Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Fastenal Company

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Fastenal Company and its subsidiaries (the "Company") as of December 31, 2025, and the related consolidated statements of income, of comprehensive income, of stockholders' equity and of cash flows for the year then ended, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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, 2025, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition

As described in Note 1 to the consolidated financial statements, net sales include products and shipping and handling charges, net of estimates for product returns and any related sales incentives. The Company recognizes revenue when or as the Company satisfies its performance obligations by transferring control of the promised products to the customer, which primarily occurs when products are delivered or picked up by the customer. For the year ended December 31, 2025, the Company's net sales were $8,200.5 million.

The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company's revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process. These procedures also included, among others, evaluating certain revenue transactions by either (i) testing the issuance and settlement of invoices; tracing transactions not settled to a detailed listing of accounts receivable; testing the completeness and accuracy of data provided by management; and confirming a sample of outstanding customer invoice balances as of December 31, 2025 and, for confirmations not returned, obtaining and inspecting source documents, such as evidence of customer arrangement, invoices, delivery documents, and subsequent cash receipts; or (ii) testing, on a sample basis, the revenue recognized by obtaining and inspecting source documents, such as evidence of customer arrangement, invoices, delivery documents, and subsequent cash receipts.

/s/ PricewaterhouseCoopers LLP

Minneapolis, Minnesota

February 5, 2026

We have served as the Company's auditor since 2024.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Fastenal Company:

Opinions on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Fastenal Company and subsidiaries (the Company) as of December 31, 2024, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cashflows for each of the years in the two-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.

Basis for Opinions

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company's auditor from 1987 to 2025.

Minneapolis, Minnesota

February 6, 2025, except for the effects of the stock split and retrospective adoption of Accounting Standards Update (ASU) 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures described in Note 1, as to which the date is February 5, 2026.

FASTENAL COMPANY

Consolidated Balance Sheets

(Amounts in millions except share and per share information)

			December 31
			2025						2024
Assets
Current assets:
Cash and cash equivalents			$	276.8					255.8
Trade accounts receivable, net of allowance for credit losses of $5.3 and $5.2, respectively			1,245.3						1,108.6
Inventories			1,748.0						1,645.0
Prepaid income taxes			20.1						18.8
Other current assets			181.9						183.7
Total current assets			3,472.1						3,211.9
Property and equipment, net			1,131.6						1,056.6
Operating lease right-of-use assets			309.0						279.2
Other assets			140.2						150.3
Total assets			$	5,052.9					4,698.0
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of debt			$	25.0					75.0
Accounts payable			316.8						287.7
Accrued expenses			264.7						225.6
Current portion of operating lease liabilities			106.1						98.8
Income taxes payable			3.0						—
Total current liabilities			715.6						687.1
Long-term debt			100.0						125.0
Operating lease liabilities			210.8						186.6
Deferred income taxes			67.4						68.9
Other long-term liabilities			15.5						14.1
Commitments and contingencies (Notes 5, 8, 9, and 11)
Stockholders' equity:
Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding			—						—
Common stock: $0.01 par value, 1,600,000,000 shares authorized, 1,148,057,473 and 1,146,640,904 shares issued and outstanding, respectively			11.5						11.5
Additional paid-in capital			115.5						82.8
Retained earnings			3,867.7						3,613.5
Accumulated other comprehensive loss			(51.1)						(91.5)
Total stockholders' equity			3,943.6						3,616.3
Total liabilities and stockholders' equity			$	5,052.9					4,698.0

See accompanying Notes to Consolidated Financial Statements.

FASTENAL COMPANY

Consolidated Statements of Income

(Amounts in millions except income per share)

For the year ended December 31

			2025						2024						2023
Net sales			$	8,200.5					7,546.0						7,346.7
Cost of sales			4,509.3						4,144.1						3,992.2
Gross profit			3,691.2						3,401.9						3,354.5
Selling, general, and administrative expenses			2,035.5						1,891.9						1,825.8
Operating income			1,655.7						1,510.0						1,528.7
Interest income			5.5						5.4						4.1
Interest expense			(6.2)						(7.3)						(10.8)
Income before income taxes			1,655.0						1,508.1						1,522.0
Income tax expense			396.6						357.5						367.0
Net income			$	1,258.4					1,150.6						1,155.0
Basic net income per share			$	1.10					1.00						1.01
Diluted net income per share			$	1.09					1.00						1.01
Basic weighted average shares outstanding			1,147.6						1,145.4						1,142.5
Diluted weighted average shares outstanding			1,150.3						1,148.6						1,146.0

See accompanying Notes to Consolidated Financial Statements.

FASTENAL COMPANY

Consolidated Statements of Comprehensive Income

(Amounts in millions)

For the year ended December 31

			2025						2024						2023
Net income			$	1,258.4					1,150.6						1,155.0
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			40.4						(36.7)						10.0
Comprehensive income			$	1,298.8					1,113.9						1,165.0

See accompanying Notes to Consolidated Financial Statements.

FASTENAL COMPANY

Consolidated Statements of Stockholders' Equity

(Amounts in millions except per share information)

			2025						2024						2023
Common stock
Balance at beginning of year			$	11.5					11.5						11.5
Stock options exercised			0.0						0.0						0.0
Balance at end of year			11.5						11.5						11.5
Additional paid-in capital
Balance at beginning of year			82.8						35.2						(2.2)
Stock options exercised			24.3						39.6						30.1
Stock-based compensation			8.4						8.0						7.3
Balance at end of year			115.5						82.8						35.2
Retained earnings
Balance at beginning of year			3,613.5						3,356.9						3,218.7
Net income			1,258.4						1,150.6						1,155.0
Cash dividends paid			(1,004.2)						(893.3)						(1,016.8)
Translation adjustment upon closure of foreign subsidiary			—						(0.7)						—
Balance at end of year			3,867.7						3,613.5						3,356.9
Accumulated other comprehensive loss
Balance at beginning of year			(91.5)						(54.8)						(64.8)
Other comprehensive income (loss)			40.4						(36.7)						10.0
Balance at end of year			(51.1)						(91.5)						(54.8)
Total stockholders' equity			$	3,943.6					3,616.3						3,348.8
Cash dividends paid per share of common stock			$	0.875					0.780						0.890

See accompanying Notes to Consolidated Financial Statements.

FASTENAL COMPANY

Consolidated Statements of Cash Flows

(Amounts in millions)

For the year ended December 31

			2025						2024						2023
Cash flows from operating activities:
Net income			$	1,258.4					1,150.6						1,155.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment			168.5						164.7						166.6
Gain on sale of property and equipment			(3.1)						(3.8)						(4.3)
Bad debt expense			4.6						1.3						2.2
Deferred income taxes			(1.6)						(4.1)						(10.7)
Stock-based compensation			8.4						8.0						7.3
Amortization of intangible assets			10.7						10.7						10.7
Changes in operating assets and liabilities:
Trade accounts receivable, net			(130.1)						(31.9)						(72.3)
Inventories			(89.2)						(133.9)						189.1
Other current assets			2.6						(11.9)						(6.4)
Accounts payable			26.0						27.5						8.4
Accrued expenses			33.3						(16.5)						(0.6)
Income taxes			2.1						(1.3)						(9.4)
Other			5.3						13.9						(2.9)
Net cash provided by operating activities			1,295.9						1,173.3						1,432.7
Cash flows from investing activities:
Purchases of property and equipment			(245.3)						(226.5)						(172.8)
Proceeds from sale of property and equipment			14.8						12.4						12.2
Other			(0.5)						(0.4)						(0.6)
Net cash used in investing activities			(231.0)						(214.5)						(161.2)
Cash flows from financing activities:
Proceeds from debt obligations			1,105.0						775.0						880.0
Payments against debt obligations			(1,180.0)						(835.0)						(1,175.0)
Proceeds from exercise of stock options			24.3						39.6						30.1
Cash dividends paid			(1,004.2)						(893.3)						(1,016.8)
Net cash used in financing activities			(1,054.9)						(913.7)						(1,281.7)
Effect of exchange rate changes on cash and cash equivalents			11.0						(10.6)						1.4
Net increase (decrease) in cash and cash equivalents			21.0						34.5						(8.8)
Cash and cash equivalents at beginning of year			255.8						221.3						230.1
Cash and cash equivalents at end of year			$	276.8					255.8						221.3
Supplemental information:
Cash paid for interest			$	6.6					7.8						12.2
Net cash paid for income taxes			$	398.8					356.5						383.0

See accompanying Notes to Consolidated Financial Statements.

Fastenal Company

Notes to Consolidated Financial Statements

Note 1. Business Overview and Summary of Significant Accounting Policies

Business Overview

Fastenal is a leader in the wholesale distribution of industrial and construction supplies. We distribute these supplies through a network of selling locations located primarily in North America.

Principles of Consolidation

The consolidated financial statements include the accounts of Fastenal Company and its subsidiaries (the 'Company,' 'Fastenal,' 'we,' 'our,' or 'us'). All material intercompany balances and transactions have been eliminated in consolidation.

Stock Split

On April 23, 2025, we announced a two-for-one stock split of our outstanding common stock. Holders of the Company's common stock, par value $0.01 per share, at the close of business on May 5, 2025, received one additional share of common stock for every share of common stock they owned. The stock split took effect at the close of business on May 21, 2025. All historical common stock share, per share information, stock option awards, and stockholders' equity balances for all periods presented have been retroactively adjusted to reflect the two-for-one stock split.

Revenue Recognition

Net sales include products and shipping and handling charges, net of estimates for product returns and any related sales incentives. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when or as we satisfy our performance obligations under the contract. We recognize revenue by transferring control of the promised products to the customer, which primarily occurs when products are delivered or picked up by the customer. We recognize revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer. We estimate product returns based on historical return rates and lag. Using probability assessments, which are based on known inputs at year-end, we estimate sales incentives expected to be paid over the term of the contract. The majority of our contracts have a single performance obligation and are short-term in nature. Sales taxes and value-added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales.

Accounts Receivable

Credit is extended based upon an evaluation of the customer's financial condition. Accounts receivable are stated at their estimated net realizable value. The allowance for credit losses is based on a historical loss experience approach which adjusts the ending balance sheet to take into consideration expected losses over the contractual lives of the receivables, considering factors such as historical data as a basis for future expected losses.

Foreign Currency Translation and Transactions

The functional currency of our foreign operations is typically the applicable local currency. The functional currency is translated into U.S. dollars for balance sheet accounts, except retained earnings, using current exchange rates as of the balance sheet date, for retained earnings at historical exchange rates, and for sales and expense accounts using a weighted average exchange rate during the applicable period. The translation adjustments are deferred as a separate component of stockholders' equity captioned accumulated other comprehensive loss. Gains or losses resulting from transactions denominated in foreign currencies are included in cost of sales or SG&A expenses.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Inventories

Inventories, which consist of finished goods merchandise that is held for resale, are stated at the lower of cost (first in, first out method) or net realizable value. We record valuation adjustments for excess, slow-moving, and obsolete inventory that are equal to the difference between the cost and estimated net realizable value for that inventory. These estimates are based on a review and comparison of the current inventory levels to projected and historical sales of inventory.

Property and Equipment

Property and equipment are stated at cost. Depreciation on property and equipment is provided for using the straight-line method over the anticipated economic useful lives of the related property.

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Leases

We determine if an arrangement contains a lease at inception. Operating leases are included in our operating lease right-of-use (ROU) assets, the current portion of operating lease liabilities, and the operating lease liabilities in our Consolidated Balance Sheets.

The ROU assets represent our right to control the use of an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The operating lease ROU assets also include any prepaid lease payments made and exclude lease incentives. Lease expense is recognized on a straight-line basis over the lease term.

Many of our leases include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. Our pick-up truck leases typically have a non-cancelable lease term of less than one year and therefore, we have elected the practical expedient to exclude these short-term leases from our ROU assets and lease liabilities.

Most leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion; therefore, the majority of renewals to extend the lease terms are not included in our ROU assets and lease liabilities as they are not reasonably certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in our lease term.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. We have a centrally managed treasury function; therefore, based on the applicable lease terms and the current economic environment, we apply a portfolio approach for determining the incremental borrowing rate.

Long-Lived Assets

Long-lived assets consist of net property and equipment, operating lease ROU assets, prepaid deposits, goodwill, and definite-lived intangible assets. Other than goodwill, these are reviewed for impairment whenever an event or change in circumstance indicates that the carrying amount of the asset group may not be recoverable. If circumstances require an asset group to be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as necessary. There were no impairments recorded during any of the three years reported in these consolidated financial statements.

Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is reviewed for impairment annually or more frequently if triggering events occur. The identifiable intangible assets are amortized on a straight-line basis over their estimated lives.

Accounting Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, sales and expenses, and the disclosure of contingent liabilities. Actual results could differ from those estimates.

Insurance Reserves

We are self-insured for certain losses relating to workers' compensation, automobile, health, and general liability costs. Specific stop-loss coverage is provided for catastrophic claims in order to limit exposure to significant claims. Self-insurance liabilities are based on our estimate of reported claims and claims incurred but not yet reported. We analyze historical trends, claims experience, and loss development patterns to ensure the appropriate loss development factors are applied to the incurred costs associated with the claims made.

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Product Warranties

We offer a basic limited warranty for certain of our products. The specific terms and conditions of those warranties vary depending upon the product sold. We typically recoup these costs through product warranties we hold with the original equipment manufacturers. Our warranty expense has historically been immaterial.

Stock-Based Compensation

We estimate the fair value of stock options as of the grant date using a Black-Scholes valuation model. Stock-based compensation expense equal to the grant date fair value is recognized on a straight-line basis over the vesting period. Our stock-based compensation expense is recorded in SG&A expenses.

Income Taxes

We account for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We recognize the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense.

Net Income Per Share

Basic net income per share is calculated using net income available to common stockholders divided by the weighted average number of shares of common stock outstanding during the year. Diluted net income per share is similar to basic net income per share except that the weighted average number of shares of common stock outstanding includes the incremental shares assumed to be issued upon the exercise of stock options considered to be 'in-the-money' (i.e., when the market price of our stock is greater than the exercise price of our outstanding stock options).

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ('FASB') issued Accounting Standards Update ('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 income tax rate reconciliation, as well as further disaggregation of income taxes paid. We adopted ASU 2023-09 for the year ended December 31, 2025 and have applied the guidance retrospectively for all periods presented within the notes to the consolidated financial statements. The adoption of ASU 2023-09 did not have a material impact on our consolidated financial statements for the year ended December 31, 2025, but did require additional disclosures. Refer to Note 7 for additional information.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), which specifies additional disclosure requirements, including the composition of certain income statement expense line items (such as purchases of inventory, employee compensation, and 'other expenses') and a separate disclosure for selling expenses. This change is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, however, early adoption is permitted. We are currently evaluating the impact that the adoption of ASU 2024-03 will have on our consolidated financial statements and disclosures and anticipate adoption in 2027.

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Note 2. Revenue

Disaggregation of Revenue

Revenues are attributed to countries based on the selling location from which the sale occurred. During 2025, 2024, and 2023, no single customer represented 5% or more of our consolidated net sales.

Our revenues related to the following geographic areas were as follows for the periods ended December 31:

			Twelve-month Period
			2025						2024						2023
United States			$	6,818.9					6,273.1						6,139.8
% of revenues			83.2		%				83.1		%				83.6		%
Canada and Mexico			1,110.2						1,035.6						981.9
% of revenues			13.5		%				13.7		%				13.4		%
All other foreign countries			271.4						237.3						225.0
% of revenues			3.3		%				3.2		%				3.0		%
Total revenues			$	8,200.5					7,546.0						7,346.7

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

			Twelve-month Period
			2025						2024						2023
Manufacturing			75.9		%				75.0		%				74.3		%
Non-residential construction			8.1		%				8.5		%				9.1		%
Other			16.0		%				16.5		%				16.6		%
			100.0		%				100.0		%				100.0		%

The percentages of our sales by product line were as follows for the periods ended December 31:

									Twelve-month Period
Type			Introduced						2025						2024						2023
Fasteners (1)			1967						30.5		%				30.7		%				32.4		%
Tools			1993						8.3		%				8.4		%				8.5		%
Cutting tools			1996						5.2		%				5.3		%				5.3		%
Hydraulics & pneumatics			1996						6.9		%				6.7		%				6.7		%
Material handling			1996						5.7		%				5.6		%				5.6		%
Janitorial supplies			1996						9.0		%				8.8		%				8.4		%
Electrical supplies			1997						4.7		%				4.7		%				4.6		%
Welding supplies			1997						4.3		%				4.2		%				4.1		%
Safety supplies			1999						22.2		%				22.2		%				21.2		%
Other									3.2		%				3.4		%				3.2		%
									100.0		%				100.0		%				100.0		%

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

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Note 3. Long-Lived Assets

Long-lived assets consist of net property and equipment, operating lease ROU assets, prepaid deposits, goodwill, and definite-lived intangible assets.

Property and equipment at year end consisted of the following:

			Depreciable Life in Years						2025						2024
Land			—						$	71.2					72.6
Buildings and improvements			15 to 40						622.7						563.6
Automated distribution and warehouse equipment			5 to 30						310.3						293.5
Shelving, industrial vending, and equipment			3 to 10						1,524.6						1,436.3
Transportation equipment			3 to 5						107.8						103.3
Construction in progress			—						135.5						117.2
									2,772.1						2,586.5
Less accumulated depreciation									(1,640.5)						(1,529.9)
Property and equipment, net									$	1,131.6					1,056.6

Our long-lived assets related to the following geographic areas at year end:

			2025						2024
United States			$	1,421.6					1,343.2
Canada and Mexico			112.9						101.3
All other foreign countries			46.3						41.6
Total long-lived assets			$	1,580.8					1,486.1

Note 4. Accrued Expenses

Accrued expenses at year end consisted of the following:

			2025						2024
Employee payroll and related taxes			$	18.0					17.9
Employee bonuses and commissions			39.8						25.5
Profit sharing contribution			23.5						20.8
Insurance reserves			25.0						26.2
Indirect taxes			53.1						32.7
Customer promotions and marketing			66.5						64.2
Occupancy			4.6						8.5
Transportation			6.4						5.7
Other			27.8						24.1
Accrued expenses			$	264.7					225.6

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Note 5. Stockholders' Equity

Dividends

On January 16, 2026, our board of directors declared a quarterly dividend of $0.24 per share of common stock to be paid in cash on February 26, 2026 to shareholders of record at the close of business on January 29, 2026. In 2025, we paid aggregate annual cash dividends per share of $0.875. We paid aggregate annual cash dividends per share of $0.78 and $0.89 in 2024 and 2023, respectively. In 2023, this included a special dividend of $0.19 per share paid in the fourth quarter.

Stock Options

Effective January 2, 2026, the compensation committee of our board of directors granted to our employees options to purchase a total of 1,339,070 shares of our common stock at an exercise price of $41.00 per share. On the same date, certain of our non-employee directors received options to acquire a total of 169,011 shares of our common stock at an exercise price of $41.00 per share. The closing stock price on the effective date of the grants was $40.44 per share.

The following tables summarize the details of options granted under our stock option plans that were still outstanding as of December 31, 2025, and the assumptions used to value those grants. All such grants were effective at the close of business on the grant date.

			Options Granted						Option Exercise Price						Closing Stock Price on Grant Date						December 31, 2025
Grant Date			Options Outstanding						Options Exercisable
January 2, 2025			1,366,636						$	36.00					$	35.555					1,279,650						88,028
January 2, 2024			1,629,824						$	32.00					$	31.775					1,390,156						300,168
January 3, 2023			2,143,886						$	24.00					$	23.700					1,547,829						535,357
January 3, 2022			1,426,876						$	31.00					$	30.990					939,370						493,898
January 4, 2021			1,483,020						$	24.00					$	23.825					824,504						535,044
January 2, 2020			1,804,526						$	19.00					$	18.615					803,266						643,754
January 2, 2019			2,633,848						$	13.00					$	12.853					709,150						562,590
January 2, 2018			2,175,872						$	13.75					$	13.635					342,584						277,404
January 3, 2017			3,059,156						$	11.75					$	11.738					155,970						155,970
Total			17,723,644																		7,992,479						3,592,213

Grant Date			Risk-free Interest Rate						Expected Life of Option in Years						Expected Dividend Yield						Expected Stock Volatility						Estimated Fair Value of Stock Option
January 2, 2025			4.3%						5.00						2.2%						27.36		%				$	8.86
January 2, 2024			3.8%						5.00						2.2%						28.44		%				$	7.94
January 3, 2023			4.0%						5.00						2.6%						29.58		%				$	5.81
January 3, 2022			1.3%						5.00						1.7%						28.52		%				$	6.84
January 4, 2021			0.4%						5.00						2.0%						29.17		%				$	4.79
January 2, 2020			1.7%						5.00						2.4%						25.70		%				$	3.41
January 2, 2019			2.5%						5.00						2.9%						23.96		%				$	2.20
January 2, 2018			2.2%						5.00						2.3%						23.45		%				$	2.51
January 3, 2017			1.9%						5.00						2.6%						24.49		%				$	2.10

All of the options in the tables above vest and become exercisable over a period of up to eight years. Each option will terminate approximately 10 years after the grant date.

The fair value of each share-based option is estimated on the grant date using a Black-Scholes valuation method that uses the assumptions listed above. The risk-free interest rate is based on the U.S. Treasury rate over the expected life of the option at the time of grant. The expected life is the average length of time over which we expect the employee groups will exercise their options, net of cancellations, which is based on historical experience with similar grants. The dividend yield is estimated over the expected life of the option based on our current dividend payout, historical dividends paid, and expected future cash dividends. Expected stock volatility is based on the movement of our stock price over the most recent historical period equivalent to the expected life of the option.

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

A summary of activities under our stock option plans consisted of the following:

			Options Outstanding						Exercise Price (1)						Remaining Life (2)
Outstanding as of January 1, 2025			8,455,854						$	22.96					6.28
Granted			1,366,636						$	36.00					9.00
Exercised			(1,416,569)						$	17.07
Cancelled/forfeited			(413,442)						$	27.97
Outstanding as of December 31, 2025			7,992,479						$	25.98					6.19
Exercisable as of December 31, 2025			3,592,213						$	21.98					4.89

			Options Outstanding						Exercise Price (1)						Remaining Life (2)
Outstanding as of January 1, 2024			9,948,156						$	19.35					5.99
Granted			1,629,824						$	32.00					9.00
Exercised			(2,676,170)						$	14.86
Cancelled/forfeited			(445,956)						$	24.06
Outstanding as of December 31, 2024			8,455,854						$	22.96					6.28
Exercisable as of December 31, 2024			3,560,662						$	19.04					4.94

(1) Weighted average exercise price.

(2) Weighted average remaining contractual life in years.

The total intrinsic value of stock options exercised during the years ended December 31, 2025, 2024, and 2023 was $34.6, $57.6, and $38.1, respectively. The intrinsic value represents the difference between the exercise price and fair value of the underlying shares at the date of exercise.

At December 31, 2025, there was $20.0 of total unrecognized stock-based compensation expense related to outstanding unvested stock options granted under the employee stock option plan. This expense is expected to be recognized over a weighted average period of 3.95 years. Any future change in estimated forfeitures will impact this amount. The total grant date fair value of stock options vested under our employee stock option plan during 2025, 2024, and 2023 was $7.1, $7.6, and $5.3, respectively.

Total stock-based compensation expense related to our employee stock option plan was $8.4, $8.0, and $7.3 for 2025, 2024, and 2023, respectively. There is no incremental stock-based compensation expense as a result of the stock split described in Note 1.

Shares Outstanding

Shares of common stock outstanding were as follows:

			2025						2024						2023
Balance at beginning of year			1,146,640,904						1,143,964,734						1,141,623,348
Stock options exercised			1,416,569						2,676,170						2,341,386
Balance at end of year			1,148,057,473						1,146,640,904						1,143,964,734

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Net Income Per Share

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

Reconciliation			2025						2024						2023
Basic weighted average shares outstanding			1,147,590,819						1,145,416,130						1,142,543,692
Weighted shares assumed upon exercise of stock options			2,743,385						3,148,292						3,473,524
Diluted weighted average shares outstanding			1,150,334,204						1,148,564,422						1,146,017,216

Summary of Anti-dilutive Options Excluded			2025						2024						2023
Options to purchase shares of common stock			1,188,357						1,826,592						3,136,920
Weighted average exercise prices of options			$	36.00					31.79						26.90

Any dilutive impact summarized above related to periods when the average market price of our stock exceeded the exercise price of the potentially dilutive stock options then outstanding.

Note 6. Retirement Savings Plan

The Fastenal Company and Subsidiaries 401(k) and Employee Stock Ownership Plan covers all of our employees in the U.S. Our employees in Canada may participate in a Registered Retirement Savings Plan. The general purpose of both of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular savings contributions. In addition to the participation of our employees, we make annual profit sharing contributions based on an established formula. The expense recorded under this profit sharing formula was approximately $23.5, $20.8, and $23.1 for 2025, 2024, and 2023, respectively.

Note 7. Income Taxes

Income before income taxes were derived from the following sources:

			2025						2024						2023
Domestic			$	1,515.2					1,390.6						1,392.7
Foreign			139.8						117.5						129.3
Income before income taxes			$	1,655.0					1,508.1						1,522.0

Components of income tax expense (benefit) were as follows:

			2025																		2024																		2023
			Current						Deferred						Total						Current						Deferred						Total						Current						Deferred						Total
Federal			$	276.6					6.8						283.4						265.6						(3.0)						262.6						273.3						(9.2)						264.1
State			63.5						0.7						64.2						56.1						(0.1)						56.0						59.6						(1.3)						58.3
Foreign			50.3						(1.3)						49.0						39.6						(0.7)						38.9						44.9						(0.3)						44.6
Income tax expense			$	390.4					6.2						396.6						361.3						(3.8)						357.5						377.8						(10.8)						367.0

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Income taxes paid were as follows:

			2025						2024						2023
Federal			$	276.4					269.6						276.8
State			60.5						54.6						60.9
Foreign			61.9						36.3						51.5
Total income taxes paid			$	398.8					360.5						389.2

Income taxes paid (net of refunds) exceeded five percent of total income taxes paid (net of refunds) in the following jurisdictions:

			2025						2024						2023
Mexico			36.5						*						20.1

** Jurisdiction below the threshold for the period presented.*

Income tax expense in the accompanying consolidated financial statements differed from the expected expense as follows:

			2025 (1)												2024 (2)												2023 (3)
			Amount						Percent						Amount						Percent						Amount						Percent
U.S. federal income tax expense at statutory rate			$	347.5					21.0		%				316.7						21.0		%				319.6						21.0		%
Increase (decrease) attributed to
State and local income taxes			50.7						3.1		%				43.4						2.9		%				45.1						3.0		%
Foreign tax effects			18.9						1.1		%				14.2						0.9		%				17.4						1.1		%
Effect of cross-border tax laws			(6.4)						-0.4		%				(5.7)						-0.4		%				(5.6)						-0.4		%
Tax credits			(5.8)						-0.4		%				(5.2)						-0.3		%				(5.4)						-0.4		%
Changes in valuation allowances			0.2						0.0		%				(0.2)						0.0		%				0.4						0.0		%
Nontaxable or nondeductible items			(2.4)						-0.1		%				(10.4)						-0.7		%				(6.4)						-0.4		%
Changes in unrecognized tax benefits			(7.4)						-0.4		%				0.7						0.0		%				1.4						0.1		%
Other, net			1.3						0.1		%				4.0						0.3		%				0.5						0.0		%
Total income tax expense, Effective income tax rate			$	396.6					24.0		%				357.5						23.7		%				367.0						24.1		%

(1)			In 2025, state taxes in Minnesota, Wisconsin, California, Illinois, New York, and Indiana made up the majority (greater than 50%) of the tax effect in this category.
(2)			In 2024, state taxes in Wisconsin, Minnesota, California, Illinois, New York, and Kansas made up the majority (greater than 50%) of the tax effect in this category.
(3)			In 2023, state taxes in Wisconsin, California, Minnesota, Illinois, New York, and Kansas made up the majority (greater than 50%) of the tax effect in this category.

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

The tax effects of temporary differences that give rise to deferred income tax assets and liabilities at year end consisted of the following:

			2025						2024
Deferred income tax assets
Inventory costing and valuation methods			$	6.8					5.9
Insurance reserves			8.0						5.5
Foreign net operating loss and credit carryforwards			2.6						2.4
Stock-based compensation			4.4						3.7
Operating lease liabilities			80.1						72.2
Section 174 capitalization			7.3						11.1
Other, deferred tax assets			11.0						8.3
Total deferred income tax assets			120.2						109.1
Less: Valuation allowances			(2.0)						(1.8)
Total net deferred income tax assets			118.2						107.3
Deferred income tax liabilities
Property and equipment			(101.3)						(90.9)
Operating lease ROU assets			(78.1)						(70.6)
Prepaid expenses			(3.7)						(4.6)
Other, deferred tax liabilities			(0.3)						(0.2)
Total deferred income tax liabilities			(183.4)						(166.3)
Net deferred income tax liabilities			$	(65.2)					(59.0)

A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits is as follows:

			2025						2024
Balance at beginning of year			$	9.9					10.2
Increase related to prior year tax positions			0.7						1.1
Increase related to current year tax positions			0.4						0.4
Decrease related to statute of limitation lapses			(2.5)						(1.8)
Decrease related to prior year tax positions			(6.3)						—
Balance at end of year			$	2.2					9.9

Included in the liability for gross unrecognized tax benefits is $0.2 as of December 31, 2025 and $4.2 as of December 31, 2024 for interest and penalties, both of which we classify as a component of income tax expense. The amount of unrecognized tax benefits that would favorably impact the effective tax rate, if recognized, is $1.7 as of December 31, 2025 and $9.1 as of December 31, 2024. The 2025 and 2024 liability is included in deferred income taxes in the Consolidated Balance Sheets.

We file income tax returns in the U.S. federal jurisdiction, all states, and various local and foreign jurisdictions. We are no longer subject to income tax examinations by taxing authorities for taxable years before 2022 in the case of U.S. federal examinations, and with limited exception, before 2020 in the case of foreign, state, and local examinations.

In general, it is our practice and intention to permanently reinvest the income of our foreign subsidiaries and repatriate income only when the tax impact is zero or very minimal. Accordingly, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our approximately $625.3 of undistributed income from foreign subsidiaries to the U.S. as that income continues to be permanently reinvested. It is not practicable to estimate the amount of unrecognized deferred tax liability on these undistributed earnings because of complexities of tax laws, the hypothetical calculation and the significant assumptions required regarding future repatriation strategies.

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Note 8. Operating Leases

We lease space under non-cancelable operating leases for several distribution centers, several manufacturing locations, and certain branch locations. These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the leases do not contain contingent rent provisions. We also lease certain semi-tractors, pick-up trucks, and computer equipment under operating leases.

Certain operating leases for pick-up trucks contain residual value guarantee provisions which would generally become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value. The aggregate residual value guarantee related to these leases was approximately $124.2. We believe the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is remote.

The cost components of our operating leases were as follows for the periods ended December 31:

			2025												2024												2023
			Leased Facilities and Equipment			Leased Vehicles			Total						Leased Facilities and Equipment						Leased Vehicles						Total						Leased Facilities and Equipment			Leased Vehicles			Total
Operating lease cost			$	103.5		24.6			128.1						101.1						22.0						123.1						99.4			18.2			117.6
Variable lease cost			16.4			1.6			18.0						14.0						1.4						15.4						10.5			1.6			12.1
Short-term lease cost			—			39.3			39.3						—						32.6						32.6						—			23.7			23.7
Total			$	119.9		65.5			185.4						115.1						56.0						171.1						109.9			43.5			153.4

Variable lease costs are excluded from ROU assets and lease liabilities and consist primarily of taxes, insurance, and common area or other maintenance costs for our leased facilities and equipment which are paid based on actual costs incurred by the lessor as well as variable mileage costs related to our leased vehicles.

Maturities of our lease liabilities for all operating leases were as follows as of December 31, 2025:

			Leased Facilities and Equipment						Leased Vehicles						Total
2026			$	92.6					19.7						112.3
2027			71.9						15.7						87.6
2028			50.9						13.0						63.9
2029			32.7						7.3						40.0
2030			18.2						3.2						21.4
2031 and thereafter			19.7						0.7						20.4
Total lease payments			$	286.0					59.6						345.6
Less: Imputed interest			(24.2)						(4.5)						(28.7)
Present value of lease liabilities			$	261.8					55.1						316.9

The weighted average remaining lease terms and discount rates for all of our operating leases were as follows for the periods ended December 31:

Remaining lease term and discount rate:			2025						2024
Weighted average remaining lease term (years)
Leased facilities and equipment			3.98						3.98
Leased vehicles			3.58						3.62
Weighted average discount rate
Lease facilities and equipment			4.36%						3.92%
Leased vehicles			4.50%						4.46%

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Supplemental cash flow information related to our operating leases was as follows for the periods ended December 31:

			2025						2024						2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases			$	125.3					119.0						115.7
Leased assets obtained in exchange for new operating lease liabilities			131.4						95.0						116.2

Note 9. Debt Commitments

Credit Facility, Notes Payable, and Commitments

Debt obligations and letters of credit outstanding at year end consisted of the following:

			Average Interest Rate at December 31, 2025												Debt Outstanding
						Maturity Date						2025						2024
Unsecured revolving credit facility			4.73		%				September 28, 2027						$	—					—
Senior unsecured promissory notes payable, Series D			2.66		%				May 15, 2025						—						75.0
Senior unsecured promissory notes payable, Series E			2.72		%				May 15, 2027						50.0						50.0
Senior unsecured promissory notes payable, Series G			2.13		%				June 24, 2026						25.0						25.0
Senior unsecured promissory notes payable, Series H			2.50		%				June 24, 2030						50.0						50.0
Total															125.0						200.0
Less: Current portion of debt															(25.0)						(75.0)
Long-term debt															$	100.0					125.0
Outstanding letters of credit under unsecured revolving credit facility - contingent obligation															$	29.7					31.2

Unsecured Revolving Credit Facility

We have an $835.0 committed unsecured revolving Credit Facility with an uncommitted accordion option to increase the aggregate revolving commitment by an additional $365.0 for a total of $1,200.0. The Credit Facility includes a committed letter of credit subfacility of $55.0. Any borrowings outstanding under the Credit Facility for which we have the ability and intent to pay using cash within the next 12 months will be classified as a current liability. The Credit Facility contains certain financial and other covenants, and our right to borrow under the Credit Facility is conditioned upon, among other things, our compliance with these covenants. We are currently in compliance with these covenants.

Borrowings under the Credit Facility generally bear interest at a rate per annum equal to Daily Simple SOFR plus a 0.10% spread adjustment plus 0.95%. We pay a commitment fee for the unused portion of the Credit Facility. This fee is either 0.10% or 0.125% per annum based on our use of the Credit Facility.

Senior Unsecured Promissory Notes Payable

We have issued senior unsecured promissory notes under our master note agreement (the Master Note Agreement) in the aggregate principal amount of $125.0 as of December 31, 2025. Our aggregate borrowing capacity under the Master Note Agreement is $900.0; however, none of the institutional investors party to that agreement are committed to purchase notes thereunder. There is no amortization of these notes prior to their maturity date and interest is payable quarterly. The notes currently issued under our Master Note Agreement, including the maturity date and fixed interest rate per annum of each series of note, are contained in the table above. The Master Note Agreement contains certain financial and other covenants and we are currently in compliance with these covenants.

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

Principal payments required on our outstanding indebtedness, based on the maturity dates defined within our long-term debt arrangements, for the succeeding five years, are displayed in the table below, as of December 31, 2025:

			Principal Payments
2026			$	25.0
2027			50.0
2028			—
2029			—
2030			50.0
2031 and thereafter			—
Total			$	125.0

Note 10. Segment Reporting

Each of our geographic regions (U.S., Canada, Mexico, Central & South America, Europe, Asia, and SE Asia) are engaged in business activities for which they may earn sales and incur expenses. Discrete financial information is available at the geographic region level through our internal Return on Asset (ROA) reporting. The ROA reporting is ultimately a selling location income statement with an ROA calculation and the results are compiled by geographic region. ROA pre-tax profit measures financial performance and drives compensation programs.

Our Chief Operating Decision Maker (CODM) is a group consisting of our Chief Executive Officer and President/Chief Sales Officer. We consider each geographic region to be an operating segment. The CODM regularly reviews ROA pre-tax profit to make decisions about the allocation of resources at the geographic region level. Operating segment significant expense categories and amounts are not regularly reviewed by or provided to our CODM. Segment expenses represent the difference between net sales and ROA pre-tax profit and consist of cost of sales and SG&A expenses. However, our CODM reviews consolidated expense information to manage the operations of the business.

Considering our operating segments outside of the U.S. individually represent less than 10% of our total operating segment net sales, ROA pre-tax profit, and ROA assets, we do not consider them reportable segments. Therefore, we report the results of our one reportable segment (U.S.) below. Further details on our significant accounting policies can be found in Note 1, which are applied company wide.

Our segment measure of profit or loss is ROA pre-tax profit and our measure of assets is ROA assets. ROA pre-tax profit is not a financial measure calculated in accordance with GAAP and excludes inter-company transactions.

The following table presents a reconciliation of reportable segment net sales from external customers to consolidated net sales for the periods ended December 31:

			2025			2024			2023
U.S. net sales from external customers			$	6,818.9		6,273.1			6,139.8
Other operating segment net sales (1)			1,381.6			1,272.9			1,206.9
Net sales			$	8,200.5		7,546.0			7,346.7

(1) Other operating segment net sales includes all other operating segments that are below the reportable segment quantitative threshold.

The following table presents a reconciliation of reportable segment ROA pre-tax profit to consolidated income before income taxes for the periods ended December 31:

			2025			2024			2023
U.S. ROA pre-tax profit			$	1,432.5		1,303.2			1,318.2
Other operating segment pre-tax profit (1)			222.5			204.9			203.8
Income before income taxes			$	1,655.0		1,508.1			1,522.0

(1) Other operating segment pre-tax profit includes ROA pre-tax profit for all other operating segments that are below the reportable segment quantitative threshold and immaterial allocations excluded from ROA pre-tax profit.

Fastenal Company

Notes to Consolidated Financial Statements (Continued)

The following table presents a reconciliation of reportable segment ROA assets to consolidated total assets for the periods ended December 31:

			2025			2024
U.S. ROA assets (1)			$	2,446.8		2,189.6
Other operating segment ROA assets (2)			667.1			585.2
Other current assets (3)			505.0			580.0
Property and equipment			987.1			915.6
Intangibles and other assets			137.9			148.4
Operating lease right-of-use assets			309.0			279.2
Total assets			$	5,052.9		4,698.0

(1) Operating segment ROA assets primarily include accounts receivable, inventory, selling location vehicles, and exclude certain centrally managed assets.

(2) Other operating segment ROA assets include all other operating segments that are below the reportable segment quantitative threshold.

(3) Other current assets includes cash and cash equivalents, the allowance for credit losses, inventories that are centrally managed, prepaid income taxes, and other current assets.

Other Segment Disclosures

Interest revenue and interest expense included in the ROA pre-tax profit are not material. The following table presents a reconciliation of reportable segment ROA pre-tax profit depreciation and amortization expense to consolidated depreciation and amortization expense for the periods ended December 31:

			2025			2024			2023
U.S. ROA pre-tax profit depreciation and amortization expense			$	163.9		188.1			168.1
Other operating segment ROA pre-tax profit depreciation and amortization expense (1)			25.6			27.4			24.7
Other reconciling items (2)			(10.3)			(40.1)			(15.5)
Depreciation and amortization expense			$	179.2		175.4			177.3

(1) Other operating segment ROA pre-tax profit depreciation and amortization expense include all other operating segments that are below the reportable segment quantitative threshold.

(2) Other reconciling items includes depreciation and amortization expense for certain assets not allocated to the ROA and differences in allocations specific to the ROA that drive decisions in the field and compensation programs.

Note 11. Legal Contingencies

We are involved in certain legal actions, including those that are ordinary routine litigation incidental to our business. The outcomes of these legal actions are not within our complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, that could require significant expenditures or result in lost sales. We record a liability for these legal actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. As of December 31, 2025, there were no litigation matters that we consider to be probable or reasonably possible to have a material adverse impact on our consolidated financial statements.

Note 12. Subsequent Events

We evaluated all subsequent event activity and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the Notes to Consolidated Financial Statements, with the exception of the dividend declaration and stock option activities disclosed in Note 5.

End of Notes to Consolidated Financial Statements