin stock tools] [added: FMI solutions at targeted levels] could be limited by events similar to the COVID-19 pandemic if customers shift their energy to [added: addressing] short-term disruptions instead of long-term strategic planning.

The ability to identify new products and product lines, and integrate them into our selling locations and distribution network, may impact our ability to compete, our ability to generate additional sales, and our profit margins. Our success depends in part on our ability to develop product expertise at the selling location level and identify future products and product [added: lines that complement existing products and product lines and that respond to our customers' needs.]

Similarly, the emergence of on-line retailers, whether as extensions of our traditional competition or in the form of major, non-traditional competitors, could result in easier [removed: and quicker price discovery and the adoption of aggressive pricing strategies and sales methods.]

We may not be successful in integrating acquisitions and achieving intended benefits and [removed: synergies.][added: synergies. We have completed several acquisitions of businesses in recent years.]

[added: Any such] violations could result in the imposition of fines and penalties, damage to our reputation, and, in the case of laws and regulations relating specifically to governmental contracts, the loss of those contracts.

The most significant recent example of this is the comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the [removed: 'Tax Act'),] [added: Tax Act),] which was enacted in the United States in December 2017.

[removed: Industry and General] [added: General] Economic [added: and Operating] Risks

- government regulations and actions, [removed: including around trade policy,]

This risk was demonstrated in [removed: 2019 and 2020.][added: 2021.]

Products manufactured in foreign countries may cease to be [removed: available for reasons unrelated to trade policy,] [added: available,] which could adversely affect our inventory levels and [removed: operating] [added: operating] results. We obtain certain of our products, and our suppliers obtain certain of their products, from China, Taiwan, South Korea, and other foreign countries.

Our suppliers could discontinue selling products manufactured in foreign countries at any time for reasons that may or may not be in our control or our suppliers' control, including foreign government regulations, domestic government regulations, [added: disruption in trade relationships and agreements,] political unrest, war, disease, [removed: disruption] or [removed: delays in shipments, or] changes in local economic conditions.

Additionally, the shipment of goods from foreign countries could be delayed by container shipping companies encountering [removed: financial] [added: financial, capacity,] or other difficulties.

Our operating results and inventory levels could suffer if we are unable to promptly replace a supplier or shipper who is unwilling or unable to satisfy our requirements with another supplier or shipper providing [removed: equally appealing] products and [removed: services.][added: services of comparable quality and utility.]

Changes in energy costs and the cost of raw materials used in our products could impact our net sales, cost of sales, gross profit percentage, distribution expenses, and occupancy expenses, which may result in lower operating income. Costs of raw materials used in our products (e.g., [removed: steel)] [added: steel, plastic)] and energy costs can fluctuate significantly over time.

While we typically try to pass higher supplier prices and fuel costs through to our customers or to modify our activities to mitigate the impact, [added: including in 2021,] we may not be successful, particularly if supplier prices or fuel costs rise rapidly.

[removed: If we have] overestimated the size of our market, and in doing so, underestimated our current share of it, the size of our opportunity for growth may not be as significant as we currently believe.

Similarly, we have provided estimates of the opportunities we have with some of our specific growth strategies, such as [removed: industrial vending] [added: FMI solutions] and Onsite locations.

Within North America, we believe the potential market opportunity for industrial vending is approximately 1.7 million devices and we have identified over [removed: 19,000] [added: 15,000] customer locations with the potential to implement our Onsite service model within our traditional manufacturing and construction customer base.

We have identified additional markets, such as government, healthcare, and academia, and geographies into which we can sell our FMI solutions, which would increase the number of identified potential [removed: industrial vending] [added: FMI solutions] or customer locations.

We are exposed to foreign currency exchange rate risk, and changes in foreign exchange rates could increase the cost of purchasing products and impact our foreign sales. [removed: Because our company was started] [added: Given that we were founded and remain based] in the United States and [removed: because] [added: that] we are publicly-traded in the United States, we report our results based on the United States dollar.

[removed: There can be no] assurance that currency exchange rate fluctuations with the Canadian dollar and other foreign currencies will not adversely affect our results of operations, financial condition, and cash flows.

Tight credit markets could impact our ability to obtain financing on reasonable terms or increase the cost of existing or future financing and interest rate fluctuations could adversely impact our results. As of December 31, [removed: 2020,] [added: 2021,] we had [removed: $405.0] [added: $390.0] of outstanding debt obligations, [removed: consisting entirely] of [added: which $365.0 is] senior unsecured promissory notes issued under our master note agreement (the [removed: 'Master] [added: Master] Note [removed: Agreement') in the aggregate principal amount of $405.0.][added: Agreement), while $25.0 is loans outstanding under our revolving credit facility (the Credit Facility).]

The notes issued under our Master Note Agreement consist of [removed: eight] [added: seven] series and are described in further detail in Note [removed: 10] [added: 9] of the Notes to Consolidated Financial Statements included later in this Form 10-K.

[removed: Although the market] [added: The] turmoil [added: that came with the onset] of [removed: 2020] [added: the COVID-19 pandemic] did not have a significant adverse impact on our liquidity or borrowing costs given our low level of indebtedness at that [removed: time, the availability of funds tightened and credit spreads on corporate debt increased.][added: time.]

The development and maintenance of these processes and systems are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.

telecommunication failures, and other problems.

The ability to adequately protect our intellectual property or successfully defend against infringement claims by others may have an adverse impact on operations. Our business relies on the use, validity and continued protection of certain proprietary information and intellectual property, which includes current and future patents, trade secrets, trademarks, service marks, copyrights, and confidentiality agreements as well as license and sublicense agreements to use intellectual property owned by affiliated entities or third parties.

Unauthorized use of our intellectual property by others could result in harm to various aspects of the business and may result in costly and protracted litigation in order to protect our rights.

In addition, we may be subject to claims that we have infringed on the intellectual property rights of others, which could subject us to liability, require us to obtain licenses to use those rights at significant cost or otherwise cause us to modify our operations.

Conversely, as business conditions normalized in 2021, sales of these products declined versus the prior year, which more than offset our traditional mix-related margin pressure and resulted in improvement of our gross profit margin.

Failure to implement an effective Environmental, Social, and Governance (ESG) strategy could result in financial losses or a tarnished corporate reputation. Customers, suppliers, employees, community partners, shareholders, and regulatory agencies are increasingly requesting disclosure and action relating to ESG performance and objectives.

For instance, over the last five years we have included shareholder proposals in our proxy statement seeking specific actions around social and governance policy and reporting.

We have also seen an increase in customer requests for information pertaining to diversity and environmental policy, including that our scores with various third-party ESG rating organizations achieve a certain threshold.

An inability to satisfactorily address the concerns of our stakeholders could adversely affect our corporate reputation, image, identity, brand equity, and status, which in turn could hurt our ability to retain and acquire customers and employees or negatively impact the price performance of our common stock.

Increasing reporting and operational regulations around ESG matters may result in higher operating expenses and/or capital expenditures that could reduce our profitability and/or cash flow.

Failure to maintain an effective system of internal controls over business processes and/or financial reporting could materially impact our business and results. Company management is responsible for establishing and maintaining effective internal controls designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.

Any internal control system, no matter how well designed and operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all internal control systems, internal control over business processes and financial reporting may not prevent or detect fraud or misstatements.

Any failure to maintain an effective system of internal control over business processes and financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud, and could expose us to litigation, economic loss or adversely affect the market price of our common stock.

In fact, the COVID-19 pandemic has made gaining access to customers more challenging due to both alternative work arrangements to manage risk of infection in workplaces and due to shifts in priorities to short-term crisis management and away from long-term strategic planning.

This has resulted in our signings of Onsites and FMI installations, both important indicators of future sales growth, to be below target levels in 2020 and 2021.

and quicker price discovery and the adoption of aggressive pricing strategies and sales methods.

Equity Risks

- impact of higher sustained global temperatures (global warming)

As economic confidence and general business conditions recovered from the COVID-related downturn in 2020, spending for industrial supplies to companies engaged in construction and the manufacture of components, capital goods, and heavy equipment expanded sharply.

This produced a resumption of growth in key cyclical product lines, such as fasteners, that had declined the preceding year (only partly offset by reduced sales of COVID\-related supplies to government, healthcare, and warehousing customers).

At the same time, we believe our growth was restrained by other economic factors.

These include: (1) difficulty adding labor resources, potentially due to low unemployment, concerns about the pandemic, and government stimulus support; (2) supply chain disruption due to constraints for certain raw material and component availability, production capacity, shipping capacity, and labor availability; and (3) the impact of inflation for raw materials, manufactured components, transportation services, and labor.

These trends were evident throughout 2021.

We experienced this in 2021 as a lack of shipping and labor capacity, caused primarily by the strong recovery in global product demand but exacerbated by continued pandemic-related workforce disruption, constrained our ability to efficiently import supplies and increased shipping costs significantly.

This was a meaningful issue in 2021, when costs for metals, particularly steel, fuels, and overseas shipping services increased sharply to reflect strong demand, and labor constraints.

If we have

The ongoing occurrence of the COVID-19 pandemic, or any other such widespread public health crisis, could have a material adverse effect on our business, results of operations, and financial condition. The onset of the COVID-19 pandemic in early 2020 impacted our business due to government authorities and customers imposing facility closures, work-from-home orders, social distancing protocols, and/or other restrictions.

These actions had both positive (strong sales of safety and sanitation supplies to government, healthcare and warehousing customers) and negative (weak sales to industrial and construction customers as well as disruption in signings of Onsites and FMI devices) effects.

In 2021, though the pandemic continued to impact United States and world populations in the form of high infection and hospitalization rates, including from new variants of COVID-19, this effect on our business and financial condition was secondary to the re-opening and recovery of the global economy.

Even so, the continued public health concerns resulting from the COVID-19 pandemic continue to create significant uncertainty, economic disruption, and volatility, all of which have impacted and may continue to impact our business.

We may be required to take significant actions to mitigate future outbreaks, including, but not limited to, facility closures and work-from-home policies, and/or customer activity may be affected by their own mitigation actions.

This could adversely affect our business, results of operations, and financial condition.

However, as we cannot predict the severity and duration of the pandemic, including additional outbreaks, new variants of the virus, and the future availability of effective medical treatments and vaccines, the net financial impact to our operating results cannot be reasonably estimated.

There can be no

However, in September 2021, the Ways and Means Committee of the United States House of Representatives published tax proposals that, if ultimately enacted as proposed, could result in higher tax payments as a result of higher corporate tax rates and higher taxes on earnings from foreign jurisdictions.

Changes in accounting standards and subjective assumptions, estimates, and judgements by management related to complex accounting matters could significantly affect our financial results or financial condition. U.S. generally accepted accounting principles (GAAP) and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as asset impairment, inventories, lease obligations, self-insurance, vendor allowances, tax matters, business combinations, and legal matters, are complex and involve many subjective assumptions, estimates, and judgments.

Changes in accounting standards or their interpretation or changes in underlying assumptions, estimates or judgments, could significantly change our reported or expected financial performance or financial condition.

solutions, and our international operations.

For example, in the second quarter of 2020, we had to quickly purchase large volumes of pandemic-related products from non-traditional sources and non-optimized supply chains, which had a negative impact on gross profit.

lines that complement existing products and product lines and that respond to our customers' needs.

We have completed several acquisitions of businesses in recent years.

Any such

There is a longer-term risk that the beneficial aspects of the Tax Act on our business could be reversed depending on changes in future fiscal or political priorities.

We experienced strong demand in 2017 and 2018 that produced double-digit sales growth for Fastenal.

Our growth slowed into the mid-single digits beginning in the second quarter of 2019 as many of our customers involved in the manufacture of components, capital goods, and heavy equipment were impacted by higher costs and reduced confidence stemming from global trade uncertainty.

When this happens, these customers tend to cut back on spending, which yields a slowdown in our business with these customers.

In the second and third quarters of 2020, the reaction to the COVID-19 pandemic resulted in sharply reduced spending by our traditional customers as they implemented shutdowns, social distancing, and safety policies.

However, the weakness that was experienced by many of our business units in the second and third quarters of 2020 was more than offset by sales of pandemic-related supplies, such as PPE and sanitation products, to traditional and less traditional (e.g., government and healthcare) customers.

While we intend to retain some of these less traditional customers as regular buyers of safety and other products once the pandemic subsides, it is uncertain whether they will continue to purchase products from us.

The COVID-19 pandemic has significantly impacted worldwide economic conditions and could have a material adverse

effect on our operations and business. The COVID-19 pandemic began to impact our operations late in the first quarter of 2020 and may continue to affect our business, particularly should government authorities impose mandatory closures, work-from-home orders and/or social distancing protocols, seek voluntary facility closures and/or impose other restrictions.

Should such actions be taken, it could materially adversely affect our ability to adequately staff and maintain our operations, impair our ability to sustain sufficient financial liquidity, and impact our financial results.

The COVID-19 pandemic has had some favorable impacts on our financial results through much of 2020.

However, as supply chains adapt to the environment, it is not certain that those favorable impacts will recur in the future to offset any resumption of public access restrictions we might impose on our branches or reductions in capacity by our customers, including facility closures.

The COVID-19 pandemic has also produced shifts in the mix of our business resulting from a decrease in sales of our fasteners and increases in sales through our safety business.

Based on the traditionally lower gross profit margin percentage of our safety business, these shifts have contributed to a lower gross profit margin percentage for us.

This impact on our gross profit margin percentage may persist in the short term until the impacts of COVID-19 start to moderate.

It is also possible that the impact on our gross profit margin percentage will be long term in the event that COVID-19 alters customer purchasing patterns to include a sustainably higher

mix of safety and sanitation products.

As we cannot predict the duration or scope of the COVID-19 pandemic, the net financial impact to our operating results cannot be reasonably estimated, but it could be material and last for an extended period of time.

These risks most recently manifested in an increase in tariffs, primarily in 2018 and 2019, either directly on products we trade in or indirectly on industries we sell into, between the United States and its trading partners, as well as greater uncertainty around regional and global trade agreements generally.

In particular, the United States' tariffs levied on most of our products originating in China have caused us to review and implement potential solutions to the increase in our product costs with our customers.

The effectiveness of these strategies in response to any future tariffs is unknown.

Trade policies could have an adverse impact on industries we sell into, negatively affecting our net sales and profits. Considerable political uncertainty in the United States may result in changes to trade policies that could create disruption in geographic demand trends.

To the extent that the United States government enacts tariffs or taxes that penalize imports to benefit domestic manufacturing, we may improve our domestic sales which may have an overall positive impact on us given that 85% of our total revenue is derived from the United States.

However, any such action may adversely impact our foreign sales, which may, in turn, adversely impact our ability to expand our overseas branches in the future.

In addition, should a foreign government engage in its own trade protection, independent of or in response to another nation's action, it could have a negative direct or, more likely, indirect effect on our net sales and profits by reducing demand for exports by United States companies.

Such changes could adversely affect our financial results.

This dynamic would apply to every country in which we operate, but no other country represents more than 10% of our net sales.

We did not have loans outstanding under our revolving credit facility (the 'Credit Facility') as of December 31, 2020.

In July 2017, the Financial Conduct Authority in the United Kingdom, the governing body responsible for regulating LIBOR, announced that it no longer will compel or persuade financial institutions and panel banks to make LIBOR submissions after 2021.

The cessation date for submission and publication of rates for certain tenors of LIBOR has since been extended until mid-2023, but it is uncertain when applicable tenors of LIBOR will cease to exist and whether additional reforms to LIBOR may be enacted, but LIBOR is still expected to cease to be the reference rate for commercial loans and other indebtedness.

While we do not believe that the impact would be material to us given the usage of our Credit Facility, we do not yet have insight into what the impacts might be.

General Risk Factors

This section of this 10-K generally discusses [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] items and year-to-year comparisons between [removed: 2020] [added: 2021] and [removed: 2019.][added: 2020.]

Discussions of [removed: 2018] [added: 2019] items and year-to-date comparisons between [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] that are not included in this Form 10-K, can be found in 'Management's Discussion and Analysis of Financial Condition and Results of Operations' in Part II, Item 7 of our annual report on Form 10-K for the fiscal year ended December 31, [removed: 2019.][added: 2020.]

[removed: To us,] [added: In our view,] this means [removed: we can] [added: that companies that] grow [removed: our] market share [removed: if we] [added: are those that develop differentiated capabilities that] provide the greatest value to [removed: our] [added: the] customer.

Our approach to addressing these aspects of our marketplace is captured in our motto [removed: Growth through Customer Service.][added: Where Industry Meets Innovation*™*.]

First, we recruit service-minded individuals to support [removed: our] customers and [added: empower them to operate in a decentralized fashion to maximize] their [removed: business.][added: flexibility to solve customer problems.]

[removed: Fourth,] [added: Third,] we strive to generate strong profits, which produce the cash flow necessary to [removed: fund] [added: support] our [removed: growth] [added: growth, our product] and [removed: to support] [added: technology development, and] the needs of our customers.

[removed: Therefore,] [added: Marrying] our [removed: focus centers on] [added: presence, capabilities and technologies deepens our relationships and our] understanding [added: of] our customers' [removed: day, their opportunities,] [added: day-to-day opportunities] and [removed: their] obstacles.

During that period, improved sales of PPE and sanitation products [removed: more than offset the general economic weakness.]

[removed: believe that the] [added: The] sequential gains in economic activity that we experienced in the latter part of the second quarter of 2020 continued through the third and fourth quarters of [removed: 2020, although the rate of improvement remains gradual.][added: 2020.]

[removed: Consistent] [added: At the height of the pandemic, and consistent] with broader social trends, we [removed: have taken] [added: took] steps to safeguard the health of our [removed: employees.][added: employees and customers.]

This [removed: includes] [added: included] closing [removed: branch and corporate] facilities to outside personnel, adjusting work [removed: schedules] [added: schedules, spaces and technologies] to [removed: maximize] [added: allow for] social [removed: distance, creating space between work areas,] [added: distancing,] providing ample PPE and cleaning supplies, [added: and] having formal [removed: policies for] mitigation [added: policies] in the event of [removed: cases of illness, utilizing technologies where work duties allow to enable work from home capabilities, and utilizing technologies such as vending and mobility to create social distancing.][added: infection.]

[removed: Still, there] [added: There] remains significant uncertainty concerning the [removed: magnitude of the impact and] duration of the COVID-19 [removed: pandemic.][added: pandemic as well as the severity of any future infection surges.]

[removed: Factors] [added: As a result, future events] deriving from [removed: the] COVID-19 [removed: response that have or] may negatively impact sales and gross margin [removed: in the future include, but are not limited to:] [added: due to, among other things:] limitations on the ability of our suppliers to manufacture, or procure from manufacturers, the products we [removed: sell, or] [added: sell; an inability] to meet delivery requirements and commitments; limitations on the ability of our employees to perform their work due to illness caused by the pandemic or local, state, or federal orders requiring employees to remain at home; limitations on the ability of carriers to deliver our products to customers; limitations on the ability of our customers to conduct their business and purchase our products and services; and limitations on the ability of our customers to pay us on a timely basis.

Our gross profit increased [removed: $52.3,] [added: $209.5,] or [removed: 2.1%,] [added: 8.2%,] in [removed: 2020] [added: 2021] relative to [removed: 2019,] [added: 2020,] and as a percentage of net sales [removed: declined] [added: increased] to [removed: 45.5%] [added: 46.2%] in [removed: 2020] [added: 2021] from [removed: 47.2%] [added: 45.5%] in [removed: 2019.][added: 2020.]

Our operating income increased [removed: $84.5,] [added: $75.6,] or [removed: 8.0%,] [added: 6.6%,] in [removed: 2020] [added: 2021] relative to [removed: 2019,] [added: 2020,] and as a percentage of net sales increased to [removed: 20.2%] [added: 20.3%] in [removed: 2020] [added: 2021] from [removed: 19.8%] [added: 20.2%] in [removed: 2019.][added: 2020.]

Our net earnings in [removed: 2020] [added: 2021] were [removed: $859.1,] [added: $925.0,] an increase of [removed: 8.6%] [added: 7.7%] when compared to [removed: 2019.][added: 2020.]

Our diluted net earnings per share were [removed: $1.49] [added: $1.60] in [removed: 2020] [added: 2021] compared to [removed: $1.38] [added: $1.49] in [removed: 2019,] [added: 2020,] an increase of [removed: 8.4%.][added: 7.4%.]

These dynamics produced signings of [removed: just 223] [added: 274] new Onsite customer locations and [removed: 16,417 new industrial vending devices] [added: 19,311 weighted FASTBin/FASTVend signings] in [removed: 2020.][added: 2021.]

The table below summarizes our absolute and full-time equivalent (FTE; based on 40 hours per week) employee headcount, our investments in in-market locations (defined as the sum of the total number of [removed: public] branch locations and the total number of active Onsite locations), and [removed: industrial vending devices] [added: weighted FMI] at the end of the periods presented and the percentage change compared to the end of the prior period.

| | | | Q4 [removed: 2020] [added: 2021] | | | | | | Q4 [removed: 2019] [added: 2020] | | | | | | Twelve-month % Change | | |

| In-market locations \- absolute employee headcount | | | [removed: 12,680] [added: 12,464] | | | | | | [removed: 13,977] [added: 12,680] | | | | | | [removed: \-9.3] [added: \-1.7] | | % |

| In-market locations - FTE employee headcount | | | [removed: 11,260] [added: 11,337] | | | | | | [removed: 12,236] [added: 11,260] | | | | | | [removed: \-8.0] [added: 0.7] | | % |

| Total absolute employee headcount | | | [removed: 20,365] [added: 20,507] | | | | | | [removed: 21,948] [added: 20,365] | | | | | | [removed: \-7.2] [added: 0.7] | | % |

| Total FTE employee headcount | | | [removed: 17,836] [added: 18,370] | | | | | | [removed: 18,968] [added: 17,836] | | | | | | [removed: \-6.0] [added: 3.0] | | % |

| Number of [removed: public] branch locations | | | [removed: 2,003] [added: 1,793] | | | | | | [removed: 2,114] [added: 2,003] | | | | | | [removed: \-5.3] [added: \-10.5] | | % |

| Number of active Onsite locations | | | [removed: 1,265] [added: 1,416] | | | | | | [removed: 1,114] [added: 1,265] | | | | | | [removed: 13.6] [added: 11.9] | | % |

| Number of in-market locations | | | [removed: 3,268] [added: 3,209] | | | | | | [removed: 3,228] [added: 3,268] | | | | | | [removed: 1.2] [added: \-1.8] | | % |

During the last twelve months, we [removed: reduced] [added: increased] our total FTE employee headcount by [removed: 1,132.][added: 534.]

[removed: We] [added: In 2021, we] activated [removed: 257] [added: 242] Onsite locations and closed [removed: 106,] [added: 91,] net of [removed: conversions, in 2020.][added: conversions.]

[removed: The] [added: In any period, the] number of closings [removed: reflects] [added: tend to reflect] both normal churn in our business, whether due to redefining or exiting customer relationships, the shutting or relocation of [removed: a] customer [removed: facility,] [added: facilities that host our locations,] or a customer decision, as well as our ongoing review of underperforming locations.

| | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Gross profit | | | | | | [removed: 45.5] [added: 46.2] | | % | | | | [removed: 47.2] [added: 45.5] | | % | | | | [removed: 48.3] [added: 47.2] | | % |

| Operating and administrative expenses | | | | | | [removed: 25.3] [added: 26.0] | | % | | | | [removed: 27.4] [added: 25.3] | | % | | | | [removed: 28.2] [added: 27.3] | | % |

| Operating income | | | | | | [removed: 20.2] [added: 20.3] | | % | | | | [removed: 19.8] [added: 20.2] | | % | | | | [removed: 20.1] [added: 19.8] | | % |

| Net interest expense | | | | | | \-0.2 | | % | | | | [removed: \-0.3] [added: \-0.2] | | % | | | | \-0.3 | | % |

| Earnings before income taxes | | | | | | 20.1 | | % | | | | [removed: 19.6] [added: 20.1] | | % | | | | [removed: 19.9] [added: 19.6] | | % |

| | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Net sales | | | $ | [removed: 5,647.3] [added: 6,010.9] | | | | | [removed: 5,333.7] [added: 5,647.3] | | | | | | [removed: 4,965.1] [added: 5,333.7] | | |

| Percentage change | | | [removed: 5.9] [added: 6.4] | | % | | | | [removed: 7.4] [added: 5.9] | | % | | | | [removed: 13.1] [added: 7.4] | | % |

| Business days | | | [removed: 255] [added: 253] | | | | | | [removed: 254] [added: 255] | | | | | | 254 | | |

Italicized discussions throughout Item 7 of this Form 10-K indicate discussions of financial condition and results of operations in 2020.

We support these customer-facing resources with a supply chain capability that is speedy, efficient, and cost-effective.

This has formed the foundation of our high-touch model since inception.

Second, we invest in, develop, and deploy capabilities that allow us to illuminate and provide greater control over a customer's supply chain.

These capabilities range from service models that take advantage of our local presence and/or our ability to more efficiently manage complex procurement needs, to hardware and software technologies that promote actionable data capture, improve operating efficiencies and reduce supply chain risk.

The ultimate aim of this 'high-tech, high-touch' approach to gaining market share is to allow us to get closer to our customers, going so far as to be right to the point of consumption within customers' facilities.

This, in turn, enhances our ability to provide innovative and comprehensive solutions to our customers' challenges.

more than offset the general economic weakness.

In 2021, we saw several distinct business patterns, which mostly persisted throughout the period.

First, economic normalization continued, resulting in strong demand from our traditional manufacturing and non-residential construction customers.

Second, the pandemic continued, with ebbs and flows in infections during the year.

This resulted in businesses, including Fastenal, continuing to take steps to promote workforce and customer health and safety.

However, in contrast to the early part of 2020, the pandemic was not primarily responsible for plant shutdowns or production cuts; companies navigated the pandemic mostly without curtailing operations.

Third, this combination of strong demand coupled with ongoing adaptations to the pandemic resulted in a number of stresses accompanying economic growth: supply chain disruption, labor force constraints, and product and shipping inflation.

As a result, while the economic backdrop was solid throughout 2021, satisfying customer demand was challenged by difficulty in procuring materials, retaining sufficient part- and full-time labor to service existing customers and acquire new ones, and offsetting inflation.

We exited 2021 with each of those dynamics still largely intact.

These precautions allowed our operations to continue to function effectively.

At the end of 2021, our operations were operating mostly normally, although we continue to practice social distancing within our facilities, make PPE and cleaning supplies available, and follow our mitigation policies when an infection is identified.

The pandemic has not precipitated any issues with our internal controls, financial health, or liquidity, with substantially all of our $700.0 bank revolver available for use.

Net sales increased $363.4, or 6.4%, in 2021 relative to 2020.

The year 2021 was marked by a number of trends.

Favorably, we experienced strong demand from our traditional manufacturing and non-residential construction customers.

Unfavorably, we experienced disruption in supply chains and labor markets, exacerbated by periodic surges in COVID-19 infections, as well as significant inflation in product and transportation costs.

While these variables do present challenges with respect to having sufficient product availability, and cost of service, at this point the impact of COVID-19 is primarily indirect through its influence on cyclical factors.

The primary exception is in our ability to market our growth drivers, as many of our customers were focused on short-term crisis management over long-term strategic planning.

As a result, the environment was not conducive to achieving the level of signings we would have

expected under normal business conditions.

| Weighted FMI devices (MEU installed count) (1) | | | 92,874 | | | | | | 83,951 | | | | | | 10.6 | | % |

(1) This number excludes approximately 12,000 non-weighted devices that are part of our locker lease program.

This reflects an increase in our in-market and non-in-market selling FTE employee headcount of 230 to support growth in the marketplace and sales initiatives targeting customer acquisition.

We had an increase in our distribution center FTE employee headcount of 149 to support increasing product throughput at our facilities and to expand our local inventory fulfillment terminals (LIFTs).

We had an increase in our remaining FTE employee headcount of 155 that relates primarily to personnel investments in information technology and operational support, such as purchasing and product development.

We opened two branches in the fourth quarter of 2021 and closed 68 branches, net of conversions.

We activated 65 Onsite locations in the fourth quarter of 2021 and closed 16, net of conversions.

In 2021, we opened ten branches and closed 220, net of conversions.

The increase in net sales noted above for 2021 was due to higher unit sales of industrial products to traditional manufacturing and construction customers and higher pricing, only partly offset by lower pandemic-related PPE sales as the prior year's demand surge did not recur.

Higher unit sales in 2021 were a result of strong economic activity which increased demand for our products to our traditional manufacturing and construction customers.

Although economic strength was fairly consistent throughout the year, our growth patterns were not, primarily due to comparisons related to the timing of pandemic-related PPE sales in the previous year.

For instance, our daily sales growth in the first half of 2021 was 2.5%.

Our cyclical product categories substantially outperformed this, as exemplified by fastener daily sales growth of 15.4% in the first half of 2021.

Second, we operate in a decentralized fashion to help identify the greatest value for our customers.

Third, we have a great team behind our customer-facing resources to operate efficiently and to help identify new business solutions.

Lastly, we identify drivers that allow us to get closer to our customers and gain market share.

We believe our ability to grow is amplified if we can serve our customers at the closest economic point of contact.

At one point, the closest economic point of contact was the local branch.

Today, in many cases, we have moved the branch inside the customers' facility.

We also are frequently positioned right at the point of consumption within customers' facilities through our suite of FMI devices and capabilities.

We

Due to these precautions, our operations have continued to function effectively, including our internal controls over financial reporting.

While there are exceptions, our customers have largely continued to operate their businesses despite a continued high rate of viral infections that exist as of this date, in contrast to the second quarter of 2020 when many temporarily suspended operations.

With respect to liquidity, as of the end of 2020, we have substantially all of our $700.0 bank revolver available for use in the event that the need arises.

Net sales increased $313.7, or 5.9%, in 2020 relative to 2019.

Although we continued to market our growth drivers in 2020, COVID-19 created an environment that was not conducive to the level of signings we would have expected under normal business conditions.

At the same time, significant resources shifted to focus on rapidly and efficiently securing, transporting, and providing PPE to new and existing customers that found themselves managing short-term crisis conditions brought on by the pandemic.

Those same dynamics also produced very strong daily sales growth of 51.0% in our safety product line and 129.7% from government and healthcare customers in the period, which more than offset the low growth driver signings and weak activity in our traditional manufacturing and construction customer base.

| | | | | | | | | | | | | | | | | | |

| *Ratio of in-market location FTE headcount to in-market locations* | | | 3:1 | | | | | | *4:1* | | | | | | | | |

| Industrial vending devices (installed count) (1) | | | 95,733 | | | | | | 89,937 | | | | | | 6.4 | | % |

| *Ratio of industrial vending devices to in-market locations* | | | 29:1 | | | | | | *28:1* | | | | | | | | |

(1) This number primarily represents devices which principally dispense product and produce product revenues, and excludes approximately 15,000 devices that are part of a locker lease program where the devices are principally used for the check-in/check-out of equipment.

This reflects a decline in our in-market FTE employee headcount of 976, as well as declines in headcount at our distribution centers and manufacturing operations.

These reductions are primarily related to efforts to manage expenses in response to weaker demand from traditional manufacturing and construction customers resulting from the COVID-19 pandemic.

This was only partly offset by additions in non-branch selling and support roles.

The latter most significantly reflects an increase in personnel in Information Technology, which includes the addition of employees from our acquisition of certain assets of Apex, as well as roles to support customer acquisition and implementation, particularly as it relates to our growth drivers and to support general corporate functions.

We opened twelve branches and closed 123 branches, net of conversions, in 2020.

| Gain on sale of property and equipment | | | | | | 0.0 | | % | | | | 0.0 | | % | | | | 0.0 | | % |

The increase in net sales noted above for 2020 was a function primarily of higher unit sales for safety products, specifically pandemic-related sales of PPE.

The effect of higher prices during the period were not material.

The increase in net sales noted above for 2019 was a result of higher unit sales and, to a lesser degree, higher prices.

Higher product prices in 2019 were a result of actions taken to offset increases in product costs, and we believe these increases contributed 0.9% to 1.0% to sales growth during 2019.

The higher unit sales in 2019 resulted primarily from two sources.

First was higher underlying market demand, as illustrated by U.S. Industrial Production, which increased 0.8% in 2019, and daily sales of fasteners, which grew 5.5% in 2019.

It is notable, however, that underlying demand in 2019 began strong but weakened throughout the year.

Referring again to U.S. Industrial Production, it increased 2.9% in the first quarter of 2019 but decreased 0.9% in the fourth quarter of 2019.

The slowing in these metrics from the start to the end of 2019 mirrored the slowing growth we experienced in our unit sales over the same period.

A relatively greater contributor to our growth in 2019 was the success of our growth initiatives.

We signed 21,857 industrial vending devices during 2019.

While this represented a slight decrease in signings of 1.0% from 2018, it also contributed to growth in our installed base to 89,937 vending devices at the end of 2019, an increase of 10.8% over 2018.

Growth in our installed base was primarily responsible for sales growth through our vending devices in the mid-teens during 2019.

We signed 362 new Onsite locations in 2019, an increase of 7.7% over 2018, and had 1,114 active sites on December 31, 2019, an increase

[removed: In] [added: *During] 2020, changes in foreign currency exchange rates [removed: reduced] [added: decreased] our reported net sales by $5.7 with the estimated effect on our net earnings being [removed: immaterial.][added: immaterial.*]

[removed: During] [added: *During] 2020, the price of commodity steel as reflected in many market indexes fell sharply early in the year as business activity declined in response to actions to address the COVID-19 pandemic, recovered sharply as business activity rebounded, and finished 2020 above the preceding year end [removed: levels.][added: levels.*]

During [removed: 2019,] [added: 2021,] the price of [removed: commodity] steel as reflected in many market indexes [removed: declined.][added: increased, which contributed to cost inflation in our steel-based products.]

[removed: Prices] [added: *During 2020, prices] for [removed: gasoline and diesel] [added: energy] were mostly lower [removed: over the course of 2020] as business activity declined in response to actions to address the COVID-19 pandemic.

[added: *During 2020, although fossil fuel prices were generally lower we experienced stable, not lower, prices for products with high chemical or plastic content.*] We believe that over time these risks are mitigated in part by our ability to pass freight and product costs to our customers, the efficiency of our trucking distribution network, and the ability, over time, to manage our occupancy costs related to the heating and cooling of our facilities through better efficiency.

In [removed: 2020,] [added: 2021,] our estimated net earnings exposure for commodity energy prices was immaterial.

A one percentage point increase in LIBOR in [removed: 2020] [added: 2021] would have resulted in approximately [removed: $1.3] [added: $0.2] of additional interest expense.

A description of our Credit Facility is contained in Note [removed: 10] [added: 9] of the Notes to Consolidated Financial Statements.

Italicized discussions throughout Item 7A of this Form 10-K indicate discussions of market risks in 2020.

During 2021, changes in foreign currency exchange rates increased our reported net sales by $37.4 with the estimated effect on our net earnings being immaterial.

Based on our ability to pass these higher costs on, the estimated effect on our net earnings was immaterial in 2021.

During 2021, the price of energy as reflected in many market indexes increased as economic activity improved, which contributed to higher costs for fuel in our vehicles and utilities at our facilities.

As a result, we experienced lower costs for fuel for our vehicles and utilities for our facilities.*

During 2021, prices for fossil fuels were generally higher which caused us to experience higher prices for products with high chemical or plastic content.

In 2021, our estimated net earnings exposure for materials for which fossil fuels are feedstock was immaterial.

As a result, we experienced lower fuel costs through most of 2020.

In 2019, prices for gasoline and diesel were stable in the early part of the year, but began to decline in the latter part of the year with slowing economic activity.

As a result, we experienced stable fuel costs through 2019.

Although fuel prices were lower through much of 2020, we experienced stable, not lower, prices for products with high chemical or plastic content.

Stable fuel costs in 2019 resulted in stable product costs.

The year end is December 31, [removed: 2020] [added: 2021] unless additional years are included or noted.

We opened our first branch in 1967 in Winona, Minnesota, a city with a population today of approximately [removed: 27,000.][added: 26,000.]

We began with a marketing strategy of supplying threaded fasteners to customers [added: through a branch network] in small, medium-sized, and, in subsequent years, large cities.

Over time, that mandate has expanded to a broader range of industrial and construction supplies spanning more than nine major product [removed: lines (described later in this document).][added: lines.]

At the end of [removed: 2020,] [added: 2021,] we had [removed: 3,268] [added: 3,209] in-market locations (defined in the table below) in 25 countries supported by 15 distribution centers in North America (12 in the United States, two in Canada, and one in Mexico), and one in Europe, and we employed [removed: 20,365] [added: 20,507] people.

Branches and Onsites exist very close to our customers, usually within miles in the case of the former and most often within [added: or immediately proximate to] our customers' physical locations in the case of the latter, and together constitute our [removed: ‘in-market’] [added: 'in-market'] network.

Many of our customers engage with us through [removed: e-commerce,] [added: eCommerce,] but most of our sales through this channel are with customers that use [removed: e-commerce] [added: eCommerce] to supplement our service through our other channels.

| | | | [removed: 2020] [added: 2021] | | | [added: 2020 | | |] 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | | | [removed: 2011 | | |]

| Net sales | | | $ | [removed: 5,647.3] [added: 6,010.9] | | [added: 5,647.3 | | |] 5,333.7 | | | 4,965.1 | | | 4,390.5 | | | 3,962.0 | | | 3,869.2 | | | 3,733.5 | | | 3,326.1 | | | 3,133.6 | | | [removed: 2,766.9 | | |]

| [removed: Public branches] [added: Branch locations] | | | [removed: 2,003] [added: 1,793] | | | [added: 2,003 | | |] 2,114 | | | 2,227 | | | 2,383 | | | 2,503 | | | 2,622 | | | 2,637 | | | 2,687 | | | 2,652 | | | [removed: 2,585 | | |]

| Branch revenue(1) | | | $ | [removed: 3,587.1] [added: 3,726.2] | | [added: 3,587.1 | | |] 3,660.1 | | | 3,625.8 | | | 3,399.6 | | | 3,198.1 | | | 3,281.8 | | | 3,225.3 | | | | | | | | | [removed: | | |]

| Average sales per branch location(2) | | | $ | [removed: 145.2] [added: 163.6] | | [added: 145.2 | | |] 140.5 | | | 131.1 | | | 116.0 | | | 104.0 | | | 104.0 | | | 101.0 | | | | | | | | | [removed: | | |]

| Onsite locations(3) | | | [removed: 1,265] [added: 1,416] | | | [added: 1,265 | | |] 1,114 | | | 894 | | | 605 | | | 401 | | | 264 | | | 214 | | | | | | | | | [removed: | | |]

| Onsite revenue(1) | | | $ | [removed: 1,485.6] [added: 1,898.0] | | [added: 1,485.6 | | |] 1,391.7 | | | 1,081.7 | | | 770.2 | | | 569.2 | | | 454.3 | | | 387.7 | | | | | | | | | [removed: | | |]

| Average sales per Onsite location(2) | | | $ | [removed: 104.1] [added: 118.0] | | [added: 104.1 | | |] 115.5 | | | 120.3 | | | 127.6 | | | 142.7 | | | 158.4 | | | 157.6 | | | | | | | | | [removed: | | |]

| Other revenue(4) | | | $ | [removed: 574.6] [added: 386.7] | | [added: 574.6 | | |] 281.9 | | | 257.6 | | | 220.7 | | | 194.7 | | | 133.1 | | | 120.5 | | | | | | | | | [removed: | | |]

| Total in-market locations(5) | | | [removed: 3,268] [added: 3,209] | | | [added: 3,268 | | |] 3,228 | | | 3,121 | | | 2,988 | | | 2,904 | | | 2,886 | | | 2,851 | | | 2,687 | | | 2,652 | | | [removed: 2,585 | | |]

(4) This portion of revenue is generated outside of our traditional in-market location presence, examples of which include [removed: our custom in-house manufacturing,] revenues arising from our [added: custom in-house manufacturing, industrial services,] leased locker arrangements, and other non-traditional sources of revenue.

(5) 'In-market locations' is defined as the sum of the total number of [removed: public branches] [added: branch locations] and the total number of Onsite locations.

[removed: Through much of our history, this was] [added: This has been] achieved by opening [removed: branches, and] [added: branch locations and,] more recently, [removed: through new] Onsite locations.

[added: In 2021, roughly 52% of our sales and 50% of our in-market locations were in major Metropolitan Statistical] Areas [removed: (MSAs);] [added: (MSAs)] (populations in the United States and Canada greater than 500,000 people), while [removed: 20%] [added: 21%] of our sales and [removed: 18%] [added: 19%] of our in-market locations were in small MSAs (populations under 500,000 people), and [removed: 26%] [added: 27%] of our sales and [removed: 30%] [added: 31%] of our in-market locations were not in an MSA.

However, new growth drivers, business [removed: models,] [added: models (Onsites),] and business tools [removed: (Onsite, vending, digital] [added: (digital] solutions) have emerged and diminished the direct role of traditional branch openings in our growth.

At the end of [removed: 2020,] [added: 2021,] we had [removed: 1,868] [added: 1,649] traditional branches in the United States and Canada, and they represented [removed: 58.6%] [added: 56.8%] of total sales.

Since then, we have continued to expand our global footprint and at the end of [removed: 2020,] [added: 2021,] we operated in 23 countries outside of the United States and Canada.

From a product perspective, these customers are more heavily oriented toward planned fastener spend, though non-fastener [removed: MRO] [added: manufacturing, repair, and operations (MRO)] spend is becoming more common in these markets.

However, our ability to provide a consistent service model, including vending, bin stocks, and Onsites, on a global basis is attractive to our [removed: foreign] customer base, much of which are the foreign operations of North American-based companies.

At the end of [removed: 2020,] [added: 2021,] we had [removed: 135] [added: 144] international branches operating outside the U.S. and Canada, and they represented [removed: 4.9%] [added: 5.2%] of total sales.

However, in each year since 2013, the company has experienced a net decline in its total branch count including net declines of [removed: 111 branches in 2020, 113 branches in 2019, and 156] [added: 210] branches in [removed: 2018.][added: 2021.]

Our total decline since 2013 is [removed: 684] [added: 894] branches.

Onsite locations may influence the trend in our traditional branch count over time, but [removed: are] [added: have] not [added: been] the primary reason for our traditional branch closings.

These include customers with which we have an existing national account relationship today, [removed: as well as] [added: and] potential customers we are aware of due to our local market [removed: presence.][added: presence with which we do not have a meaningful relationship today.]

[removed: However, as awareness of our capabilities has grown, we have identified additional Onsite] potential with certain agencies of state, provincial and local government customers and academia.

[removed: 2020, 2019,] [added: We had 1,416 Onsite locations as of December 31, 2021,] and [removed: 2018, respectively,] [added: they represented 31.6% of total sales,] and signed [added: 274,] 223, [removed: 362,] and [removed: 336] [added: 362] new Onsite locations in [added: 2021,] 2020, [removed: 2019,] and [removed: 2018,] [added: 2019,] respectively.

We believe the marketplace can support 375 to 400 new Onsite signings [removed: annually, and our goal in 2021 is to sign that many locations.][added: annually.]

This ability to increase our operating profit margin is influenced by: (1) general growth based on end market expansion and/or market share gains, (2) the age of the in-market location (new locations tend to be less profitable due to start-up costs and, in the case of a traditional branch, the time necessary to generate a customer base), and/or (3) rationalization actions, as in the past several years we have seen a net decline in our traditional [removed: branch base.]

The following table provides a summary of the [removed: public] branches and Onsite locations we operated at the end of each year, as well as the openings, closings, and conversions during each year:

| | | | United States | | | Canada | | | Mexico & [removed: Caribbean (1)] [added: Caribbean(1)] | | | Subtotal | | | | | | Central & South [removed: America (2)] [added: America(2)] | | | [removed: Asia (3)] [added: Asia(3)] | | | [removed: Europe (4)] [added: Europe(4)] | | | Subtotal | | | Total | | |

| Opened Branches | | | [removed: 1] [added: —] | | | [removed: 1] [added: —] | | | [removed: 5] [added: 3] | | | [removed: 7] [added: 3] | | | | | | — | | | [removed: 1] [added: 5] | | | 4 | | | [removed: 5] [added: 9] | | | 12 | | |

| [removed: Closed/Converted Onsites (5)] [added: Closed/Converted Onsites(5)] | | | [removed: (78)] [added: (75)] | | | [removed: (7)] [added: (7)] | | | [removed: (7)] [added: (5)] | | | [removed: (92)] [added: (87)] | | | | | | [removed: (1)] [added: —] | | | [removed: 1] [added: (2)] | | | [removed: —] [added: (2)] | | | [removed: —] [added: (4)] | | | [removed: (92)] [added: (91)] | | |

| Opened Branches | | | [removed: —] [added: 3] | | | — | | | [removed: 3] [added: 5] | | | [removed: 3] [added: 8] | | | | | | — | | | [removed: 5] [added: 1] | | | [removed: 4] [added: 1] | | | [removed: 9] [added: 2] | | | [removed: 12] [added: 10] | | |

How we engage with our customers has similarly evolved to include Onsites, Fastenal Managed Inventory and eCommerce.

We provide additional descriptions of our product lines and market channels later in this document.

The significant increase in other revenue in 2020 largely reflects the onset of the COVID-19 pandemic in that period and the substantial sales of pandemic-related products that we direct-shipped (versus selling through our in-market locations) as a means of delivering critical supplies more quickly.

The decline in other revenue in 2021 largely reflects the absence of such direct-shipped revenue as the supply chain for such products stabilized.

At the end of 2021, 35% of our traditional branches operated as a CSB and 65% operated as a CFC.

However, as awareness of our capabilities has grown, we have identified additional Onsite

We did not achieve that level of signings in 2021, 2020, or 2019 as certain market variables, including the ongoing COVID-19 pandemic, supply chain constraints, and labor shortages created challenges in our ability to engage with key decision makers and caused many of our customers to focus on short-term crisis management rather than long-term strategic planning.

These conditions remain in force at the beginning of 2022.

It is our intention to sign 375 to 400 new Onsites in 2022, though achieving this may require some relief in the factors described above.

| Starting Branches | | | 1,689 | | | 179 | | | 66 | | | 1,934 | | | | | | 5 | | | 19 | | | 45 | | | 69 | | | 2,003 | | |

| Closed/Converted Branches(5) | | | (216) | | | (6) | | | — | | | (222) | | | | | | — | | | — | | | 2 | | | 2 | | | (220) | | |

| Ending Branches | | | 1,476 | | | 173 | | | 71 | | | 1,720 | | | | | | 5 | | | 20 | | | 48 | | | 73 | | | 1,793 | | |

| Starting Onsites | | | 1,044 | | | 81 | | | 93 | | | 1,218 | | | | | | 15 | | | 12 | | | 20 | | | 47 | | | 1,265 | | |

| Opened Onsites | | | 204 | | | 15 | | | 12 | | | 231 | | | | | | — | | | 7 | | | 4 | | | 11 | | | 242 | | |

| Ending Onsites | | | 1,173 | | | 89 | | | 100 | | | 1,362 | | | | | | 15 | | | 17 | | | 22 | | | 54 | | | 1,416 | | |

| In-Market Locations - 12/31/21 | | | 2,649 | | | 262 | | | 171 | | | 3,082 | | | | | | 20 | | | 37 | | | 70 | | | 127 | | | 3,209 | | |

branch base.

However, in 2019 we introduced our FASTBin technology.

These are either configurable or are available in multiple

Similar to Onsite, we believe the marketplace can support at least this level of signings annually, though we did not achieve it in 2021 as variables including the ongoing COVID-19 pandemic, supply chain constraints, and labor shortages created challenges in our ability to engage with key decision makers and caused many of our customers to focus on short-term crisis management rather than long-term strategic planning.

These conditions remain in force at the beginning of 2022.

We acknowledge that achieving this may require some relief in the factors that negatively impacted our efforts in the preceding two years.

The table below summarizes the signings and installations of, and sales through, our FMI devices.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Twelve-month Period | | | | | | | | | | | | | | |

| | | | 2021 | | | | | | 2020 | | | | | | Change | | |

| Weighted FASTBin/FASTVend signings (MEUs) | | | 19,311 | | | | | | 16,503 | | | | | | 17.0 | | % |

| *Signings per day* | | | 76 | | | | | | *65* | | | | | | | | |

| Weighted FASTBin/FASTVend installations (MEUs; end of period) | | | 92,874 | | | | | | 83,951 | | | | | | 10.6 | | % |

| | | | | | | | | | | | | | | | | | |

| FASTStock sales | | | $ | 587.6 | | | | | $ | 323.0 | | | | | 81.9 | | % |

| % of sales | | | 9.7 | | % | | | | *5.7* | | *%* | | | | | | |

| FASTBin/FASTVend sales | | | $ | 1,353.7 | | | | | $ | 1,064.4 | | | | | 27.2 | | % |

| *% of sales* | | | 22.3 | | % | | | | *18.6* | | *%* | | | | | | |

| FMI sales | | | $ | 1,941.3 | | | | | $ | 1,387.4 | | | | | 39.9 | | % |

| *FMI daily sales* | | | $ | 7.7 | | | | | *$* | *5.4* | | | | | *41.0* | | *%* |

| % of sales | | | 32.0 | | % | | | | *24.3* | | *%* | | | | | | |

These solutions provide system-to-system exchange of electronic

Digital Footprint

In 2020, roughly 54% of our sales and 52% of our in-market locations were in major Metropolitan Statistical

We experienced net increases of 151, 220, and 289 Onsite locations in

We had 1,265 Onsite locations as of December 31, 2020, and they represented 26.3% of total sales.

However, we recognize that achieving the goal will be challenging, as the continued prevalence of COVID-19 infections has made gaining access to customer facilities and decision-makers difficult.

| In-Market Locations - 12/31/18 | | | 2,656 | | | 246 | | | 133 | | | 3,035 | | | | | | 14 | | | 23 | | | 49 | | | 86 | | | 3,121 | | |

| Starting Branches | | | 1,924 | | | 186 | | | 60 | | | 2,170 | | | | | | 6 | | | 14 | | | 37 | | | 57 | | | 2,227 | | |

| Closed/Converted Branches (5) | | | (119) | | | (4) | | | (1) | | | (124) | | | | | | — | | | (1) | | | — | | | (1) | | | (125) | | |

| Ending Branches | | | 1,806 | | | 183 | | | 64 | | | 2,053 | | | | | | 6 | | | 14 | | | 41 | | | 61 | | | 2,114 | | |

| Starting Onsites | | | 732 | | | 60 | | | 73 | | | 865 | | | | | | 8 | | | 9 | | | 12 | | | 29 | | | 894 | | |

| Opened Onsites | | | 271 | | | 18 | | | 16 | | | 305 | | | | | | 2 | | | 1 | | | 4 | | | 7 | | | 312 | | |

| Ending Onsites | | | 925 | | | 71 | | | 82 | | | 1,078 | | | | | | 9 | | | 11 | | | 16 | | | 36 | | | 1,114 | | |

Our discussion generally focuses on the approximately 95,700 product revenue devices.

However, in 2019 we introduced our FAST Bin technology, which we began to more aggressively commercialize in 2020.

These technologies provide superior monitoring capabilities.

We plan on changing our reporting of FMI beginning in 2021.

Historically, we have reported only on FAST Vend.

However, the development and commercialization of FAST Bin and its digital capabilities, combined with industrial vending, provides us with a broader suite of tools with which to best manage our customers' product consumption and fulfillment, which we believe

will enhance our ability to manage and grow our OEM and MRO fasteners, hydraulics and pneumatics, and other product offerings.

Further, we view the value-add offered to our customers by FAST Bin as it relates to product monitoring and data collection to be comparable to our industrial vending solution.

Similar to Onsite, however, we recognize that achieving the goal will be challenging, as the continued prevalence of COVID-19 infections has made gaining access to customer facilities and decision-makers difficult.

The tables below contain information on how the presentation of weighted FMI devices differs from the industrial vending information (product revenue devices) on signings and installations that we have previously provided.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | Q1 | | | | | | Q2 | | | | | | Q3 | | | | | | Q4 | | | | | | Annual | | |

| Vending device count signed during the period | | | 2020 | | | | | | 4,798 | | | | | | 3,483 | | | | | | 4,680 | | | | | | 3,456 | | | | | | 16,417 | | |

| | | | 2019 | | | | | | 5,603 | | | | | | 5,439 | | | | | | 5,671 | | | | | | 5,144 | | | | | | 21,857 | | |

| | | | 2018 | | | | | | 5,679 | | | | | | 5,537 | | | | | | 5,877 | | | | | | 4,980 | | | | | | 22,073 | | |

| Machine equivalent vending count signed during the period | | | 2020 | | | | | | 4,561 | | | | | | 3,362 | | | | | | 4,515 | | | | | | 3,279 | | | | | | 15,717 | | |

| | | | 2019 | | | | | | 5,213 | | | | | | 5,058 | | | | | | 5,354 | | | | | | 4,938 | | | | | | 20,563 | | |

| | | | 2018 | | | | | | 5,271 | | | | | | 5,250 | | | | | | 5,251 | | | | | | 4,610 | | | | | | 20,382 | | |

| Machine equivalent FMI devices signed during the period | | | 2020 | | | | | | 4,564 | | | | | | 3,364 | | | | | | 4,517 | | | | | | 3,279 | | | | | | 15,724 | | |

| | | | 2019 | | | | | | 5,213 | | | | | | 5,075 | | | | | | 5,364 | | | | | | 4,941 | | | | | | 20,593 | | |

| | | | | | | | | | Q1 | | | | | | Q2 | | | | | | Q3 | | | | | | Q4 | | | | | | | | |

| Vending device count installed at the end of the period | | | 2020 | | | | | | 92,124 | | | | | | 92,615 | | | | | | 94,395 | | | | | | 95,733 | | | | | | | | |

| | | | 2019 | | | | | | 83,410 | | | | | | 85,871 | | | | | | 88,327 | | | | | | 89,937 | | | | | | | | |

| | | | 2018 | | | | | | 73,561 | | | | | | 76,069 | | | | | | 78,706 | | | | | | 81,137 | | | | | | | | |

| Machine equivalent vending count installed at the end of the | | | 2020 | | | | | | 79,230 | | | | | | 80,123 | | | | | | 82,236 | | | | | | 83,802 | | | | | | | | |

| period | | | 2019 | | | | | | 69,258 | | | | | | 71,942 | | | | | | 74,686 | | | | | | 76,792 | | | | | | | | |

| | | | 2018 | | | | | | 58,571 | | | | | | 61,405 | | | | | | 64,205 | | | | | | 66,784 | | | | | | | | |

| Machine equivalent FMI devices installed at the end of the | | | 2020 | | | | | | 79,233 | | | | | | 80,128 | | | | | | 82,243 | | | | | | 83,809 | | | | | | | | |

A description of our legal proceedings, if any, is contained in [removed: [Note](#ife810274569f4b179a477e3c078b570c_139) [1](#ife810274569f4b179a477e3c078b570c_139)[1](#ife810274569f4b179a477e3c078b570c_139)] [added: [Note 1](#i2ed65f529e4d4582846cfc03b6e9e140_130)[0](#i2ed65f529e4d4582846cfc03b6e9e140_130)] of the Notes to Consolidated Financial Statements.

For the fiscal year ended December 31, [removed: 2020][added: 2021]

The aggregate market value of the Common Stock held by non-affiliates of the registrant as of June 30, [removed: 2020,] [added: 2021,] the last business day of the registrant's most recently completed second fiscal quarter, was [removed: $24,488,427,338,] [added: $29,835,146,952,] based on the closing price of the registrant's Common Stock on that date.

For purposes of determining this number, all executive officers and directors of the registrant as of June 30, [removed: 2020] [added: 2021] are considered to be affiliates of the registrant.

As of January [removed: 22, 2021,] [added: 21, 2022,] the registrant had [removed: 574,317,276] [added: 575,550,072] shares of Common Stock issued and outstanding.

| Item 1. | | | | | | [removed: [Business](#ife810274569f4b179a477e3c078b570c_22)] [added: [Business](#i2ed65f529e4d4582846cfc03b6e9e140_25)] | | | [removed: [3](#ife810274569f4b179a477e3c078b570c_22)] [added: [3](#i2ed65f529e4d4582846cfc03b6e9e140_25)] | | |

| Item 1A. | | | | | | [Risk [removed: Factors](#ife810274569f4b179a477e3c078b570c_25)] [added: Factors](#i2ed65f529e4d4582846cfc03b6e9e140_28)] | | | [removed: [15](#ife810274569f4b179a477e3c078b570c_25)] [added: [16](#i2ed65f529e4d4582846cfc03b6e9e140_28)] | | |

| Item 1B. | | | | | | [Unresolved Staff [removed: Comments](#ife810274569f4b179a477e3c078b570c_28)] [added: Comments](#i2ed65f529e4d4582846cfc03b6e9e140_31)] | | | [removed: [21](#ife810274569f4b179a477e3c078b570c_28)] [added: [23](#i2ed65f529e4d4582846cfc03b6e9e140_31)] | | |

| Item 2. | | | | | | [removed: [Properties](#ife810274569f4b179a477e3c078b570c_31)] [added: [Properties](#i2ed65f529e4d4582846cfc03b6e9e140_34)] | | | [removed: [22](#ife810274569f4b179a477e3c078b570c_31)] [added: [24](#i2ed65f529e4d4582846cfc03b6e9e140_34)] | | |

| Item 3. | | | | | | [Legal [removed: Proceedings](#ife810274569f4b179a477e3c078b570c_34)] [added: Proceedings](#i2ed65f529e4d4582846cfc03b6e9e140_37)] | | | [removed: [23](#ife810274569f4b179a477e3c078b570c_34)] [added: [25](#i2ed65f529e4d4582846cfc03b6e9e140_37)] | | |

| Item 4. | | | | | | [Mine Safety [removed: Disclosures](#ife810274569f4b179a477e3c078b570c_37)] [added: Disclosures](#i2ed65f529e4d4582846cfc03b6e9e140_40)] | | | [removed: [23](#ife810274569f4b179a477e3c078b570c_37)] [added: [25](#i2ed65f529e4d4582846cfc03b6e9e140_40)] | | |

| Item 5. | | | | | | [Market for [removed: Registrant's] [added: Registrant](#i2ed65f529e4d4582846cfc03b6e9e140_46)['](#i2ed65f529e4d4582846cfc03b6e9e140_46)[s] Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#ife810274569f4b179a477e3c078b570c_43)] [added: Securities](#i2ed65f529e4d4582846cfc03b6e9e140_46)] | | | [removed: [24](#ife810274569f4b179a477e3c078b570c_43)] [added: [26](#i2ed65f529e4d4582846cfc03b6e9e140_46)] | | |

| Item 7. | | | | | | [removed: [Management's] [added: [Management](#i2ed65f529e4d4582846cfc03b6e9e140_52)['](#i2ed65f529e4d4582846cfc03b6e9e140_52)[s] Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ife810274569f4b179a477e3c078b570c_49)] [added: Operations](#i2ed65f529e4d4582846cfc03b6e9e140_52)] | | | [removed: [26](#ife810274569f4b179a477e3c078b570c_49)] [added: [28](#i2ed65f529e4d4582846cfc03b6e9e140_52)] | | |

| Item 7A. | | | | | | [Quantitative and Qualitative Disclosures About Market [removed: Risks](#ife810274569f4b179a477e3c078b570c_73)] [added: Risks](#i2ed65f529e4d4582846cfc03b6e9e140_76)] | | | [removed: [41](#ife810274569f4b179a477e3c078b570c_73)] [added: [45](#i2ed65f529e4d4582846cfc03b6e9e140_76)] | | |

| Item 8. | | | | | | [Financial Statements and Supplementary [removed: Data](#ife810274569f4b179a477e3c078b570c_76)] [added: Data](#i2ed65f529e4d4582846cfc03b6e9e140_79)] | | | [removed: [42](#ife810274569f4b179a477e3c078b570c_76)] [added: [46](#i2ed65f529e4d4582846cfc03b6e9e140_79)] | | |

| Item 9. | | | | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ife810274569f4b179a477e3c078b570c_148)] [added: Disclosure](#i2ed65f529e4d4582846cfc03b6e9e140_139)] | | | [removed: [64](#ife810274569f4b179a477e3c078b570c_148)] [added: [66](#i2ed65f529e4d4582846cfc03b6e9e140_139)] | | |

| Item 9A. | | | | | | [Controls and [removed: Procedures](#ife810274569f4b179a477e3c078b570c_151)] [added: Procedures](#i2ed65f529e4d4582846cfc03b6e9e140_142)] | | | [removed: [64](#ife810274569f4b179a477e3c078b570c_151)] [added: [66](#i2ed65f529e4d4582846cfc03b6e9e140_142)] | | |

| Item 9B. | | | | | | [Other [removed: Information](#ife810274569f4b179a477e3c078b570c_154)] [added: Information](#i2ed65f529e4d4582846cfc03b6e9e140_145)] | | | [removed: [65](#ife810274569f4b179a477e3c078b570c_154)] [added: [67](#i2ed65f529e4d4582846cfc03b6e9e140_145)] | | |

| Item 10. | | | | | | [Directors, Executive Officers, and Corporate [removed: Governance](#ife810274569f4b179a477e3c078b570c_160)] [added: Governance](#i2ed65f529e4d4582846cfc03b6e9e140_151)] | | | [removed: [65](#ife810274569f4b179a477e3c078b570c_160)] [added: [67](#i2ed65f529e4d4582846cfc03b6e9e140_151)] | | |

| Item 11. | | | | | | [Executive [removed: Compensation](#ife810274569f4b179a477e3c078b570c_163)] [added: Compensation](#i2ed65f529e4d4582846cfc03b6e9e140_154)] | | | [removed: [67](#ife810274569f4b179a477e3c078b570c_163)] [added: [69](#i2ed65f529e4d4582846cfc03b6e9e140_154)] | | |

| Item 12. | | | | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ife810274569f4b179a477e3c078b570c_166)] [added: Matters](#i2ed65f529e4d4582846cfc03b6e9e140_157)] | | | [removed: [67](#ife810274569f4b179a477e3c078b570c_166)] [added: [69](#i2ed65f529e4d4582846cfc03b6e9e140_157)] | | |

| Item 13. | | | | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ife810274569f4b179a477e3c078b570c_169)] [added: Independence](#i2ed65f529e4d4582846cfc03b6e9e140_160)] | | | [removed: [67](#ife810274569f4b179a477e3c078b570c_169)] [added: [69](#i2ed65f529e4d4582846cfc03b6e9e140_160)] | | |

| Item 14. | | | | | | [Principal Accountant Fees and [removed: Services](#ife810274569f4b179a477e3c078b570c_172)] [added: Services](#i2ed65f529e4d4582846cfc03b6e9e140_163)] | | | [removed: [67](#ife810274569f4b179a477e3c078b570c_172)] [added: [69](#i2ed65f529e4d4582846cfc03b6e9e140_163)] | | |

| Item 15. | | | | | | [Exhibits and Financial Statement [removed: Schedules](#ife810274569f4b179a477e3c078b570c_178)] [added: Schedules](#i2ed65f529e4d4582846cfc03b6e9e140_169)] | | | [removed: [68](#ife810274569f4b179a477e3c078b570c_178)] [added: [70](#i2ed65f529e4d4582846cfc03b6e9e140_169)] | | |

| Item 16. | | | | | | [Form 10-K [removed: Summary](#ife810274569f4b179a477e3c078b570c_181)] [added: Summary](#i2ed65f529e4d4582846cfc03b6e9e140_172)] | | | [removed: [69](#ife810274569f4b179a477e3c078b570c_181)] [added: [71](#i2ed65f529e4d4582846cfc03b6e9e140_172)] | | |

Portions of our Proxy Statement for the annual meeting of shareholders to be held Saturday, April [removed: 24, 2021 ('Proxy Statement')] [added: 23, 2022 (Proxy Statement)] are incorporated by reference in Part III.

Our forward-looking statements generally relate to our expectations 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 about capital expenditures, tax rates, inventory levels, in-market locations and signings of Onsite locations and new machine equivalent units [added: for Fastenal Managed Inventory (FMI)] (including [removed: industrial vending] [added: bin stock] and [removed: FAST Bin technologies),] [added: industrial vending), our] digital [added: solutions] and other product offerings, national accounts as a percentage of overall sales, the advantages of our integrated physical and virtual model, [removed: and the sustainability of our] growth in [removed: the] safety [added: products as a percentage of] product [removed: market] [added: sales and the amount of FMI revenue] that we [removed: experienced during the COVID-19 pandemic.][added: may be able to service through local inventory fulfillment terminals.]

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 (including economic downturns as a result of global pandemics, including the ongoing COVID-19 pandemic), weakness in the manufacturing or commercial construction industries, competitive pressure on selling prices, changes in trade policies or tariffs, 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, [added: product and transportation inflation,] inclement weather, changes in foreign currency exchange rates, difficulty in adapting our business model to different foreign business environments, failure to accurately predict the market potential of our business strategies, the introduction or expansion of new business strategies, increased competition in [removed: industrial vending] [added: FMI] or Onsite, difficulty in maintaining installation quality as our industrial vending business expands, the [removed: leasing to customers of a significant number of additional industrial vending devices, the] failure to meet our goals and expectations regarding [removed: branch openings, branch closings, or] expansion of our [removed: industrial vending] [added: FMI] or Onsite operations, changes in the implementation objectives of our business strategies, 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 discrete items on future tax rates, 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, difficulty in obtaining continued business from new safety product customers, cyber-security incidents, potential liability and reputational damage that can arise if our products are defective, and other risks and uncertainties detailed in this Form 10-K under the heading 'Item 1A.

All information contained in this Form 10-K reflects the two-for-one stock [removed: splits] [added: split] in [removed: both 2019 and 2011.][added: 2019.]

| | | | | | | [PART I](#i2ed65f529e4d4582846cfc03b6e9e140_22) | | | | | |

| | | | | | | [PART II](#i2ed65f529e4d4582846cfc03b6e9e140_43) | | | | | |

| Item 6. | | | | | | [Removed and Reserved](#i2ed65f529e4d4582846cfc03b6e9e140_49) | | | [27](#i2ed65f529e4d4582846cfc03b6e9e140_49) | | |

| Item 9C. | | | | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i2ed65f529e4d4582846cfc03b6e9e140_1491) | | | [67](#i2ed65f529e4d4582846cfc03b6e9e140_1491) | | |

| | | | | | | [PART III](#i2ed65f529e4d4582846cfc03b6e9e140_148) | | | | | |

| | | | | | | [PART IV](#i2ed65f529e4d4582846cfc03b6e9e140_166) | | | | | |

| | | | | | | [Signatures](#i2ed65f529e4d4582846cfc03b6e9e140_178) | | | [73](#i2ed65f529e4d4582846cfc03b6e9e140_178) | | |

| | | | | | | [PART I](#ife810274569f4b179a477e3c078b570c_19) | | | | | |

| | | | | | | [PART II](#ife810274569f4b179a477e3c078b570c_40) | | | | | |

| Item 6. | | | | | | [Selected Financial Data](#ife810274569f4b179a477e3c078b570c_46) | | | [25](#ife810274569f4b179a477e3c078b570c_46) | | |

| | | | | | | [PART III](#ife810274569f4b179a477e3c078b570c_157) | | | | | |

| | | | | | | [PART IV](#ife810274569f4b179a477e3c078b570c_175) | | | | | |

| | | | | | | [Signatures](#ife810274569f4b179a477e3c078b570c_187) | | | [71](#ife810274569f4b179a477e3c078b570c_187) | | |

Portions of our 2020 Annual Report to Shareholders are incorporated by reference in Part II.

Note – Information in this section is as of December 31, [removed: 2020,] [added: 2021,] unless otherwise noted.

| Location | | | Purpose | | | Leased | | | Tote Locations [removed: (ASRS)(1)] [added: (ASRS) (1)] | | | | | | Approximate Square Feet | | |

| Winona, Minnesota | | | Distribution center and home office [removed: (2)] | | | | | | 246,000 | | | | | | [removed: 259,000] [added: 331,000] | | |

| Indianapolis, Indiana | | | Distribution center | | | | | | 547,000 | | | [removed: (3)] [added: (2)] | | | [removed: 1,039,000] [added: 1,078,000] | | |

| Akron, Ohio | | | Distribution center | | | | | | 103,000 | | | | | | [removed: 182,000] [added: 188,000] | | |

| Scranton, Pennsylvania | | | Distribution center [added: (3)] | | | | | | 104,000 | | | | | | [removed: 189,000] [added: 222,000] | | |

| Denton, Texas | | | Distribution center [added: (4)] | | | | | | 41,000 | | | [removed: (4)] [added: (5)] | | | [removed: 176,000] [added: 206,000] | | |

| Atlanta, Georgia | | | Distribution center | | | | | | 77,000 | | | | | | [removed: 198,000] [added: 252,000] | | |

| Seattle, Washington | | | Distribution center | | | | | | 140,000 | | | | | | [removed: 246,000] [added: 238,000] | | |

| Salt Lake City, Utah | | | Distribution center and packaging facility (three buildings) | | | X | | | — | | | | | | [removed: 156,000] [added: 153,000] | | |

| High Point, North Carolina | | | Distribution center (two buildings) [removed: (5)] [added: (6)] | | | | | | 132,000 | | | | | | [removed: 680,000] [added: 829,000] | | |

| Kansas City, Kansas | | | Distribution center | | | | | | 170,000 | | | | | | [removed: 468,000] [added: 462,000] | | |

| Jackson, Mississippi | | | Distribution center | | | | | | — | | | | | | [removed: 269,000] [added: 271,000] | | |

| Dordrecht, Netherlands | | | Distribution center | | | X | | | — | | | | | | [removed: 35,000] [added: 44,000] | | |

| Shanghai, China | | | Local re-distribution center | | | X | | | — | | | | | | [removed: 16,000] [added: 17,000] | | |

[removed: (3)] [added: (2)] This property contains an ASRS with capacity of 52,000 pallet locations, in addition to the 547,000 tote locations for small parts.

[removed: (4)] [added: (5)] This facility contains an ASRS with capacity of 14,000 pallet locations, in addition to the 41,000 tote locations for small parts.

[removed: (5)] [added: (6)] In late December 2018, we purchased an additional distribution center in High Point, North Carolina with approximately 750,000 total square feet.

Approximately [removed: 371,000] [added: 395,000] square feet will be leased by the building's previous owner until December 2022.

We currently utilize approximately [removed: 379,000] [added: 355,000] square feet for distribution activities.

| Indianapolis, Indiana | | | Manufacturing facility | | | | | | [removed: 220,000] [added: 198,000] | | |

| Houston, Texas | | | Manufacturing facility | | | | | | [removed: 120,000] [added: 122,000] | | |

| Rockford, Illinois | | | Manufacturing facility | | | | | | [removed: 100,000] [added: 101,000] | | |

| Modrice, Czech Republic | | | Manufacturing facility | | | X | | | [removed: 17,000] [added: 18,000] | | |

| Winona, Minnesota | | | Multiple facilities for office space, storage, and packaging operations | | | | | | [removed: 240,000] [added: 262,000] | | |

In addition, we own [removed: 167] [added: 165] buildings that house our in-market locations in various cities throughout North America.

Leased branches range from approximately 3,000 to [removed: 15,000] [added: 20,000] square feet, with lease terms of up to [removed: 60] [added: 120] months (most initial lease terms are for 36 to 60 months).

(3) Approximately 36,000 square feet is leased space for distribution related activities.

(4) Approximately 30,000 square feet is leased space for distribution related activities.

(2) During 2018, we acquired land for future expansion of our home office, and, as of December 2020, we have additional office space under construction.

As of January [removed: 22, 2021,] [added: 21, 2022,] there were approximately 1,000 record holders of our common stock, which includes nominees or broker dealers holding stock on behalf of an estimated [removed: 348,000] [added: 411,000] beneficial owners.

The table below sets forth information regarding purchases of our common stock during each of the last three months of [removed: 2020:][added: 2021:]

| October 1-31, [removed: 2020] [added: 2021] | | | 0 | | | | | | — | | | | | | | | | 0 | | | | | | 3,200,000 | | |

| November 1-30, [removed: 2020] [added: 2021] | | | 0 | | | | | | — | | | | | | | | | 0 | | | | | | 3,200,000 | | |

| December 1-31, [removed: 2020] [added: 2021] | | | 0 | | | | | | — | | | | | | | | | 0 | | | | | | 3,200,000 | | |

As of December 31, [removed: 2020,] [added: 2021,] we had remaining authority to repurchase 3,200,000 shares under this authorization.

Purchases of shares of our common [removed: stock throughout 2020] [added: stock, if applicable,] are described later in this Form 10-K under the heading 'Item 7.

Set forth below is a graph comparing, for the five years ended December 31, [removed: 2020,] [added: 2021,] the yearly cumulative total shareholder return on our common stock with the yearly cumulative total shareholder return of the S&P 500 Index and the Dow Jones US Industrial Suppliers Index.

The comparison of total shareholder returns in the performance graph assumes that $100 was invested on December 31, [removed: 2015] [added: 2016] in Fastenal Company, the S&P 500 Index, and the Dow Jones US Industrial Suppliers Index, and that dividends were reinvested when and as paid.

[removed: ][added: ]

| | | | | | | [removed: 2015] [added: 2016] | | | | | | [removed: 2016] [added: 2017] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | |

| Fastenal Company | | | $ | | | 100.00 | | | | | | 119.67 | | | | | | 117.79 | | | | | | 170.84 | | | | | | 233.32 | | | | | | 312.73 | | |

| S&P 500 Index | | | | | | 100.00 | | | | | | 121.83 | | | | | | 116.49 | | | | | | 153.17 | | | | | | 181.35 | | | | | | 233.41 | | |

| Dow Jones US Industrial Suppliers Index | | | | | | 100.00 | | | | | | 104.26 | | | | | | 101.75 | | | | | | 134.53 | | | | | | 170.10 | | | | | | 227.27 | | |

| Fastenal Company | | | $ | | | 100.00 | | | | | | 118.51 | | | | | | 141.82 | | | | | | 139.60 | | | | | | 202.47 | | | | | | 276.51 | | |

| S&P 500 Index | | | | | | 100.00 | | | | | | 111.96 | | | | | | 136.40 | | | | | | 130.42 | | | | | | 171.49 | | | | | | 203.04 | | |

| Dow Jones US Industrial Suppliers Index | | | | | | 100.00 | | | | | | 122.84 | | | | | | 128.08 | | | | | | 124.99 | | | | | | 165.27 | | | | | | 208.95 | | |

Incorporated herein by reference is Ten-Year Selected Financial Data on pages 4 and 5 of Fastenal's 2020 Annual Report to Shareholders of which this Form 10-K forms a part, a portion of which is filed as Exhibit 13 to this annual report on

Form 10-K.

We have audited the accompanying consolidated balance sheets of Fastenal Company and subsidiaries (the Company) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2020] [added: 2021] and the related notes and financial statement schedule listed in the table of contents at Item 15 (collectively, the consolidated financial statements).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* *(2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2020,] [added: 2021,] in conformity with U.S. generally accepted accounting principles.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

*Sufficiency of audit evidence over inventory [removed: quantities*][added: quantities at in-market locations*]

As disclosed in the consolidated balance sheet, the Company held [removed: $1,337.5] [added: $1,523.6] million of inventory, the majority of which was held at [removed: 3,268] [added: 3,209] in-market locations, as of December 31, [removed: 2020.][added: 2021.]

The [removed: Company’s] [added: Company's] processes to track and determine consolidated inventory relies on a perpetual inventory system which involves the interaction of [removed: multiple] information technology (IT) systems.

We identified the evaluation of the sufficiency of audit evidence obtained related to the quantities of inventory [added: at in-market locations] as a critical audit matter.

Evaluating the sufficiency of audit evidence over quantities of inventory [added: at in-market locations] required challenging auditor judgment to assess the number of in-market locations [removed: visited,] [added: visited] and included the involvement of IT professionals with specialized skills and knowledge due to the interaction of [removed: multiple] IT systems that track physical inventory quantities by location.

This included IT application controls, as well as certain controls related to access to programs and data, program changes, [removed: program development,] and computer operations.

We involved IT professionals with specialized skills and knowledge, who assisted in testing certain IT controls, inclusive of the interface of [removed: multiple] IT systems, which support the [removed: Company’s] [added: Company's] perpetual inventory system.

- The Company's inventory cycle count results, including the results of monitoring and compliance with [added: the] cycle count program by in-market location.

We tested the existence and completeness of inventory by counting inventory quantities on a sample basis through [added: in-market] location visits during the year to evaluate the [removed: Company’s] [added: Company's] perpetual inventory records.

In addition, we evaluated the overall sufficiency of audit evidence obtained over the quantities of [removed: inventory.][added: inventory at in-market locations.]

| | | | [removed: 2020] [added: 2021] | | | | | | [added: 2020 | | | | | |] 2019 | | |

| Cash and cash equivalents | | | $ | [removed: 245.7] [added: 236.2] | | | | | [removed: 174.9] [added: 245.7] | | |

| Trade accounts receivable, net of allowance for credit losses of [removed: $12.3] [added: $12.0] and [removed: $10.9,] [added: $12.3,] respectively | | | [removed: 769.4] [added: 900.2] | | | | | | [removed: 741.8] [added: 769.4] | | |

| Inventories | | | [removed: 1,337.5] [added: 1,523.6] | | | | | | [removed: 1,366.4] [added: 1,337.5] | | |

| Prepaid income taxes | | | [removed: 6.7] [added: 8.5] | | | | | | [removed: 16.7] [added: 6.7] | | |

| Other current assets | | | [removed: 140.3] [added: 188.1] | | | | | | [removed: 157.4] [added: 140.3] | | |

| Total current assets | | | [removed: 2,499.6] [added: 2,856.6] | | | | | | [removed: 2,457.2] [added: 2,499.6] | | |

| Property and equipment, net | | | [removed: 1,030.7] [added: 1,019.2] | | | | | | [removed: 1,023.2] [added: 1,030.7] | | |

| Operating lease right-of-use assets | | | [removed: 243.0] [added: 242.3] | | | | | | [removed: 243.2] [added: 243.0] | | |

| Other assets | | | [removed: 191.4] [added: 180.9] | | | | | | [removed: 76.3] [added: 191.4] | | |

| Total assets | | | $ | [removed: 3,964.7] [added: 4,299.0] | | | | | [removed: 3,799.9] [added: 3,964.7] | | |

| Current portion of debt | | | $ | [removed: 40.0] [added: 60.0] | | | | | [removed: 3.0] [added: 40.0] | | |

| Accounts payable | | | [removed: 207.0] [added: 233.1] | | | | | | [removed: 192.8] [added: 207.0] | | |

| Accrued expenses | | | [removed: 272.1] [added: 298.3] | | | | | | [removed: 251.5] [added: 272.1] | | |

| Current portion of operating lease liabilities | | | [removed: 93.6] [added: 90.8] | | | | | | [removed: 97.4] [added: 93.6] | | |

| Total current liabilities | | | [removed: 612.7] [added: 682.2] | | | | | | [removed: 544.7] [added: 612.7] | | |

| Long-term debt | | | [removed: 365.0] [added: 330.0] | | | | | | [removed: 342.0] [added: 365.0] | | |

| Operating lease liabilities | | | [removed: 151.5] [added: 156.0] | | | | | | [removed: 148.2] [added: 151.5] | | |

| Deferred income taxes | | | [removed: 102.3] [added: 88.6] | | | | | | [removed: 99.4] [added: 102.3] | | |

| Commitments and contingencies (Notes [removed: 6,] [added: 5, 8,] 9, [removed: 10,] and [removed: 11)] [added: 10)] | | | | | | | | | | | |

| Common stock: $0.01 par value, 800,000,000 shares authorized, [removed: 574,159,575] [added: 575,464,682] and [removed: 574,128,911] [added: 574,159,575] shares issued and outstanding, respectively | | | [removed: 2.9] [added: 5.8] | | | | | | [removed: 2.9] [added: 5.7] | | |

| Additional paid-in capital | | | [removed: 61.9] [added: 96.2] | | | | | | [removed: 67.2] [added: 59.1] | | |

| Retained earnings | | | [removed: 2,689.6] [added: 2,970.9] | | | | | | [removed: 2,633.9] [added: 2,689.6] | | |

| Accumulated other comprehensive loss | | | [removed: (21.2)] [added: (30.7)] | | | | | | [removed: (38.4)] [added: (21.2)] | | |

| Total [removed: stockholders’] [added: stockholders'] equity | | | [removed: 2,733.2] [added: $] | [added: 3,042.2] | | | | | [added: 2,733.2 | | | | | |] 2,665.6 | | |

| Total liabilities and [removed: stockholders’] [added: stockholders'] equity | | | $ | [removed: 3,964.7] [added: 4,299.0] | | | | | [removed: 3,799.9] [added: 3,964.7] | | |

- Homogeneity of the locations;

February 7, 2022

| | | | 2021 | | | | | | 2020 | | |

| Stock options exercised | | | 0.1 | | | | | | 0.0 | | | | | | 0.0 | | |

| Balance at beginning of year | | | 59.1 | | | | | | 64.4 | | | | | | 0.2 | | |

| Balance at end of year | | | 96.2 | | | | | | 59.1 | | | | | | 64.4 | | |

| Net earnings | | | 925.0 | | | | | | 859.1 | | | | | | 790.9 | | |

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| Net earnings | | | $ | 925.0 | | | | | 859.1 | | | | | | 790.9 | | |

| Stock-based compensation | | | 5.6 | | | | | | 5.7 | | | | | | 5.7 | | |

We distribute these supplies through a network of branches and Onsite locations.

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

These include supply chain disruptions and labor shortages, and a modest shift in our mix to include more safety products.

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

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

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

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

To the extent that COVID-19 infections and/or interventions continue to meaningfully influence the marketplace, on a national, local, or business-specific basis, this can either directly impact or indirectly influence access to customer facilities and decision-makers, and lengthen the sales cycle for certain of our solutions.

additional share of common stock for every share of common stock they owned.

Immaterial Revision

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

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

We are currently evaluating the impact of the new guidance on our consolidated financial statements; however, we have determined that, of our current debt commitments as outlined in detail in Note 9 'Debt Commitments', only the obligations described under Unsecured Revolving Credit Facility in Note 9 would be impacted by ASU 2020-04.

Our Senior Unsecured Promissory Notes Payable described in Note 9 each have fixed interest rates.

During 2021, no single customer represented 5% or more of our consolidated net sales.

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| | | | | | | | | | 2,197.2 | | | | | | 2,084.6 | | |

| | | | 2021 | | | | | | 2020 | | |

| | | | 2021 | | | 2020 | | | | | |

| January 4, 2021 | | | 741,510 | | | | | | $48.00 | | | | | | $47.650 | | | | | | 711,199 | | | | | | 26,643 | | |

| Total | | | 11,375,531 | | | | | | | | | | | | | | | | | | 5,173,270 | | | | | | 1,693,805 | | |

| January 4, 2021 | | | 0.4% | | | | | | 5.00 | | | | | | 2.0% | | | | | | 29.17 | | % | | | | $9.57 | | |

| Outstanding as of January 1, 2021 | | | 5,914,757 | | | | | | $ | 26.73 | | | | | 6.22 | | |

| Granted | | | 741,510 | | | | | | $ | 48.00 | | | | | 9.00 | | |

| Exercised | | | (1,305,107) | | | | | | $ | 24.34 | | | | | | | |

| Cancelled/forfeited | | | (177,890) | | | | | | $ | 31.22 | | | | | | | |

| Outstanding as of December 31, 2021 | | | 5,173,270 | | | | | | $ | 30.23 | | | | | 6.08 | | |

| Exercisable as of December 31, 2021 | | | 1,693,805 | | | | | | $ | 25.11 | | | | | 4.68 | | |

| | | | Options Outstanding | | | | | | Exercise Price (1) | | | | | | Remaining Life (2) | | |

February 8, 2021

FASTENAL COMPANY AND SUBSIDIARIES

| Balance at beginning of year | | | 67.2 | | | | | | 3.0 | | | | | | 8.5 | | |

| Balance at end of year | | | 61.9 | | | | | | 67.2 | | | | | | 3.0 | | |

Notes to Consolidated Financial Statements—Continued

We recently experienced an increase in sales volume of safety related products.

However, we may realize lower product margins as well as inventory write-downs as a result of the improved supply and the potential inability to sell excess safety related products ordered from suppliers.

Recently Adopted Accounting Pronouncements

Effective January 1, 2020, we adopted Financial Accounting Standard Board ('FASB') Accounting Standards Update ('ASU') 2016-13, *Measurement of Credit Losses on Financial Instruments*, which changed the way entities recognize impairment of most financial assets.

Short-term and long-term financial assets, as defined by the standard, are impacted by immediate

recognition of estimated credit losses in the financial statements, reflecting the net amount expected to be collected.

The adoption of this standard had an immaterial impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, *Business Combinations (Topic 805): Clarifying the Definition of a Business*, which provides guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

ASU 2017-01 requires that, to be a business, an acquired set of assets and activities must include, at a minimum, an input and a substantive process that together significantly contributes to the ability to create outputs.

The company adopted this guidance during the first quarter of 2020 when evaluating the transaction discussed further in Note 2, '*Asset Acquisition'*.

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

Asset Acquisition

On March 30, 2020, we purchased certain assets of Apex Industrial Technologies LLC ('Apex') that have contributed to the development, design, and scalability of the vending delivery platform utilized since 2008 within our industrial vending business to dispense product and lease devices to our customers.

In connection with this transaction, we purchased a perpetual and unfettered use of key patents, designs, software and licenses, as well as direct access to the vending equipment supply chain.

The total purchase price of the assets acquired consisted of $125.0.

The majority of this was paid in cash at closing, though a small portion of the purchase price is held in escrow with final payment dependent on certain performance obligations of the seller.

We funded the purchase price with available cash and proceeds from borrowings on our unsecured revolving credit facility.

We accounted for the purchase as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in the identifiable intangible assets used in the vending delivery platform for our industrial vending business.

On a relative fair value basis, the allocated identifiable intangible assets total $123.8 and tangible property and equipment total $1.2.

| | | | | | | | | | 2,084.6 | | | | | | 1,966.9 | | |

| April 17, 2012 | | | 2,470,000 | | | | | | $27.00 | | | | | | $24.505 | | | | | | 47,748 | | | | | | 47,748 | | |

| Total | | | 13,104,021 | | | | | | | | | | | | | | | | | | 5,914,757 | | | | | | 1,885,241 | | |

| April 17, 2012 | | | 0.9% | | | | | | 5.00 | | | | | | 1.4% | | | | | | 39.25 | | % | | | | $6.85 | | |

| Outstanding as of January 1, 2019 | | | 7,999,264 | | | | | | $ | 24.765 | | | | | 5.61 | | |

| Granted | | | 1,316,924 | | | | | | $ | 26.000 | | | | | 9.00 | | |

| Exercised | | | (2,325,073) | | | | | | $ | 25.150 | | | | | | | |

| Cancelled/forfeited | | | (183,898) | | | | | | $ | 24.630 | | | | | | | |

| Outstanding as of December 31, 2019 | | | 6,807,217 | | | | | | $ | 24.890 | | | | | 6.09 | | |

| Exercisable as of December 31, 2019 | | | 2,164,067 | | | | | | $ | 24.510 | | | | | 4.30 | | |

| Purchases of common stock | | | (1,600,000) | | | | | | — | | | | | | (4,000,000) | | |

| Federal | | | $ | 143.8 | | | | | 27.4 | | | | | | 171.2 | | |

| State | | | 38.8 | | | | | | 0.2 | | | | | | 39.0 | | |

| Foreign | | | 24.1 | | | | | | 0.8 | | | | | | 24.9 | | |

| Income tax expense | | | $ | 206.7 | | | | | 28.4 | | | | | | 235.1 | | |

| Transition tax | | | — | | | | | | — | | | | | | 1.2 | | |

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our 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 [removed: 'Securities] [added: Securities] Exchange [removed: Act')).][added: Act)).]

Based on our assessment and those criteria, management believes that the company maintained effective internal control over financial reporting as of December 31, [removed: 2020.][added: 2021.]

| February 7, 2022 | | | | | | | | |

| February 8, 2021 | | | | | | | | |

PART III

None.

PART III

| Daniel L. Florness | | | 1996 | | | | | | [removed: 57] [added: 58] | | | | | | President, Chief Executive Officer, and Director | | |

| William J. Drazkowski | | | 1995 | | | | | | [removed: 49] [added: 50] | | | | | | Executive Vice President – Sales | | |

| James C. Jansen | | | 1992 | | | | | | [removed: 50] [added: 51] | | | | | | Executive Vice President – Manufacturing | | |

| Holden Lewis | | | 2016 | | | | | | [removed: 51] [added: 52] | | | | | | Executive Vice President and Chief Financial Officer | | |

| Sheryl A. Lisowski | | | 1994 | | | | | | [removed: 53] [added: 54] | | | | | | Executive Vice President – Chief Accounting Officer and Treasurer | | |

| Charles S. Miller | | | 1999 | | | | | | [removed: 46] [added: 47] | | | | | | Senior Executive Vice President – Sales | | |

| Terry M. Owen | | | 1999 | | | | | | [removed: 52] [added: 53] | | | | | | Senior Executive Vice President – Sales Operations | | |

| John L. Soderberg | | | 1993 | | | | | | [removed: 49] [added: 50] | | | | | | Senior Executive Vice President – Information Technology | | |

| Jeffery M. Watts | | | 1996 | | | | | | [removed: 49] [added: 50] | | | | | | Executive Vice President – International Sales | | |

| Reyne K. Wisecup | | | 1988 | | | | | | [removed: 57] [added: 58] | | | | | | Senior Executive Vice President – Human Resources and Director | | |

[added: From November 2007 to] December 2010, Mr. Jansen was our executive vice president – internal operations.

Mr. Owen's responsibilities include oversight of our [removed: e-commerce,] [added: eCommerce,] marketing, national accounts sales, government sales, FAST Solutions® (Onsite and FMI), our Mansco division, manufacturing, distribution, transportation, product development, supplier development, procurement, and supply chain.

From July 2015 to December 2015, Mr. Owen was one of our executive vice [removed: president] [added: presidents] – sales.

From November 2007 to

| Equity compensation plans approved by security holders (1) | | | 5,173,270 | | | | | | $ | 30.23 | | | | | 12,193,276 | | |

| Total | | | 5,173,270 | | | | | | | | | | | | 12,193,276 | | |

| Equity compensation plans approved by security holders (1) | | | 5,914,757 | | | | | | $ | 26.73 | | | | | 12,756,896 | | |

| Total | | | 5,914,757 | | | | | | | | | | | | 12,756,896 | | |

Incorporated herein by reference is the information appearing under the headings 'Corporate Governance and Director Compensation—Director [removed: Independence and Other Board Matters',] [added: Independence',] 'Corporate Governance and Director Compensation—Related Person Transaction Approval Policy', and 'Corporate Governance and Director Compensation—Transactions with Related Persons' in the Proxy Statement.

Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019][added: 2020]

Consolidated Statements of Earnings for the years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

Consolidated Statements of Comprehensive Income for the years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

Consolidated Statements of Stockholders' Equity for the years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

Consolidated Statements of Cash Flows for the years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

Report of Independent Registered Public Accounting Firm [added: (KPMG LLP, Minneapolis, MN, Auditor Firm ID: 185)]

[added: | | | | 2.] Financial Statement Schedules: [added: | | |]

[added: | | | | 3.] Exhibits: [added: | | |]

| Exhibit Number | | | [removed: Description of Document] | | | [added: Description of Document] | | |

| 3.1 | | | [added: | | |] [Restated Articles of Incorporation of Fastenal Company, as amended (incorporated by reference to Exhibit 3.1 to Fastenal [removed: Company's] [added: Company](https://www.sec.gov/Archives/edgar/data/815556/000081555619000032/ex_314232019amendedarticle.htm)['](https://www.sec.gov/Archives/edgar/data/815556/000081555619000032/ex_314232019amendedarticle.htm)[s] Form 8-K dated as of April 23, [removed: 2019](https://www.sec.gov/Archives/edgar/data/815556/000081555619000032/ex_314232019amendedarticle.htm)[)](https://www.sec.gov/Archives/edgar/data/815556/000081555619000032/ex_314232019amendedarticle.htm) | | |] [added: 2019)](https://www.sec.gov/Archives/edgar/data/815556/000081555619000032/ex_314232019amendedarticle.htm)] | | |

| 3.2 | | | [added: | | |] [Restated By-Laws of Fastenal Company (incorporated by reference to Exhibit 3.2 to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555619000007/exhibit32restatedbylaws.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555619000007/exhibit32restatedbylaws.htm)[s] Form 8-K dated as of January 17, [removed: 2019](http://www.sec.gov/Archives/edgar/data/815556/000081555619000007/exhibit32restatedbylaws.htm)[)](http://www.sec.gov/Archives/edgar/data/815556/000081555619000007/exhibit32restatedbylaws.htm) | | |] [added: 2019)](http://www.sec.gov/Archives/edgar/data/815556/000081555619000007/exhibit32restatedbylaws.htm)] | | |

| 4.1 | | | [added: | | |] [Form of Senior Notes due July 20, [removed: 2021] [added: 2022] (incorporated by reference to Exhibit [removed: 4.1] [added: 4.2] to Fastenal [removed: Company’s] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit42.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit42.htm)[s] Form 8‑K dated as of July 20, [removed: 2016](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit41.htm)[)](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit41.htm) | | |] [added: 2016)](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit42.htm)] | | |

| 4.2 | | | [added: | | |] [Form of Senior Notes due [removed: July 20, 2022] [added: March 1, 2024] (incorporated by reference to Exhibit [removed: 4.2] [added: 4.1] to Fastenal [removed: Company’s] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555617000021/fast33117ex_41.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555617000021/fast33117ex_41.htm)[s] Form [removed: 8‑K dated as of July 20, 2016](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit42.htm)[)](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit42.htm) | | |] [added: 10-Q for the quarter ended March 31, 2017)](http://www.sec.gov/Archives/edgar/data/815556/000081555617000021/fast33117ex_41.htm)] | | |

| [removed: 4.3] [added: 4.6] | | | [added: | | |] [Form of Senior Notes due [removed: March 1, 2024] [added: June 24, 2023] (incorporated by reference to Exhibit [removed: 4.1] [added: 4.3] to Fastenal [removed: Company's] [added: Company](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex43.htm)['](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex43.htm)[s] Form 10-Q for the quarter ended [removed: March 31, 2017](http://www.sec.gov/Archives/edgar/data/815556/000081555617000021/fast33117ex_41.htm)[)](http://www.sec.gov/Archives/edgar/data/815556/000081555617000021/fast33117ex_41.htm) | | |] [added: June 30, 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex43.htm)] | | |

| [removed: 4.4] [added: 4.3] | | | [removed: [Description of Capital Stock](https://www.sec.gov/Archives/edgar/data/815556/000081555621000008/fast1231202010-kexhibit44.htm)] | | | [added: [Description of Capital Stock](https://www.sec.gov/Archives/edgar/data/815556/000081555622000009/fast1231202110-kexhibit043.htm)] | | |

| [removed: 4.5] [added: 4.4] | | | [added: | | |] [Form of Senior Notes due May 15, 2025 (incorporated by reference to Exhibit 4.1 to Fastenal [removed: Company's] [added: Company](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex41.htm)['](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex41.htm)[s] Form 10-Q for the quarter ended June 30, 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex41.htm) | | | [removed: | | |]

| [removed: 4.6] [added: 4.5] | | | [added: | | |] [Form of Senior Notes due May 15, 2027 (incorporated by reference to Exhibit 4.2 to Fastenal [removed: Company's] [added: Company](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex42.htm)['](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex42.htm)[s] Form 10-Q for the quarter ended June 30, 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex42.htm) | | | [removed: | | |]

| 4.7 | | | [added: | | |] [Form of Senior Notes due June 24, [removed: 2023] [added: 2026] (incorporated by reference to Exhibit [removed: 4.3] [added: 4.4] to Fastenal [removed: Company's] [added: Company](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex44.htm)['](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex44.htm)[s] Form 10-Q for the quarter ended June 30, [removed: 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex43.htm) | | |] [added: 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex44.htm)] | | |

| 4.8 | | | [added: | | |] [Form of Senior Notes due June 24, [removed: 2026] [added: 2030] (incorporated by reference to Exhibit [removed: 4.4] [added: 4.5] to Fastenal [removed: Company's] [added: Company](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex45.htm)['](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex45.htm)[s] Form 10-Q for the quarter ended June 30, [removed: 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex44.htm) | | |] [added: 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex45.htm)] | | |

| 10.1 | | | [added: | | |] [Bonus Program for Executive [removed: Officers*](https://www.sec.gov/Archives/edgar/data/815556/000081555621000008/fast1231202010-kexhibit101.htm) | | |] [added: Officers*](https://www.sec.gov/Archives/edgar/data/815556/000081555622000009/fast1231202110-kexhibit101.htm)] | | |

| 10.2 | | | [added: | | |] [Fastenal Company Stock Option Plan as amended and restated effective as of December 12, 2014 (incorporated by reference to Exhibit 10.1 to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555614000073/exhibit101stockoptionplana.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555614000073/exhibit101stockoptionplana.htm)[s] Form 8-K dated December 17, [removed: 2014](http://www.sec.gov/Archives/edgar/data/815556/000081555614000073/exhibit101stockoptionplana.htm)[)*](http://www.sec.gov/Archives/edgar/data/815556/000081555614000073/exhibit101stockoptionplana.htm) | | |] [added: 2014)*](http://www.sec.gov/Archives/edgar/data/815556/000081555614000073/exhibit101stockoptionplana.htm)] | | |

| 10.3 | | | [added: | | |] [Fastenal Company Incentive Plan (incorporated by reference to Appendix A to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000119312512074269/d296107ddef14a.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000119312512074269/d296107ddef14a.htm)[s] Proxy Statement dated February 23, [removed: 2012](http://www.sec.gov/Archives/edgar/data/815556/000119312512074269/d296107ddef14a.htm)[)*](http://www.sec.gov/Archives/edgar/data/815556/000119312512074269/d296107ddef14a.htm) | | |] [added: 2012)*](http://www.sec.gov/Archives/edgar/data/815556/000119312512074269/d296107ddef14a.htm)] | | |

| 10.4 | | | [added: | | |] [Fastenal Company Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 99 to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555618000026/exhibit99-nonxemployeedire.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555618000026/exhibit99-nonxemployeedire.htm)[s] Registration Statement on Form S-8 filed on April 25, [removed: 2018](http://www.sec.gov/Archives/edgar/data/815556/000081555618000026/exhibit99-nonxemployeedire.htm)[).*](http://www.sec.gov/Archives/edgar/data/815556/000081555618000026/exhibit99-nonxemployeedire.htm) | | |] [added: 2018).*](http://www.sec.gov/Archives/edgar/data/815556/000081555618000026/exhibit99-nonxemployeedire.htm)] | | |

| 10.5 | | | [added: | | |] [Credit Agreement, dated as of May 1, 2015, among Fastenal Company, the Lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and Issuing Lender (incorporated by reference to Exhibit 10.1 to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555615000036/exhibit10105012015creditag.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555615000036/exhibit10105012015creditag.htm)[s] Form 8-K dated May 5, [removed: 2015](http://www.sec.gov/Archives/edgar/data/815556/000081555615000036/exhibit10105012015creditag.htm)[).](http://www.sec.gov/Archives/edgar/data/815556/000081555615000036/exhibit10105012015creditag.htm) | | |] [added: 2015).](http://www.sec.gov/Archives/edgar/data/815556/000081555615000036/exhibit10105012015creditag.htm)] | | |

| 10.6 | | | [added: | | |] [First Amendment to Credit Agreement, dated as of November 23, 2015, among Fastenal Company, the Lenders from time to time party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555615000074/exhibit101amendment11232015.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555615000074/exhibit101amendment11232015.htm)[s] Form 8-K dated November 25, [removed: 2015](http://www.sec.gov/Archives/edgar/data/815556/000081555615000074/exhibit101amendment11232015.htm)[).](http://www.sec.gov/Archives/edgar/data/815556/000081555615000074/exhibit101amendment11232015.htm) | | |] [added: 2015).](http://www.sec.gov/Archives/edgar/data/815556/000081555615000074/exhibit101amendment11232015.htm)] | | |

| 10.7 | | | [added: | | |] [Second Amendment to Credit Agreement, dated as of March 10, 2017, by and among Fastenal Company, the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555617000015/exhibit101creditfacilityse.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555617000015/exhibit101creditfacilityse.htm)[s] Form 8-K dated as of March 14, [removed: 2017](http://www.sec.gov/Archives/edgar/data/815556/000081555617000015/exhibit101creditfacilityse.htm)[).](http://www.sec.gov/Archives/edgar/data/815556/000081555617000015/exhibit101creditfacilityse.htm) | | |] [added: 2017).](http://www.sec.gov/Archives/edgar/data/815556/000081555617000015/exhibit101creditfacilityse.htm)] | | |

| 10.8 | | | [added: | | |] [Third Amendment to Credit Agreement dated as of November 30, 2018 among Fastenal Company, the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit101-thirdamendmentt.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit101-thirdamendmentt.htm)[s] Form 8‑K dated December 3, [removed: 2018](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit101-thirdamendmentt.htm)[).](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit101-thirdamendmentt.htm) | | |] [added: 2018).](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit101-thirdamendmentt.htm)] | | |

| 10.9 | | | [added: | | |] [Master Note Agreement dated as of July 20, 2016 by and among (i) Fastenal Company, (ii) Metropolitan Life Insurance Company, NYL Investors LLC and PGIM, Inc. (formerly known as Prudential Investment Management, Inc.), as investor group representatives (each, [removed: an 'Investor] [added: an](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit101agreement07202016.htm) ['](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit101agreement07202016.htm)[Investor] Group [removed: Representative'),] [added: Representative](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit101agreement07202016.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit101agreement07202016.htm)[),] and (iii) Metropolitan Life Insurance Company (in its capacity as a purchaser of notes under such Master Note Agreement) and/or affiliates of any Investor Group Representative who become purchasers of notes under such Master Note Agreement (incorporated by reference to Exhibit 10.1 to Fastenal Company’s Form 8-K dated as of July 20, [removed: 2016](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit101agreement07202016.htm)[).](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit101agreement07202016.htm) | | |] [added: 2016).](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit101agreement07202016.htm)] | | |

| 10.10 | | | [added: | | |] [Omnibus First Amendment to Master Note Agreement and Subsidiary Guaranty Agreement dated as of November 30, 2018 by and among Fastenal Company, Fastenal Company Purchasing, and Fastenal IP Company, on one hand, and Metropolitan Life Insurance Company, NYL Investors LLC, PGIM, Inc., and each holder of Notes that are signatory thereto, on the other hand (incorporated by reference to Exhibit 10.2 to Fastenal [removed: Company's] [added: Company](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit102-firstamendmentt.htm)['](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit102-firstamendmentt.htm)[s] Form 8-K dated December 3, [removed: 2018](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit102-firstamendmentt.htm)[).](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit102-firstamendmentt.htm) | | |] [added: 2018).](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit102-firstamendmentt.htm)] | | |

| 10.11 | | | [added: | | |] [Consent, Waiver and Agreement to Master Note Agreement dated as of June 10, 2020 by and among Fastenal Company, Fastenal Company Purchasing, and Fastenal IP Company, on the one hand, and Metropolitan Life Insurance Company, MetLife Investment Management, LLC, NYL Investors LLC, PGIM, Inc. and each holder of Notes that are signatory thereto, on the other [removed: hand](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex101.htm) [(incorporated] [added: hand (incorporated] by reference to Exhibit 10.1 to Fastenal [removed: Company's] [added: Company](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex101.htm)['](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex101.htm)[s] Form 10-Q for the quarter ended June 30, [removed: 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex101.htm)[.](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex101.htm) | | |] [added: 2020).](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex101.htm)] | | |

| 21 | | | [removed: [List of Subsidiaries](https://www.sec.gov/Archives/edgar/data/815556/000081555621000008/fast1231202010-kexhibit21.htm)] | | | [added: [List of Subsidiaries](https://www.sec.gov/Archives/edgar/data/815556/000081555622000009/fast1231202110-kexhibit21.htm)] | | |

| 23 | | | [added: | | |] [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/815556/000081555621000008/fast1231202010-kexhibit23.htm) | | |] [added: Firm](https://www.sec.gov/Archives/edgar/data/815556/000081555622000009/fast1231202110-kexhibit23.htm)] | | |

| 31 | | | [added: | | |] [Certifications [removed: under](https://www.sec.gov/Archives/edgar/data/815556/000081555621000008/fast1231202010-kexhibit31.htm) [Section] [added: under Section] 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/815556/000081555621000008/fast1231202010-kexhibit31.htm) | | |] [added: 2002](https://www.sec.gov/Archives/edgar/data/815556/000081555622000009/fast1231202110-kexhibit31.htm)] | | |

| 32 | | | [added: | | |] [Certification under Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/815556/000081555621000008/fast1231202010-kexhibit32.htm) | | |] [added: 2002](https://www.sec.gov/Archives/edgar/data/815556/000081555622000009/fast1231202110-kexhibit32.htm)] | | |

| 101 | | | [added: | | |] The following financial statements from the Annual Report on Form 10-K for the year ended December 31, [removed: 2020,] [added: 2021,] formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Earnings, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of [removed: Stockholders’] [added: Stockholders'] Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. | | | [removed: | | |]

| 104 | | | [added: | | |] The cover page from the Annual Report on Form 10-K for the year ended December 31, [removed: 2020,] [added: 2021,] formatted in Inline XBRL. | | | [removed: | | |]

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| Exhibit Number | | | | | | Description of Document | | |

2.

3.

| 4.9 | | | [Form of Senior Notes due June 24, 2030 (incorporated by reference to Exhibit 4.5 to Fastenal Company's Form 10-Q for the quarter ended June 30, 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex45.htm) | | | | | |

| 13 | | | [Portions of 2020 Annual Report to Shareholders not included in this Form 10-K (only those sections specifically incorporated by reference in this Form 10-K shall be deemed filed with the SEC)](https://www.sec.gov/Archives/edgar/data/815556/000081555621000008/a2020_annualreportxfinal.htm) | | | | | |

Years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

| Allowance for credit losses | | | [removed: $] [added: $] | [removed: 10.9] [added: 10.9] | | | | | [removed: 7.5] [added: 7.5] | | | | | | [removed: —] [added: —] | | | | | | [removed: 6.1] [added: 6.1] | | | | | | [removed: 12.3] [added: 12.3] | | |