Fastenal (FAST) 10-K risk factor changes: FY2023 vs FY2022

Our ability to successfully attract, develop, and retain qualified personnel to staff our selling locations could impact labor costs, sales at existing selling locations, and the successful execution of our growth drivers. Our success depends in part on our ability to attract, motivate, and retain a sufficient number of qualified employees, including inside and outside branch associates, Onsite managers, national account sales representatives, and [added: logistical and administrative] support personnel, who understand and appreciate our culture and are able to adequately represent this culture to our customers.

If we are unable to hire and retain personnel capable of consistently providing a high level of customer service, as demonstrated by their enthusiasm for our culture and product knowledge, our sales could be materially [added: and] adversely affected.

Still, information systems are vulnerable to natural disasters, power losses, unauthorized access, [added: cybersecurity incidents,] 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. [removed: Our] [added: Additionally, our] business relies on the use, validity, and continued protection of certain proprietary information and intellectual property, which include 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.

[removed: There] can be no assurance that we will not experience a cyber security incident that may materially impact our business.

For example, we have experienced a [removed: long-term] [added: sustained] increase in the proportion of our sales attributable to both non-fastener products and national accounts and Onsite customers.

Setting aside the circumstances of any given year or period, however, customer and product mix have contributed to the decline of our gross profit percentage over time [removed: and] [added: and, based on the anticipated sources of our future growth,] will likely continue to reduce our gross profit percentage into the foreseeable future.

There are other variables that could cause our gross profit percentage to decline, including downward pressure on sales prices due to deflation, [added: increases in overseas freight charges, the inability of freight revenue to leverage the expenses associated with our captive trucking fleet,] pressure from customers to reduce costs, or increased competition.

Failure to implement an effective Environmental, Social, and Governance (ESG) strategy could result in financial losses or [removed: a tarnished] [added: impair our] corporate reputation.

- the availability of effective and acceptable emission offset technologies or strategies in the event such tools will be necessary to achieve overall emission reduction and mitigation goals; [added: and]

- our ability to recruit, develop, and retain diverse talent in our labor [removed: markets; and][added: markets.]

[removed: Furthermore, increasing] [added: - increases in] reporting and operating regulations around ESG [removed: matters] may result in higher operating expenses and/or capital expenditures that could reduce our profitability and/or cash [removed: flow.][added: flow;]

In addition, market variables, [removed: such as] [added: which include but are not exclusive of] labor rates, energy costs, legal costs, and health care costs, could move in such a way as to cause us to not be able to manage our operating and administrative expenses [removed: in a way that would enable us] [added: so as] to leverage our revenue growth into higher net earnings.

The ability to identify new products and product lines, and integrate them into our selling [removed: locations] [added: efforts] 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 [removed: the] [added: our] selling [removed: location level] [added: locations] and [added: through our specialist roles and] identify future products and product lines that complement existing products and product lines and that respond to our customers' needs.

In addition, our ability to integrate new products and product lines into our [removed: branches] [added: selling locations] and distribution network could impact sales and profit margins.

Our competitive advantage in FMI solutions, which includes industrial vending (FASTVend) and bin stock (FASTStock and FASTBin) tools could be eliminated and, in the case of [removed: FASTVend,] [added: FASTVend and FASTBin,] the loss of key suppliers of equipment and services could be impactful and result in failure to deploy devices.

Certain circumstances could lead to a short-term inability to promote and/or install our FMI solutions. We believe we have a competitive advantage in industrial vending and bin stock due to our hardware and software, our local [removed: branch] presence (allowing us to service devices and bins more rapidly and with less burden on our customers), our depth of products that lend themselves to being dispensed through industrial vending devices or bin stocks, and, [added: particularly] in North America, our distribution strength.

In addition, we currently rely on a limited number of suppliers for [removed: the] [added: our] vending [removed: devices] [added: devices, RFID technology, and IR technology] used in our FASTVend [removed: platform.][added: and FASTBin platforms.]

While devices, software, and services can be obtained from other sources, loss of our current suppliers could be disruptive and could result in our failure to meet short- or long-term goals related to the numbers of FASTVend [added: and FASTBin] devices we are able to deploy.

For instance, [removed: when] [added: during periods of dramatic change in] economic [removed: activity slows,] [added: activity,] some customers may prioritize managing existing operations over adopting new technologies until business circumstances change.

[removed: Volatility in our stock price could also result in the] filing of securities class action litigation, which could result in substantial costs and the diversion of our management's time, attention, and resources.

Historically, investors have given our earnings a higher multiple, or premium, than is typical of the broader industrial sector [removed: of] [added: with] which we are typically associated.

However, to the extent that we fail to successfully execute our growth strategies and/or poorly navigate the risks that surround our business, including those described throughout this section, or to [added: the extent our industry (industrial distribution, or industrial stocks in general) loses favor in the marketplace, there can be no assurance that investors will continue to afford a premium multiple to our earnings which could adversely affect our stock price.]

- general business [removed: conditions,][added: conditions;]

- business conditions in our principal [removed: markets,][added: markets;]

- interest [removed: rates,][added: rates;]

- liquidity in credit [removed: markets,][added: markets;]

- [removed: taxation,][added: taxation;]

- government regulations and [removed: actions,][added: actions;]

- unemployment [removed: trends,][added: trends;]

- terrorist attacks and acts of [removed: war,][added: war;]

- impact of higher sustained global temperatures (global [removed: warming),][added: warming);]

- acts of God, which may include, but are not limited to, weather events, earthquakes, pandemics, [removed: etc.,] [added: etc.;] and

Products manufactured in foreign countries may cease to be 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 or experience disruption in selling products manufactured in foreign countries at any time for reasons that may or may not be in our control or our [removed: suppliers’] [added: suppliers'] control, including foreign government regulations, domestic government regulations, disruption in trade relationships and agreements, political unrest, war, disease, labor availability, or [removed: change] [added: changes] in local economic conditions.

[removed: 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 products and services of comparable quality and utility.

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. Given that we were founded and remain based in the United States and that we are [removed: publicly-traded] [added: publicly traded] in the United States, we report our results based on the United States dollar.

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 FMI solutions or [removed: customer] [added: Onsite] locations.

[removed: Similar to] [added: As is] the case for total market size, we use our own experience and data to arrive at the size of these potential opportunities and not independent sources.

These estimates are based on our business model today, and the introduction or expansion of other business [removed: strategies, such as on-line retailing,] [added: strategies] could cause them to change.

There

We experienced a number of these variables in 2023.

A softer manufacturing economy caused relative weakness in our more cyclical and higher gross margin fastener product line versus our non-fastener product lines.

Similarly, we continued to execute initiatives aimed at accelerating key account penetration, which resulted in relative growth in our lower gross margin national account and Onsite customers.

The combination of these two events produced pressure on our product gross profit percentage in 2023 from product and customer mix.

The ability to adequately protect our reputation may have an adverse impact on operations and profitability. The Fastenal name is valuable to our business, as well as to the implementation of our strategies for expanding our business.

Maintaining, promoting, and positioning our brand will depend largely on our ability to provide high quality products, deliver consistent services, and improve our customer's business operations.

Further, information on our company, including our products and services, can be more easily accessed and more quickly disseminated through traditional and social media and digital channels.

Should we fail to deliver a positive customer experience or should our public image be tarnished by negative publicity, whether or not based in fact, it could jeopardize our reputation and discourage customers from purchasing our products and services, which in turn could adversely affect our ability to grow our revenues and profitability.

Volatility in our stock price could also result in the

This is often referred to as a price-to-earnings (P/E) ratio, although other forms of multiples are often utilized by investors to value our company's shares.

- increases (inflation) or decreases (deflation) in the cost of products from our vendors, transportation services, energy and fuel prices, and electrical power rates;

- the impact on customer demand or availability of goods and services based on labor shortages or work stoppages;

The primary variable affecting our results in 2023 was a softening in manufacturing sector business conditions.

Our operating results and inventory levels could suffer if we are unable to promptly replace a supplier or shipper who is

Historically, our primary exchange rate exposure has been with the Canadian dollar as our Mexican activities are primarily conducted in United States dollars and our non-North American operations are relatively small in scale.

In

First, our customer's needs are evolving to reflect a greater awareness of the total cost and risk of fulfillment and their need to have consistent sources of supply at multiple locations, including outside of North America.

Second, providing these capabilities to our customers requires increasing investment in hardware, software, and analytic capabilities that require a certain degree of scale to support.

While we believe that in a fragmented market such as exists for industrial supplies these emerging trends favor large distributors such as Fastenal, as the industry consolidates into fewer and larger competitors it may become more difficult to differentiate our product and service offering from that of our competitors.

We also continue to see consolidation among our suppliers.

This trend could result in fewer and larger suppliers, with greater channel power and negotiating leverage.

Mitigation efforts and prescriptions may be facilitated by regulatory authorities, which could limit our flexibility to pursue alternative, potentially more favorable, means of limiting these negative impacts.

It can also be difficult to anticipate what the effect on business conditions will be as the impacts of any public health crisis fades and mitigating policies are reversed.

We are subject to litigation risk due to the nature of our business, which may have a material adverse effect on our business. From time to time, we are involved in lawsuits or other legal proceedings that arise from business transactions or the operation of our business.

Due to the nature of our business, these proceedings may, for example, relate to product liability claims, commercial disputes, suits arising from our trucking operations, or employment matters.

In addition, we could face claims over other matters, such as claims arising from our status as a government contractor, intellectual property matters, or corporate or securities law matters.

The defense and ultimate outcome of lawsuits or other legal proceedings may result in higher operating expenses, which could have a material adverse effect on our business, financial condition or results of operations.

We also have borrowing capacity under our revolving credit facility (the Credit Facility) of $835.0, but no loans were outstanding as of December 31, 2023.

For instance, in 2022, we executed initiatives intended to drive key account penetration, which resulted in relative growth in our national account and Onsite customers and a decline in our gross profit percentage from customer mix.

In contrast, the strength of the manufacturing economy in 2022 resulted in relatively faster growth in our more economically cyclical fastener product line over our non-fastener product lines, resulting in an increase in our gross profit percentage from product mix.

- the success of our organic growth and acquisitions and dispositions of businesses or operations.

For instance, a lack of customer access during the COVID-19 pandemic in 2020 and 2021 resulted in signings of Onsites and FMI devices, both important indicators of future sales growth, being below target levels for those years, which had adverse implications on sales growth in 2022.

For instance, in 2020 and 2021 we experienced a slowdown in the signing of FMI devices as customers limited access to decision-makers and facilities to minimize risks related to the COVID-19 pandemic.

This is often referred to as a price-to-earnings (P/E) ratio.

the extent our industry (industrial distribution, or industrial stocks in general) loses favor in the marketplace, there can be no assurance that investors will continue to afford a premium multiple to our earnings which could adversely affect our stock price.

- inflation,

- energy and fuel prices and electrical power rates,

In 2022, we experienced a weakening in the value of many local currencies relative to the United States dollar.

As a result, in certain international markets our relatively healthy local currency sales were weak or weakened in certain international markets when reported in our functional currency.

This was particularly pronounced in Europe.

In 2022, a loosening of China’s "zero tolerance" COVID-19 domestic policy, and the resulting surge in infections, caused a weakening in local currency results in our Chinese and Southeast Asian markets.

In 2022, the Russo-Ukrainian war adversely affected European energy markets and business activity, resulting in a weakening of sales growth in local currency for our Continental European business unit.

We experienced this in 2021 and 2022, as a strong recovery in global product demand following the COVID-19 pandemic created disruptions due to a shortage of shipping capacity and the effect of labor capacity restraints on the ability to produce sufficient goods in a timely manner.

We and our customers experienced a shortage of certain products and elevated transportation costs as a result.

We experienced resource inflation in 2021 and 2022, as a strong recovery in global demand following the COVID-19 pandemic created tightness in the market for certain raw materials and energy.

This caused our company and our suppliers to increase product prices to address higher input costs.

Historically, our primary exchange rate exposure has been with the Canadian dollar.

to a change in the marketplace (such as changes in customer concentration or needs), a change in the nature of that business strategy, or weaker than anticipated acceptance by customers of that business strategy.

This consolidation is being driven by customer needs and supplier capabilities, which could cause the industry to become more competitive as greater economies of scale are achieved by suppliers, or as competitors with new business models are willing and able to operate with lower gross profit on select products.

Customers are increasingly aware of the total costs of fulfillment and of the need to have consistent sources of supply at multiple locations.

We believe these customer needs could result in fewer suppliers as the remaining suppliers become larger and capable of being a consistent source of supply.

We experienced these effects with the onset of the COVID-19 pandemic in early 2020, when government authorities and our customers imposed facility closures, work-from-home orders, social distancing protocols, and/or other restrictions in an effort to mitigate the effects on global societies.

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

COVID-19 did not have any meaningful direct impact on our financial results in 2022.

However, COVID-19 infections continue in most societies in which we operate, and we cannot predict the severity and duration of additional outbreaks, new variants of the virus, or the future availability of effective medical treatments and vaccines.

We also cannot predict the severity or duration of the net financial impact of COVID-19 or any other public health event on our operating results.

Any

This section of this Form 10-K generally discusses [removed: 2022] [added: 2023] and [removed: 2021] [added: 2022] items and year-to-year comparisons for the current year and the prior year.

Discussions of [removed: 2020] [added: 2021] items 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: 2021.][added: 2022.]

We distribute these supplies through a network of [removed: approximately 3,300] [added: more than 3,400] in-market locations.

[removed: The manufacturing market] [added: Sales to these customers] includes [removed: sales of] products for both original equipment manufacturing (OEM), where our products are consumed in the final products of our customers, and manufacturing, repair and operations (MRO), where our products are consumed to support the facilities and ongoing operations of our customers.

[removed: Other users of our products include] [added: We also service general and commercial contractors in non-residential end markets as well as] farmers, truckers, railroads, oil exploration companies, oil production and refinement companies, mining companies, federal, state, and local governmental entities, schools, and certain retail trades.

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

Our approach to addressing these aspects of our marketplace is captured in our [added: motto Growth Through Customer Service® and our] tagline Where Industry Meets Innovation™.

The concept of growth is simple: find more customers every day [added: that value the services we provide] and increase our activity with them.

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 [removed: efficiencies] [added: efficiencies,] and reduce supply chain risk.

The ultimate aim of this [removed: 'high-tech, high-touch'] [added: 'high-touch, high-tech'] 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.

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | YOY Change | | | | | | [removed: 2020] [added: 2021] | | | | | | YOY Change | | |

| Net sales | | | [removed: $ | 6,980.6 | | | | | 6,010.9 | | | | | | 16.1 | | % | | | |] $ | [removed: 5,647.3] [added: 6,980.6] | | | | | [removed: 6.4] [added: 6,010.9] | | [removed: %] |

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

| Daily sales | | | [removed: $ | 27.5 | | | | | 23.8 | | | | | | 15.7 | | % | | | |] $ | [removed: 22.1] [added: 27.5] | | | | | [removed: 7.3] [added: 23.8] | | [removed: %] |

| Gross profit | | | $ | [removed: 3,215.8] [added: 3,354.5] | | | | | [removed: 2,777.2] [added: 3,215.8] | | | | | | [removed: 15.8] [added: 4.3] | | % | | | | $ | [removed: 2,567.8] [added: 2,777.2] | | | | | [removed: 8.2] [added: 15.8] | | % |

| *% of net sales* | | | [removed: 46.1] [added: 45.7] | | % | | | | [removed: *46.2*] [added: *46.1*] | | *%* | | | | | | | | | | [removed: *45.5*] [added: *46.2*] | | *%* | | | | | | |

| Operating and administrative expenses | | | $ | [removed: 1,762.2] [added: 1,825.8] | | | | | [removed: 1,559.8] [added: 1,762.2] | | | | | | [removed: 13.0] [added: 3.6] | | % | | | | $ | [removed: 1,426.0] [added: 1,559.8] | | | | | [removed: 9.4] [added: 13.0] | | % |

| [removed: %] [added: *%] of net [removed: sales] [added: sales*] | | | [removed: 25.2] [added: 24.9] | | % | | | | [removed: *26.0*] [added: *25.2*] | | *%* | | | | | | | | | | [removed: *25.3*] [added: *26.0*] | | *%* | | | | | | |

| Operating income | | | $ | [removed: 1,453.6] [added: 1,528.7] | | | | | [removed: 1,217.4] [added: 1,453.6] | | | | | | [removed: 19.4] [added: 5.2] | | % | | | | $ | [removed: 1,141.8] [added: 1,217.4] | | | | | [removed: 6.6] [added: 19.4] | | % |

| *% of net sales* | | | 20.8 | | % | | | | [removed: *20.3*] [added: *20.8*] | | *%* | | | | | | | | | | [removed: *20.2*] [added: *20.3*] | | *%* | | | | | | |

| Earnings before income taxes | | | $ | [removed: 1,440.0] [added: 1,522.0] | | | | | [removed: 1,207.8] [added: 1,440.0] | | | | | | [removed: 19.2] [added: 5.7] | | % | | | | $ | [removed: 1,132.7] [added: 1,207.8] | | | | | [removed: 6.6] [added: 19.2] | | % |

| *% of net sales* | | | [removed: 20.6] [added: 20.7] | | % | | | | [removed: *20.1*] [added: *20.6*] | | *%* | | | | | | | | | | *20.1* | | *%* | | | | | | |

| Net earnings | | | [removed: $ | 1,086.9 | | | | | 925.0 | | | | | | 17.5 | | % | | | |] $ | [removed: 859.1] [added: 1,086.9] | | | | | [removed: 7.7] [added: 925.0] | | [removed: %] |

| Diluted net earnings per share | | | $ | [removed: 1.89] [added: 2.02] | | | | | [removed: 1.60] [added: 1.89] | | | | | | [removed: 17.8] [added: 6.7] | | % | | | | $ | [removed: 1.49] [added: 1.60] | | | | | [removed: 7.4] [added: 17.8] | | % |

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

| | | | Q4 [removed: 2022] [added: 2023] | | | | | | Q4 [removed: 2021] [added: 2022] | | | | | | Twelve-month % Change | | |

| Total [added: personnel -] absolute employee headcount | | | [removed: 22,386] [added: 23,201] | | | | | | [removed: 20,507] [added: 22,386] | | | | | | [removed: 9.2] [added: 3.6] | | % |

| Total [added: personnel -] FTE employee headcount [removed: (1)] | | | [removed: 19,854] [added: 20,721] | | | | | | [removed: 18,334] [added: 19,854] | | | | | | [removed: 8.3] [added: 4.4] | | % |

| Number of branch locations | | | [removed: 1,683] [added: 1,597] | | | | | | [removed: 1,793] [added: 1,683] | | | | | | [removed: \-6.1] [added: \-5.1] | | % |

| Number of active Onsite locations | | | [removed: 1,623] [added: 1,822] | | | | | | [removed: 1,416] [added: 1,623] | | | | | | [removed: 14.6] [added: 12.3] | | % |

| Number of in-market locations | | | [removed: 3,306] [added: 3,419] | | | | | | [removed: 3,209] [added: 3,306] | | | | | | [removed: 3.0] [added: 3.4] | | % |

| Weighted FMI devices (MEU installed count) [removed: (2)] | | | [removed: 102,151] [added: 113,138] | | | | | | [removed: 92,874] [added: 102,151] | | | | | | [removed: 10.0] [added: 10.8] | | % |

During the last twelve months, we increased our total FTE employee headcount by [removed: 1,520.][added: 867.]

This reflects an increase in our [removed: in-market and non-in-market selling] [added: total] FTE [removed: employee headcount] [added: selling personnel] of [removed: 1,063] [added: 594] to support growth in the marketplace and sales initiatives targeting customer acquisition.

We had an increase in our distribution [removed: center] [added: and transportation] FTE [removed: employee headcount] [added: personnel] of [removed: 231] [added: 124] to support [removed: increasing] [added: increased] product throughput at our facilities and to expand our local inventory fulfillment terminals (LIFTs).

[added: We had an] increase in our remaining FTE [removed: employee headcount] [added: personnel] of [removed: 226] [added: 149] that relates primarily to personnel investments in information technology, manufacturing, and operational support, such as purchasing and product development.

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

[removed: Our in-market network forms the foundation of our business strategy, and we] [added: We] will continue to open or close locations [removed: as is deemed necessary] to sustain and improve our network, support our growth drivers, and manage our operating expenses.

CURRENT YEAR RESULTS ENDED [removed: 2022][added: 2023]

The following [added: table] sets forth consolidated statements of earnings information (as a percentage of net sales) for the periods ended December 31:

Our largest end market is manufacturing.

| Daily sales | | | $ | 29.0 | | | | | 27.5 | | | | | | 5.7 | | % | | | | $ | 23.8 | | | | | 15.7 | | % |

| Net earnings | | | $ | 1,155.0 | | | | | 1,086.9 | | | | | | 6.3 | | % | | | | $ | 925.0 | | | | | 17.5 | | % |

2023 was a year of modest economic contraction in our key markets.

The Institute for Supply Management's Purchasing Manager's Index (PMI) for the United States averaged 47.1 for the full year and remained below 50, the threshold demarcating manufacturing growth or contraction, every month.

Industrial Production for the United States reflected moderating business activity, with markets that are most relevant to us, such as Fabricated Metals and Machinery, declining at an accelerating rate through the year.

In addition, inflation in product costing flattened out, with some deflation emerging in fastener products.

The combined effect of these dynamics was to produce daily sales growth in 2023 that slowed appreciably from 2022.

We continued to migrate to a key accounts-focused model, expand our Onsite footprint, grow our installed base of FMI hardware, and lift the proportion of sales that run through our Digital Footprint.

The efficiencies these investments provide and good organizational control of discretionary expenses allowed us to achieve a stable operating profit margin despite the challenges stemming from this slower and less inflationary environment.

We also produced record operating cash flow which, combined with our confidence in the future cash generation capability of our business model, allowed us to pay a supplemental fifth dividend in the fourth quarter of 2023.

| Selling personnel \- absolute employee headcount | | | 16,512 | | | | | | 15,898 | | | | | | 3.9 | | % |

| Selling personnel - FTE employee headcount | | | 15,070 | | | | | | 14,476 | | | | | | 4.1 | | % |

The table below summarizes the number of branches opened and closed, net of conversions, as well as the number of Onsites activated and closed, net of conversions during the periods presented.

| | | | 2023 | | | | | | 2022 | | |

| Branch openings | | | 10 | | | | | | 12 | | |

| Branch closures, net of conversions | | | (96) | | | | | | (122) | | |

| Onsite activations | | | 329 | | | | | | 306 | | |

| Onsite closures, net of conversions | | | (130) | | | | | | (99) | | |

Our in-market network forms the foundation of our business strategy.

In recent years, we have seen a gradual increase in our in-market locations because of significant growth in Onsites and, to a lesser degree international branches, which has more than overcome a meaningful decline in our traditional branch network.

However, we believe the strategic rationalization that has produced the meaningful decline in our traditional branch network in the United States and Canada since 2013 is largely completed, and we expect reduced closing activity beginning in 2024.

| | | | 2023 | | | | | | 2022 | | |

| Gross profit | | | 45.7 | | % | | | | 46.1 | | % |

Sales

| | | | 2023 | | | | | | 2022 | | |

| Percentage change | | | 5.2 | | % | | | | 16.1 | | % |

| Percentage change | | | 5.7 | | % | | | | 15.7 | | % |

The increase in net sales noted above for 2023 was due to higher unit sales of MRO, OEM, and construction supplies, as well as higher pricing as further set forth below.

We believe higher unit sales in 2023 were primarily a result of our ability to gain market share, as most measures of industrial activity were flat to down throughout the period.

Despite this challenging environment, in 2023 we produced net sales growth of 5.2% and, owing to one fewer selling day in the period, daily sales growth of 5.7%.

Growth was led by our transportation customers, which includes sales to transportation services customers as the warehousing operations of retailer-oriented customers, and manufacturing end markets, which benefit disproportionately from our shift to a key account model.

Our non-residential construction and reseller customers contracted during the period, which we believe is due to our shift to a key account model which tends to de-emphasize walk-in, over-the-counter, and infrequent transactions.

This contribution to growth from price was primarily due to easier comparisons in the first six months of 2023.

For instance, in the first six months of 2023 contribution to growth from price averaged 240 to 270 basis points, while in the third and fourth quarters of 2023 contribution to growth from price averaged 110 to 140 basis points and 50 to 80 basis points, respectively.

We increased total Onsite locations, the installed base of FMI devices, and our Digital Footprint in 2023, which enhanced the value we provide to our customers and supported our growth and efficiency.

The rate of penetration we achieved with these growth drivers was uneven, however.

We expanded the proportion of our sales running through our Digital Footprint to 56.1%, below our goal at the start of 2023 of 65.0% but above the prior year level of 49.3%.

From a product standpoint, we have three categories: fasteners, safety supplies, and other product lines, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools.

The percent of sales in the periods below were as follows:

Most of our customers are in the manufacturing and non-residential construction markets.

The non-residential construction market includes general, electrical, plumbing, sheet metal, and road contractors.

We would characterize 2022 as reflecting the normalization of the business cycle relative to the pandemic-impacted years of 2020 and 2021.

While we did experience some slowing in business activity over the course of the year, customer demand was generally healthy throughout, resulting in good unit growth.

Incremental pricing from actions taken at the end of 2021 and the start of 2022 further contributed to our growth, though over the course of the year we saw the inflationary pressures and supply chain constraints that catalyzed our pricing actions largely dissipate.

This normalization in business activity also resulted in improved signings of Onsites and FMI devices, which approached pre-pandemic levels.

These factors more than offset challenges in our smaller non-North American markets, where the effects of the Russo-Ukrainian War and China's evolving COVID-19 policies weighed on growth.

This growth, combined with improvements to our efficiency stemming from growth in our Digital Footprint and changes to our go-to-market strategies, allowed us to expand our operating margins in the period.

| In-market locations \- absolute employee headcount | | | 13,410 | | | | | | 12,464 | | | | | | 7.6 | | % |

| In-market locations - FTE employee headcount | | | 12,017 | | | | | | 11,337 | | | | | | 6.0 | | % |

| | | | | | |

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

| (1) | | | Due to a calculation error, organizational support personnel was overstated by 36 FTE in the fourth quarter of 2021, with total non-selling FTE and total FTE being overstated by the same amount. These figures have been corrected in this Form 10-K. Adjusting for this error, total FTE in 2021 would have been down by an additional 0.2% for year-to-date growth. | | |

| (2) | | | This number excludes approximately 6,500 non-weighted devices that are part of our locker lease program. | | |

We had an

We opened one branch in the fourth quarter of 2022 and closed 34, net of conversions.

We activated 76 Onsite locations in the fourth quarter of 2022 and closed 20, net of conversions.

In 2022, we opened 12 branches and closed 122, net of conversions.

In 2022, we activated 306 Onsite locations and closed 99, net of conversions.

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

The approximate mix of sales from fasteners, safety supplies, and all other product lines was as follows:

| Fasteners | | | 34.0% | | | | | | 33.3% | | |

| Safety supplies | | | 20.8% | | | | | | 21.2% | | |

| 2021 | | | 6.5 | | % | | | | 1.5 | | % | | | | 7.5 | | % | | | | 1.2 | | % | | | | \-3.2 | | % | | | | 1.7 | | % | | | | 9.7 | | % | | | | 9.0 | | % | | | | 11.1 | | % | | | | 14.1 | | % | | | | 13.2 | | % | | | | 16.5 | | % |

| 2021 | | | 0.9 | | % | | | | \-2.3 | | % | | | | 5.6 | | % | | | | \-2.2 | | % | | | | 5.6 | | % | | | | 1.6 | | % | | | | \-3.4 | | % | | | | 3.1 | | % | | | | 4.8 | | % | | | | 0.0 | | % | | | | 13.0 | | % |

| 2021 | | | 5.6 | | % | | | | 24.5 | | % | | | | 20.8 | | % | | | | 23.8 | | % | | | | 18.4 | | % |

Our manufacturing business consists of two subsets: the industrial production business (this is business where we supply products that become part of the finished goods produced by our customers and is sometimes referred to as OEM - original equipment manufacturing) and the maintenance portion (this is business where we supply products that maintain the facility or the equipment of our customers engaged in manufacturing and is sometimes referred to as MRO - maintenance, repair, and operations).

The industrial business is more fastener-centered, while the maintenance portion is represented by all product categories.

| 2021 | | | 4.0 | | % | | | | 28.4 | | % | | | | 20.2 | | % | | | | 24.2 | | % | | | | 18.8 | | % |

| 2021 | | | 6.1 | | % | | | | \-10.8 | | % | | | | 5.1 | | % | | | | 9.6 | | % | | | | 1.9 | | % |

We estimate approximately 15% to 20% of our business is with customers engaged in non-residential construction and reseller markets.

| 2022 | | | 10.3 | | % | | | | 8.0 | | % | | | | 4.6 | | % | | | | \-1.6 | | % | | | | 5.3 | | % |

| 2021 | | | \-6.7 | | % | | | | 3.5 | | % | | | | 7.0 | | % | | | | 10.3 | | % | | | | 3.3 | | % |

Our non-residential construction and reseller business is heavily influenced by manufacturing, oil and gas, and infrastructure spending.

In 2022, these markets were healthy, which contributed to growth with these customers.

| 2021 | | | 45.4 | | % | | | | 46.5 | | % | | | | 46.3 | | % | | | | 46.5 | | % | | | | 46.2 | | % |

Employee-related expenses, as a percentage of net sales, decreased by approximately 20 basis points.

Occupancy-related expenses, as a percentage of net sales, decreased by approximately 60 basis points.

| In-market locations (branches & Onsites) | | | 6.0 | | % | | | | 0.7 | | % |

| Non-in-market selling (1) | | | 18.4 | | % | | | | 8.0 | | % |

[removed: These] [added: Commodity steel prices – We buy and sell various types of steel products; these] products consist primarily of different types of [removed: threaded] fasteners and related hardware.

We estimate the effect on our net earnings [added: related to commodity steel prices] was immaterial in [removed: 2022.][added: 2023.]

[removed: During 2022, the price of energy as] [added: As] reflected in many market [removed: indexes increased as economic activity improved,] [added: indexes, energy prices during 2023 were generally below prior year levels,] which contributed to [removed: higher] [added: lower] costs for fuel [added: consumed] in our vehicles and [removed: utilities] [added: lower utility costs] at our facilities.

[removed: In 2022,] [added: As a result, we estimate the effect on] our [removed: estimated] net earnings [removed: exposure for] [added: related to] materials for which fossil fuels are [added: a] feedstock was [removed: immaterial.][added: immaterial in 2023.]

A one percentage point increase to our floating rate debt in [removed: 2022] [added: 2023] would have resulted in approximately [removed: $1.6] [added: $0.6] of additional interest expense.

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

Import shipping costs – We import a significant quantity of our products, particularly fasteners and private label products, from foreign suppliers, primarily in Asia.

As a result, we incur costs related to shipping charges, duties, harbor fees, and sundry other expenses involved in the movement of product for sale in North America and our other global locations.

These costs are embedded in our product values, and significant fluctuations can affect our product gross profit depending on what mitigating actions might be taken.

The most significant contributor to these fluctuations is the cost of overseas shipping containers.

During 2023, the cost of overseas shipping containers was below the prior year.

We estimate the effect on our net earnings related to import shipping costs was $23.0 to $28.0 in 2023.

During 2023, the price of steel as reflected in many market indexes has been below prior year levels, though in most cases price levels have stabilized in recent periods and the rate of decline is moderating.

Due to our long supply chain, changes in the cost of steel can take a number of quarters to be reflected in our financial results.

Further, the cost of the raw material is generally a small part of the total value of the steel products that we sell, which can also diminish the impact of cost changes for the raw material.

Total direct fuel consumption is a relatively minor cost to the company and, as a result, we estimate the effect on our net earnings related to commodity energy prices was immaterial in 2023.

During 2023, prices for fossil fuels were generally below prior year levels.

The cost of the raw material is generally a small part of the total value of the products that we sell, which can diminish the impact of cost changes for the raw material.

We estimate the effect on our sales and net earnings related to changes in foreign exchange rates was $18.7 and immaterial, respectively, in 2023.

CURRENT YEAR RESULTS ENDED 2022

During 2022, changes in foreign currency exchange rates decreased our reported net sales by $37.5 with the estimated effect on our net earnings being immaterial.

Commodity steel pricing – We buy and sell various types of steel.

During 2022, and particularly in the latter half of 2022, the price of steel as reflected in many market indexes began to decrease.

Due to our long supply chain, changes that we experienced in 2022 do not immediately impact our earnings results.

In fact, we were not able to fully compensate for higher costs through higher prices in 2022, resulting in a modestly negative impact to our gross margin percentage in 2022.

We believe we were able to mitigate the effect of higher fuel costs by increasing freight charges in 2022, and as a result our estimated net earnings exposure for commodity energy prices was immaterial.

During 2022, prices for fossil fuels were generally higher, which caused us to experience higher 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.

The year end is December 31, [removed: 2022] [added: 2023] unless additional years are included or noted.

At the end of [removed: 2022,] [added: 2023,] we had [removed: 3,306] [added: 3,419] 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 [removed: one] [added: two] in Europe, and we employed [removed: 22,386] [added: 23,201] people.

| | | | [removed: 2022] [added: 2023] | | | [added: 2022 | | |] 2021 | | | 2020 | | | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | [removed: 2013 (1) | | |]

| Net sales | | | $ | [removed: 6,980.6] [added: 7,346.7] | | [added: 6,980.6 | | |] 6,010.9 | | | 5,647.3 | | | 5,333.7 | | | 4,965.1 | | | 4,390.5 | | | 3,962.0 | | | 3,869.2 | | | 3,733.5 | | | [removed: 3,326.1 | | |]

| Branch locations | | | [removed: 1,683] [added: 1,597] | | | [added: 1,683 | | |] 1,793 | | | 2,003 | | | 2,114 | | | 2,227 | | | 2,383 | | | 2,503 | | | 2,622 | | | 2,637 | | | [removed: 2,687 | | |]

| Branch revenue [removed: (2)] [added: (1)] | | | $ | [removed: 4,161.6] [added: 4,073.6] | | [added: 4,161.6 | | |] 3,726.2 | | | 3,587.1 | | | 3,660.1 | | | 3,625.8 | | | 3,399.6 | | | 3,198.1 | | | 3,281.8 | | | 3,225.3 | | | [removed: — | | |]

| Average monthly sales per branch location [removed: (3)] [added: (2)] | | | $ | [removed: 199.5] [added: 207.0] | | [added: 199.5 | | |] 163.6 | | | 145.2 | | | 140.5 | | | 131.1 | | | 116.0 | | | 104.0 | | | 104.0 | | | 101.0 | | | [removed: — | | |]

| Onsite locations | | | [removed: 1,623] [added: 1,822] | | | [added: 1,623 | | |] 1,416 | | | 1,265 | | | 1,114 | | | 894 | | | 605 | | | 401 | | | 264 | | | 214 | | | [removed: — | | |]

| Onsite revenue [removed: (2)] [added: (1)] | | | $ | [removed: 2,465.5] [added: 2,926.7] | | [added: 2,465.5 | | |] 1,898.0 | | | 1,485.6 | | | 1,391.7 | | | 1,081.7 | | | 770.2 | | | 569.2 | | | 454.3 | | | 387.7 | | | [removed: — | | |]

| Average monthly sales per Onsite location [removed: (3)] [added: (2)] | | | $ | [removed: 135.2] [added: 141.6] | | [added: 135.2 | | |] 118.0 | | | 104.1 | | | 115.5 | | | 120.3 | | | 127.6 | | | 142.7 | | | 158.4 | | | 157.6 | | | [removed: — | | |]

| Other revenue [removed: (4)] [added: (3)] | | | $ | [removed: 353.5] [added: 346.4] | | [added: 353.5 | | |] 386.7 | | | 574.6 | | | 281.9 | | | 257.6 | | | 220.7 | | | 194.7 | | | 133.1 | | | 120.5 | | | [removed: — | | |]

| Total in-market locations [removed: (5)] [added: (4)] | | | [removed: 3,306] [added: 3,419] | | | [added: 3,306 | | |] 3,209 | | | 3,268 | | | 3,228 | | | 3,121 | | | 2,988 | | | 2,904 | | | 2,886 | | | 2,851 | | | [removed: 2,687 | | |]

| [removed: (2)] [added: (1)] | | | Revenues attributable to our traditional and international branch locations (both of which are defined below), and our Onsite locations, respectively. | | |

| [removed: (3)] [added: (2)] | | | Average sales per month considers the average active base of branches and Onsites, respectively, in the given year, factoring in the beginning and ending location count, divided by total revenues attributable to our branch and Onsite locations, [added: respectively,] further divided by 12 [removed: months, respectively.] [added: months.] This information is presented in thousands. | | |

| [removed: (4)] [added: (3)] | | | This portion of revenue is generated outside [removed: of] our traditional in-market [removed: location presence,] [added: locations,] examples of which include revenues arising from our custom in-house manufacturing, industrial services, [removed: leased locker arrangements,] and other non-traditional sources of revenue. In 2020, this included the effects of COVID-19, one response to which was substantial sales of pandemic-related products that were direct-shipped (versus sold through [removed: our] in-market locations) as a means of delivering critical supplies more quickly. | | |

| [removed: (5)] [added: (4)] | | | 'In-market locations' is defined as the sum of the total number of branch locations and the total number of Onsite locations. | | |

In [removed: 2022,] [added: 2023,] roughly 52% of our sales and [removed: 50%] [added: 51%] of our in-market locations were in major Metropolitan Statistical Areas (MSAs) (populations in the United States and Canada greater than 500,000 people), while 21% of our sales and 19% of our in-market locations were in small MSAs (populations under 500,000 people), and 27% of our sales and [removed: 31%] [added: 30%] of our in-market locations were not in an MSA.

Locations are selected primarily based on their proximity to our distribution [removed: network, population statistics,] [added: network] and employment [added: and production] data for manufacturing and non-residential construction companies.

We stock all branches with inventory drawn from all of our product [removed: lines,] [added: lines] and [removed: over time, where appropriate,] [added: tailored by] our district and branch personnel [removed: may tailor the inventory offering] to the needs of the local customer base.

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

At the end of [removed: 2022,] [added: 2023,] we had [removed: 1,538] [added: 1,441] traditional branches in the United States and Canada, and they represented [removed: 55.0%] [added: 51.0%] of net sales.

Certain locations are Customer Service Branches (CSBs), which tend to feature a [removed: showroom, regular hours during which they are open to the public,] [added: showroom] and our standard stocking model of products designed for contractors.

CSBs [removed: are similar in function to a hardware store and they] often conduct some business with non-account or retail-like customers.

Other locations operate as Customer Fulfillment Centers (CFCs), which tend to feature a limited [removed: showroom, reduced hours of access to the public, greater usage of will-call,] [added: showroom] and stock customer-specific inventory.

These tend to appear and function more like an industrial supply house and stocking location and [removed: tend not to] [added: often] have [added: fewer] transactions with non-account or retail-like customers [removed: unless it is] [added: than in] a [removed: will-call arrangement related to an online transaction.][added: CSB branch.]

At the end of [removed: 2022, 20%] [added: 2023, 15%] of our traditional branches operated as a CSB and [removed: 80%] [added: 85%] operated as a CFC.

Since then, we have continued to expand our global footprint, and at the end of [removed: 2022,] [added: 2023,] we operated in 23 countries outside of the United States and Canada.

Our go-to-market strategy in countries outside of the United States and Canada focuses primarily on servicing large, national account customers disproportionately concentrated in [removed: manufacturing.][added: manufacturing and heavily oriented toward planned fastener and non-fastener product spend.]

[removed: Despite strong growth in our international business in recent years, we] [added: We] are not as well recognized in many of our [added: non-North American] locations [removed: outside of the U.S. and Canada] as we are in the U.S. and Canada.

At the end of [removed: 2022,] [added: 2023,] we had [removed: 145] [added: 156] international branches operating outside the U.S. and Canada, and they represented [removed: 4.6%] [added: 4.5%] of net sales.

[removed: However, in] [added: In] each year since 2013, [removed: the company has] [added: we have] experienced a net decline in [removed: its] [added: our] total branch [removed: count] [added: count, primarily due to consolidations in our U.S. market,] including net declines of [removed: 110] [added: 86] branches in [removed: 2022.][added: 2023.]

Our total decline since 2013 is [removed: 1,004] [added: 1,090] branches.

In this model, we provide dedicated sales and service to a single customer from a location that is physically [removed: within] [added: within, or strategically proximate to,] the customers' [removed: facility (or, in some cases, at a strategically placed off-site location),] [added: facility,] with inventory that is specific to the customers' needs.

In many cases, we are shifting revenue with the customer from an existing branch location, though we [removed: are beginning to] [added: also] see [removed: more] new customer opportunities arise as a result of our Onsite capabilities.

It has been our experience that the sales mix at our Onsite locations [added: typically] produces a lower gross profit percentage than at our branch locations, but we gain revenue with the customer and our cost to serve is lower.

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

We had [removed: 1,623] [added: 1,822] Onsite locations as of December 31, [removed: 2022,] [added: 2023,] which represented [removed: 35.3%] [added: 39.8%] of net sales, and signed [added: 326,] 356, [removed: 274,] and [removed: 223] [added: 274] new Onsite locations (referred to herein as signings) in [added: 2023,] 2022, [removed: 2021,] and [removed: 2020,] [added: 2021,] respectively.

| Opened Branches | | | [removed: 3] [added: —] | | | [removed: —] [added: 1] | | | [removed: 5] [added: 4] | | | [removed: 8] [added: 5] | | | | | | — | | | [removed: 1] [added: 2] | | | [removed: 1] [added: 5] | | | [removed: 2] [added: 7] | | | [removed: 10] [added: 12] | | |

| [removed: Closed/Converted Branches (6)] [added: Closed/Converted Branches (6)] | | | [removed: (216)] [added: (92)] | | | [removed: (6)] [added: (5)] | | | [removed: —] [added: —] | | | [removed: (222)] [added: (97)] | | | | | | [removed: —] [added: —] | | | [removed: —] [added: —] | | | [removed: 2] [added: 1] | | | [removed: 2] [added: 1] | | | [removed: (220)] [added: (96)] | | |

| Closed/Converted Onsites (6) | | | [removed: (76)] [added: (94)] | | | [removed: (7)] [added: (3)] | | | [removed: (4)] [added: (1)] | | | [removed: (87)] [added: (98)] | | | | | | — | | | [removed: (2)] [added: —] | | | [removed: (2)] [added: (1)] | | | [removed: (4)] [added: (1)] | | | [removed: (91)] [added: (99)] | | |

1) A 'traditional branch' typically services a wide variety of customers, ranging from the local operations of large, national account customers to smaller local businesses.

Based on the unique characteristics of certain markets, some traditional branches will be structured and stocked to service retail customers.

We will continue to open traditional and international branches in accordance with our overall strategy.

We believe the strategic rationalization that has produced a significant decline in our traditional branch network in the United States and Canada since 2013 is largely completed, and expect reduced closing activity beginning in 2024.

These include customers with which we have an existing national account relationship today, and

| Starting Branches | | | 1,369 | | | 169 | | | 66 | | | 1,604 | | | | | | 5 | | | 22 | | | 52 | | | 79 | | | 1,683 | | |

| Ending Branches | | | 1,277 | | | 164 | | | 69 | | | 1,510 | | | | | | 5 | | | 25 | | | 57 | | | 87 | | | 1,597 | | |

| Starting Onsites | | | 1,338 | | | 107 | | | 111 | | | 1,556 | | | | | | 16 | | | 23 | | | 28 | | | 67 | | | 1,623 | | |

| Opened Onsites | | | 283 | | | 18 | | | 20 | | | 321 | | | | | | — | | | 1 | | | 7 | | | 8 | | | 329 | | |

| Ending Onsites | | | 1,506 | | | 119 | | | 128 | | | 1,753 | | | | | | 15 | | | 22 | | | 32 | | | 69 | | | 1,822 | | |

| In-Market Locations - 12/31/23 | | | 2,783 | | | 283 | | | 197 | | | 3,263 | | | | | | 20 | | | 47 | | | 89 | | | 156 | | | 3,419 | | |

branch base.

We do not include FASTStock in this measurement because scanned stocking locations can take many forms, such as bins, shelves, cabinets, pallets, etc., that cannot be converted into a standardized MEU.

We operate 15 regional distribution centers in North America: 12 in the United States, two in Canada, and one in Mexico.

We also operate two distribution centers in Europe.

Additional details on these locations can be found within the 'Item 2.

Properties' section of this Form 10-K.

We also utilize a network of Local Inventory Fulfillment Terminals (LIFTs) which reside within our existing distribution centers and are intended to support areas that have a dense population of FMI devices.

In a minority of cases we deploy a 'drop-and-scatter' model, wherein delivery and replenishment is also performed by LIFT personnel.

Transportation

The ability to move product, globally and domestically, from our sources of supply to our customers is critical to the competitiveness of our business model.

We utilize multiple modes of transportation to support our business model.

We transport product from our global manufacturing and supplier partners to our distribution centers.

Related costs range from port fees, duties, costs related to container and shipper services, and inland trucking and intermodal charges.

We consider these expenses to be a part of our landed product cost, and significant fluctuations are typically addressed through product pricing.

We transport product between our distribution centers and from our distribution centers to our in-market locations.

We typically transport approximately 90% of our products on our own fleet of Class 6, 7, and 8 trucks, with the remainder being on third party shippers.

Costs range from lease charges, driver pay, fuel costs to support our captive fleet, and fees paid to third-party shippers.

These expenses are included in cost of goods sold but are not considered a part of our landed product cost, with fluctuations typically addressed by applying freight charges to customer purchases and by securing commercial back-hauls.

We primarily lease our trucks, and at December 31, 2023, we operated approximately 520 units.

We transport product from our in-market locations to our customers on a fleet of pick-up, box, and other trucks.

Expenses to maintain this fleet are considered selling-related transportation costs, which include lease charges, depreciation, and fuel, and are typically reflected in all other operating and administrative expenses.

We have a mix of leased and owned vehicles, and at December 31, 2023, we operated approximately 10,200 units.

Prior to 2023, each of our product categories tended to have its own private label.

In 2023, we consolidated these into two labels: Body Guard®, which is our long-standing brand for North American safety supplies, and ORMADUS®, which is our global brand encompassing the remainder of our product offerings.

Approximately 70% to 75% of our customers are in manufacturing end markets, which encompasses fabricated products, heavy machinery, petrochemical, mining and aerospace and includes both OEM and MRO customers.

The remaining 25% to 30% of our customers fall primarily into non-residential construction (general and commercial contractors), reseller (retail and wholesale trades, dealers, and rental businesses), transportation (transportation services, such as air, train, maritime or truck transport, as well as fulfillment centers) and state and local government entities, including schools, school districts and universities.

Our national accounts program is aimed at creating contractual agreements with single or multi-location customers.

These contractual programs are intended to help improve our customers' supply chains by identifying productivity and efficiency gains throughout their organization.

Further, the development of our web capabilities provided us with an alternative means of more efficiently servicing these smaller customers.

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

| | | | | | |

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

| (1) | | | Onsite locations have existed since 1992; however, we did not specifically track their number until we identified our Onsite program as a growth driver in 2014. Therefore, Onsite, branch, and other revenue, and average monthly sales per location are intentionally omitted for 2013. | | |

1) A 'traditional branch' typically services a wide variety of customers, including our larger national and regional accounts as well as retail customers.

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

We will continue to open traditional branches as the company sees fit.

We believe the marketplace can support 375 to 400 new Onsite signings annually.

We did not achieve that level of signings in 2022, though we increased our signings substantially from the prior year and were just below our pre-pandemic signings in 2019.

We also did not achieve that level of signings in 2021 or 2020, which we believe was due to certain market variables, including the ongoing COVID-19 pandemic, supply chain constraints, and labor shortages having 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.

Our goal for Onsite signings in 2023 is 375 to 400.

| In-Market Locations - 12/31/20 (5) | | | 2,752 | | | 260 | | | 140 | | | 3,152 | | | | | | 20 | | | 31 | | | 65 | | | 116 | | | 3,268 | | |

| Starting Branches | | | 1,697 | | | 179 | | | 58 | | | 1,934 | | | | | | 5 | | | 19 | | | 45 | | | 69 | | | 2,003 | | |

| Ending Branches (5) | | | 1,484 | | | 173 | | | 63 | | | 1,720 | | | | | | 5 | | | 20 | | | 48 | | | 73 | | | 1,793 | | |

| Starting Onsites | | | 1,055 | | | 81 | | | 82 | | | 1,218 | | | | | | 15 | | | 12 | | | 20 | | | 47 | | | 1,265 | | |

| Opened Onsites | | | 205 | | | 15 | | | 11 | | | 231 | | | | | | — | | | 7 | | | 4 | | | 11 | | | 242 | | |

| Ending Onsites (5) | | | 1,184 | | | 89 | | | 89 | | | 1,362 | | | | | | 15 | | | 17 | | | 22 | | | 54 | | | 1,416 | | |

smaller fixed cost burden but have greater leverage of its employee-related expenses.

In any given year, it is difficult to predict whether our total branch count will rise or fall.

In 2023, we anticipate weighted FMI device signings to be in a range of 23,000 to 25,000 MEUs.

Similar to Onsite, we did not achieve that level of signings in 2022, though we increased our signings substantially from the prior year and were just below our pre-pandemic signings in 2019.

One of our eCommerce solutions, Fastenal EXPRESS, guides our customers to products which are locally stocked, capitalizing on our existing location footprint, in order to provide same-day or early next-day service for online orders.

This positions us to outperform what is most typically a 24- to 48-hour fulfillment expectation.

We operate 15 regional distribution centers in North America; 12 of which are in the United States – Minnesota, Indiana, Ohio, Pennsylvania, Texas, Georgia, Washington, California, Utah, North Carolina, Kansas, and Mississippi – and three are outside the United States – Ontario, Canada; Alberta, Canada; and Nuevo Leon, Mexico.

We also operate one distribution center in Europe, located in Dordrecht, Netherlands.

In 2018, we began to deploy Local Inventory Fulfillment Terminals (LIFTs), which were once small distribution facilities situated where we had a dense population of FMI devices.

However, today, we have shifted our focus to position them into our existing distribution centers.

By centralizing inventory and packaging into a LIFT and relying on dedicated LIFT fulfillment personnel for delivery and device replenishment, which we refer to as 'drop-and-scatter', we can reduce FMI-dedicated inventory, provide more consistent

and predictable service to our customer's FMI devices, and free up time for our sales personnel to focus on customer penetration and acquisition.

Our transportation network allows us to expand the geographic reach of our LIFTs by deploying a 'drop-and-deliver' model.

Most of our customers are in the manufacturing and non-residential construction markets.

The manufacturing market includes both OEM and MRO customers and represents approximately 70% of our business.

The non-residential construction market includes general, electrical, plumbing, sheet metal, and road contractors and represents approximately 10% of our business.

Other users of our products include farmers, truckers, railroads, oil exploration companies, oil production and refinement companies, mining companies, federal, state, and local governmental entities, schools, and certain retail trades.

Our national accounts program is aimed at creating contractual partnerships that are dedicated to curating supply chain solutions in the OEM and MRO space.

These contractual programs are intended for multi-site companies and are created to drive value in the form of greater efficiency and productivity for them.

We also believe we can provide better and more efficient service to these customers.

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

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

stronger non-residential construction activity and relatively fewer holidays (although Good Friday will sometimes fall in the second quarter and the 4th of July will always fall in the third quarter).

A description of our legal proceedings, if any, is contained in [removed: [Note 10](#i71b8e53d2ffa4217a334bc08a6e2f5c9_127)] [added: Note 10] of the Notes to Consolidated Financial Statements.

[removed: (Mark One)][added: (Mark One)]

For the fiscal year ended December 31, [removed: 2022][added: 2023, or]

| [removed: (State] [added: (State] or other jurisdiction of incorporation or [removed: organization)] [added: organization)] | | | | | | [removed: (I.R.S.] [added: (I.R.S.] Employer Identification [removed: No.)] [added: No.)] | | |

The aggregate market value of the Common Stock held by non-affiliates of the registrant as of June 30, [removed: 2022,] [added: 2023,] the last business day of the registrant's most recently completed second fiscal quarter, was [removed: $28,635,820,712,] [added: $33,637,970,933,] 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: 2022] [added: 2023] are considered to be affiliates of the registrant.

As of January [removed: 20, 2023,] [added: 19, 2024,] the registrant had [removed: 570,833,585] [added: 572,232,755] shares of Common Stock issued and outstanding.

| [removed: Item 1.] [added: [Item 1.](#i44f57459b2e0450ab60929ff8ee729f0_25)] | | | | | | [removed: [Business](#i71b8e53d2ffa4217a334bc08a6e2f5c9_25)] [added: [Business](#i44f57459b2e0450ab60929ff8ee729f0_25)] | | | [removed: [2](#i71b8e53d2ffa4217a334bc08a6e2f5c9_25)] [added: [2](#i44f57459b2e0450ab60929ff8ee729f0_25)] | | |

| [removed: Item 1A.] [added: [Item 1A.](#i44f57459b2e0450ab60929ff8ee729f0_28)] | | | | | | [Risk [removed: Factors](#i71b8e53d2ffa4217a334bc08a6e2f5c9_28)] [added: Factors](#i44f57459b2e0450ab60929ff8ee729f0_28)] | | | [removed: [16](#i71b8e53d2ffa4217a334bc08a6e2f5c9_28)] [added: [15](#i44f57459b2e0450ab60929ff8ee729f0_28)] | | |

| [removed: Item 1B.] [added: [Item 1B.](#i44f57459b2e0450ab60929ff8ee729f0_31)] | | | | | | [Unresolved Staff [removed: Comments](#i71b8e53d2ffa4217a334bc08a6e2f5c9_31)] [added: Comments](#i44f57459b2e0450ab60929ff8ee729f0_31)] | | | [removed: [23](#i71b8e53d2ffa4217a334bc08a6e2f5c9_31)] [added: [22](#i44f57459b2e0450ab60929ff8ee729f0_31)] | | |

| [removed: Item 2.] [added: [Item 2.](#i44f57459b2e0450ab60929ff8ee729f0_34)] | | | | | | [removed: [Properties](#i71b8e53d2ffa4217a334bc08a6e2f5c9_34)] [added: [Properties](#i44f57459b2e0450ab60929ff8ee729f0_34)] | | | [removed: [24](#i71b8e53d2ffa4217a334bc08a6e2f5c9_34)] [added: [25](#i44f57459b2e0450ab60929ff8ee729f0_34)] | | |

| [removed: Item 3.] [added: [Item 3.](#i44f57459b2e0450ab60929ff8ee729f0_37)] | | | | | | [Legal [removed: Proceedings](#i71b8e53d2ffa4217a334bc08a6e2f5c9_37)] [added: Proceedings](#i44f57459b2e0450ab60929ff8ee729f0_37)] | | | [removed: [25](#i71b8e53d2ffa4217a334bc08a6e2f5c9_37)] [added: [26](#i44f57459b2e0450ab60929ff8ee729f0_37)] | | |

| [removed: Item 4.] [added: [Item 4.](#i44f57459b2e0450ab60929ff8ee729f0_40)] | | | | | | [Mine Safety [removed: Disclosures](#i71b8e53d2ffa4217a334bc08a6e2f5c9_40)] [added: Disclosures](#i44f57459b2e0450ab60929ff8ee729f0_40)] | | | [removed: [25](#i71b8e53d2ffa4217a334bc08a6e2f5c9_40)] [added: [26](#i44f57459b2e0450ab60929ff8ee729f0_40)] | | |

| [removed: Item 5.] [added: [Item 5.](#i44f57459b2e0450ab60929ff8ee729f0_46)] | | | | | | [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#i71b8e53d2ffa4217a334bc08a6e2f5c9_46)] [added: Securities](#i44f57459b2e0450ab60929ff8ee729f0_46)] | | | [removed: [26](#i71b8e53d2ffa4217a334bc08a6e2f5c9_46)] [added: [27](#i44f57459b2e0450ab60929ff8ee729f0_46)] | | |

| [removed: Item 6.] [added: [Item 6.](#i44f57459b2e0450ab60929ff8ee729f0_49)] | | | | | | [removed: [Reserved](#i71b8e53d2ffa4217a334bc08a6e2f5c9_49)] [added: [Reserved](#i44f57459b2e0450ab60929ff8ee729f0_49)] | | | [removed: [27](#i71b8e53d2ffa4217a334bc08a6e2f5c9_49)] [added: [28](#i44f57459b2e0450ab60929ff8ee729f0_49)] | | |

| [removed: Item 7.] [added: [Item 7.](#i44f57459b2e0450ab60929ff8ee729f0_52)] | | | | | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i71b8e53d2ffa4217a334bc08a6e2f5c9_52)] [added: Operations](#i44f57459b2e0450ab60929ff8ee729f0_52)] | | | [removed: [28](#i71b8e53d2ffa4217a334bc08a6e2f5c9_52)] [added: [29](#i44f57459b2e0450ab60929ff8ee729f0_52)] | | |

| [removed: Item 7A.] [added: [Item 7A.](#i44f57459b2e0450ab60929ff8ee729f0_100)] | | | | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i71b8e53d2ffa4217a334bc08a6e2f5c9_76)] [added: Risk](#i44f57459b2e0450ab60929ff8ee729f0_100)] | | | [removed: [50](#i71b8e53d2ffa4217a334bc08a6e2f5c9_76)] [added: [50](#i44f57459b2e0450ab60929ff8ee729f0_100)] | | |

| [removed: Item 8.] [added: [Item 8.](#i44f57459b2e0450ab60929ff8ee729f0_106)] | | | | | | [Financial Statements and Supplementary [removed: Data](#i71b8e53d2ffa4217a334bc08a6e2f5c9_79)] [added: Data](#i44f57459b2e0450ab60929ff8ee729f0_106)] | | | [removed: [51](#i71b8e53d2ffa4217a334bc08a6e2f5c9_79)] [added: [51](#i44f57459b2e0450ab60929ff8ee729f0_106)] | | |

| [removed: Item 9.] [added: [Item 9.](#i44f57459b2e0450ab60929ff8ee729f0_160)] | | | | | | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#i71b8e53d2ffa4217a334bc08a6e2f5c9_133)] [added: Disclosure](#i44f57459b2e0450ab60929ff8ee729f0_160)] | | | [removed: [71](#i71b8e53d2ffa4217a334bc08a6e2f5c9_133)] [added: [70](#i44f57459b2e0450ab60929ff8ee729f0_160)] | | |

| [removed: Item 9A.] [added: [Item 9A.](#i44f57459b2e0450ab60929ff8ee729f0_163)] | | | | | | [Controls and [removed: Procedures](#i71b8e53d2ffa4217a334bc08a6e2f5c9_136)] [added: Procedures](#i44f57459b2e0450ab60929ff8ee729f0_163)] | | | [removed: [71](#i71b8e53d2ffa4217a334bc08a6e2f5c9_136)] [added: [70](#i44f57459b2e0450ab60929ff8ee729f0_163)] | | |

| [removed: Item 9B.] [added: [Item 9B.](#i44f57459b2e0450ab60929ff8ee729f0_166)] | | | | | | [Other [removed: Information](#i71b8e53d2ffa4217a334bc08a6e2f5c9_139)] [added: Information](#i44f57459b2e0450ab60929ff8ee729f0_166)] | | | [removed: [72](#i71b8e53d2ffa4217a334bc08a6e2f5c9_139)] [added: [71](#i44f57459b2e0450ab60929ff8ee729f0_166)] | | |

| [removed: Item 9C.] [added: [Item 9C.](#i44f57459b2e0450ab60929ff8ee729f0_169)] | | | | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i71b8e53d2ffa4217a334bc08a6e2f5c9_142)] [added: Inspections](#i44f57459b2e0450ab60929ff8ee729f0_169)] | | | [removed: [72](#i71b8e53d2ffa4217a334bc08a6e2f5c9_142)] [added: [71](#i44f57459b2e0450ab60929ff8ee729f0_169)] | | |

| [removed: Item 10.] [added: [Item 10.](#i44f57459b2e0450ab60929ff8ee729f0_175)] | | | | | | [Directors, Executive Officers, and Corporate [removed: Governance](#i71b8e53d2ffa4217a334bc08a6e2f5c9_148)] [added: Governance](#i44f57459b2e0450ab60929ff8ee729f0_175)] | | | [removed: [72](#i71b8e53d2ffa4217a334bc08a6e2f5c9_148)] [added: [71](#i44f57459b2e0450ab60929ff8ee729f0_175)] | | |

| [removed: Item 11.] [added: [Item 11.](#i44f57459b2e0450ab60929ff8ee729f0_178)] | | | | | | [Executive [removed: Compensation](#i71b8e53d2ffa4217a334bc08a6e2f5c9_151)] [added: Compensation](#i44f57459b2e0450ab60929ff8ee729f0_178)] | | | [removed: [74](#i71b8e53d2ffa4217a334bc08a6e2f5c9_151)] [added: [73](#i44f57459b2e0450ab60929ff8ee729f0_178)] | | |

| [removed: Item 12.] [added: [Item 12.](#i44f57459b2e0450ab60929ff8ee729f0_181)] | | | | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i71b8e53d2ffa4217a334bc08a6e2f5c9_154)] [added: Matters](#i44f57459b2e0450ab60929ff8ee729f0_181)] | | | [removed: [74](#i71b8e53d2ffa4217a334bc08a6e2f5c9_154)] [added: [73](#i44f57459b2e0450ab60929ff8ee729f0_181)] | | |

| [removed: Item 13.] [added: [Item 13.](#i44f57459b2e0450ab60929ff8ee729f0_184)] | | | | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i71b8e53d2ffa4217a334bc08a6e2f5c9_157)] [added: Independence](#i44f57459b2e0450ab60929ff8ee729f0_184)] | | | [removed: [74](#i71b8e53d2ffa4217a334bc08a6e2f5c9_157)] [added: [74](#i44f57459b2e0450ab60929ff8ee729f0_184)] | | |

| [removed: Item 14.] [added: [Item 14.](#i44f57459b2e0450ab60929ff8ee729f0_187)] | | | | | | [Principal Accountant Fees and [removed: Services](#i71b8e53d2ffa4217a334bc08a6e2f5c9_160)] [added: Services](#i44f57459b2e0450ab60929ff8ee729f0_187)] | | | [removed: [74](#i71b8e53d2ffa4217a334bc08a6e2f5c9_160)] [added: [74](#i44f57459b2e0450ab60929ff8ee729f0_187)] | | |

| [removed: Item 15.] [added: [Item 15.](#i44f57459b2e0450ab60929ff8ee729f0_193)] | | | | | | [Exhibits and Financial Statement [removed: Schedules](#i71b8e53d2ffa4217a334bc08a6e2f5c9_166)] [added: Schedules](#i44f57459b2e0450ab60929ff8ee729f0_193)] | | | [removed: [75](#i71b8e53d2ffa4217a334bc08a6e2f5c9_166)] [added: [75](#i44f57459b2e0450ab60929ff8ee729f0_193)] | | |

| [removed: Item 16.] [added: [Item 16.](#i44f57459b2e0450ab60929ff8ee729f0_199)] | | | | | | [Form 10-K [removed: Summary](#i71b8e53d2ffa4217a334bc08a6e2f5c9_1536)] [added: Summary](#i44f57459b2e0450ab60929ff8ee729f0_199)] | | | [removed: [77](#i71b8e53d2ffa4217a334bc08a6e2f5c9_1536)] [added: [77](#i44f57459b2e0450ab60929ff8ee729f0_199)] | | |

Portions of our Proxy Statement [removed: for the] [added: relating to our 2024] annual meeting of shareholders [removed: to be held Saturday, April 22, 2023] (Proxy Statement) are incorporated by reference [removed: in] [added: into] Part [removed: III.][added: III of this Annual Report on Form 10-K where indicated.]

Certain statements contained in this [added: Annual Report on] Form 10-K, or in other reports of the company and other written and oral statements made from time to time by the company, do not relate strictly to historical or current facts.

Our forward-looking statements generally relate to our expectations regarding the business environment in which we operate, our projections of future performance and opportunities for growth based on potential market opportunities, our perceived marketplace opportunities, our strategies, goals, mission and vision, and our expectations about matters including capital expenditures, tax rates, inventory levels, liquidity, liabilities from tax positions, the performance of our fastener business in comparison to our non-fastener business, [added: openings and closing of] in-market locations and signings of Onsite locations and new machine equivalent units for Fastenal Managed Inventory (FMI) (including bin stock and industrial vending) and the competitive advantages they offer, our digital solutions and other product [removed: offerings,] [added: offerings (including new product lines),] national accounts as a percentage of overall sales, the advantages of our integrated physical and virtual model, growth in safety products as a percentage of product sales, the amount of FMI revenue that we may be able to service through local inventory fulfillment terminals, and the ability of our competitors to replicate our distribution capabilities.

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 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, 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 (including with respect to our FMI or Onsite operations), difficulty in maintaining installation quality as our industrial vending business expands, the failure to meet our goals and expectations regarding expansion of our FMI or Onsite [removed: operations,] [added: operations or any] changes in [added: branch locations, 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, 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 and increases in interest rates, 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 [removed: customers,] [added: customers and the acceptance by customers of any new product lines,] 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 dollar amounts in this [added: Annual Report on] Form 10-K are presented in millions, except for share and per share amounts or where otherwise noted.

| | | | | | | [PART I](#i44f57459b2e0450ab60929ff8ee729f0_22) | | | | | |

| [Item 1C.](#i44f57459b2e0450ab60929ff8ee729f0_1490) | | | | | | [Cybersecurity](#i44f57459b2e0450ab60929ff8ee729f0_1490) | | | [23](#i44f57459b2e0450ab60929ff8ee729f0_1490) | | |

| | | | | | | [PART II](#i44f57459b2e0450ab60929ff8ee729f0_43) | | | | | |

| | | | | | | [PART III](#i44f57459b2e0450ab60929ff8ee729f0_172) | | | | | |

| | | | | | | [PART IV](#i44f57459b2e0450ab60929ff8ee729f0_190) | | | | | |

| | | | | | | [Signatures](#i44f57459b2e0450ab60929ff8ee729f0_202) | | | [78](#i44f57459b2e0450ab60929ff8ee729f0_202) | | |

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

Our Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

____________________________________________________________

or

| | | | | | | [PART I](#i71b8e53d2ffa4217a334bc08a6e2f5c9_22) | | | | | |

| | | | | | | [PART II](#i71b8e53d2ffa4217a334bc08a6e2f5c9_43) | | | | | |

| | | | | | | [PART III](#i71b8e53d2ffa4217a334bc08a6e2f5c9_145) | | | | | |

| | | | | | | [PART IV](#i71b8e53d2ffa4217a334bc08a6e2f5c9_163) | | | | | |

| | | | | | | [Signatures](#i71b8e53d2ffa4217a334bc08a6e2f5c9_175) | | | [78](#i71b8e53d2ffa4217a334bc08a6e2f5c9_175) | | |

Cybersecurity Risk Management and Strategy

We have established processes and procedures for ensuring the confidentiality, integrity, and availability of data.

These processes are in place to assess, identify, and manage material risks from cybersecurity threats.

Annual risk assessments are performed and incorporated as part of our Enterprise Risk Management (ERM) organizational process, which is overseen by our Board of Directors (the Board) and the Audit Committee, along with Executive Leadership.

Our information security management system (ISMS) program is aligned to ISO 27001, which is an international standard to manage information security.

ISO 27001 is published by the International Organization for Standardization (ISO), the world's largest developer of voluntary standards, and the International Electrotechnical Commission (IEC).

Our information technology (IT) security department, led by our Senior Vice President (SVP) IT Infrastructure & Security, is tasked with monitoring cybersecurity and operational risks related to information security and system disruption.

The team employs measures designed to protect against, detect, and respond to cybersecurity threats, and has implemented processes and procedures aligned with our information security management system to support and promote resilient programs.

This includes:

- Enterprise security framework and cyber security standards;

- Cyber security awareness and training plans;

- Security assessments and monitoring;

- Restricted physical access to critical areas, servers, and network equipment;

- Incident response, crisis management, business continuity, and disaster recovery plans; and

- Third-party IT vendor risk management process to identify, assess, and manage risks presented by our IT vendors and business partners.

Our IT security department maintains a playbook to respond to potential cybersecurity threats.

We conduct tabletop exercises for tactical response readiness, perform regular security scans of our environment both from an external and internal perspective, as well as work with a qualified third-party vendor to perform penetration tests of our environment.

Any identified risks are included in our overall risk management program, and internal and external auditors validate our IT controls on a regular basis.

We conduct organization-wide cybersecurity training and compliance exercises in connection with our information security program.

This training consists of educational material and compliance testing administered to all of our employees, which is tracked and recorded throughout the year.

Results and progress are shared with Executive Leadership, the Audit Committee, and the Board.

Employee phishing tests are conducted on a regular basis.

Employees who do not follow protocol are redirected for additional training.

We have implemented an IT vendor risk management policy that provides guidance in managing risks associated with IT vendors and business partners.

We have also established a third-party risk management program and conduct pre-onboarding security assessments and annual re-assessments of our service providers to collect, track, and manage third-party security controls based upon the risk presented to the business.

Any issues identified during assessment are tracked through to remediation.

Governance

Our Board of Directors and Audit Committee are actively engaged in the oversight of our risk management, including cybersecurity risk.

The Audit Committee receives quarterly reports on information security from our SVP IT Infrastructure & Security.

Additionally, Executive Leadership is briefed on information security at least quarterly by members of our IT security, compliance, governance, and audit teams.

The Audit Committee of the Board is responsible for overseeing our risk exposure to information security, cybersecurity, and data protection, as well as the steps management has taken to monitor and control such exposures.

Our IT security department, which assesses and manages our risks from cybersecurity threats, is led by our SVP IT Infrastructure & Security, who reports to our Senior EVP IT.

Additional oversight for assessing and managing cybersecurity risk include Executive sponsors, Information Technology, Human Resources, IT Governance Risk and Compliance, Internal Audit, and Legal, as well as members of our Information Security Risk Council, IT Risk Committee, and Enterprise Risk Management teams.

We have in place an incident response plan to identify, protect, detect, respond to, and recover from cybersecurity threats and incidents.

The Information Security Risk Council, Executive Leadership, the Audit Committee, and the Board are notified of any material cybersecurity incidents through an established escalation process.

Additionally, we maintain a qualified third-party vendor relationship which is available to the team for on-demand incident response and investigation, as needed.

The IT security department team members have degrees applicable to cybersecurity, including Bachelors in Information Systems, Computer Science, Management Information Systems and/or Masters in Cybersecurity, and hold professional certifications, including Certified Information Systems Security Professional, Offensive Security Certified Professional, Global Information Assurance Certification (GIAC) Defensible Security Architecture, GIAC Forensic Examiner, GIAC Incident Handling, and GIAC Open Source Intelligence.

Our SVP IT Infrastructure & Security holds a Cybersecurity and Privacy Law Certificate from Mitchell Hamline School of Law, and has 28 years of experience in systems, network, and database administration.

Additionally, our Senior IT security department manager is an Offensive Security Certified Professional, and holds GIAC Security Leadership (GSLC), with over 25 years of experience in network performance, availability, and protection.

Impact of Cybersecurity Threats

Note – Information in this section is as of December 31, [removed: 2022,] [added: 2023,] unless otherwise noted.

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

| Denton, Texas | | | Distribution [removed: center (3)] [added: center(3)] | | | | | | 41,000 | | | (4) | | | [removed: 206,000] [added: 263,000] | | |

| Salt Lake City, Utah | | | Distribution center and packaging facility (three [removed: buildings)] [added: buildings)(5)] | | | X | | | — | | | | | | 153,000 | | |

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

| Dordrecht, Netherlands | | | Distribution center | | | X | | | — | | | | | | [removed: 38,000] [added: 39,000] | | |

| Shanghai, China | | | Local re-distribution center | | | X | | | — | | | | | | [removed: 15,000] [added: 12,000] | | |

| [removed: (5)] [added: (6)] | | | In December 2018, we purchased an additional distribution center in High Point, North Carolina with approximately 750,000 total square feet. Approximately 395,000 square feet will be leased by the building's previous owner until December 2024. We currently utilize approximately 355,000 square feet for distribution activities. | | |

In addition, we own [removed: 157] [added: 154] buildings that house our in-market locations in various cities throughout North America.

| Saint Helens, United Kingdom | | | Distribution center | | | X | | | — | | | | | | 14,000 | | |

| (3) | | | As of May 2023, we no longer lease space for distribution-related activities. In 2024, an additional ASRS will go live at this property. | | |

| (5) | | | During 2021, we acquired land for future expansion of our distribution center in Magna, Utah, and, as of November 2023, earthwork is underway. This building is expected to be complete in June of 2025 and will be approximately 290,000 square feet. | | |

| (3) | | | Approximately 30,000 square feet is leased space for distribution related activities. In 2022, we began a project to add square footage and add additional ASRS to this property. | | |

As of January [removed: 20, 2023,] [added: 19, 2024,] there were approximately [removed: 1,000] [added: 900] record holders of our common stock, which include nominees or broker dealers holding stock on behalf of an estimated [removed: 424,000] [added: 662,000] beneficial owners.

The table below sets forth information regarding purchases of our common stock during each of the last three months of [removed: 2022:][added: 2023:]

| Period | | | Total Number of Shares Purchased | | | | | | [added: | | |] Average Price Paid per Share | | | | | | [added: | | |] Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | | | | | | [added: | | |] Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1) | | | [added: | | | | | |]

| October 1-31, [removed: 2022] [added: 2023] | | | [removed: 2,000,000] | | | [added: 0] | | | [removed: $46.62] | | | | | | [removed: 2,000,000] [added: $0.00] | | | | | | [added: | | | 0 | | | | | | | | |] 6,200,000 | | | [added: | | |]

| November 1-30, [removed: 2022] [added: 2023] | | | [added: | | |] 0 | | | | | | [added: | | |] $0.00 | | | | | | [added: | | |] 0 | | | | | | [added: | | |] 6,200,000 | | | [added: | | |]

| December 1-31, [removed: 2022] [added: 2023] | | | [added: | | |] 0 | | | | | | [added: | | |] $0.00 | | | | | | [added: | | |] 0 | | | | | | [added: | | |] 6,200,000 | | | [added: | | |]

| Total | | | [removed: 2,000,000] | | | [added: 0] | | | [removed: $46.62] | | | | | | [removed: 2,000,000] [added: $0.00] | | | | | | [added: | | | 0 | | | | | | | | |] 6,200,000 | | | [added: | | |]

| (1) | | | As of December 31, [removed: 2022,] [added: 2023,] we had remaining authority to repurchase 6,200,000 shares under the July 12, 2022 authorization. This authorization does not have an expiration date. | | |

Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations'.][added: Operations' under 'Liquidity and Capital Resources' - 'Stock Purchases'.]

Set forth below is a graph comparing, for the five years ended December 31, [removed: 2022,] [added: 2023,] 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: 2017] [added: 2018] 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: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2022] [added: 2023] | | |

| | | | | | | (a) | | | | | | | | | (b) | | | | | | | | | (c) | | | | | | | | | (d) | | | | | |

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

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

| Fastenal Company | | | $ | | | 100.00 | | | | | | 145.04 | | | | | | 198.08 | | | | | | 265.50 | | | | | | 200.88 | | | | | | 283.77 | | |

| S&P 500 Index | | | | | | 100.00 | | | | | | 131.49 | | | | | | 155.68 | | | | | | 200.37 | | | | | | 164.08 | | | | | | 207.21 | | |

| Dow Jones US Industrial Suppliers Index | | | | | | 100.00 | | | | | | 132.23 | | | | | | 167.18 | | | | | | 223.37 | | | | | | 193.89 | | | | | | 287.68 | | |

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

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

| | | | (a) | | | | | | (b) | | | | | | (c) | | | | | | (d) | | |

| Fastenal Company | | | $ | | | 100.00 | | | | | | 98.43 | | | | | | 142.76 | | | | | | 194.97 | | | | | | 261.33 | | | | | | 197.72 | | |

| S&P 500 Index | | | | | | 100.00 | | | | | | 95.62 | | | | | | 125.72 | | | | | | 148.85 | | | | | | 191.58 | | | | | | 156.88 | | |

| Dow Jones US Industrial Suppliers Index | | | | | | 100.00 | | | | | | 97.58 | | | | | | 129.03 | | | | | | 163.14 | | | | | | 217.97 | | | | | | 189.21 | | |

We have audited the accompanying consolidated balance sheets of Fastenal Company and subsidiaries (the Company) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] 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: 2022] [added: 2023,] and the related notes and financial statement schedule II [removed: -] [added: —] valuation and qualifying accounts (collectively, the consolidated financial statements).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in *Internal Control [removed: -] [added: –] Integrated [removed: Framework* *(2013)*] [added: 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: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2022,] [added: 2023,] 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: 2022] [added: 2023] based on criteria established in *Internal Control [removed: -] [added: –] Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As disclosed in the consolidated balance sheet, the Company held [removed: $1,708.0] [added: $1,522.7] million of inventory, the majority of which was held at [removed: 3,306] [added: 3,419] in-market locations, as of December 31, [removed: 2022.][added: 2023.]

[removed: The following are the primary procedures we performed to address this critical audit matter:] We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter.

- Historical inventory locations we have visited and [removed: the] results of prior physical counts;

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

| | | | [removed: 2022] [added: 2023] | | | | | | [added: 2022 | | | | | |] 2021 | | |

| Cash and cash equivalents | | | $ | [removed: 230.1] [added: 221.3] | | | | | [removed: 236.2] [added: 230.1] | | |

| Trade accounts receivable, net of allowance for credit losses of [removed: $8.3] [added: $6.4] and [removed: $12.0,] [added: $8.3,] respectively | | | [removed: 1,013.2] [added: 1,087.6] | | | | | | [removed: 900.2] [added: 1,013.2] | | |

| Inventories | | | [removed: 1,708.0] [added: 1,522.7] | | | | | | [removed: 1,523.6] [added: 1,708.0] | | |

| Prepaid income taxes | | | [removed: 8.1] [added: 17.5] | | | | | | [removed: 8.5] [added: 8.1] | | |

| Other current assets | | | [removed: 165.4] [added: 171.8] | | | | | | [removed: 188.1] [added: 165.4] | | |

| Total current assets | | | [removed: 3,124.8] [added: 3,020.9] | | | | | | [removed: 2,856.6] [added: 3,124.8] | | |

| Property and equipment, net | | | [removed: 1,010.0] [added: 1,011.1] | | | | | | [removed: 1,019.2] [added: 1,010.0] | | |

| Operating lease right-of-use assets | | | [removed: 243.0] [added: 270.2] | | | | | | [removed: 242.3] [added: 243.0] | | |

| Other assets | | | [removed: 170.8] [added: 160.7] | | | | | | [removed: 180.9] [added: 170.8] | | |

| Total assets | | | $ | [removed: 4,548.6] [added: 4,462.9] | | | | | [removed: 4,299.0] [added: 4,548.6] | | |

| Current portion of debt | | | $ | [removed: 201.8] [added: 60.0] | | | | | [removed: 60.0] [added: 201.8] | | |

| Accounts payable | | | [removed: 255.0] [added: 264.1] | | | | | | [removed: 233.1] [added: 255.0] | | |

| Accrued expenses | | | [removed: 241.1] [added: 241.0] | | | | | | [removed: 298.3] [added: 241.1] | | |

| Current portion of operating lease liabilities | | | [removed: 91.9] [added: 96.2] | | | | | | [removed: 90.8] [added: 91.9] | | |

| Total current liabilities | | | [removed: 789.8] [added: 661.3] | | | | | | [removed: 682.2] [added: 789.8] | | |

| Long-term debt | | | [removed: 353.2] [added: 200.0] | | | | | | [removed: 330.0] [added: 353.2] | | |

| Operating lease liabilities | | | [removed: 155.2] [added: 178.8] | | | | | | [removed: 156.0] [added: 155.2] | | |

| Deferred income taxes | | | [removed: 83.7] [added: 73.0] | | | | | | [removed: 88.6] [added: 83.7] | | |

| Other long-term liabilities | | | [removed: 3.5] [added: 1.0] | | | | | | [removed: —] [added: 3.5] | | |

| Common stock: $0.01 par value, 800,000,000 shares authorized, [removed: 570,811,674] [added: 571,982,367] and [removed: 575,464,682] [added: 570,811,674] shares issued and outstanding, respectively | | | 5.7 | | | | | | [removed: 5.8] [added: 5.7] | | |

| Additional paid-in capital | | | [removed: 3.6] [added: 41.0] | | | | | | [removed: 96.2] [added: 3.6] | | |

| Retained earnings | | | [removed: 3,218.7] [added: 3,356.9] | | | | | | [removed: 2,970.9] [added: 3,218.7] | | |

| Accumulated other comprehensive loss | | | [removed: (64.8)] [added: (54.8)] | | | | | | [removed: (30.7)] [added: (64.8)] | | |

| Total stockholders' equity | | | [removed: 3,163.2] [added: $] | [added: 3,348.8] | | | | | [added: 3,163.2 | | | | | |] 3,042.2 | | |

| Total liabilities and stockholders' equity | | | $ | [removed: 4,548.6] [added: 4,462.9] | | | | | [removed: 4,299.0] [added: 4,548.6] | | |

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Net sales | | | $ | [removed: 6,980.6] [added: 7,346.7] | | | | | [removed: 6,010.9] [added: 6,980.6] | | | | | | [removed: 5,647.3] [added: 6,010.9] | | |

| Cost of sales | | | [removed: 3,764.8] [added: 3,992.2] | | | | | | [removed: 3,233.7] [added: 3,764.8] | | | | | | [removed: 3,079.5] [added: 3,233.7] | | |

| Gross profit | | | [removed: 3,215.8] [added: 3,354.5] | | | | | | [removed: 2,777.2] [added: 3,215.8] | | | | | | [removed: 2,567.8] [added: 2,777.2] | | |

| Operating and administrative expenses | | | [removed: 1,762.2] [added: 1,825.8] | | | | | | [removed: 1,559.8] [added: 1,762.2] | | | | | | [removed: 1,426.0] [added: 1,559.8] | | |

| Operating income | | | [removed: 1,453.6] [added: 1,528.7] | | | | | | [removed: 1,217.4] [added: 1,453.6] | | | | | | [removed: 1,141.8] [added: 1,217.4] | | |

The following are the primary procedures we performed to address this critical audit matter.

February 6, 2024

| | | | 2023 | | | | | | 2022 | | |

(Amounts in millions except per share information)

| Net earnings | | | 1,155.0 | | | | | | 1,086.9 | | | | | | 925.0 | | |

| Net earnings | | | $ | 1,155.0 | | | | | 1,086.9 | | | | | | 925.0 | | |

| Stock-based compensation | | | 7.3 | | | | | | 7.2 | | | | | | 5.6 | | |

| Cash dividends paid | | | (1,016.8) | | | | | | (711.3) | | | | | | (643.7) | | |

Notes to Consolidated Financial Statements (Continued)

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures*, which enhances reporting requirements under Topic 280.

The enhanced disclosure requirements include: title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances.

This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

This change will apply retrospectively to all periods presented.

In December 2023, the FASB issued ASU 2023-09, *Improvements to Income Tax Disclosures (Topic 740)*, which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.

The new guidance requires consistent categorization and greater disaggregation of information in the rate reconciliation, as well as further disaggregation of income taxes paid.

This change is effective for annual periods beginning after December 15, 2024.

This change will apply on a prospective basis to annual financial statements for periods beginning after the effective date.

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

Notes to Consolidated Financial Statements (Continued)

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| *% of revenues* | | | 83.6 | | % | | | | *84.0* | | *%* | | | | *83.7* | | *%* |

| *% of revenues* | | | 13.4 | | % | | | | *12.7* | | *%* | | | | *12.5* | | *%* |

| *% of revenues* | | | 97.0 | | % | | | | *96.7* | | *%* | | | | *96.2* | | *%* |

| *% of revenues* | | | 3.0 | | % | | | | *3.3* | | *%* | | | | *3.8* | | *%* |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

Notes to Consolidated Financial Statements (Continued)

| | | | | | | | | | 2,436.6 | | | | | | 2,311.4 | | |

| | | | 2023 | | | | | | 2022 | | |

| | | | 2023 | | | | | | 2022 | | |

Notes to Consolidated Financial Statements (Continued)

| January 3, 2023 | | | 1,071,943 | | | | | | $ | 48.00 | | | | | $ | 47.400 | | | | | 989,048 | | | | | | 70,562 | | |

| Total | | | 10,840,912 | | | | | | | | | | | | | | | | | | 4,974,078 | | | | | | 2,197,022 | | |

| January 3, 2023 | | | 4.0% | | | | | | 5.00 | | | | | | 2.6% | | | | | | 29.58 | | % | | | | $ | 11.62 | |

Notes to Consolidated Financial Statements (Continued)

| Outstanding as of January 1, 2023 | | | 5,374,736 | | | | | | $ | 34.37 | | | | | 5.66 | | |

| Exercised | | | (1,170,693) | | | | | | $ | 25.69 | | | | | | | |

| Cancelled/forfeited | | | (301,908) | | | | | | $ | 45.00 | | | | | | | |

| Outstanding as of December 31, 2023 | | | 4,974,078 | | | | | | $ | 38.70 | | | | | 5.99 | | |

| Exercisable as of December 31, 2023 | | | 2,197,022 | | | | | | $ | 30.88 | | | | | 4.54 | | |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

February 7, 2023

FASTENAL COMPANY AND SUBSIDIARIES

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

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

(Amounts in millions)

| Cash paid for acquisition | | | — | | | | | | — | | | | | | (125.0) | | |

On March 30, 2020, we purchased certain assets of Apex for $125.0, including identifiable intangible assets totaling $123.8, with a weighted average amortization period of approximately 19.4 years.

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, *Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting*, which provides temporary optional expedients and exceptions to U.S. GAAP on contract modifications, hedging relationships, and other transactions affected by reference rate reform to ease entities' financial reporting burdens as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.

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

In December 2022, the FASB issued ASU 2022-06, *Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848*, which extended the date to December 31, 2024.

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

On September 28, 2022, we amended and restated our unsecured revolving credit agreement.

At the same time, we also amended our master note agreement.

As a result of those amendments, our floating rate debt no longer references a LIBOR based benchmark rate.

Therefore, we will not be electing the optional practical expedients associated with this ASU.

During 2020, we had a single customer that represented 5% of our consolidated net sales, whereas all remaining customers fell below that threshold.

| | | | | | | | | | 2,311.4 | | | | | | 2,197.2 | | |

| April 22, 2014 | | | 1,910,000 | | | | | | $ | 28.00 | | | | | $ | 25.265 | | | | | 109,894 | | | | | | 109,894 | | |

| Total | | | 11,678,969 | | | | | | | | | | | | | | | | | | 5,374,736 | | | | | | 2,437,636 | | |

| April 22, 2014 | | | 1.8% | | | | | | 5.00 | | | | | | 2.0% | | | | | | 28.55 | | % | | | | $ | 4.79 | |

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

| 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 | | |

| 2021: | | | Current | | | | | | Deferred | | | | | | Total | | |

| Federal | | | $ | 214.3 | | | | | (11.4) | | | | | | 202.9 | | |

| State | | | 46.7 | | | | | | (1.7) | | | | | | 45.0 | | |

| Foreign | | | 34.1 | | | | | | 0.8 | | | | | | 34.9 | | |

| Income tax expense | | | $ | 295.1 | | | | | (12.3) | | | | | | 282.8 | | |

| 2020: | | | Current | | | | | | Deferred | | | | | | Total | | |

| Federal | | | $ | 195.4 | | | | | 1.8 | | | | | | 197.2 | | |

| State | | | 47.5 | | | | | | (0.5) | | | | | | 47.0 | | |

| Foreign | | | 28.1 | | | | | | 1.3 | | | | | | 29.4 | | |

| Income tax expense | | | $ | 271.0 | | | | | 2.6 | | | | | | 273.6 | | |

| U.S. federal income tax expense at statutory rate | | | $ | 302.4 | | | | | 253.6 | | | | | | 237.9 | | |

| Increase (decrease) attributed to: | | | | | | | | | | | | | | | | | |

| Total income tax expense | | | $ | 353.1 | | | | | 282.8 | | | | | | 273.6 | | |

| Prepaid royalty | | | 0.3 | | | | | | 5.9 | | |

(1) The presentation of prior year deferred income tax assets and liabilities has been updated to conform to current period presentation.

Based on our assessment and those criteria, management believes that the company maintained effective internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

| February 6, 2024 | | | | | | | | |

| February 7, 2023 | | | | | | | | |

None of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act) adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Securities Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fiscal quarter ended December 31, 2023.

We are reporting the following information in lieu of reporting on a Current Report on Form 8-K under Item 5.03 "Amendments to Articles of Incorporation or By-laws; Change in Fiscal Year" and Item 9.01 "Financial Statements and Exhibits."

On February 2, 2024, our board of directors amended and restated our by-laws as a result of a periodic review of best practices and the SEC's adoption of the universal proxy rules.

The amendments:

(i)Make certain limited updates to the procedural mechanics for meetings of shareholders and clarify that the chair of a shareholder meeting may adjourn a meeting for any reason;

(ii)Include express authorization of electronic and telephonic proxies and add a requirement that a shareholder soliciting proxies must use a proxy card color other than white, in order to avoid shareholder confusion; and

(iii)Make various other conforming, technical, and non-substantive changes.

The foregoing description of the amended and restated by-laws is not complete and is qualified by reference to the full text of the amended and restated by-laws, a copy of which is filed as Exhibit 3.2 hereto and incorporated herein by reference.

None.

Incorporated herein by reference is the information appearing under the headings 'Proposal #1—Election of Directors', 'Corporate Governance and Director Compensation—Board Leadership Structure and Committee Membership', 'Corporate Governance and Director [added: Compensation—Other Board and Corporate Governance Matters: *Securities Trading Policy'*, 'Corporate Governance and Director] Compensation—Audit Committee', and 'Corporate Governance and Director Compensation—Delinquent Section 16(a) Reports' in the Proxy Statement.

| Daniel L. Florness | | | 1996 | | | | | | [removed: 59] [added: 60] | | | | | | President, Chief Executive Officer, and Director | | |

| William J. Drazkowski | | | 1995 | | | | | | [removed: 51] [added: 52] | | | | | | Executive Vice President – Sales | | |

| James C. Jansen | | | 1992 | | | | | | [removed: 52] [added: 53] | | | | | | Executive Vice President – Manufacturing | | |

| Holden Lewis | | | 2016 | | | | | | [removed: 53] [added: 54] | | | | | | Senior Executive Vice President and Chief Financial Officer | | |

| Sheryl A. Lisowski | | | 1994 | | | | | | [removed: 55] [added: 56] | | | | | | Executive Vice President – Chief Accounting Officer and Treasurer | | |

| Charles S. Miller | | | 1999 | | | | | | [removed: 48] [added: 49] | | | | | | Senior Executive Vice President – Sales | | |

| John L. Soderberg | | | 1993 | | | | | | [removed: 51] [added: 52] | | | | | | Senior Executive Vice President – Information Technology | | |

| Jeffery M. Watts | | | 1996 | | | | | | [removed: 51] [added: 52] | | | | | | [removed: Executive Vice President – International] [added: Chief] Sales [added: Officer] | | |

Mr. [removed: Drazkowski's] [added: Miller's] responsibilities include sales and operational oversight of our [removed: Western] United States business.

Mr. Lewis has been [removed: our] [added: a] senior executive vice president and [added: the] chief financial officer of Fastenal since December 2022.

As chief financial officer, Mr. Lewis manages the [removed: company’s] [added: company's] finance, [removed: accounting] [added: accounting, audit,] and [removed: audit] [added: general counsel] functions, and plays a central role in effectively executing and communicating company strategy, with a concentration on profitability, efficiency, and assets.

Mr. [removed: Owen] [added: Broersma] has been our [removed: senior] executive vice president – [removed: sales] operations since [removed: January 2016.][added: October 2023.]

From [removed: July 2015 to] December [removed: 2015,] [added: 2016 to April 2023,] Mr. [removed: Owen] [added: Watts] was [removed: one of] our executive vice [removed: presidents] [added: president] – [added: international] sales.

Mr. Watts has been our [removed: executive vice president – international] [added: chief] sales [added: officer] since [removed: December 2016.][added: May 2023.]

| Anthony P. Broersma | | | 2003 | | | | | | 44 | | | | | | Executive Vice President – Operations | | |

| Noelle J. Oas | | | 2015 | | | | | | 39 | | | | | | Executive Vice President – Human Resources | | |

Mr. Broersma’s responsibilities include oversight of our supply chain, compliance, supplier development, content, property management, eCommerce, supply to fulfillment distribution, and logistics operations of the company.

From June 2022 to October 2023, Mr. Broersma served as our senior vice president – operations.

From February 2021 to June 2022, Mr. Broersma was our vice president of procurement and supply chain.

From February 2016 to February 2021, Mr. Broersma served as our vice president of international operations, leading all global operations.

From December 2012 to February 2016, Mr. Broersma was the regional vice president for our continental Europe locations, while living in the Czech Republic.

From February 2011 to December 2012, Mr. Broersma served as the director of Asian operations, while living in Shanghai, China.

From December 2007 to February 2011, Mr. Broersma served as the regional operations manager of our distribution center located in Scranton, PA.

Mr. Broersma joined Fastenal in 2003 and, prior to 2007, served in various roles of increasing responsibility within our branch locations.

Mr. Drazkowski's responsibilities include oversight of national accounts, government and industry specific sales, support, and development teams.

From October 2019 to October 2023, Mr. Drazkowski oversaw our Western United States business.

Ms. Oas has been our executive vice president – human resources since February 2023.

As executive vice president – human resources, Ms. Oas manages the company's human resources department, which includes payroll, benefits, diversity and compliance, general insurance, and the Fastenal School of Business.

From March 2015 to January 2023, she was our director of compliance – human resources.

From 2010 to February 2015, Ms. Oas practiced employment law for a firm in Minneapolis, Minnesota and later acted as a solo practitioner in Winona, Minnesota.

Mr. Watts' responsibilities include providing oversight and guidance concerning the global sales activities of the company.

| Terry M. Owen | | | 1999 | | | | | | 54 | | | | | | Senior Executive Vice President – Sales Operations | | |

| Reyne K. Wisecup | | | 1988 | | | | | | 59 | | | | | | Senior Executive Vice President – Human Resources and Director | | |

Mr. Miller's responsibilities include sales and operational oversight of our Eastern United States business.

Mr. Owen's responsibilities include oversight of our eCommerce, marketing, national accounts sales, government sales, FAST Solutions® (Onsite and FMI), manufacturing, distribution, transportation, product development, supplier development, procurement, and supply chain.

From May 2014 to June 2015, Mr. Owen served as our executive vice president – e-business, and from December 2007 to May 2014, Mr. Owen was regional vice president of our Texas based and Mexico regions.

Prior to December 2007, Mr. Owen served in various distribution center leadership roles at our company.

Ms. Wisecup has been our senior executive vice president – human resources from December 2016 through February 2023, when she will retire from that position.

From November 2007 to December 2016, Ms. Wisecup was our executive vice president – human resources.

Prior to November 2007, she served in various support roles, including director of employee development.

Ms. Wisecup has also served as one of our directors since 2000.

| Equity compensation plans approved by security holders (1) | | | 4,974,078 | | | | | | $ | 38.70 | | | | | 10,877,707 | | |

| Total | | | 4,974,078 | | | | | | | | | | | | 10,877,707 | | |

| Equity compensation plans approved by security holders (1) | | | 5,374,736 | | | | | | $ | 34.37 | | | | | 11,644,818 | | |

| Total | | | 5,374,736 | | | | | | | | | | | | 11,644,818 | | |

[added: | | | |] Consolidated Balance Sheets as of December 31, [removed: 2022] [added: 2023] and [removed: 2021][added: 2022 | | |]

[added: | | | |] Consolidated Statements of Earnings for the years ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021 | | |]

[added: | | | |] Consolidated Statements of Comprehensive Income for the years ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021 | | |]

[added: | | | |] Consolidated Statements of Stockholders' Equity for the years ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021 | | |]

[added: | | | |] Consolidated Statements of Cash Flows for the years ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021 | | |]

[added: | | | |] Notes to Consolidated Financial Statements [added: | | |]

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

[added: | | | |] Schedule II—Valuation and Qualifying Accounts [added: | | |]

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

| | | | 3.1 | | | | | | [Restated Articles of Incorporation of Fastenal Company, as amended (incorporated by reference to Exhibit 3.1 to Fastenal Company's Form 8-K dated as of April 22, 2019)](https://www.sec.gov/Archives/edgar/data/815556/000081555619000032/ex_314232019amendedarticle.htm) | | | [added: | | |]

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

| | | | 4.2 | | | | | | [Description of Capital [removed: Stock](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit042.htm)] [added: Stock (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast1231202310-kexhibit042.htm)] | | | [added: | | |]

| | | | 4.3 | | | | | | [Form of Senior Notes due May 15, 2025 (incorporated by reference to Exhibit 4.1 to Fastenal Company's Form 10-Q for the quarter ended June 30, 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex41.htm) | | | [added: | | |]

| | | | 4.4 | | | | | | [Form of Senior Notes due May 15, 2027 (incorporated by reference to Exhibit 4.2 to Fastenal Company's Form 10-Q for the quarter ended June 30, 2020)](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex42.htm) | | | [added: | | |]

| | | | 4.5 | | | | | | [Form of Senior Notes due June 24, [removed: 2023] [added: 2026] (incorporated by reference to Exhibit [removed: 4.3] [added: 4.4] to Fastenal Company'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)] | | | [added: | | |]

| | | | 4.6 | | | | | | [Form of Senior Notes due June 24, [removed: 2026] [added: 2030] (incorporated by reference to Exhibit [removed: 4.4] [added: 4.5] to Fastenal Company'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)] | | | [added: | | |]

| | | | 10.1 | | | | | | [Bonus Program for Executive [removed: Officers*](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit101.htm)] [added: Officers* (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast1231202310-kexhibit101.htm)] | | | [added: | | |]

| | | | 10.2 | | | | | | [Fastenal Company Stock Option Plan as amended and restated effective as of [removed: December 12, 2014 (incorporated by reference to Exhibit 10.1 to Fastenal Company's Form 8-K dated December 17, 2014)*](http://www.sec.gov/Archives/edgar/data/815556/000081555614000073/exhibit101stockoptionplana.htm)] [added: April 24, 2018.* (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast12312023exhibit102.htm)] | | | [added: | | |]

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

| | | | 10.4 | | | | | | [Fastenal Company Non-Employee Director Stock Option Plan as amended and restated effective December 20, [removed: 2021.*](https://www.sec.gov/Archives/edgar/data/815556/000081555622000011/fast1231202110-kaexhibit104.htm)] [added: 2021 (incorporated by reference to Exhibit 10.4 to Fastenal Company's 10-K for fiscal year ended December 31, 202](https://www.sec.gov/Archives/edgar/data/815556/000081555622000011/fast1231202110-kaexhibit104.htm)[1](https://www.sec.gov/Archives/edgar/data/815556/000081555622000011/fast1231202110-kaexhibit104.htm)[).*](https://www.sec.gov/Archives/edgar/data/815556/000081555622000011/fast1231202110-kaexhibit104.htm)] | | | [added: | | |]

| | | | 10.5 | | | | | | [Amended and Restated Credit Agreement, dated as of September 28, 2022, 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 Company's Form 8-K dated as of September 30, 2022).](https://www.sec.gov/Archives/edgar/data/815556/000081555622000036/exhibit101.htm) | | | [added: | | |]

| | | | 10.6 | | | | | | [First Amendment to Amended and Restated Credit Agreement, dated as of January 20, 2023, by and among Fastenal Company, the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative [removed: Agent.](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit106.htm)] [added: Agent (](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit106.htm)[i](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit106.htm)[ncorporated by reference to Exhibit 10.6](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit106.htm) [to Fastenal Compan](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit106.htm)[y's Form 10-K](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit106.htm) [dated February 7, 2023).](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit106.htm)] | | | [added: | | |]

| | | | 10.7 | | | | | | [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, an 'Investor Group Representative'), 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, 2016).](http://www.sec.gov/Archives/edgar/data/815556/000081555616000115/exhibit101agreement07202016.htm) | | | [added: | | |]

| | | | 10.8 | | | | | | [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 Company's Form 8-K dated December 3, 2018).](http://www.sec.gov/Archives/edgar/data/815556/000081555618000052/exhibit102-firstamendmentt.htm) | | | [added: | | |]

| | | | 10.9 | | | | | | [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 hand (incorporated by reference to Exhibit 10.1 to Fastenal Company's Form 10-Q for the quarter ended June 30, 2020).](https://www.sec.gov/Archives/edgar/data/815556/000081555620000056/fast6302020ex101.htm) | | | [added: | | |]

| | | | 10.10 | | | | | | [Omnibus Second Amendment to Master Note Agreement and Subsidiary Guaranty Agreement dated as of September 28, 2022 by and among Fastenal Company, Fastenal Company Purchasing, and Fastenal IP Company, on one hand, and Metropolitan Life Insurance Company, MetLife Investment Management, LLC, NYL Investors LLC, PGIM, Inc., and each holder of Notes that is a signatory thereto, on the other hand (incorporated by reference to Exhibit 10.2 to Fastenal Company's Form 8-K dated as of September 30, 2022).](https://www.sec.gov/Archives/edgar/data/815556/000081555622000036/exhibit102.htm) | | | [added: | | |]

| | | | 21 | | | | | | [List of [removed: Subsidiaries](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit21.htm)] [added: Subsidiaries (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast1231202310-kexhibit21.htm)] | | | [added: | | |]

| | | | 23 | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit23.htm)] [added: Firm (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast1231202310-kexhibit23.htm)] | | | [added: | | |]

| | | | 31 | | | | | | [Certifications under Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit31.htm)] [added: 2002 (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast1231202310-kexhibit31.htm)] | | | [added: | | |]

| | | | 32 | | | | | | [Certification under Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/815556/000081555623000009/fast1231202210-kexhibit32.htm)] [added: 2002 (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast1231202310-kexhibit32.htm)] | | | [added: | | |]

| | | | 101 | | | | | | The following financial statements from the Annual Report on Form 10-K for the year ended December 31, [removed: 2022,] [added: 2023,] formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Earnings, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. | | | [added: | | |]

| | | | 104 | | | | | | The cover page from the Annual Report on Form 10-K for the year ended December 31, [removed: 2022,] [added: 2023,] formatted in Inline XBRL. | | | [added: | | |]

Years ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020][added: 2021]

| Allowance for credit losses | | | [removed: $] [added: $] | [removed: 12.0] [added: 12.0] | | | | | [removed: (1.8)] [added: (1.8)] | | | | | | [removed: —] [added: —] | | | | | | [removed: 1.9] [added: 1.9] | | | | | | [removed: 8.3] [added: 8.3] | | |

| Insurance reserves | | | [removed: $] [added: $] | [removed: 35.7] [added: 35.7] | | | | | [removed: 78.2] [added: 78.2] | | | [removed: (1)] [added: (1)] | | | [removed: —] [added: —] | | | | | | [removed: 73.5] [added: 73.5] | | | [removed: (2)] [added: (2)] | | | [removed: 40.4] [added: 40.4] | | |

| Year ended December 31, [removed: 2020] [added: 2023] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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

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

| | | | 3.2 | | | | | | [Restated By-Laws of Fastenal Company dated as of February 2, 2024 (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast1231202310-kexhibit3_2.htm) | | | | | |

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

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

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

| | | | 97 | | | | | | [Compensation Forfeiture, Recovery, and True-up Policy of Fastenal Company dated as of October 11, 2023 (filed herewith)](https://www.sec.gov/Archives/edgar/data/815556/000081555624000009/fast1231202310-kexhibit97.htm) | | | | | |

| Allowance for credit losses | | | $ | 8.3 | | | | | 2.2 | | | | | | — | | | | | | 4.1 | | | | | | 6.4 | | |

| Insurance reserves | | | $ | 40.4 | | | | | 86.2 | | | (1) | | | — | | | | | | 86.5 | | | (2) | | | 40.1 | | |

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

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

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

| | | | 4.7 | | | | | | [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) | | |

| Allowance for credit losses | | | $ | 10.9 | | | | | 7.5 | | | | | | — | | | | | | 6.1 | | | | | | 12.3 | | |

| Insurance reserves | | | $ | 41.1 | | | | | 72.1 | | | (1) | | | — | | | | | | 72.2 | | | (2) | | | 41.0 | | |

| Date: | | | | | | February [removed: 7, 2023] [added: 6, 2024] | | |

| Rita J. Heise, Director | | | | | | | | | [removed: Reyne K. Wisecup,] [added: Irene A. Quarshie,] Director | | |

| /s/ Hsenghung Sam Hsu | | | | | | | | | [added: /s/ Reyne K. Wisecup] | | |

| Hsenghung Sam Hsu, Director | | | | | | | | | [added: Reyne K. Wisecup, Director] | | |