10q10k10q10k.net

What changed in Fastenal's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Fastenal's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+323 added−421 removedSource: 10-K (2026-02-05) vs 10-K (2025-02-06)

Top changes in Fastenal's 2025 10-K

323 paragraphs added · 421 removed · 256 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

104 edited+23 added−53 removed90 unchanged
Biggest changeTwelve-month Period 2024 2023 Change Weighted FASTBin/FASTVend signings (MEUs) 27,984 24,126 16.0 % Signings per day 110 95 Weighted FASTBin/FASTVend installations (MEUs; end of period) 126,957 113,138 12.2 % FASTStock sales $ 956.6 927.6 3.1 % % of sales 12.5 % 12.5 % FASTBin/FASTVend sales $ 2,295.5 2,070.2 10.9 % % of sales 30.0 % 27.8 % FMI sales $ 3,252.1 2,997.8 8.5 % FMI daily sales $ 12.8 11.8 7.6 % % of sales 42.5 % 40.3 % Digital Solutions We also invest in digital solutions that aim to deliver strategic value for our customers, leverage local inventory for same-day solutions, and provide efficient service.
Biggest changeTwelve-month Period 2025 2024 DSR Change (1) Weighted FASTBin/FASTVend signings (MEUs) 25,892 27,984 -7.5 % Signings per day 102 110 Weighted FASTBin/FASTVend installations (MEUs; end of period) 136,638 126,957 7.6 % FASTStock sales $ 1,037.7 956.6 8.9 % % of sales 12.5 % 12.5 % FASTBin/FASTVend sales $ 2,675.0 2,295.5 17.0 % % of sales 32.2 % 30.0 % FMI sales $ 3,712.7 3,252.1 14.6 % FMI daily sales $ 14.6 12.8 % of sales 44.7 % 42.5 % (1) Weighted FASTBin/FASTVend signings and installations reflects the percent change compared to the same period in the prior year.
Today we sell a broader range of industrial and construction supplies spanning more than nine major product lines through a global network of in-market locations utilizing diverse technologies such as vending devices, bin stock devices, and eBusiness. The large majority of our transactions are business-to-business. We provide additional descriptions of our product lines and market channels later in this document.
Today we sell a broader range of industrial and construction supplies spanning more than nine major product lines through a global network of locations utilizing diverse technologies such as vending devices, bin stock devices, and eBusiness. The large majority of our transactions are business-to-business. We provide additional descriptions of our product lines and market channels later in this document.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are available free of charge on or through our website at www.fastenal.com as soon as reasonably practicable after such reports have been filed with or furnished to the SEC. 15 Table of Contents Information about our Executive Officers The following section sets forth the name, age, and business experience for the past five years of the executive officers as of the filing date of the Form 10-K.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are available free of charge on or through our website at www.fastenal.com as soon as reasonably practicable after such reports have been filed with or furnished to the SEC. 13 Table of Contents Information about our Executive Officers The following section sets forth the name, age, and business experience for the past five years of the executive officers as of the filing date of the Form 10-K.
Utilizing third-party tools and global databases, Fastenal actively monitors government sanctions, denied party listings, withhold release orders, export restriction updates, financial status, adverse media, and multiple other official exclusion lists that provide information on any known risk of any entities and locations with which Fastenal engages, and screens all business partners against those lists.
Utilizing third-party tools and global databases, Fastenal actively monitors government sanctions, denied party listings, withhold release orders, export restriction updates, financial status, adverse media, and multiple other official exclusion lists that provide information on any known risk of any entities and selling locations with which Fastenal engages, and screens all business partners against those lists.
This presents challenges in moving product from suppliers, most of whom are outside of North America, to our distribution centers, as well as from our distribution centers to our in-market and customer locations. At the same time, fasteners are ubiquitous in manufactured products, construction projects, and maintenance and repair while also exhibiting great geometric variability based on use and application.
This presents challenges in moving product from suppliers, most of whom are outside of North America, to our distribution centers, as well as from our distribution centers to our customer locations. At the same time, fasteners are ubiquitous in manufactured products, construction projects, and maintenance and repair while also exhibiting great geometric variability based on use and application.
Our computer system monitors the inventory level for all stock items and triggers replenishment, or prompts a buyer to purchase, as necessary, based on an established minimum-maximum stocking level. In the past we have utilized a base inventory model for all of our branches, and such a model still exists in a smaller subset of our locations.
Our computer system monitors the inventory level for all stock items and triggers replenishment, or prompts a buyer to purchase, as necessary, based on an established minimum-maximum stocking level. In the past we have utilized a base inventory model for all of our branches, and such a model still exists in a smaller subset of our selling locations.
The scale and scope of the products and services that are addressed tend to be narrower and less complex than is the case for national account agreements. Some agreements cover the entirety of a customer's operations where the locations are focused in a specific geographic territory.
The scale and scope of the products and services that are addressed tend to be narrower and less complex than is the case for national account agreements. Some agreements cover the entirety of a customer's operations where the selling locations are focused in a specific geographic territory.
Other agreements may represent a subset of a customer's North American or global operations, with additional locations either covered by separate local and regional contracts, being serviced on a transactional basis, or not being serviced at all.
Other agreements may represent a subset of a customer's North American or global operations, with additional selling locations either covered by separate local and regional contracts, being serviced on a transactional basis, or not being serviced at all.
These technologies provide superior monitoring capabilities and immediate visibility to consumption changes, allowing for a lean supply chain, reducing risk of stock-outs, and providing a more efficient labor model for both the customer and the supplier. 6 Table of Contents Our weighted FMI measure combines signings and installations of FASTBin and FASTVend in a standardized machine equivalent unit (MEU) based on the expected output of each type of device.
These technologies provide superior monitoring capabilities and immediate visibility to consumption changes, allowing for a lean supply chain, reducing risk of stock-outs, and providing a more efficient labor model for both the customer and the supplier. 4 Table of Contents Our weighted FMI measure combines signings and installations of FASTBin and FASTVend in a standardized machine equivalent unit (MEU) based on the expected output of each type of device.
Detailed information about our sales by product line is provided in Note 2 of the Notes to Consolidated Financial Statements included later in this Form 10-K. Each product line may contain multiple product categories. Inventory Control Our inventory stocking levels are determined using our computer systems, by our sales personnel at in-market locations, and by our district and regional leadership.
Detailed information about our sales by product line is provided in Note 2 of the Notes to Consolidated Financial Statements included later in this Form 10-K. Each product line may contain multiple product categories. Inventory Control Our inventory stocking levels are determined using our computer systems, by our sales personnel at selling locations, and by our district and regional leadership.
Our most utilized models include the helix-based FAST 5000 and our 12- and 18-door lockers; combined, these comprise approximately 64% of our installed base of devices. These are either configurable or are available in multiple configurations to accommodate the various sizes and forms of products that will be dispensed to match the unique needs of our customers.
Our most utilized models include the helix-based FAST 5000 and our 12- and 18-door lockers; combined, these comprise approximately 63% of our installed base of devices. These are either configurable or are available in multiple configurations to accommodate the various sizes and forms of products that will be dispensed to match the unique needs of our customers.
We attribute the sales generated from a customer location through our transactional platforms to the in-market location traditionally servicing this customer location. 2) Analytics . Data analytics provide customers with detailed insights into their business operations. FAST360° offers a comprehensive view of inventory and spending, allowing users to visualize product organization and analyze spending trends.
We attribute the sales generated from a customer location through our transactional platforms to the location traditionally servicing this customer location. 2) Analytics . Data analytics provide customers with detailed insights into their business operations. FAST360° offers a comprehensive view of inventory and spending, allowing users to visualize product organization and analyze spending trends.
As a result, we maintain in-market locations in small, medium, and large markets, each offering a wide variety of products. The convenience of a large number of in-market locations in a given area, combined with our ability to provide them with frequent deliveries to such branches from centrally located distribution centers, facilitates the prompt and efficient distribution of products.
As a result, we maintain selling locations in small, medium, and large markets, each offering a wide variety of products. The convenience of a large number of selling locations in a given area, combined with our ability to provide them with frequent deliveries to such branches from centrally located distribution centers, facilitates the prompt and efficient distribution of products.
We estimate the market could support as many as 1.7 million vending units and, as a result, we anticipate continued growth in installed devices over time. Our industrial vending portfolio consists of 20 different vending devices, with 16 of these being in either a helix or locker format.
We estimate the market could support as many as 1.7 million vending units and, as a result, we anticipate continued growth in installed devices over time. Our industrial vending portfolio consists of 21 different vending devices, with 16 of these being in either a helix or locker format.
The distribution centers in Indiana and Kansas also serve as 'master' hubs, with those in California and North Carolina serving as 'secondary' hubs to support the needs of the in-market locations in their geographic regions, as well as to provide a broader selection of products for the in-market locations serviced by the other distribution centers.
The distribution centers in Indiana and Kansas also serve as 'master' hubs, with those in California and North Carolina serving as 'secondary' hubs to support the needs of the selling locations in their geographic regions, as well as to provide a broader selection of products for the selling locations serviced by the other distribution centers.
When deployed effectively, we have demonstrated the ability to assume responsibility for portions of our customer's sourcing operations while reducing the cost, lowering the risk, and increasing the scalability of our customer's supply chains. Our value proposition is focused on improving the operating effectiveness and reducing the total cost of ownership of our customer's supply chains.
When deployed effectively, we have demonstrated the ability to assume responsibility for portions of our customers' sourcing operations while reducing the cost, lowering the risk, and increasing the scalability of our customers' supply chains. Our value proposition is focused on improving the operating effectiveness and reducing the total cost of ownership of our customers' supply chains.
Florness' responsibilities expanded beyond finance, including leadership of a portion of our manufacturing division, our product development and procurement, and our national accounts business. Mr. Florness has served as one of our directors since January 2016. Mr. Watts has been our president and chief sales officer since August 2024. Mr.
Florness' responsibilities expanded beyond finance, including leadership of a portion of our manufacturing division, our product development and procurement, and our contract accounts business. Mr. Florness has served as one of our directors since January 2016. Mr. Watts has been our president and chief sales officer since August 2024. Mr.
These manufactured products c onsist primarily of non-standard sizes of threaded fasteners and hardware made to customers' specifications at one of our nine manufacturing locations, or standard sizes manufactured under our Holo-Krome ® , Cardinal Fasteners ® , and Spensall ® product lines. These manufacturing products represent approximately 7% of our fastener sales.
These manufactured products c onsist primarily of non-standard sizes of threaded fasteners and hardware made to customers' specifications at one of our nine manufacturing locations, or standard sizes manufactured under our Holo-Krome ® , Cardinal Fasteners ® , and Spensall ® product lines. These manufactured products represent approximately 8% of our fastener sales.
We believe it is also appropriate 9 Table of Contents to think about our private label sales as a percentage of our non-fastener sales for two reasons: (1) there is not a well-defined branded versus private label dynamic in fasteners as there is in non-fasteners; and (2) non-fastener data is more comparable to information reported by our peers, who do not generally have our significant mix of fastener business.
We believe it is also appropriate to think about our private label sales as a percentage of our non-fastener sales for two reasons: (1) there is not a well-defined branded versus private label dynamic in fasteners as there is in non-fasteners; and (2) non-fastener data is more comparable to information reported by our peers, who do not generally have our significant mix of fastener business.
Our eBusiness includes eProcurement activities, which are integrated transactions, including electronic data interchange (EDI), and eCommerce (transactional website sales), which provide a means for our customers to effectively and efficiently procure MRO and unplanned spend.
Our eBusiness includes eProcurement activities, which are integrated transactions, including electronic data interchange (EDI), and eCommerce (transactional website sales), which provide a means for our customers to effectively and efficiently procure indirect and unplanned spend.
We expect to invest in additional automation technologies, expand existing distribution facilities, and/or add new distribution centers over time as our scale and the number of our in-market locations increases.
We expect to invest in additional automation technologies, expand existing distribution facilities, and/or add new distribution centers over time as our scale and the number of our selling locations increases.
In light of our promote-from-within philosophy, we know we are hiring a potential future leader with every new hire. Our Human Resources department develops efficient processes to expand our reach and pool of diverse talent while balancing the needs and requirements of data collection and storage.
In light of our promote-from-within philosophy, we know we are hiring a potential future leader with every new hire. Our HR department develops efficient processes to expand our reach and pool of diverse talent while balancing the needs and requirements of data collection and storage.
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 SG&A expenses.
We transport product from our selling 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 selling, general, and administrative (SG&A) expenses.
These distribution centers are located so as to permit deliveries of two to five times per week to our in-market locations using our trucks and overnight delivery by surface common carrier, with approximately 79% of our North American in-market locations receiving service four to five times per week.
These distribution centers are located so as to permit deliveries of two to five times per week to our selling locations using our trucks and overnight delivery by surface common carrier, with approximately 79% of our North American selling locations receiving service four to five times per week.
Industry averages are benchmarked at a 1.00 EMR, with a reduction in the rate being reflective of an organization's ability to implement superior safety procedures and protocols, resulting in a safer environment and reducing both personnel and financial risk.
Industry averages are benchmarked at a 1.00 EMR, with a reduction in the rate being reflective of an organization's ability to implement superior safety procedures and protocols, 11 Table of Contents resulting in a safer environment and reducing both personnel and financial risk.
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 services (air, train, maritime or truck transport, as well as warehousing and fulfillment centers), and state and local government entities, including schools, school districts, and universities.
The remaining 24% to 29% of our customers fall primarily into non-residential construction (general and commercial contractors), reseller (retail and wholesale trades, dealers, and rental businesses), transportation services (air, train, maritime or truck transport, as well as warehousing and fulfillment centers), and state and local government entities, including schools, school districts, and universities.
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, 2024, we operated approximately 490 units.
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, 2025, we operated approximately 590 units.
Approximately 71% of our employees interface directly with customers on a daily or frequent basis, with the remainder supporting the selling efforts of our customer-facing employees.
Approximately 70% of our employees interface directly with customers on a daily or frequent basis, with the remainder supporting the selling efforts of our customer-facing employees.
In 1993, we began to aggressively add additional product lines, and these represented 69.3% of our consolidated sales in 2024. These products, which we refer to as non-fastener product lines, tend to move through the same distribution channel, get used by the same customers, and utilize the same logistical capabilities as the original fastener product line.
In 1993, we began to aggressively add additional product lines, and these represented 69.5% of our consolidated sales in 2025. These products, which we refer to as non-fastener product lines, tend to move through the same distribution channel, get used by the same customers, and utilize the same logistical capabilities as the original fastener product line.
Our Digital Footprint represented 60.4% of sales in 2024. We believe the combination of our broad product offering, physical presence on a global scale, and toolbox of services, specialists, and digital capabilities, produces a customer engagement model that is difficult for large and small competitors to replicate.
Our Digital Footprint represented 61.4% of sales in 2025. We believe the combination of our broad product offering, physical presence on a global scale, and toolbox of services, specialists, and digital capabilities, produces a customer engagement model that is difficult for large and small competitors to replicate.
We also operate one distribution center in Asia and two distribution centers in Europe. These distribution centers give us approximately 5.1 million square feet of distribution capacity. Additional details on these locations can be found within the 'Item 2. Properties' section of this Form 10-K.
We also operate two distribution centers in Asia and two distribution centers in Europe. These distribution centers give us approximately 5.3 million square feet of distribution capacity. Additional details on these locations can be found within the 'Item 2. Properties' section of this Form 10-K.
Inventory quantities are continuously re-balanced utilizing an automated transfer mechanism we call 'inventory re-distribution'. Inventory held at our selling locations, close to customers and available on a same-day basis, accounted for approximately 59% of our total inventory at the end of 2024.
Inventory quantities are continuously re-balanced utilizing an automated transfer mechanism we call 'inventory re-distribution'. Inventory held at our selling locations, close to customers and available on a same-day basis, accounted for approximately 54% of our total inventory at the end of 2025.
Drazkowski was our vice president – national accounts sales, from September 2013 to September 2014, he served as regional vice president of our Minnesota based region, and from November 2007 to August 2013, he served as one of our district managers. Prior to November 2007, Mr. Drazkowski served in various sales leadership roles at Fastenal. 16 Table of Contents Mr.
Drazkowski was our vice president – contract accounts sales, from September 2013 to September 2014, he served as regional vice president of our Minnesota based region, and from November 2007 to August 2013, he served as one of our district managers. Prior to November 2007, Mr. Drazkowski served in various sales leadership roles at Fastenal. 14 Table of Contents Mr.
We have a mix of leased and owned vehicles, and at December 31, 2024, we operated approximately 10,200 units. Information Systems Our Information Systems teams develop, implement, secure, and maintain the computer-based technology used to support business functions within Fastenal.
We have a mix of leased and owned vehicles, and at December 31, 2025, we operated approximately 9,200 units. Information Systems Our Information Systems teams develop, implement, secure, and maintain the computer-based technology used to support business functions within Fastenal.
We also believe our FMI solutions, supported by an in-market location, provide a unique way to serve our customers with convenient access to products and cost saving solutions using a business model not easily replicated by our competitors. Having trained personnel at each in-market location also enhances our ability to compete (see 'Employees' below).
We also believe our FMI solutions, supported by our selling locations, provide a unique way to serve our customers with convenient access to products and cost saving solutions using a business model not easily replicated by our competitors. Having trained personnel at each location also enhances our ability to compete (see 'Employees' below).
Not only is this process followed for all new hires, we replicate the same procedures for any internal transfers and promotions. 14 Table of Contents The FSB (our internal corporate university program) develops and delivers a comprehensive array of industry and company-specific training and development programs that are offered to our employees.
Not only is this process followed for all new hires, we replicate the same procedures for any internal transfers and promotions. 12 Table of Contents The FSB develops and delivers a comprehensive array of industry and company-specific training and development programs that are offered to our employees.
Our cultural values – Ambition , Integrity , Innovation, and Teamwork – are woven into the fabric of our human resources processes and protocols, and inform our employment and compensation philosophies. Several principles underpin our employment philosophy.
Our cultural values – Ambition , Integrity , Innovation, and Teamwork – are woven into the fabric of our HR processes and protocols, and inform our employment and compensation philosophies. Several principles underpin our employment philosophy.
Our fastener product line, which is primarily sold under the Fastenal product name, represented 30.7% of our consolidated sales in 2024. Fastener distribution is complex. In most cases, the product has low per unit value but high per unit weight.
Our fastener product line, which is primarily sold under the Fastenal product name, represented 30.5% of our consolidated sales in 2025. Fastener distribution is complex. In most cases, the product has low per unit value but high per unit weight.
Supply chain compliance representatives are placed in international corporate offices to ensure global coverage and governance, ensuring that no matter where a customers' operations may take them, Fastenal has the infrastructure, resources, and internal processes established to perform its supply chain governance obligations. In 2024, approximately 26% of our total company-wide inventory spend was with small and/or diverse businesses.
Supply chain compliance representatives are placed in international corporate offices to ensure global coverage and governance, ensuring that no matter where a customers' operations may take them, Fastenal has the infrastructure, resources, and internal processes established to perform its supply chain governance obligations. In 2025, approximately 24% of our total company-wide inventory spend was with small and/or certified/impactful businesses.
For instance, relative to the 24.1% of our U.S. workforce that is female, the proportion of females in the U.S. manufacturing and construction workforces are 29.3% and 11.2%, respectively. Similarly, relative to the 24.3% of our U.S. workforce that are minorities, the proportion of non-white (a definition utilized by the U.S.
For instance, relative to the 23.9% of our U.S. workforce that is female, the proportion of females in the U.S. manufacturing and construction workforces are 29.3% and 11.2%, respectively. Similarly, relative to the 25.2% of our U.S. workforce that are minorities, the proportion of non-white (a definition utilized by the U.S.
Building on our core business strategy of the local branch, the Onsite model provides value to our customers through customized service while giving us a competitive advantage through stronger relationships with those customers, all with a relatively low incremental investment given the existing branch and distribution structure. 12 Table of Contents Human Capital Resources Employees At the end of 2024, we employed 23,702 full- and part-time employees.
Building on our core business strategy of the local branch, the Onsite model provides value to our customers through customized service while giving us a competitive advantage through stronger relationships with those customers, all with a relatively low incremental investment given the existing branch and distribution structure. 10 Table of Contents Human Capital Resources Employees At the end of 2025, we employed 24,489 full- and part-time employees.
Seasonality Seasonality has some impact on our sales. The first and fourth quarters of each year are typically our lower volume periods, given their overlap with winter months in North America during which our direct and indirect sales to customers in the non-residential construction market typically slow due to inclement weather.
The first and fourth quarters of each year are typically our lower volume periods, given their overlap with winter months in North America during which our direct and indirect material sales to customers in the non-residential construction market typically slow due to inclement weather.
We currently operate 11 of our North American distribution centers with automated storage and retrieval systems (ASRS). These distribution centers operate with greater speed and efficiency, and currently handle approximately 94% of our picking activity.
We currently operate 12 of our North American distribution centers with automated storage and retrieval systems (ASRS). These distribution centers operate with greater speed and efficiency, and currently handle approximately 96% of our picking activity.
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. Ms. Papenfuss has been our executive vice president – strategy and communications since November 2024. Ms.
Oas practiced employment law for a firm in Minneapolis, Minnesota and later acted as a solo practitioner in Winona, Minnesota. Ms. Papenfuss has been our executive vice president – strategy and communications since November 2024. Ms.
We believe these absolute figures gain further context when viewed against two additional data sets. First, over the past ten years there is a clear trend toward greater diversity in our business. Since 2014, our female and minority workforces have grown 2.3x and 4.4x faster, respectively, than our overall U.S. workforce.
We believe these absolute figures gain further context when viewed against two additional data sets. First, over the past ten years there is a clear trend toward greater diversity in our business. Since 2015, our female and minority workforces have grown 3.4x and 9.2x faster, respectively, than our overall U.S. workforce.
We believe that we have a market advantage by virtue of our extensive in-market network of inventory and local personnel. For these reasons, the initiative began to gain significant traction in 2011, and we finished 2024 with approximately 119,800 FASTVend devices in the field.
We believe that we have a market advantage by virtue of our extensive network of inventory and local personnel. For these reasons, the initiative began to gain significant traction in 2011, and we finished 2025 with approximately 124,000 FASTVend devices in the field.
Unless otherwise noted, the positions described are positions with Fastenal or its subsidiaries. Name Employee of Fastenal Since Age Position Daniel L. Florness 1996 61 Chief Executive Officer and Director Jeffery M. Watts 1996 53 President and Chief Sales Officer Anthony P. Broersma 2003 45 Executive Vice President – Operations William J.
Unless otherwise noted, the positions described are positions with Fastenal or its subsidiaries. Name Employee of Fastenal Since Age Position Daniel L. Florness (1) 1996 62 Chief Executive Officer and Director Jeffery M. Watts 1996 54 President and Chief Sales Officer Anthony P. Broersma 2003 46 Executive Vice President – Operations William J.
Approximately 72% of our consolidated sales in 2024 were with customers whose spend was subject to a contractual agreement between ourselves and the customer.
Approximately 74% of our consolidated sales in 2025 were with customers whose spend was subject to a contractual agreement between ourselves and the customer.
While there are isolated exceptions, these technologies are not themselves channels to the market but rather are utilized by our branch and Onsite channels to enhance service to our customers. Collectively, these tools comprise our Fastenal Managed Inventory (FMI) Technology suite. We believe our fully integrated distribution network allows us to manage the supply chain for all sizes of customers.
While there are isolated exceptions, these technologies are not themselves channels to the market but rather are utilized by our selling locations to enhance service to our customers. Collectively, these tools comprise our FMI Technology suite. We believe our fully integrated distribution network allows us to manage the supply chain for all sizes of customers.
We consider these expenses to be a part of our landed product cost, and significant fluctuations are typically addressed through product pricing. 8 Table of Contents We transport product between our distribution centers and from our distribution centers to our in-market locations.
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 selling locations.
For example, we utilize a limited number of suppliers for our distribution equipment and our vehicle fleet, and primarily one supplier for our industrial vending equipment. However, we believe there are viable alternatives to each of these, if necessary.
Beyond inventory, we have some concentration of purchasing activity. For example, we utilize a limited number of suppliers for our distribution equipment and our vehicle fleet, and primarily one supplier for our industrial vending equipment. However, we believe there are viable alternatives to each of these, if necessary.
We believe we are successful because of our ability to integrate these features into supply chain solutions that are tailored to the specific challenges 10 Table of Contents of our customer's operations.
We believe we are successful because of our ability to integrate these features into supply chain solutions that are tailored to the specific challenges of our customers' operations.
Trainings, audits, inspections, risk assessments, safety coaching, and employee engagement are all programs that help us consistently manage our facility safety and employee safety. In 2024, there were over 247,000 completed health and safety engagements, which is an increase of 16% compared to 2023.
Training, audits, inspections, risk assessments, safety coaching, and employee engagement are all programs that help us consistently manage our facility safety and employee safety. In 2025, there were over 288,000 completed health and safety engagements, which is an increase of 17% compared to 2024.
Our contractual programs fall into three broad categories: • National accounts represent the largest proportion of our contract business, accounting for 63% of our consolidated sales in 2024. This program is aimed at multi-location customers where the scale and scope of the OEM and MRO products that need to be managed are very complex and costly.
Our contractual programs fall into three broad categories: • National accounts represent the largest proportion of our contract business, accounting for 65% of our consolidated sales in 2025. This program is aimed at multi-location customers where the scale and scope of the direct and indirect materials that need to be managed are very complex and costly.
This logic is as true today as it was when we first began to diversify our product offering. However, over time, the supply chain for these product lines has evolved in ways independent of the fastener line. For instance, non-fastener product lines benefit disproportionately from our development of industrial vending.
This logic is as true today as it was when we first began to diversify our product offering. However, over time, the supply chain for these product lines has evolved in ways independent of the fastener line.
Such programs have existed in the industrial supply industry for a considerable time, with open bins being clustered in a racking system, each of which holds original equipment manufacturing (OEM) fasteners, maintenance, repair, and operations (MRO) fasteners, and/or non-fastener products that are consumed in the customers' operations.
Such programs have existed in the industrial supply industry for a considerable time, with open bins being clustered in a racking system, each of which holds direct fasteners, indirect fasteners, and/or non-fastener products that are consumed in the customers' operations.
It provides easy, real-time information pertaining to a customer's local inventory position within their point-of-use devices. It incorporates customer usage data to recommend optimized parts and quantity for specific devices, which improves customer inventories while reducing the risk of stock-outs.
It provides easy, real-time information pertaining to a customer's local inventory position within their point-of-use devices. Other applications are assisted by artificial intelligence (AI) to analyze customer usage data to recommend optimized parts and quantity for specific devices, which improves customer inventories while reducing the risk of stock-outs.
(2) Organizational support personnel consists of: (1) Sales & Growth Driver Support personnel (35%-40% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) Information Technology personnel (35% to 40% of category); and (3) Administrative Support personnel (22% to 27% of category), which includes human resources, Fastenal School of Business (FSB), accounting and finance, senior management, etc.
(3) Organizational support personnel consists of: (1) Sales Support personnel (37% to 42% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) Information Technology (IT) personnel (34% to 39% of category); and (3) Administrative Support personnel (22% to 27% of category), which includes human resources (HR), Fastenal School of Business (FSB), accounting and finance, senior management, etc.
In 2024, Fastenal had an EMR of 0.46, which is 54% better than the average performance rate for our industry. 13 Table of Contents In 2024, we achieved third-party re-certification for the ISO 45001 Occupational Health and Safety Management System.
In 2025, Fastenal had an EMR of 0.45, which is 55% better than the average performance rate for our industry. In 2025, we achieved third-party re-certification for the ISO 45001 Occupational Health and Safety Management System.
Of these, approximately 71% held a selling role.
Of these, approximately 70% held a selling role.
Our internal scorecard system and safety management system ensures we maintain focus on a variety of risks while we sustain an inclusive safety environment that contributes to innovation and improved performance. We continue to expand and evolve our safety programs to better meet our employee needs and workplace conditions as our business grows.
Our internal scorecard system and safety management system ensure we maintain focus on a variety of risks while we sustain an inclusive safety environment that contributes to innovation and improved performance. We continue to expand and evolve our safety programs to better meet both our employee needs, and our customer needs as we strengthen our partnerships.
Oas has been our executive vice president – human resources since February 2023. As executive vice president – human resources, Ms. Oas leads our 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.
Oas leads our human resources department, which includes payroll, benefits, human resources 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.
Certain of our digital capabilities are intended to produce operational efficiencies for our customers and ourselves and/or to deliver strategic value by illuminating customer supply chain operations. For instance, we have developed, and continue to develop, 'Mobility' applications, one example of which is our Vending App, which provides a number of benefits.
Our digital capabilities are intended to produce operational efficiencies for our customers and ourselves and/or to deliver strategic value by illuminating customer supply chain operations where the employee works. For instance, we have developed, and continue to develop, 'Mobility' applications (Apps), one example of which is our FASTScan and BinStock App, which provides several benefits.
Approximately 70% to 75% of our customers are in manufacturing end markets, which encompasses heavy machinery, fabricated products, process industries (oil & gas, petrochemical, mining, pulp and paper, etc.), and transportation components (automotive, aerospace, etc.). We provide both the OEM and MRO needs of these customers.
Approximately 71% to 76% of our customers are in manufacturing end markets, which encompass heavy machinery, fabricated products, process industries (oil & gas, petrochemical, mining, pulp and paper, etc.), and transportation components (automotive, aerospace, etc.). We provide both the direct and indirect material needs of these customers.
We believe our success can be attributed to the high quality of our employees and their convenient proximity to our customers, and our ability to offer customers a full range of products and services to reduce their total cost of procurement. Our Channels to Market We engage our customers primarily through branch and Onsite locations.
We believe our success can be attributed to the high quality of our employees and their convenient proximity to our customers, and our ability to offer customers a full range of products and services to reduce their total cost of procurement. Channels to Market Historically, our growth was primarily measured by our physical locations count.
Private label brand sales represented approximately 17% of our total non-fastener sales in 2024.
Private label brand sales represented approximately 16% of our total non-fastener sales in 2025.
We began with a marketing strategy of supplying threaded fasteners to customers through a branch network in small, medium, and, in subsequent years, large cities. Over time, how and where we engage our customers has expanded and evolved.
We opened our first branch in 1967 in Winona, Minnesota, a city with a population today of approximately 26,000. We began with a marketing strategy of supplying threaded fasteners to customers through a branch network in small, medium, and, in subsequent years, large cities. Over time, how and where we engage our customers has expanded and evolved.
Moving our fulfillment process from a vending device-based keypad function to a tablet or scanning interaction improves the restock process (reduced risk of product outages), reducing time consumed (greater efficiency) while improving accuracy (improved quality assurance). We will continue to build out our suite of Mobility applications.
Our Vending App moves our fulfillment process from a vending device-based keypad function to a tablet or scanning interaction, which improves the restock process (reduced risk of product outages), reducing time consumed (greater efficiency) while improving accuracy (improved quality assurance).
These private label brands represented approximately 12% of our consolidated sales in 2024.
These private label brands represented approximately 11% of our consolidated sales in 2025.
FASTCrib creates a one-stop, just-in-time supply chain management capability for all of the products and services consumed by our customers, whether provided directly by Fastenal or other vendors.
It also has asset tracking features and integrates with portions of our FMI suite. FASTCrib creates a one-stop, just-in-time supply chain management capability for all of the products and services consumed by our customers, whether provided directly by Fastenal or other vendors.
Further, in many cases where we source directly from a North American supplier, the original country of origin of the acquired parts is the supplier's Asian facilities. As a result, the cost and effectiveness of our supply chain is dependent on relatively unfettered trade across geographic regions. Beyond inventory, we have some concentration of purchasing activity.
Within Asia, suppliers in China and Taiwan represent a significant source of product. Further, in many cases where we source directly from a North American supplier, the original country of origin of the acquired parts is the supplier's Asian facilities. As a result, the cost and effectiveness of our supply chain is dependent on relatively unfettered trade across geographic regions.
In the former case, we often try to migrate the customer to a national agreement. • Government contracts establish Fastenal as an approved supplier of MRO products to facilities managed by local, state, or municipal authorities. We do not generate meaningful direct sales from federal government agencies. These agreements are not different in function from local and regional non-government contracts.
In the former case, we often try to migrate the customer to a national agreement. 9 Table of Contents • Government contracts establish Fastenal as an approved supplier of indirect materials to facilities managed by local, state, or municipal authorities. We do not generate meaningful direct sales from federal government agencies.
We have created a standardized framework for posting jobs and interviewing for positions, supplemented with training through the FSB. We have a Diversity and Compliance team that is heavily involved in developing this standardized framework, which ensures its integrity.
We have created a standardized framework for posting jobs and interviewing for positions, supplemented with training through the FSB (our internal corporate university program — Fastenal School of Business). We have an HR Compliance team that is heavily involved in developing this standardized framework, which ensures its integrity.
Employee Profile Of the employees noted above, 18,701 are located in the U.S., 3,304 are located in Canada and Mexico, and 1,697 are located overseas in 23 other countries throughout the world. Based on our EEO-1 data for 2024, in the U.S., females and minorities constitute 24.1% and 24.3% of our workforce, respectively.
Employee Profile Of the employees noted above, 19,206 are located in the U.S., 3,441 are located in Canada and Mexico, and 1,842 are located overseas in 23 other countries throughout the world. Based on our EEO-1 data for 2025, in the U.S., females and minorities constitute 23.9% and 25.2% of our workforce, respectively.
Lisowski was our controller and chief accounting officer from October 2013 to August 2016, and also served as our interim chief financial officer from January 2016 to August 2016. From March 2007 to October 2013, Ms. Lisowski served as our controller – accounting operations. Ms.
Lisowski was our executive vice president – chief accounting officer and treasurer. From August 2016 to November 2020, Ms. Lisowski was our controller, chief accounting officer, and treasurer. Ms. Lisowski was our controller and chief accounting officer from October 2013 to August 2016, and also served as our interim chief financial officer from January 2016 to August 2016.
Drazkowski has been our executive vice president - sales since July 2023. Mr. Drazkowski's responsibilities include oversight of growing and maintaining Fastenal's overall contract portfolio including national accounts, government and industry specific sales, support, and development teams. From October 2019 to June 2023, Mr. Drazkowski was our executive vice president - sales and oversaw our Western United States business.
Drazkowski has been our senior executive vice president – sales since January 2026. Mr. Drazkowski's responsibilities include oversight of growing and maintaining Fastenal's overall contract portfolio including contract accounts, regional agreements, government and industry specific sales, support, and development teams. From July 2023 to December 2025, Mr. Drazkowski was our executive vice president – sales.
Miller was one of our executive vice presidents – sales. From January 2009 to October 2015, Mr. Miller served as regional vice president of our southeast central region based primarily in Tennessee and Kentucky. Prior to January 2009, Mr. Miller served in various sales leadership roles at Fastenal. Ms.
Miller served as regional vice president of our southeast central region based primarily in Tennessee and Kentucky. Prior to January 2009, Mr. Miller served in various sales leadership roles at Fastenal. Ms. Oas has been our executive vice president – human resources since February 2023. As executive vice president – human resources, Ms.
At the end of 2024, we had 3,628 in-market locations (defined in the table below) in 25 countries supported by 15 distribution centers in North America, with 12 in the United States (U.S.), two in Canada, and one in Mexico; one in Asia; and two in Europe, and we employed 23,702 people.
At the end of 2025, we had 1,595 branch locations in 25 countries supported by 15 distribution centers in North America, with 12 in the United States (U.S.), two in Canada, and one in Mexico; two in Asia; and two in Europe, and we employed 24,489 people.
We believe the data that is created through our digital capabilities enhances product visibility, traceability, and control that reduces risk in operations and creates ordering and fulfillment efficiencies for both us and our customers. As a result, we believe our opportunity to grow our business will be enhanced through the continued development and expansion of our digital capabilities.
We believe the data that is created through our digital capabilities enhances product visibility, traceability, and control that reduces risk in operations and creates ordering and fulfillment efficiencies for both us and our customers.
While there is a transactional element to our digital services, many of the solutions we invest in are intended to add value to customers by illuminating various elements of their supply chain.
Digital Solutions We also invest in digital solutions that aim to deliver strategic value for our customers, leverage local inventory for same-day solutions, and provide efficient service. While there is a transactional element to our digital services, many of the solutions we invest in are intended to add value to customers by illuminating various elements of their supply chain.

… 100 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

44 edited+8 added−7 removed110 unchanged
Biggest changePrivacy security laws and regulations, including the European Union General Data Protection Regulation 2016, the California Consumer Protection Act, and other similar privacy laws, pose increasingly complex compliance challenges, which may increase compliance costs, and any failure to comply with data privacy laws and regulations could result in significant penalties.
Biggest changePrivacy security laws and regulations, including the European Union General Data Protection Regulation 2016, the California Consumer Protection Act, and other similar privacy laws, pose increasingly complex compliance challenges, which may increase compliance costs, and any failure to comply with data privacy laws and regulations could result in significant penalties. 17 Table of Contents Changes in customer or product mix, downward pressure on sales prices, an inability to capture price increases in response to increased costs associated with tariffs, and changes in volume or timing of orders have caused and could continue to cause our gross profit percentage to fluctuate or decline in the future.
A downturn in either the national or local economies where we operate, or in the principal markets served by us, or changes in any of the other factors described above, could negatively impact sales at our in-market locations, sales through our other selling channels, and the level of profitability of those in-market locations and other selling channels.
A downturn in either the national or local economies where we operate, or in the principal markets served by us, or changes in any of the other factors described above, could negatively impact sales at our selling locations, sales through our other selling channels, and the level of profitability of those selling locations and other selling channels.
We currently have the capacity under our Credit Facility and Master Note Agreement to increase borrowings in the future to finance stock purchases, dividends, capital expenditures, working capital additions, acquisitions, or other investments.
We currently have the capacity under the Credit Facility and Master Note Agreement to increase borrowings in the future to finance stock purchases, dividends, capital expenditures, working capital additions, acquisitions, or other investments.
We cannot guarantee that our market potential estimates are accurate or that we will ultimately decide to expand our industrial vending or Onsite service models as we anticipate to reach the full market opportunity. 23 Table of Contents The industrial, construction, and maintenance supply industry is consolidating, which could cause it to become more competitive and could negatively impact our market share, gross profit, and operating income.
We cannot guarantee that our market potential estimates are accurate or that we will ultimately decide to expand our industrial vending or Onsite service models as we anticipate to reach the full market opportunity. 22 Table of Contents The industrial, construction, and maintenance supply industry is consolidating, which could cause it to become more competitive and could negatively impact our market share, gross profit, and operating income.
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, 2024. Loans under the Credit Facility generally bear interest at a rate per annum equal to Daily Simple Secured Overnight Financing Rate (SOFR), the rate on which may vary daily, and mature on September 28, 2027.
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, 2025. Loans under the Credit Facility generally bear interest at a rate per annum equal to Daily Simple Secured Overnight Financing Rate (SOFR), the rate on which may vary daily, and mature on September 28, 2027.
The cost of servicing any existing balances on our Credit Facility could increase if interest rates increase due to the SOFR-based interest rate provided for under our Credit Facility.
The cost of servicing any existing balances on the Credit Facility could increase if interest rates increase due to the SOFR-based interest rate provided for under the Credit Facility.
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 logistical and administrative support personnel, who understand and appreciate our culture and are able to adequately represent this culture to our customers.
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, contract account sales representatives, and logistical and administrative support personnel, who understand and appreciate our culture and are able to adequately represent this culture to our customers.
The combination of these two events produced pressure on our product gross profit percentage in 2024 from product and customer mix. Our SG&A expenses could grow more rapidly than net sales, which could result in failure to achieve our goals related to leveraging sales growth into higher net income.
The combination of these two events produced pressure on our product gross profit percentage in 2025 from product and customer mix. Our SG&A expenses could grow more rapidly than net sales, which could result in failure to achieve our goals related to leveraging sales growth into higher net income.
Changes in our customer and product mix have caused our gross profit percentage to decline and could cause our gross profit percentage to further fluctuate or decline. For example, we have experienced a sustained increase in the proportion of our sales attributable to both non-fastener products and national accounts and Onsite customers.
Changes in our customer and product mix have caused our gross profit percentage to decline and could cause our gross profit percentage to further fluctuate or decline. For example, we have experienced a sustained increase in the proportion of our sales attributable to both non-fastener products and contract accounts and Onsite customers.
Within North America, we believe the potential market opportunity for industrial vending is approximately 1.7 million devices and we have identified over 11,000 customer locations with the potential to implement our Onsite service model within our traditional manufacturing and construction customer base.
Within North America, we believe the potential market opportunity for industrial vending is approximately 1.7 million devices and we have identified over 13,000 customer locations with the potential to implement our Onsite service model within our traditional manufacturing and construction customer base.
While we have implemented policies and procedures designed to facilitate compliance 24 Table of Contents with these laws and regulations, there can be no assurance that our employees, contractors, or agents will not violate such laws and regulations, or our policies.
While we have implemented policies and procedures designed to facilitate compliance 23 Table of Contents with these laws and regulations, there can be no assurance that our employees, contractors, or agents will not violate such laws and regulations, or our policies.
The notes issued under our Master Note Agreement carry a fixed interest rate and consist of four series and are described in further detail in Note 9 of the Notes to Consolidated Financial Statements in this Form 10-K.
The notes issued under our Master Note Agreement carry a fixed interest rate and consist of three series and are described in further detail in Note 9 of the Notes to Consolidated Financial Statements in this Form 10-K.
While we have taken steps to build momentum in the growth drivers of our business, we cannot assure you those steps will lead to sales growth. Failure to achieve any of our goals regarding our Digital Footprint, Onsites, national accounts, international capabilities, analytics, or other growth drivers could negatively impact our long-term sales and profit growth.
While we have taken steps to build momentum in the growth drivers of our business, we cannot assure you those steps will lead to sales growth. Failure to achieve any of our goals regarding our Digital Footprint, contract accounts, international capabilities, analytics, or other growth drivers could negatively impact our long-term sales and profit growth.
Similarly, national accounts and Onsite customers typically have a lower gross profit percentage than smaller customers by virtue of their scale, available business, and broader offering of products which typically have lower gross profit percentages.
Similarly, contract accounts and Onsite customers typically have a lower gross profit percentage than smaller customers by virtue of their scale, available business, and broader offering of products which typically have lower gross profit percentages.
Our ability to process orders, maintain proper levels of inventories, collect accounts receivable, pay expenses, and maintain the security of Fastenal and customer data, as well as the success of our growth drivers, is dependent in varying degrees on the effective and timely operation and support of our information technology systems.
Our ability to process orders, maintain proper levels of inventories, collect accounts receivable, pay expenses, and maintain the security of Fastenal and customer data, as well as the success of our growth drivers, is dependent in varying degrees on the effective and timely operation and support of our IT systems.
In recent years, we have increased the resources devoted to developing a multi-dimensional, differentiated service offering, including our Digital Footprint (which incorporates our FMI and eBusiness capabilities), Onsites, national accounts, international capabilities, and process and consumption analytics.
In recent years, we have increased the resources devoted to developing a multi-dimensional, differentiated service offering, including our Digital Footprint (which incorporates our FMI and eBusiness capabilities), contract accounts, international capabilities, and process and consumption analytics.
In 22 Table of Contents addition, we move and source products within North America. Any trading disruption (tariffs, product restrictions, etc.) between Canada, the U.S., and Mexico, or disruption in their respective trading relationships with other nations can adversely impact our business.
In addition, we move and source products within North America. Any trading disruption (tariffs, product restrictions, etc.) between Canada, the U.S., and Mexico, or disruption in their respective trading relationships with other nations can adversely impact our business.
In addition, market variables, 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 SG&A expenses so as to leverage our sales growth into higher net income. We experienced a number of these variables in 2024.
In addition, market variables, 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 SG&A expenses so as to leverage our sales growth into higher net income.
As of December 31, 2024, we had $200.0 of outstanding debt obligations, all in the form of senior unsecured promissory notes issued under our master note agreement (the Master Note Agreement).
As of December 31, 2025, we had $125.0 of outstanding debt obligations, all in the form of senior unsecured promissory notes issued under our master note agreement (the Master Note Agreement).
Should we seek to increase our borrowings during periods of volatility and disruption in the U.S. credit markets, financing may become more costly and more difficult to obtain. This was not a material consideration in 2024.
Should we seek to increase our borrowings during periods of volatility and disruption in the financial and credit markets, financing may become more costly and more difficult to obtain. This was not a material consideration in 2025.
We could experience reductions in the volume of purchases we make from our suppliers, which could reduce supplier volume allowances. We may not be able to pass higher product costs along to customers if those customers have ready product or supplier alternatives in the marketplace. We experienced a number of these variables in 2024.
We could experience reductions in the volume of purchases we make from our suppliers, which could reduce supplier volume allowances. We may not be able to pass higher product costs along to customers if those customers have ready product or supplier alternatives in the marketplace.
Further, our future effective tax rates in any of these jurisdictions could be affected, positively or negatively, by changing tax priorities, changes in statutory rates, and/or changes in tax laws or the interpretation thereof, including any changes resulting from the new presidential administration in the U.S. In 2022, the Inflation Reduction Act was passed, which contained tax-related provisions.
Further, our future effective tax rates in any of these jurisdictions could be affected, positively or negatively, by changing tax priorities, changes in statutory rates, and/or changes in tax laws or the interpretation thereof, including any changes resulting from the new presidential administration in the U.S. In 2025, the One Big Beautiful Bill Act was passed, which contained tax-related provisions.
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.
In 2025, the softer manufacturing economy continued to cause 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 contract accounts.
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 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 income, which could adversely affect our stock price. 21 Table of Contents We cannot provide any guaranty of future dividend payments or that we will continue to purchase shares of our common stock pursuant to our share purchase program.
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 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 income, which could adversely affect our stock price.
The primary variable affecting our results in 2024 was a softening in manufacturing sector business conditions. Trade policies could make sourcing product from overseas more difficult and/or more costly, and could adversely impact our gross and/or operating profit percentage. We source a significant amount of the products we sell from outside of North America, primarily Asia.
In 2025, our results continued to be impacted by soft manufacturing sector business conditions. Trade policies could make sourcing product from overseas more difficult and/or more costly, and could adversely impact our gross and/or operating profit percentage. We source a significant amount of the products we sell from outside of North America, primarily Asia.
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 FASTVend and FASTBin, the loss of key suppliers of equipment and services could be impactful and result in failure to deploy devices.
If we are unable to manage this transition effectively, our operations may be disrupted. 18 Table of Contents 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 FASTVend and FASTBin, the loss of key suppliers of equipment and services could be impactful and result in failure to deploy devices.
In addition, difficulties in smoothly implementing any transition to new members of our executive team, or recruiting suitable replacements, could divert the attention of other members of our senior leadership team from our existing operations. In December 2024, our Chief Financial Officer disclosed his intention to resign from Fastenal effective April 16, 2025.
In addition, difficulties in smoothly implementing any transition to new members of our executive team, or recruiting suitable replacements, could divert the attention of other members of our senior leadership team from our existing operations. As previously disclosed, on December 19, 2025, Mr.
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 sales and profitability.
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 sales and profitability. 19 Table of Contents We may not be able to compete effectively against traditional or non-traditional competitors, which could cause us to lose market share or erode our gross and/or operating income profit and/or percentage.
Any decision to continue to pay quarterly dividends on our common stock, to increase those dividends, or to purchase our common stock in the future will be based upon our financial condition and results of operations, the price of our common stock, credit conditions, and such other factors as are deemed relevant by our board of directors.
Any decision to continue to pay quarterly dividends on our common stock, to increase those dividends, or to purchase our common stock in the future will be based upon our financial condition and results of operations, the price of our common stock, credit conditions, recommendations of management, and such other factors as are deemed relevant by our board of directors. 20 Table of Contents General Economic and Operating Risks Operational Risks Products manufactured in foreign countries may cease to be available, which could adversely affect our inventory levels and operating results.
An inability to recruit and retain a sufficient number of qualified individuals in the future may also delay the planned expansion of our various selling channels. 18 Table of Contents Cybersecurity incidents, or violations of data privacy laws and regulations, could cause us to experience certain operational interruptions, incur substantial additional costs, become subject to legal or regulatory proceedings, or suffer damage to our reputation in the marketplace.
Cybersecurity incidents, or violations of data privacy laws and regulations, could cause us to experience certain operational interruptions, incur substantial additional costs, become subject to legal or regulatory proceedings, or suffer damage to our reputation in the marketplace.
In addition, we may be subject to claims that we have infringed on the intellectual property rights of others, which could subject us to liability, require us to obtain licenses to use those rights at significant cost, or otherwise cause us to modify our operations.
In addition, we may be subject to claims that we have infringed on the intellectual property rights of others, which could subject us to liability, require us to obtain licenses to use those rights at significant cost, or otherwise cause us to modify our operations. 16 Table of Contents 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.
We may not be able to compete effectively unless our product selection keeps up with trends in the markets in which we compete or trends in new products.
We may not be able to compete effectively unless our product selection keeps up with trends in the markets in which we compete or trends in new products. In addition, our ability to integrate new products and product lines into our selling locations and distribution network could impact sales and profit margins.
They can also experience significant fluctuation in the cost of energy consumed in their production processes and in the cost of fuel consumed to transport their products. These suppliers typically look to pass their increased costs along to us through price increases.
These suppliers typically look to pass their increased costs along to us through price increases. We also consume energy and fuel in our own operations, and can experience direct and significant fluctuation in our own costs.
The degree to which these changes in the global marketplace affect our financial results will be influenced by the specific details of the changes in trade policies, their timing and duration, and our effectiveness in deploying tools to address these issues.
The degree to which these changes in the global marketplace affect our financial results will be influenced by the specific details of the changes in trade policies, their timing and duration, and our effectiveness in deploying tools to address these issues. 21 Table of Contents Changes in energy costs and the cost of raw materials used in our products could impact our net sales, cost of sales, gross profit percentage, distribution expenses, and occupancy expenses, which may result in lower operating income.
Further, information on Fastenal, including our products and services, can be more easily accessed and more quickly disseminated through traditional and social media and digital channels.
Maintaining, promoting, and positioning our brand will depend largely on our ability to provide high quality products, deliver consistent services, and improve our customers' business operations. Further, information on Fastenal, including our products and services, can be more easily accessed and more quickly disseminated through traditional and social media and digital channels.
Over time, we have generally experienced an increase in our SG&A expenses, including costs related to payroll, occupancy, freight, and information technology, among others, as our net sales have grown.
Over time, we have generally experienced an increase in our SG&A expenses, including costs related to payroll, occupancy, freight, and IT, among others, as our net sales have grown. However, historically, a portion of these expenses has not increased at the same rates as net sales, allowing us to leverage our growth and sustain or expand our operating profit margins.
Changes in energy costs and the cost of raw materials used in our products could impact our net sales, cost of sales, gross profit percentage, distribution expenses, and occupancy expenses, which may result in lower operating income. Our suppliers can experience significant fluctuation over time in the cost of raw materials (e.g., steel, plastic, etc.) used to produce their products.
Our suppliers can experience significant fluctuation over time in the cost of raw materials (e.g., steel, plastic, etc.) used to produce their products. They can also experience significant fluctuation in the cost of energy consumed in their production processes and in the cost of fuel consumed to transport their products.
The ability to adequately protect our intellectual property or successfully defend against infringement claims by others may have an adverse impact on operations.
The evolving regulatory landscape surrounding AI and data usage may also introduce compliance risks and additional costs. These factors could materially and adversely impact our business, financial condition, and results of operations. The ability to adequately protect our intellectual property or successfully defend against infringement claims by others may have an adverse impact on operations.
General Economic and Operating Risks Operational Risks Products manufactured in foreign countries may cease to be available, which could adversely affect our inventory levels and 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.
We obtain certain of our products, and our suppliers obtain certain of their products, from China, Taiwan, South Korea, and other foreign countries.
However, historically, a portion of these expenses has not increased at the same rates as net sales, allowing us to leverage our growth and sustain or expand our operating profit margins. There are various scenarios where we may not be able to continue to achieve this leverage as we have been able to do in the past.
There are various scenarios where we may not be able to continue to achieve this leverage as we have been able to do in the past.
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 customers' business operations.
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.
The 10% additional tariff on all imports from China went into effect, and on February 4, 2025 China retaliated with various levels of tariffs on certain products imported into that country from the U.S. We are closely monitoring these actions, which could have an adverse impact on our business and financial results.
Certain of the duties and tariffs enacted are being challenged from a legal perspective. We are closely monitoring these developments, which could have an adverse impact on our business and financial results.
We may not be able to compete effectively against traditional or non-traditional competitors, which could cause us to lose market share or erode our gross and/or operating income profit and/or percentage. The industrial, construction, and maintenance supply industry, although slowly consolidating, still remains a large, fragmented, and highly competitive industry.
The industrial, construction, and maintenance supply industry, although slowly consolidating, still remains a large, fragmented, and highly competitive industry.
Specifically, a softer manufacturing economy and our continued investment in personnel to support Onsite growth caused our SG&A to grow faster than sales, resulting in pressure on our operating margin percentage. 19 Table of Contents Our inability to attract or transition key executive officers may divert the attention of other members of our senior leadership and adversely impact our existing operations.
In 2025, our incentive compensation programs did not leverage during the year due to increased sales and pretax profit growth compared to contraction or very low growth in most periods of 2024. Our inability to attract or transition key executive officers may divert the attention of other members of our senior leadership and adversely impact our existing operations.
Removed
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.
Added
We may not be successful in adopting and integrating emerging technologies. Our ability to maintain and enhance our competitive position depends in part on our capacity to adopt and integrate emerging technologies, including AI and advanced analytics, into our operations, customer solutions, and supply chain management.
Removed
Changes in customer or product mix, downward pressure on sales prices, and changes in volume or timing of orders have caused and could continue to cause our gross profit percentage to fluctuate or decline in the future.
Added
If we fail to identify, develop, or implement relevant technologies in a timely and cost-effective manner, or if such technologies do not deliver the anticipated benefits, our business operations, customer experience, and financial performance could be adversely affected. Additionally, our competitors may leverage these technologies more effectively, which could result in a loss of market share.
Removed
The process of filling this role is underway. However, failure to develop, attract, and retain a suitable replacement may have an adverse effect on our senior leadership team and our existing operations.
Added
An inability to recruit and retain a sufficient number of qualified individuals in the future may also delay the planned expansion of our various selling channels.
Removed
In addition, our ability to integrate new products and product lines into our selling locations and distribution network could impact sales and profit margins. 20 Table of Contents The ability to adequately protect our reputation may have an adverse impact on operations and profitability.
Added
In 2025, tariff rates increased on many of the parts we sell. Additionally, new tariffs were enacted.
Removed
On February 1, 2025, the White House issued three executive orders directing the U.S. to impose an increase of the duty on imports from Canada and Mexico and China and empowering the U.S. president to raise the tariffs further should any country retaliate.
Added
Florness informed our board of directors of his decision to voluntarily step out of his role as our chief executive officer, effective as of the CEO Transition Date, and his decision to resign from our board of directors, effective as of the CEO Transition Date. On December 19, 2025, our board of directors also appointed Mr.
Removed
On February 3, 2025, the prospective tariffs on Canada and Mexico were deferred for 30 days, though the execution of these tariff increases remain possible beyond the current short-term reprieve.
Added
Watts, our current president and chief sales officer, as the next chief executive officer of Fastenal, effective as of the CEO Transition Date.
Removed
We also consume energy and fuel in our own operations, and can experience direct and significant fluctuation in our own costs.
Added
We cannot provide any guaranty of future dividend payments or that we will continue to purchase shares of our common stock pursuant to our share purchase program.
Added
Since February 2025, the U.S. government has imposed additional duties and tariffs in an effort to promote U.S. production of goods and improved trade balance with our global trading partners. This environment has been very fluid, resulting in several changes to the duties and tariffs enacted throughout the year.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+1 added−0 removed10 unchanged
Biggest changeAdditionally, 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 There have been no previous cybersecurity incidents which have materially affected us to date, including our business strategy, results of operations or financial condition.
Biggest changeAdditionally, our Senior IT security department manager is an Offensive Security Certified Professional, and holds GIAC Security Leadership (GSLC), with over 26 years of experience in network performance, availability, and protection.
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.
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, AI security, and data protection, as well as the steps management has taken to monitor and control such exposures.
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.
Any identified risks are included in our overall risk management program, and internal 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.
However, any future potential risks from cybersecurity threats, including but not limited to exploitation of vulnerabilities, ransomware, denial of service, supply chain attacks, and the use of artificial intelligence by threat actors engaged in these activities, or other similar threats may materially affect us, including our execution of business strategy, reputation, results of operations and/or financial condition.
However, any future potential risks from cybersecurity threats, including but not limited to exploitation of vulnerabilities, ransomware, denial of service, supply chain attacks, and the use of AI by threat actors engaged in these activities, or other similar threats may materially affect us, including our execution of business strategy, reputation, results of operations and/or financial condition.
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.
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 25 Table of Contents Information Assurance Certification (GIAC) Defensible Security Architecture, GIAC Forensic Examiner, GIAC Incident Handling, and GIAC Open Source Intelligence.
For additional information regarding cybersecurity threats, see 'Item 1A. Risk Factors' of this Form 10-K. 27 Table of Contents
For additional information regarding cybersecurity threats, see 'Item 1A. Risk Factors' of this Form 10-K. 26 Table of Contents
Additional oversight for assessing and managing cybersecurity risk include Executive sponsors, IT, 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 ERM teams. 26 Table of Contents We have in place an incident response plan to identify, protect, detect, respond to, and recover from cybersecurity threats and incidents.
Additional oversight for assessing and managing cybersecurity risk include Executive sponsors, IT, HR, IT Governance Risk and Compliance, Internal Audit, and Legal, as well as members of our Information Security Risk Council, IT Risk Committee, and ERM teams. We have in place an incident response plan to identify, protect, detect, respond to, and recover from cybersecurity threats and incidents.
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.
This training consists of educational material and compliance testing administered to all of our employees, which is 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.
Our SVP IT Infrastructure & Security holds a Cybersecurity and Privacy Law Certificate from Mitchell Hamline School of Law, and has 29 years of experience in systems, network, and database administration.
Our SVP IT Infrastructure & Security holds a Cybersecurity and Privacy Law Certificate from Mitchell Hamline School of Law, is also a Digital Directors Network (DDN) Boardroom Certified Qualified Technology Expert (OTE), and has 30 years of experience in systems, network, and database administration.
Added
Impact of Cybersecurity Threats We have not identified risks from cybersecurity threats, including as a result of previous cybersecurity incidents, which have materially affected or are reasonably likely to materially affect us to date, including our business strategy, results of operations or financial condition.

Item 2. Properties

Properties — owned and leased real estate

7 edited+1 added−2 removed0 unchanged
Biggest changeWe own, and in some cases, lease, the following facilities, excluding selling locations: Location Purpose Leased Tote Locations (ASRS) (1) Approximate Square Feet Winona, Minnesota Distribution center and home office 246,000 334,000 Indianapolis, Indiana Distribution center 547,000 (2) 1,078,000 Akron, Ohio Distribution center 103,000 188,000 Scranton, Pennsylvania Distribution center 106,000 187,000 Denton, Texas Distribution center 154,000 (3) 294,000 Atlanta, Georgia Distribution center 77,000 252,000 Seattle, Washington Distribution center 140,000 238,000 Modesto, California Distribution center and manufacturing facility 75,000 328,000 Salt Lake City, Utah Distribution center and packaging facility (three buildings) (4) X — 154,000 High Point, North Carolina Distribution center (two buildings) (5) 131,000 829,000 Kansas City, Kansas Distribution center 156,000 462,000 Jackson, Mississippi Distribution center — 271,000 Kitchener, Ontario, Canada Distribution center 128,000 242,000 Edmonton, Alberta, Canada Distribution center X — 38,000 Apodaca, Nuevo Leon, Mexico Distribution center X — 104,000 Dordrecht, Netherlands Distribution center X — 39,000 Saint Helens, United Kingdom Distribution center X — 14,000 Shanghai, China Distribution center X — 12,000 (1) Total number of tote locations for small parts storage included in facilities with an ASRS.
Biggest changeWe own, and in some cases, lease, the following facilities, excluding selling locations: Location Purpose Leased Tote Locations (ASRS) (1) Approximate Square Feet Winona, Minnesota Distribution center and home office 246,000 382,000 Indianapolis, Indiana Distribution center 547,000 (2) 1,078,000 Akron, Ohio Distribution center 103,000 190,000 Scranton, Pennsylvania Distribution center 106,000 187,000 Denton, Texas Distribution center 154,000 294,000 Atlanta, Georgia Distribution center 77,000 250,000 Seattle, Washington Distribution center 140,000 238,000 Modesto, California Distribution center and manufacturing facility 75,000 328,000 Magna, Utah Distribution center and packaging facility 102,000 (3) 291,000 High Point, North Carolina Distribution center 131,000 829,000 Kansas City, Kansas Distribution center 156,000 462,000 Jackson, Mississippi Distribution center — 271,000 Kitchener, Ontario, Canada Distribution center 128,000 242,000 Edmonton, Alberta, Canada Distribution center X — 38,000 Apodaca, Nuevo Leon, Mexico Distribution center X — 103,000 Johor, Malaysia Distribution center X — 38,000 Dordrecht, Netherlands Distribution center X — 39,000 Saint Helens, United Kingdom Distribution center X — 14,000 Shanghai, China Distribution center X — 12,000 (1) Total number of tote locations for small parts storage included in facilities with an ASRS.
Our experience has been that there is sufficient space suitable for our needs and available for leasing. ITEM 3. LEGAL PROCEEDINGS A description of our legal proceedings, if any, is contained in Note 11 of the Notes to Consolidated Financial Statements and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 29 Table of Contents PART II
Our experience has been that there is sufficient space suitable for our needs and available for leasing. ITEM 3. LEGAL PROCEEDINGS A description of our legal proceedings, if any, is contained in Note 11 of the Notes to Consolidated Financial Statements and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
If economic conditions are suitable in the future, we will consider purchasing branch locations to house our older branches. It is anticipated the majority of new branch locations will continue to be leased. It is our policy to negotiate relatively short lease terms to facilitate relocation of particular branch operations, when desirable.
If economic conditions are suitable in the future, we will consider purchasing branch locations to house our older branches. It is anticipated the majority of new branch 27 Table of Contents locations will continue to be leased. It is our policy to negotiate relatively short lease terms to facilitate relocation of particular branch operations, when desirable.
We also own, and in some cases, lease, the following support facilities, excluding selling locations: Location Purpose Leased Approximate Square Feet Winona, Minnesota Manufacturing facility 121,000 Indianapolis, Indiana Manufacturing facility 194,000 Houston, Texas Manufacturing facility 114,000 Wallingford, Connecticut Manufacturing facility 177,000 Rockford, Illinois Manufacturing facility 101,000 Johor, Malaysia Manufacturing facility 30,000 Brno-Lisen, Czech Republic Manufacturing facility X 20,000 Leeds, United Kingdom Manufacturing facility X 28,000 Winona, Minnesota Multiple facilities for office space, storage, and packaging operations 419,000 Bangalore, India International information technology office X 67,000 In addition, we own 151 buildings that house our in-market locations in various cities throughout North America.
We also own, and in some cases, lease, the following support facilities, excluding selling locations: Location Purpose Leased Approximate Square Feet Winona, Minnesota Manufacturing facility 121,000 Indianapolis, Indiana Manufacturing facility 194,000 Houston, Texas Manufacturing facility 114,000 Wallingford, Connecticut Manufacturing facility 177,000 Rockford, Illinois Manufacturing facility 101,000 Johor, Malaysia Manufacturing facility 30,000 Brno-Lisen, Czech Republic Manufacturing facility X 20,000 Leeds, United Kingdom Manufacturing facility X 28,000 Winona, Minnesota Multiple facilities for office space, storage, and packaging operations 371,000 Bangalore, India International information technology office X 67,000 In addition, we own 147 buildings that house our branch locations in various cities throughout North America.
ITEM 2. PROPERTIES Note – Information in this section is as of December 31, 2024, unless otherwise noted.
ITEM 2. PROPERTIES Note – Information in this section is as of December 31, 2025, unless otherwise noted.
All other buildings we occupy are leased. On average, leased in-market locations range from approximately 3,000 to 15,000 square feet, with lease terms of up to 144 months (most initial lease terms are for 36 to 60 months). 28 Table of Contents We currently own land for future distribution center expansion and development.
All other buildings we occupy are leased. On average, leased locations range from approximately 3,000 to 15,000 square feet, with lease terms of up to 144 months (most initial lease terms are for 36 to 60 months). We currently own land for future distribution center expansion and development.
(2) This property contains an ASRS with a capacity of 52,000 pallet locations, in addition to the 547,000 tote locations for small parts. (3) In March of 2024, we installed a new ASRS that has a capacity of 154,000 tote locations for small parts.
(2) This property contains an ASRS with a capacity of 52,000 pallet locations, in addition to the 547,000 tote locations for small parts. (3) In 2025, we began operating out of our newly-built distribution center in Magna, Utah.
Removed
This property contains an ASRS with a capacity of 14,000 pallet locations, in addition to the 154,000 tote locations for small parts. (4) During 2021, we acquired land for future expansion of our distribution center in Magna, Utah. This building is expected to be complete in June of 2025 and will be approximately 290,000 square feet.
Added
Previously, we rented three buildings in the Salt Lake City area to run our regional operations which are now consolidated into the Magna, Utah building.
Removed
(5) In December 2018, we purchased an additional distribution center in High Point, North Carolina with approximately 750,000 total square feet. We currently utilize approximately 355,000 square feet for distribution activities and the other 395,000 square feet will be renovated in 2025 for additional distribution space.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures 29 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 30 Item 6. Reserved 31 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 54 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 28 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities 28 Item 6. Reserved 29 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed2 unchanged
Biggest changeAs of January 21, 2025, there were approximately 900 record holders of our common stock, which include nominees or broker dealers holding stock on behalf of an estimated 767,000 beneficial owners.
Biggest changeAs of January 21, 2026, there were approximately 900 record holders of our common stock, which include nominees or broker dealers holding stock on behalf of an estimated 1,029,000 beneficial owners. Dividends We have a long history of paying regular cash dividends, and our Board of Directors evaluates the dividend rate on an ongoing basis.
The comparison of total shareholder returns in the performance graph assumes that $100 was invested on December 31, 2019 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.
The comparison of total shareholder returns in the performance graph assumes that $100 was invested on December 31, 2020 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations' under 'Liquidity and Capital Resources' - 'Stock Purchases'. 30 Table of Contents Fastenal Company Common Stock Comparative Performance Graph Set forth below is a graph comparing, for the five years ended December 31, 2024, 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations' under 'Liquidity and Capital Resources' - 'Stock Purchases'. 28 Table of Contents Fastenal Company Common Stock Comparative Performance Graph Set forth below is a graph comparing, for the five years ended December 31, 2025, 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.
Issuer Purchases of Equity Securities The table below sets forth information regarding purchases of our common stock during each of the last three months of 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1-31, 2024 0 $0.00 0 6,200,000 November 1-30, 2024 0 $0.00 0 6,200,000 December 1-31, 2024 0 $0.00 0 6,200,000 Total 0 $0.00 0 6,200,000 (1) As of December 31, 2024, we had remaining authority to repurchase 6,200,000 shares of our common stock under the July 12, 2022 authorization, which originally authorized the repurchase of up to 8,000,000 shares.
Issuer Purchases of Equity Securities The table below sets forth information regarding purchases of our common stock during each of the last three months of 2025: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1-31, 2025 0 $0.00 0 12,400,000 November 1-30, 2025 0 $0.00 0 12,400,000 December 1-31, 2025 0 $0.00 0 12,400,000 Total 0 $0.00 0 12,400,000 (1) As of December 31, 2025, we had authority to repurchase 12,400,000 shares of our common stock under the July 12, 2022 authorization, which originally authorized the repurchase of up to 16,000,000 shares.
Comparison of Five-Year Cumulative Total Return Among Fastenal Company, the S&P 500 Index, and the Dow Jones US Industrial Suppliers Index 2019 2020 2021 2022 2023 2024 Fastenal Company $ 100.00 136.57 183.05 138.50 195.65 222.04 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 Dow Jones US Industrial Suppliers Index 100.00 126.43 168.93 146.64 217.57 247.40 Note - The graph and index table above were obtained from Zacks SEC Compliance Services Group.
Comparison of Five-Year Cumulative Total Return Among Fastenal Company, the S&P 500 Index, and the Dow Jones US Industrial Suppliers Index 2020 2021 2022 2023 2024 2025 Fastenal Company $ 100.00 134.04 101.41 143.26 162.59 185.35 S&P 500 Index 100.00 128.71 105.40 133.10 166.40 196.16 Dow Jones US Industrial Suppliers Index 100.00 133.61 115.98 172.08 195.68 219.37 Note - The graph and index table above were obtained from Zacks SEC Compliance Services Group.
Added
While future dividends remain subject to Board approval and our financial performance, liquidity needs, and market conditions, we currently expect to continue paying cash dividends on a basis generally consistent with historical practice.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+32 added−102 removed26 unchanged
Biggest changeBy doing these things every day, Fastenal remains a growth-centric organization. 32 Table of Contents Executive Overview The following table presents a performance summary of our results of operations for the periods ended December 31. 2024 2023 YOY Change 2022 YOY Change Net sales $ 7,546.0 7,346.7 2.7 % $ 6,980.6 5.2 % Business days 255 253 254 Daily sales $ 29.6 29.0 1.9 % $ 27.5 5.7 % Gross profit $ 3,401.9 3,354.5 1.4 % $ 3,215.8 4.3 % % of net sales 45.1 % 45.7 % 46.1 % SG&A expenses $ 1,891.9 1,825.8 3.6 % $ 1,762.2 3.6 % % of net sales 25.1 % 24.9 % 25.2 % Operating income $ 1,510.0 1,528.7 -1.2 % $ 1,453.6 5.2 % % of net sales 20.0 % 20.8 % 20.8 % Income before income taxes $ 1,508.1 1,522.0 -0.9 % $ 1,440.0 5.7 % % of net sales 20.0 % 20.7 % 20.6 % Net income $ 1,150.6 1,155.0 -0.4 % $ 1,086.9 6.3 % Diluted net income per share $ 2.00 2.02 -0.6 % $ 1.89 6.7 % Note – Daily sales are defined as the total net sales for the period divided by the number of business days (in the U.S.) in the period.
Biggest changeHowever, the ultimate impact of ongoing macroeconomic conditions, including recent tariff-related developments, remains uncertain and cannot be predicted at this time. 30 Table of Contents Executive Overview The following table presents a performance summary of our results of operations for the periods ended December 31. 2025 2024 YOY Change Net sales $ 8,200.5 7,546.0 8.7 % Business days 254 255 Daily sales $ 32.3 29.6 9.1 % Gross profit $ 3,691.2 3,401.9 8.5 % % of net sales 45.0 % 45.1 % SG&A expenses $ 2,035.5 1,891.9 7.6 % % of net sales 24.8 % 25.1 % Operating income $ 1,655.7 1,510.0 9.6 % % of net sales 20.2 % 20.0 % Income before income taxes $ 1,655.0 1,508.1 9.7 % % of net sales 20.2 % 20.0 % Net income $ 1,258.4 1,150.6 9.4 % Diluted net income per share $ 1.09 1.00 9.2 % Note – Daily sales are defined as the total net sales for the period divided by the number of business days (in the U.S.) in the period.
We have excluded 2020 from the average as the effects of the pandemic created unusual sequential patterns that we do not consider representative of normal trends. We believe this time frame serves to show the historical pattern and could serve as a benchmark. The '2024' and '2023' lines represent our actual sequential daily sales changes.
We have excluded 2020 from the average as the effects of the pandemic created unusual sequential patterns that we do not consider representative of normal trends. We believe this time frame serves to show the historical pattern and could serve as a benchmark. The '2025' and '2024' lines represent our actual sequential daily sales changes.
The '24Delta' and '23Delta' lines indicate the difference between the 'Benchmark' and the actual results in the respective year. Under normal circumstances, the sequential trends shown below are directly linked to fluctuations in our end markets. Further, in any given month it is possible to get significant deviation from the benchmark.
The '25Delta' and '24Delta' lines indicate the difference between the 'Benchmark' and the actual results in the respective year. Under normal circumstances, the sequential trends shown below are directly linked to fluctuations in our end markets. Further, in any given month it is possible to get significant deviation from the benchmark.
All other SG&A expenses include: (1) selling-related transportation, (2) IT expenses, (3) general corporate expenses, which consists of legal expenses, general insurance expenses, travel and marketing expenses, etc., and (4) sales of property and equipment. Combined, all other SG&A expenses increased in 2024 from 2023.
All other SG&A expenses include: (1) selling-related transportation, (2) IT expenses, (3) general corporate expenses, which consists of legal expenses, general insurance expenses, travel and marketing expenses, etc., and (4) sales of property and equipment. Combined, all other SG&A expenses increased in 2025 from 2024.
Recently Issued and Adopted Accounting Pronouncements A description of recently issued and adopted accounting pronouncements, if any, is contained in Note 1 of the Notes to Consolidated Financial Statements. 53 Table of Contents
Recently Issued and Adopted Accounting Pronouncements A description of recently issued and adopted accounting pronouncements, if any, is contained in Note 1 of the Notes to Consolidated Financial Statements. 41 Table of Contents
Debt In order to fund the considerable cash needed to expand our industrial vending business, expand capacity and increase the use of automation in our distribution centers, and pay dividends, we have borrowed under our Credit Facility and our Master Note Agreement in recent periods.
Debt In order to fund the considerable cash needed to expand our industrial vending business, expand capacity and increase the use of automation in our distribution centers, and pay dividends, we have borrowed under the Credit Facility and our Master Note Agreement historically.
Geographically, our branches, Onsite locations, and customers are primarily located in North America, though we continue to grow our non-North American presence as well. It is helpful to appreciate several aspects of our marketplace: First, it is big and fragmented.
Geographically, our selling locations and customers are primarily located in North America, though we continue to grow our non-North American presence as well. It is helpful to appreciate several aspects of our marketplace: First, it is big and fragmented.
Third, many customers prefer to reduce their number of MRO and OEM suppliers to simplify their business, while also utilizing various technologies and models (including our local branches when they need something quickly or unexpectedly) to improve availability and reduce waste. Lastly, we believe the markets are efficient.
Third, many customers prefer to reduce their number of indirect and direct suppliers to simplify their business, while also utilizing various technologies and models (including our local branches when they need something quickly or unexpectedly) to improve availability and reduce waste. Lastly, we believe the markets are efficient.
Approximate Percentage of Total SG&A Expenses Twelve-month Period 2024 2023 Employee-related expenses 70% to 75% 3.2 % 3.4 % Occupancy-related expenses 15% to 20% 2.1 % 4.2 % All other SG&A expenses 10% to 15% 8.1 % 4.2 % Employee-related expenses include: (1) payroll (which includes cash compensation, stock option expense, and profit sharing), (2) health care, (3) personnel development, and (4) social taxes.
Approximate Percentage of Total SG&A Expenses Twelve-month Period 2025 2024 Employee-related expenses 70% to 75% 9.0 % 3.2 % Occupancy-related expenses 15% to 20% 5.2 % 2.1 % All other SG&A expenses 10% to 15% 2.5 % 8.1 % Employee-related expenses include: (1) payroll (which includes cash compensation, stock option expense, and profit sharing), (2) health care, (3) personnel development, and (4) social taxes.
The increase in our accounts receivable balance in 2024 was primarily attributable to growth in sales to our customers. Our inventory balances over time will respond to business activity, though various factors produce a looser relationship to our monthly sales patterns than we tend to experience in accounts receivable. One reason for this is because it is cyclical.
Th e increase in our accounts receivable balance in 2025 was primarily attributable to growth in sales to our customers. Our inventory balances over time will respond to business activity, though various factors produce a looser relationship to our monthly sales patterns than we tend to experience in accounts receivable. One reason for this is because it is cyclical.
Note – Amounts may not foot due to rounding difference. 36 Table of Contents A graph of the sequential daily sales change patterns discussed above, starting with a base of '100' in the previous October and ending with the next October, would be as follows: End Market Performance We estimate approximately 70% to 75% of our business is with customers engaged in some type of manufacturing, a significant subset of which finds its way into the heavy equipment market.
Note – Amounts may not foot due to rounding. 34 Table of Contents A graph of the sequential daily sales change patterns discussed above, starting with a base of '100' in the previous October and ending with the next October, would be as follows: End Market Performance We estimate approximately 71% to 76% of our business is with customers engaged in some type of manufacturing, a significant subset of which finds its way into the heavy equipment market.
Dec. 2024 1.6 % 2.6 % 1.8 % 0.7 % 1.5 % 3.3 % 0.5 % 2.1 % 3.2 % 2.8 % 3.4 % 0.0 % 2023 11.2 % 9.6 % 6.8 % 7.8 % 5.2 % 4.7 % 3.7 % 3.6 % 5.0 % 1.9 % 3.8 % 5.3 % Sequential Trends We find it helpful to think about the monthly sequential changes in our business using the analogy of climbing a stairway – This stairway has several predictable landings where there is a pause in the sequential gain (i.e., April, July, and October to December), but generally speaking, climbs from January to October.
Dec. 2025 1.9 % 5.0 % 8.3 % 6.5 % 9.3 % 9.8 % 12.8 % 11.8 % 10.2 % 11.3 % 11.8 % 10.7 % 2024 1.6 % 2.6 % 1.8 % 0.7 % 1.5 % 3.3 % 0.5 % 2.1 % 3.2 % 2.8 % 3.4 % 0.0 % 33 Table of Contents Sequential Trends We find it helpful to think about the monthly sequential changes in our business using the analogy of climbing a stairway – This stairway has several predictable landings where there is a pause in the sequential gain (i.e., April, July, and October to December), but generally speaking, climbs from January to October.
CURRENT YEAR RESULTS ENDED 2024 Results of Operations The following table sets forth consolidated statements of income information (as a percentage of net sales) for the periods ended December 31: 2024 2023 Net sales 100.0 % 100.0 % Gross profit 45.1 % 45.7 % SG&A expenses 25.1 % 24.9 % Operating income 20.0 % 20.8 % Net interest expense 0.0 % -0.1 % Income before income taxes 20.0 % 20.7 % Note – Amounts may not foot due to rounding difference.
CURRENT YEAR RESULTS ENDED 2025 Results of Operations The following table sets forth consolidated statements of income information (as a percentage of net sales) for the periods ended December 31: 2025 2024 Net sales 100.0 % 100.0 % Gross profit 45.0 % 45.1 % SG&A expenses 24.8 % 25.1 % Operating income 20.2 % 20.0 % Net interest 0.0 % 0.0 % Income before income taxes 20.2 % 20.0 % Note – Amounts may not foot due to rounding.
The DSR changes to our manufacturing customers, when compared to the same periods in the prior year, were as follows: DSR change - manufacturing customers Q1 Q2 Q3 Q4 Annual 2024 2.6 % 2.7 % 3.0 % 3.3 % 2.9 % 2023 14.4 % 10.4 % 6.2 % 4.7 % 8.9 % We estimate approximately 25% to 30% of our business is with customers engaged in a wide range of activities, none of which individually constitute 10% of sales.
The DSR changes to our manufacturing customers, when compared to the same periods in the prior year, were as follows: DSR change - manufacturing customers Q1 Q2 Q3 Q4 Annual 2025 6.8 % 9.2 % 12.7 % 12.8 % 10.4 % 2024 2.6 % 2.7 % 3.0 % 3.3 % 2.9 % We estimate approximately 24% to 29% of our business is with customers engaged in a wide range of activities, none of which individually constitute 10% of sales.
First, our inventory increased as a result of growth in sales to our customers and the addition of stock to ensure we can support our customers' future growth. Second, we added $30.0 to $35.0 in stock to improve service to our in-market locations and generate efficiencies in our hubs.
First, our inventory increased as a result of growth in sales to our customers and the addition of stock to ensure we can support our customers' future growth. Second, we added stock to improve service to our selling locations and generate efficiencies in our hubs.
The approximate percentage mix of inventory stocked at our selling locations versus our distribution center and manufacturing locations was as follows at year end: 2024 2023 Selling locations 59 % 64 % Distribution center and manufacturing locations 41 % 36 % Total 100 % 100 % Lease Obligations We have facilities, equipment, and vehicles leased under operating leases.
The approximate percentage mix of inventory stocked at our selling locations versus our distribution center and manufacturing locations was as follows at year end: 2025 2024 Selling locations 54 % 59 % Distribution center and manufacturing locations 46 % 41 % Total 100 % 100 % Lease Obligations We have facilities, equipment, and vehicles leased under operating leases.
We have authority to purchase up to 6,200,000 additional shares of our common stock under the July 12, 2022 authorization. This authorization does not have an expiration date.
We have authority to purchase up to 12,400,000 shares of our common stock under the July 12, 2022 authorization. This authorization does not have an expiration date.
As of December 31, 2024, we had loans outstanding under the Master Note Agreement of $200.0. Descriptions of our Credit Facility and Master Note Agreement are contained in Note 9 of the Notes to Consolidated Financial Statements.
As of December 31, 2025, we had loans outstanding under the Master Note Agreement of $125.0. Descriptions of the Credit Facility and Master Note Agreement are contained in Note 9 of the Notes to Consolidated Financial Statements.
Occupancy-related expenses include: (1) building rent and depreciation, (2) building utility costs, (3) equipment related to our branches and distribution locations, and (4) industrial vending equipment and bins utilized as part of FMI services (we consider this hardware to be a logical extension of our in-market operations and classify the depreciation and repair costs as occupancy expenses).
Occupancy-related expenses include: (1) building rent and depreciation, (2) building utility costs, (3) equipment related to our branches and distribution locations, and (4) industrial vending equipment and bins utilized as part of FMI services (we consider this hardware to be a logical extension of our operations and classify the depreciation and repair costs as occupancy expenses). 36 Table of Contents Our occupancy-related expenses increased in 2025 from 2024.
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.
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 government entities, schools, warehouse and storage, data centers, and certain retail trades.
Benchmark (2) 0.1 % 1.6 % 3.3 % -0.7 % 2.5 % 1.4 % -3.2 % 2.7 % 3.6 % -2.1 % 9.2 % 2024 -0.7 % 2.7 % 0.2 % -1.3 % 1.5 % 1.6 % -5.3 % 3.0 % 5.1 % -3.4 % 3.6 % 24Delta -0.8 % 1.1 % -3.1 % -0.6 % -1.1 % 0.2 % -2.1 % 0.3 % 1.5 % -1.3 % -5.6 % 2023 -0.4 % 1.7 % 1.0 % -0.2 % 0.7 % -0.2 % -2.6 % 1.3 % 4.0 % -3.0 % 2.3 % 23Delta -0.5 % 0.1 % -2.3 % 0.5 % -1.9 % -1.5 % 0.5 % -1.4 % 0.4 % -0.9 % -6.8 % (1) The January figures represent the percentage change from the previous October, whereas the remaining figures represent the percentage change from the previous month.
Benchmark (2) 0.2 % 1.3 % 2.9 % -1.5 % 2.7 % 0.9 % -3.5 % 2.5 % 4.0 % -2.2 % 7.1 % 2025 -1.6 % 5.8 % 3.3 % -2.9 % 4.1 % 2.0 % -2.7 % 2.1 % 3.6 % -2.5 % 13.1 % 25Delta -1.8 % 4.5 % 0.4 % -1.4 % 1.4 % 1.1 % 0.8 % -0.4 % -0.4 % -0.3 % 6.0 % 2024 -0.7 % 2.7 % 0.2 % -1.3 % 1.5 % 1.6 % -5.3 % 3.0 % 5.1 % -3.4 % 3.6 % 24Delta -0.9 % 1.4 % -2.7 % 0.1 % -1.2 % 0.7 % -1.8 % 0.4 % 1.2 % -1.2 % -3.5 % (1) The January figures represent the percentage change from the previous October, whereas the remaining figures represent the percentage change from the previous month.
Property and equipment expenditures typically consist primarily of: (1) purchases related to FMI hardware, (2) purchases of property and equipment related to expansion of and enhancements to distribution centers, owned or leased branch properties, and other company facilities, (3) spending on software and hardware for our information processing systems, (4) the addition of fleet vehicles, and (5) the addition of manufacturing equipment.
Our capital spending typically falls into five categories: (1) purchases related to FMI hardware, (2) purchases of property and equipment related to expansion of and enhancements to distribution centers, owned or leased branch properties, and other company facilities, (3) spending on software and hardware for our information processing systems, (4) the addition of fleet vehicles, and (5) the addition of manufacturing equipment.
A third factor that tends to require incremental inventory increases over time is our growth drivers, including our FMI offerings, Onsite channel, and international expansion, all of which tend to require significant investments in inventory. The increase in our inventory balance in 2024 was primarily attributable to three factors.
A third factor that tends to require incremental inventory increases over time is our growth drivers, including our FMI offerings, customer contract signings, and international expansion, all of which tend to require significant investments in inventory. The increase in our inventory balance in 2025 was primarily attributable to four factors.
Sales The table below sets forth net sales and daily sales for the periods ended December 31, and changes in such sales from the prior period to the more recent period: 2024 2023 Net sales $ 7,546.0 7,346.7 Percentage change 2.7 % 5.2 % Business days 255 253 Daily sales $ 29.6 29.0 Percentage change 1.9 % 5.7 % Daily sales impact of currency fluctuations -0.1 % -0.3 % 34 Table of Contents The increase in net sales noted above for 2024 was primarily due to higher unit sales of MRO, OEM, and construction supplies.
Sales The table below sets forth net sales and daily sales for the periods ended December 31, and changes in such sales from the prior period to the more recent period: 2025 2024 Net sales $ 8,200.5 7,546.0 Percentage change 8.7 % 2.7 % Business days 254 255 Daily sales $ 32.3 29.6 Percentage change 9.1 % 1.9 % Daily sales impact of currency fluctuations 0.0 % -0.1 % The increase in net sales noted above for 2025 was primarily due to higher unit sales of Direct (OEM/Production) materials, Indirect (MRO/Facilities Maintenance) materials, and construction supplies.
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%.
We believe higher unit sales in 2025 were primarily a result of our ability to gain market share, as most measures of industrial activity were flat to slightly up throughout the period. Despite this challenging environment, in 2025 we produced net sales growth of 8.7% and, owing to one less selling day in the period, daily sales growth of 9.1%.
The increase in interest income and the reduction in interest expense resulted in net interest expense of $1.9 in 2024 compared to $6.7 in 2023. 39 Table of Contents Income Taxes We recorded income tax expense of $357.5 in 2024, or 23.7% of income before income taxes, compared to $367.0 in 2023, or 24.1% of income before income taxes.
The slight increase in interest income and the reduction in interest expense resulted in net interest expense of $0.7 in 2025 compared to $1.9 in 2024. Income Taxes We recorded income tax expense of $396.6 in 2025, or 24.0% of income before income taxes. Income tax expense was $357.5 in 2024, or 23.7% of income before income taxes .
We distribute these supplies through a network of more than 3,600 in-market locations. Our largest end market is manufacturing. Sales to these customers include products for both OEM, where our products are consumed in the final products of our customers, and MRO, where our products are consumed to support the facilities and ongoing operations of our customers.
We distribute these supplies through a network of approximately 1,600 branch locations. Our largest end market is manufacturing. Sales to these customers include products for both direct materials, where our products are consumed in the final products of our customers, and indirect materials, where our products are consumed to support the facilities and ongoing operations of our customers.
(2) Organizational support personnel consists of: (1) Sales & Growth Driver Support personnel (35% to 40% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) IT personnel (35% to 40% of category); and (3) Administrative Support personnel (22% to 27% of category), which includes human resources, FSB, accounting and finance, senior management, etc.
(3) Organizational support personnel consists of: (1) Sales Support personnel (37% to 42% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) IT personnel (34% to 39% of category); and (3) Administrative Support personnel (22% to 27% of category), which includes HR, FSB, accounting and finance, senior management, etc.
We saw modest economic contraction in our key markets in 2024. The Institute for Supply Management's Purchasing Manager's Index (PMI) for the U.S. averaged 48.3 for the full year and remained below 50, the threshold demarcating manufacturing growth or contraction, in 11 out of 12 months. Business activity as measured by U.S.
Market conditions were sluggish in our key markets in 2025. The Institute for Supply Management's Purchasing Manager's Index (PMI) for the U.S. averaged 48.9 for the full year and remained below 50, the threshold demarcating manufacturing growth or contraction, in 10 out of 12 months. Business activity as measured by U.S.
Net Income Net income, net income per share, the percentage change in net income, and the percentage change in net income per share, were as follows: Dollar Amounts 2024 2023 Net income $ 1,150.6 1,155.0 Basic net income per share 2.01 2.02 Diluted net income per share 2.00 2.02 Percentage Change 2024 2023 Net income -0.4 % 6.3 % Basic net income per share -0.6 % 6.7 % Diluted net income per share -0.6 % 6.7 % 2024 2023 Tax Rate 23.7 % 24.1 % During 2024, net income per share decreased.
Net Income Net income, net income per share, the percentage change in net income, and the percentage change in net income per share, were as follows: Dollar Amounts 2025 2024 Net income $ 1,258.4 1,150.6 Basic net income per share 1.10 1.00 Diluted net income per share 1.09 1.00 Percentage Change 2025 2024 Net income 9.4 % -0.4 % Basic net income per share 9.2 % -0.6 % Diluted net income per share 9.2 % -0.6 % 2025 2024 Tax Rate 24.0 % 23.7 % During 2025, net income per share increased.
Our borrowings under the Credit Facility and Master Note Agreement peaked during each quarter of 2024 as follows: Peak borrowings 2024 First quarter $ 390.0 Second quarter 300.0 Third quarter 305.0 Fourth quarter 300.0 43 Table of Contents As of December 31, 2024, we had $0.0 outstanding under the Credit Facility and had contingent obligations from letters of credit outstanding under the Credit Facility in an aggregate face amount of $31.2.
Our borrowings under the Credit Facility and Master Note Agreement peaked during each quarter of 2025 as follows: Peak borrowings 2025 First quarter $ 320.0 Second quarter 365.0 Third quarter 265.0 Fourth quarter 185.0 As of December 31, 2025, we had $0.0 outstanding under the Credit Facility and had contingent obligations from letters of credit outstanding under the Credit Facility in an aggregate face amount of $29.7.
As previously addressed, we believe these markets contracted slightly in 2024. Our manufacturing end markets outperformed primarily due to the relative strength we are experiencing with key account customers with significant managed spend where our service model and technology is particularly impactful. This disproportionately benefits manufacturing customers.
The manufacturing environment remained sluggish in 2025. O ur manufacturing end markets outperformed primarily due to the relative strength we are experiencing with key account customers with significant managed spend where our service model and technology is particularly impactful. This disproportionately benefits manufacturing customers.
We effectively increased the penetration of key growth initiatives in 2024, as judged by installations and adoption, which enhanced the value we provide to our customers and supported our growth and efficiency. This was achieved through three areas.
We effectively increased the penetration of key growth initiatives in 2025, as judged by installations and adoption, which enhanced the value we provide to our customers and supported our growth and efficiency. This was achieved through three areas. Fi rst, we signed 25,892 FMI MEUs, meeting our goal of 25,000 to 26,000 MEU.
The table below summarizes our absolute and full-time equivalent (FTE; based on 40 hours per week) employee headcount, our investments related to in-market locations (defined as the sum of the total number of branch locations and the total number of active Onsite locations), and weighted FMI devices at the end of the periods presented and the percentage change compared to the end of the prior period.
The table below summarizes our absolute and full time equivalent (FTE; based on 40 hours per week) employee headcount, number of branch locations, number of customer sites summarized by monthly spend band, and weighted FMI devices at the end of the periods presented and the percentage change compared to the end of the prior period.
The decrease in operating cash flow, as a percent of net income, primarily reflects our operating assets and liabilities being a use of cash in 2024 as compared to a source of cash in 2023.
In 2025, we experienced a slight increase in our operating cash flow as a percentage of net income. The increase in operating cash flow, as a percent of net income, primarily reflects our operating assets and liabilities being a slightly less use of cash in 2025 as compared to 2024.
Set forth below is a recap of our 2024 and 2023 net capital expenditures in dollars and as a percentage of net sales and net income: 2024 2023 Manufacturing, warehouse and packaging equipment, industrial vending equipment, and facilities $ 145.8 83.9 Shelving and related supplies for in-market location openings and for product expansion at existing in-market locations 23.5 24.0 Data processing software and equipment 25.5 33.4 Real estate and improvements to branch locations 8.7 7.0 Vehicles 23.0 24.5 Purchases of property and equipment 226.5 172.8 Proceeds from sale of property and equipment (12.4) (12.2) Net capital expenditures 214.1 160.6 % of net sales 2.8 % 2.2 % % of net income 18.6 % 13.9 % Our net capital expenditures in 2024 increased when compared to 2023, though they were below our anticipated range of $235.0 to $255.0 for the year.
Set forth below is a recap of our 2025 and 2024 net capital expenditures in dollars and as a percentage of net sales and net income: 2025 2024 Manufacturing, warehouse and packaging equipment, industrial vending equipment, and facilities $ 160.1 145.8 Shelving and related supplies for selling location openings and for product expansion at existing selling locations 27.3 23.5 Data processing software and equipment 34.7 25.5 Real estate and improvements to branch locations 6.9 8.7 Vehicles 16.3 23.0 Purchases of property and equipment 245.3 226.5 Proceeds from sale of property and equipment (14.8) (12.4) Net capital expenditures (1) 230.6 214.1 % of net sales 2.8 % 2.8 % % of net income 18.3 % 18.6 % (1) Amounts may not foot due to rounding.
A discussion of our lease obligations is contained in Note 8 of the Notes to Consolidated Financial Statements. 41 Table of Contents Net Cash Used in Investing Activities Net cash used in investing activities in dollars and as a percentage of net income were as follows: 2024 2023 Net cash used $ 214.5 161.2 % of net income 18.6 % 14.0 % Our net cash used in investing activities increased in 2024 from 2023.
A discussion of our lease obligations is contained in Note 8 of the Notes to Consolidated Financial Statements. 38 Table of Contents Net Cash Used in Investing Activities Net cash used in investing activities in dollars and as a percentage of net income were as follows: Five-Year Average (1) 2025 2024 Net cash used $ 193.8 $ 231.0 214.5 % of net income 19.3 % 18.4 % 18.6 % (1) Five-year average includes 2020 to 2024.
A significant proportion of our products, particularly fasteners, are sourced from Asia and transported primarily by ship and rail to our North American network for sale. This requires us to purchase a meaningful quantity of our products months in advance of those products being available for sale in our North American facilities.
A significant proportion of our products, particularly fasteners, are sourced from Asia and transported primarily by ship and rail to our North American network for sale.
Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgments based on our understanding and analysis of relevant circumstances, historical experience, and actuarial valuations. Actual amounts could differ from those estimated at the time the consolidated financial statements are prepared.
In reaching such decisions, we apply judgments based on our understanding and analysis of relevant circumstances, historical experience, and actuarial valuations. Actual amounts could differ from those estimated at the time the consolidated financial statements are prepared. Our most significant accounting policies, including Revenue Recognition and Inventories, are described in Note 1 of the Notes to Consolidated Financial Statements.
Our occupancy-related expenses increased in 2024 from 2023.
Our employee-related expenses increased in 2025 from 2024.
The table below summarizes the percentage change in our FTE headcount at the end of the periods presented compared to the end of the prior period: Twelve-month Period 2024 2023 Selling personnel (1) -0.1 % 4.1 % Distribution/Transportation personnel 3.7 % 4.2 % Manufacturing personnel 3.7 % 0.1 % Organizational support personnel (2) 6.0 % 8.6 % Total personnel 1.1 % 4.4 % (1) Of our Selling Personnel, 80%-85% are attached to a specific in-market location.
The table below summarizes the percentage change in our FTE headcount at the end of the periods presented compared to the end of the prior period: Twelve-month Period 2025 2024 (1) Selling personnel (2) 2.8 % 0.0 % Distribution/Transportation personnel 2.0 % 2.5 % Manufacturing personnel 2.4 % 8.0 % Organizational support personnel (3) 6.9 % 5.2 % Total personnel 3.1 % 1.1 % (1) In the fourth quarter of 2024, we realigned certain employees as a result of a routine review of our organizational structure.
Third, we expect greater outlays for FMI hardware reflecting an increase in our targeted signings. 42 Table of Contents Net Cash Used in Financing Activities Net cash used in financing activities in dollars and as a percentage of income were as follows: 2024 2023 Cash dividends paid $ 893.3 1,016.8 % of net income 77.6 % 88.0 % Total returned to shareholders $ 893.3 1,016.8 % of net income 77.6 % 88.0 % Proceeds from the exercise of stock options $ (39.6) (30.1) % of net income -3.4 % -2.6 % Debt obligations payments (proceeds), net $ 60.0 295.0 % of net income 5.2 % 25.5 % Net cash used $ 913.7 1,281.7 The decrease in net cash used in financing activities reflects two factors.
Third, we expect elevated IT spending as projects that were expected in 2025 experienced delays and are expected to continue throughout 2026. 39 Table of Contents Net Cash Used in Financing Activities Net cash used in financing activities in dollars and as a percentage of income were as follows: 2025 2024 Cash dividends paid $ 1,004.2 893.3 % of net income 79.8 % 77.6 % Total returned to shareholders $ 1,004.2 893.3 % of net income 79.8 % 77.6 % Proceeds from the exercise of stock options $ (24.3) (39.6) % of net income -1.9 % -3.4 % Debt obligations payments (proceeds), net $ 75.0 60.0 % of net income 6.0 % 5.2 % Net cash used $ 1,054.9 913.7 The increase in net cash used in financing activities reflects two factors.
Our employee-related expenses increased in 2024 from 2023. This was related to: higher base pay and employment taxes as a result of increased FTE during the period and moderate wage inflation; and higher healthcare costs due to growth in the number and size of claims.
This was related to: improvement in our sales and profitability generating significantly higher bonuses and commissions; higher base pay as a result of increased FTE during the period and moderate wage inflation; higher employment taxes; higher healthcare costs due to growth in the number and size of claims; and an increase in profit sharing expense reflecting improved sales and profit growth versus the prior year.
We continued to invest in areas, such as Onsite, technology and analytics personnel, and sales-related travel that we view as critical to supporting future growth.
We continued to invest in areas such as role specialization, technology, analytics personnel, and sales-related travel that we view as critical to supporting future growth. We managed expenses not directly related to customer acquisition and growth, which allowed us to leverage SG&A expenses in 2025.
Gross Profit The gross profit percentage during each period was as follows: Q1 Q2 Q3 Q4 Annual 2024 45.5 % 45.1 % 44.9 % 44.8 % 45.1 % 2023 45.7 % 45.5 % 45.9 % 45.5 % 45.7 % Our gross profit, as a percentage of net sales, was 45.1% in 2024 and 45.7% in 2023.
The DSR changes to our non-manufacturing customers, when compared to the same periods in the prior year, was as follows: DSR change - non-manufacturing customers Q1 Q2 Q3 Q4 Annual 2025 -0.6 % 6.7 % 8.4 % 6.3 % 5.2 % 2024 0.0 % -1.0 % -1.5 % -0.3 % -0.7 % 35 Table of Contents Gross Profit The gross profit percentage during each period was as follows: Q1 Q2 Q3 Q4 Annual 2025 45.1 % 45.3 % 45.3 % 44.3 % 45.0 % 2024 45.5 % 45.1 % 44.9 % 44.8 % 45.1 % Our gross profit, as a percentage of net sales, was 45.0% in 2025 and 45.1% in 2024.
The income tax impact of repatriating cash associated with investments in foreign subsidiaries is discussed in Note 7 of the Notes to Consolidated Financial Statements. Effects of Inflation We observed very modest deflationary conditions in 2024, primarily for fasteners.
The income tax impact of repatriating cash associated with investments in foreign subsidiaries is discussed in Note 7 of the Notes to Consolidated Financial Statements. Effects of Inflation We observed inflationary conditions in 2025, primarily related to the implementation of incremental tariffs on imported products. Steel and aluminum products and derivatives had the highest increases.
We estimate the disruption to operations and logistics from severe winter weather in January 2024 and hurricanes in September 2024, while meaningful in the months in which they occurred, were not material to net sales for the full year of 2024. Changes in product pricing did not have a material impact on net sales in 2024.
We estimate the disruption to operations and logistics from severe winter weather in January 2025, while meaningful in the month of January, was not material to net sales for the full year of 2025. Changes in product pricing resulted in 170 to 200 basis points of growth in net sales in 2025.
This primarily reflected improvement, as a percentage of net sales, in employee-related expenses as bonuses and commissions were down as a result of slower sales and profit growth in 2023 versus the prior year. The percentage change in employee-related, occupancy-related, and all other SG&A expenses compared to the same periods in the preceding year, is outlined in the table below.
The percentage change in employee-related, occupancy-related, and all other SG&A expenses compared to the same periods in the preceding year, is outlined in the table below.
In addition, we may have liabilities for uncertain tax positions but we do not believe any of these liabilities will be material. A discussion of income taxes is contained in Note 7 of the Notes to Consolidated Financial Statements. Unremitted Foreign Income Approximately $197.5 of cash and cash equivalents were held by non-U.S. subsidiaries on December 31, 2024.
A disc ussion of income taxes is contained in Note 7 of the Notes to Consolidated Financial Statements. 40 Table of Contents Unremitted Foreign Income Approximately $177.5 of cash and cash equivalents were held by non-U.S. subsidiaries on December 31, 2025.
Liquidity and Capital Resources Net Cash Provided by Operating Activities Net cash provided by operating activities in dollars and as a percentage of net income were as follows: 2024 2023 Net cash provided $ 1,173.3 1,432.7 % of net income 102.0 % 124.0 % In 2024, we experienced a decrease in our operating cash flow as a percentage of net income.
Liquidity and Capital Resources Net Cash Provided by Operating Activities Net cash provided by operating activities in dollars and as a percentage of net income were as follows: Five-Year Average (1) 2025 2024 Net cash provided $ 1,083.8 $ 1,295.9 1,173.3 % of net income 104.8 % 103.0 % 102.0 % (1) Five-year average includes 2020 to 2024.
This increase was primarily related to investments for net capital expenditures.
Our net cash used in investing activities increased in 2025 from 2024. This increase was primarily related to investments for net capital expenditures.
In 2024, we paid aggregate annual dividends per share of $1.56. In 2023, we paid aggregate annual dividends per share of $1.78, which included $1.40 per share in regular quarterly dividends and a $0.38 per share special dividend paid in December 2023. Stock Purchases We did not purchase any of our common stock in 2024 or 2023.
Dividends We declared a quarterly dividend of $0.240 per share on January 16, 2026. In 2025, we paid aggregate annual dividends per share of $0.875. In 2024, we paid aggregate annual dividends per share of $0.780. Stock Purchases We did not purchase any of our common stock in 2025 or 2024.
We had an increase in our distribution and transportation FTE personnel of 115 to support increased product throughput at our distribution facilities. We had an increase in our remaining FTE personnel of 137, which related primarily to personnel investments in manufacturing, quality control, IT, and business analytics.
W e had an increase in our remaining FTE personnel of 160, which related primarily to personnel investments in IT, quality control, and supply chain support.
We carried lower average borrowings relative to 2023 primarily from cash generated from working capital reductions enabling us to reduce outstanding revolver debt under our Credit Facility.
Net Interest Interest income slightly increased in 2025 and we had lower interest expense in 2025. We carried lower average borrowings relative to 2024 primarily from cash generated from higher net earnings enabling us to reduce outstanding revolver debt under the Credit Facility.
Volume growth in 2024 was not sufficient to produce SG&A leverage that could offset mix-related gross margin contraction, resulting in operating margin contraction that was only partially offset by our modest growth in sales, lower net interest expense, and a more favorable tax rate.
Volume growth in 2025 was sufficient to produce SG&A leverage that could offset mix-related gross margin contraction, resulting in operating margin expansion.
This was related to: slightly higher depreciation and expenses related to a higher installed base of our FMI suite of technologies; moderately higher costs and depreciation for the maintenance, upgrade, and installation of equipment in hub and non-hub facilities; and a slight rise in branch rents related to higher inflation and branch size.
This was related to: inflation in branch rent expense, increased FMI depreciation as the number of installed devices increased; higher costs and depreciation for the maintenance, upgrade, and installation of equipment in hub and non-hub facilities; and an increase in property taxes.
This was primarily attributable to investing in inventory in 2024 as opposed to reducing inventory in 2023. 40 Table of Contents Trade Working Capital Assets The following table sets forth the dollar and percentage change in accounts receivable, net, inventories, and accounts payable for the period ended December 31: Twelve-month Dollar Change Twelve-month Percentage Change 2024 2024 2024 Accounts receivable, net $ 1,108.6 21.0 1.9 % Inventories 1,645.0 122.3 8.0 % Trade working capital $ 2,753.6 143.3 5.5 % Accounts payable $ 287.7 23.6 8.9 % Trade working capital, net $ 2,465.9 119.7 5.1 % Net sales in last three months $ 1,824.5 65.9 3.7 % Note – Amounts may not foot due to rounding difference.
This was attributable to an increase in accounts receivable reflecting increased sales activity, partially offset by a lower investment in inventory at the end of the period. 37 Table of Contents Trade Working Capital Assets The following table sets forth the dollar and percentage change in accounts receivable, net, inventories, and accounts payable for the period ended December 31: Twelve-month Dollar Change Twelve-month Percentage Change 2025 2025 2025 Accounts receivable, net $ 1,245.3 136.6 12.3 % Inventories 1,748.0 103.0 6.3 % Trade working capital $ 2,993.3 239.6 8.7 % Accounts payable $ 316.8 29.1 10.1 % Trade working capital, net $ 2,676.5 210.5 8.5 % Net sales in last three months $ 2,027.4 202.9 11.1 % Note – Amounts may not foot due to rounding.
Our most significant accounting policies, including Revenue Recognition and Inventories, are described in Note 1 of the Notes to Consolidated Financial Statements. Some of those significant accounting policies require us to make difficult, subjective, or complex judgments, or estimates.
Some of those significant accounting policies require us to make difficult, subjective, or complex judgments, or estimates.
This includes non-residential construction, reseller, transportation, and government customers. Weakness within our construction end market reflected the ongoing effect of our reduced physical footprint and reduced local inventory tailored to smaller, local contractors. Weakness within our reseller end market reflected efforts in many industries to reduce channel inventories.
This includes non-residential construction, reseller, transportation, warehouse and storage, data centers, and g overnment/education customers. Our construction end market experienced growth starting in the second quarter of 2025 and reflected increased adoption of our solutions. Weakness within our reseller end market reflected efforts in many industries to reduce channel inventories.
The overall profile of our growth was consistent with 2023: growth was driven by larger, key accounts and Onsite customers and by non-fastener products, particularly safety. We continued to expand our installed base of Onsites and FMI technology and lift the proportion of sales that run through our Digital Footprint.
In 2025, our growth was the result of improved customer contract signings with large key account customers and fastener products. We continued to expand our installed base of FMI technology and lift the proportion of sales that run through our Digital Footprint. In a fluid tariff environment, our gross profit was well managed.
Second, we expect higher distribution center spending to complete our upgraded Utah hub, begin construction on a new Atlanta hub, and improve our picking capacity and efficiency across our hub network.
First, we expect increased spending to replace our Atlanta hub facility and improve our picking capacity and efficiency across our hub network. Second, we expect increased trucking spend.
For 2025, we expect our investment in property and equipment, net of proceeds from sales, to be within a range of $265.0 to $285.0, an increase from $214.1 in 2024. This increase reflects three items. First, we expect elevated IT spending as projects that were planned in 2024, but experienced delays, are now expected to occur in 2025.
For 2026, we expect our investment in property and equipment, net of proceeds from sales, to be within a range of $310.0 to $330.0, an increase from $230.6 in 2025. The expected growth on a year-to-year basis reflects three items.
Discussions of 2022 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, 2023. Business and Operational Overview Fastenal is a North American leader in the wholesale distribution of industrial and construction supplies.
This section of the Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between the years. Discussions of 2023 comparisons can be found in our 2024 Annual Report filed with the SEC. Business and Operational Overview Fastenal is a global leader in the wholesale distribution of industrial and construction supplies.
We believe our ongoing tax rate, absent any discrete tax items or broader changes to tax law, will be approximately 24.5%. Our tax rate in 2024 was below our expected ongoing tax rate due to the tax benefits associated with (1) the exercise of stock options during the period and (2) return to provision adjustments processed during the year.
We believe our ongoing tax rate, absent any discrete tax items or broader changes to tax law, will be approximately 24.5%.
The net effect on our gross profit percentage of these trends in cost and price inflation was immaterial in 2023. 52 Table of Contents Critical Accounting Estimates In preparing our consolidated financial statements in conformity with U.S. GAAP, we must make decisions that impact the reported amounts of assets, liabilities, sales, and expenses, and the related disclosures.
We implemented pricing actions to address the incremental tariffs beginning in the second quarter of 2025. T he combined net effect on our gross profit percentage of these trends in cost and price inflatio n was immaterial in 2025. Critical Accounting Estimates In preparing our consolidated financial statements in conformity with U.S.
Second, we used less cash to reduce outstanding debt obligations in 2024 than we did in 2023, primarily because we carried lower balances on our Credit Facility throughout 2024. These uses of cash were only partly offset by an increase in the exercise of stock options. Dividends We declared a quarterly dividend of $0.43 per share on January 16, 2025.
First, we had higher dividend payments. We increased regular dividend payments in 2025 by 12.4%. Sec ond, we used more cash to reduce outstanding debt obligations in 2025 than we did in 2024. These uses of cash were only partly offset by a decrease in the exercise of stock options.
The increase in our accounts payable balance in 2024 was primarily attributable to an increase in our product purchases as reflected in the growth in inventories.
Third, we took advantage of year-end opportunities arising from our suppliers' desire to reduce inventory at year-end. Fourth, incremental tariffs enacted in 2025 meaningfully increased the cost of certain inventory. The increase in our accounts payable balance in 2025 was primarily attributable to an increase in our product purchases as reflected in the growth in inventories.
Even so, it was meaningfully above the prior year level of 56.1% reflecting increasing internal and external adoption of our digital resources. We expect that at some point during 2025 we will achieve having 66% to 68% of our sales volume running through Digital Footprint.
This was below our goal at the start of 2025, which was between 66% and 68%, attributable to lower volume through our FMI devices due to the business disruption associated with a rapidly changing tariff environment. Even so, it improved from the prior year level of 60.4% reflecting increasing internal and external adoption of our digital resources.
Q4 2024 Q4 2023 Twelve-month % Change Selling personnel - absolute employee headcount 16,712 16,512 1.2 % Selling personnel - FTE employee headcount 15,055 15,070 -0.1 % Total personnel - absolute employee headcount 23,702 23,201 2.2 % Total personnel - FTE employee headcount 20,958 20,721 1.1 % Number of branch locations 1,597 1,597 — % Number of active Onsite locations 2,031 1,822 11.5 % Number of in-market locations 3,628 3,419 6.1 % Weighted FMI devices (MEU installed count) 126,957 113,138 12.2 % 33 Table of Contents During the last twelve months, we increased our total FTE employee headcount by 237.
Q4 2025 Q4 2024 Twelve-month % Change Selling personnel - absolute employee headcount (1) 17,166 16,669 3.0 % Selling personnel - FTE employee headcount (1) 15,439 15,014 2.8 % Total personnel - absolute employee headcount 24,489 23,702 3.3 % Total personnel - FTE employee headcount 21,602 20,958 3.1 % Number of branch locations 1,595 1,597 -0.1 % Number of $50k+ customer sites 2,657 2,330 14.0 % Number of $10k+ customer sites 11,712 10,837 8.1 % Number of $5k-$10k customer sites 7,067 6,948 1.7 % Number of 73,357 82,650 -11.2 % Weighted FMI devices (MEU installed count) 136,638 126,957 7.6 % (1) In the fourth quarter of 2024, we realigned certain employees as a result of a routine review of our organizational structure.
This was related to: selling-related transportation costs were higher reflecting higher lease costs as we refreshed our fleet of pick-ups, which more than offset lower fuel expense; higher expenses related to Fastenal-sponsored trade events, such as our Customer Expo held in April, and general marketing costs; higher spending on IT; and higher general insurance costs.
This was related to the following increases: higher spending on IT, increased sales expense associated with signing and im plementing customer sites, and selling-related transportation costs increased and were only partially offset by lower fuel expense. The increases were partially offset by increases in shared marketing initiatives with our suppliers and lower general insurance costs.
Third, we expanded the proportion of our sales running through our Digital Footprint. This measure reached 62.5% in November 2024 before easing modestly to 62.1% in December 2024. This was below our goal at the start of 2024 of 66.0%, attributable to lower volume through our FMI devices due to weaker business activity.
Our installed base of FMI MEUs was 136,638 at the end of 2025, an increase of 7.6% over th e end of 2024. Second, we expanded the proportion of our sales running through our Digital Footprint. This measure reached 62.4% in December 2025.
Removed
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons for the current year and the prior year.
Added
This, in turn, enhances our ability to provide innovative and comprehensive solutions to our customers' challenges. By doing these things every day, Fastenal remains a growth-centric organization. The global economy continues to experience elevated levels of volatility and uncertainty, including within the commodity, labor, and transportation markets, driven by a combination of geopolitical developments and macroeconomic factors.
Removed
This, in turn, enhances our ability to provide innovative and comprehensive solutions to our customers' challenges.
Added
Recent imposition of new and expanded tariffs have further contributed to disruptions in global capital markets and global supply chains. These developments may impact our operations, financial condition, and results of operations.
Removed
Industrial Production declined 0.4% in the first 11 months of 2024 over 2023 with markets that are most relevant to us, such as Primary Metal (-1.5%), Fabricated Metals (-0.8%), and Machinery (-2.2%) declining more rapidly than the broad index. This was the primary factor contributing to daily sales growth of 1.9%, slowing from the preceding year.
Added
We are actively monitoring economic conditions in the U.S. and internationally, including the potential ramifications of evolving trade policies, changes in interest rates, foreign currency exchange rate fluctuations, inflationary pressures, and the risk of a global or regional economic recession.
Removed
However, the effect of our continued investment in key areas we view as critical to accelerate future growth and the slow growth in sales volume combined to pressure our profitability, reducing operating margin. On the other hand, asset efficiency remained stable from the preceding year and we generated good cash flow.
Added
In response to these factors, we have implemented various strategies designed to mitigate certain adverse effects of changing inflationary conditions and supply chain challenges, while continuing to maintain market price competitiveness and price/cost neutrality.
Removed
Our total FTE selling and sales support personnel decreased by 15. While we added FTE to support growth in our Onsite locations, we reduced personnel at our branch locations, reflecting both shifts to Onsite locations and tight management of headcount given challenging business conditions.

… 125 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

15 edited+1 added−1 removed2 unchanged
Biggest changeWe estimate the effect on our net income related to import shipping costs was a favorable $15.0 to $18.0 in 2024. Commodity steel prices – We buy and sell various types of steel products; these products consist primarily of different types of fasteners and related hardware.
Biggest changeCommodity steel prices – We buy and sell various types of steel products; these products consist primarily of different types of fasteners and related hardware. We are exposed to the impacts of commodity steel pricing and our related ability to pass through the impacts to our end customers.
As a result, changes in such rates can affect our operating results and liquidity to the extent we do not have effective interest rate swap arrangements in place. Our debt levels are relatively small; therefore, we have not historically used interest rate swap arrangements to hedge the variable interest rates under our Credit Facility.
As a result, changes in such rates can affect our operating results and liquidity to the extent we do not have effective interest rate swap arrangements in place. Our debt levels are relatively small; therefore, we have not historically used interest rate swap arrangements to hedge the variable interest rates under the Credit Facility.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks from changes in import shipping costs, commodity steel prices, commodity energy prices, foreign currency exchange rates, and interest rates as described in Item 1A above. Changes in these factors cause fluctuations in our income and cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks from changes in tariffs and import shipping costs, commodity steel prices, commodity energy prices, foreign currency exchange rates, and interest rates as described in Item 1A above. Changes in these factors cause fluctuations in our income and cash flows.
Further, the cost of the raw material is generally a smaller part of the total value of the steel products that we sell, which can also diminish the impact of cost changes for the raw material. We estimate the effect on our net income related to commodity steel prices was immaterial in 2024.
Further, the cost of the raw material is generally a smaller part of the total value of the steel products that we sell, which can also diminish the impact of cost changes for the raw material. We estimate the effect on our net income related to commodity steel prices was immaterial in 2025.
We evaluate and manage exposure to these market risks as follows: Import shipping costs – We import a significant quantity of our products from foreign suppliers, primarily in Asia.
We evaluate and manage exposure to these market risks as follows: Tariffs and import shipping costs – We import a significant quantity of our products from foreign suppliers, primarily from Asia.
As a result, we estimate the effect on our net income related to materials for which fossil fuels are a feedstock was immaterial in 2024. Foreign currency exchange rates – Foreign currency fluctuations can affect our operations in countries other than the U.S., and/or the value of income and assets denominated in foreign currencies.
As a result, we estimate the effect on our net income related to materials for which fossil fuels are a feedstock wa s immaterial in 2025. Foreign currency exchange rates – Foreign currency fluctuations can affect our operations in countries other than the U.S., and/or the value of income and assets denominated in foreign currencies.
Total direct fuel consumption is a relatively smaller cost to us and, as a result, we estimate the effect on our net income related to commodity energy prices was immaterial in 2024. Fossil fuels are also often a key feedstock for chemicals and plastics that comprise a key raw material for many products that we sell.
Total direct fuel consumption is a relatively smaller cost to us and, as a result, we estimate the effect on our net income related to commodity energy prices wa s immaterial in 2 025. Fossil fuels are also often a key feedstock for chemicals and plastics that comprise a key raw material for many products that we sell.
Commodity energy prices – We have market risk for changes in prices of oil, gasoline, diesel fuel, natural gas, and electricity, largely due to our consumption of fuel in our vehicles and utility costs at our facilities. As reflected in many market indexes, energy prices during 2024 were below the prior year.
Commodity energy prices – We have market risk for changes in prices of oil, gasoline, diesel fuel, natural gas, and electricity, largely due to our consumption of fuel in our vehicles and utility costs at our facilities. As reflected in many market indexes, energy prices during 2025 on average were above the prior year.
During 2024, prices for fossil fuels were generally at or slightly below the prior year. The cost of the raw material is generally a smaller part of the total value of the products that we sell, which can diminish the impact of cost changes for the raw material.
During 2025, prices for fossil fuels were below the prior year. The cost of the raw material is generally a smaller part of the total value of the products that we sell, which can diminish the impact of cost changes for the raw material.
The dollar strengthened in 2024 relative to other foreign currencies in which we operate. However, the effect of these changes in foreign currencies to our net income was immaterial in 2024. Interest rates - Loans under our Credit Facility bear interest at floating rates.
The dollar strengthened in 2025 relative to other foreign currencies in which we operate. However, the effect of these changes in foreign currencies to our net income w as immaterial in 2025. Interest rates – Loans under the Credit Facility bear interest at floating rates.
A one percentage point increase to our floating rate debt in 2024 would have resulted in approximately $0.3 of additional interest expense. A description of our Credit Facility is contained in Note 9 of the Notes to Consolidated Financial Statements. 54 Table of Contents
A one percentage point increase to our floating rate debt in 2025 would have resulted in approximately $0.4 of additional interest expense. A description of the Credit Facility is contained in Note 9 of the Notes to Consolidated Financial Statements. 42 Table of Contents
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.
Additionally, we incur costs related to shipping charges, duties, harbor fees, a nd 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.
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.
During 2025, the price of steel as reflected in many market indexes most relevant to our business was higher than the prior year. 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.
These imports are both direct, where we procure directly from a foreign producer, and indirect, where we purchase from a domestic supplier that produces or supplies the product we purchase from foreign locations.
These imports are both direct, where we procure directly from a foreign producer, and indirect, where we purchase from a domestic supplier that produces or supplies the product we purchase from foreign locations. The current U.S. presidential administration has implemented tariffs on imports from a number of countries which have increased the cost of our products.
The most significant contributor to these fluctuations is the cost of overseas shipping containers, although the timing of any impact can be affected by the length of our supply chain, contractually agreed upon rates, or differences in rates between routes.
Fluctuations in the cost of tariffs and overseas shipping containers can be affected by the length of our supply chain, contractually agreed upon rates, or differences in rates between routes. We endeavor to offset these impacts in our business by appropriately considering them in our pricing and operational models.
Removed
We are exposed to the impacts of commodity steel pricing and our related ability to pass through the impacts to our end customers. During 2024, the price of steel as reflected in many market indexes most relevant to our business was lower than the prior year.
Added
We estimate the effect on our net income related to tariffs and import shipping cost s was immaterial in 2025; however, our tariff exposure may become more impactful in subsequent quarters as our lower tariff inventory is depleted and replaced with inventory that is subject to new and expanded tariffs.