FASTENAL COMPANY The following is management's discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Dollar amounts are stated in millions except for share and per share amounts and where otherwise noted. Share and per share information in this 10-Q has been adjusted to reflect the two-for-one stock split effective at the close of business onMay 22, 2019 . Throughout this document, percentage and dollar change calculations, which are based on non-rounded dollar values, may not be able to be recalculated using the dollar values in this document due to the rounding of those dollar values. Business Fastenal is a North American leader in the wholesale distribution of industrial and construction supplies. We distribute these supplies through a network of over 3,200 in-market locations. Most of our customers are in the manufacturing and non-residential construction markets. The manufacturing market includes producers who incorporate our products into final goods, called original equipment manufacturing (OEM), and/or utilize our supplies in the maintenance, repair, and operation (MRO) of their facilities and equipment. The non-residential construction market includes general, electrical, plumbing, sheet metal, and road contractors. Other users of our products include farmers, truckers, railroads, oil exploration, production, and refinement companies, mining companies, federal, state, and local governmental entities, schools, and certain retail trades. Geographically, our branches, Onsite locations, and customers are primarily located inNorth America (the United States ,Canada , andMexico ), though our presence outside ofNorth America continues to grow as well. Our motto is Growth through Customer Service®. We are a growth-centric organization focused on identifying 'drivers' that allow us to get closer to our customers and gain market share in what we believe remains a fragmented industrial distribution market. Our growth drivers have evolved and changed, and can be expected to continue to evolve and change, over time. Impact of COVID-19 on Our Business The COVID-19 pandemic has resulted, and is likely to continue to result, in significant economic disruption and has and will likely adversely affect our business. As of the date of this filing, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. As of the date of this filing, while the company's facilities and in-market locations continue to operate, we did restrict public access to our branches and many of our Onsite locations were closed or operating at a meaningfully diminished capacity, which negatively impacted sales at the end of the quarter and may negatively impact sales until the COVID-19 pandemic moderates. The COVID-19 pandemic is also shifting demand patterns to favor our lower-margin products, which is producing a reduction in our gross margins. Factors deriving from the COVID-19 response that have or may negatively impact sales and gross margin in the future include, but are not limited to: limitations on the ability of our suppliers to manufacture, or procure from manufacturers, the products we sell, or to meet delivery requirements and commitments; limitations on the ability of our employees to perform their work due to illness caused by the pandemic or local, state, or federal orders requiring employees to remain at home; limitations on the ability of carriers to deliver our products to customers; limitations on the ability of our customers to conduct their business and purchase our products and services; and limitations on the ability of our customers to pay us on a timely basis. We are experiencing disruptions in our business as we implement modifications to preserve adequate liquidity and ensure that our business can continue to operate during this uncertain time. Certain states have issued executive orders requiring all workers to remain at home, unless their work is critical, essential, or life-sustaining. We believe that, based on the various standards published to date, the work our employees are performing, particularly with respect to supplying products required by our safety business, is critical, essential, and life-sustaining. With respect to liquidity, we are evaluating and taking actions to reduce costs and spending across our organization. This includes reducing hiring activities, adjusting pay programs, and limiting discretionary spending. We have reduced anticipated spending on capital investment projects. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders. While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our business, results of operations, liquidity or capital resources, we believe that it is important to share where our company stands today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses. Executive Overview Net sales increased$57.7 , or 4.4%, in the first quarter of 2020 relative to the first quarter of 2019. Our gross profit as a percentage of net sales declined to 46.6% in the first quarter of 2020 from 47.7% in the first quarter of 2019. Our operating income, as a percentage of net sales, declined to 19.9% in the first quarter of 2020 from 20.0% in the first quarter of 2019. Our net earnings during the first quarter of 2020 were$202.6 , an increase of 4.4% when compared to the first quarter of 2019. Our diluted net earnings per share were$0.35 during the first quarter of 2020 compared to$0.34 during the first quarter of 2019, an increase of 4.0%. 12
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We continued to focus on our growth drivers in the first quarter of 2020. We
signed 85 new Onsite customer locations (defined as dedicated sales and service
provided from within, or in close proximity to, the customer's facility) and
4,798 new industrial vending devices in the first quarter of 2020. Daily sales
to our national account customers (defined as customer accounts with a
multi-site contract) grew 5.5%.
The table below summarizes our total employee headcount, our investments in
in-market locations (defined as the sum of the total number of public branch
locations and the total number of active Onsite locations), and industrial
vending devices at the end of the periods presented and the percentage change
compared to the end of the prior periods.
Change Change
Since: Since:
Q1 Q4 Q4 Q1 Q1
2020 2019 2019 2019 2019
In-market locations - absolute
employee headcount 14,001 13,977 0.2 % 14,336 -2.3 % Total absolute employee headcount 22,131 21,948 0.8 % 22,205 -0.3 %
Number of public branch locations 2,091 2,114 -1.1 % 2,187 -4.4 % Number of active Onsite locations 1,179 1,114 5.8 %
945 24.8 % Number of in-market locations 3,270 3,228 1.3 % 3,132 4.4 % Industrial vending devices (installed count) (1) 92,124 89,937 2.4 % 83,410 10.4 %Ratio of industrial vending devices to in-market locations 28:1 28:1
27:1
(1) This number primarily represents devices which principally dispense product and produce product revenues, and excludes slightly more than 15,000 devices that are part of our locker lease program where the devices are principally used for the check-in/check-out of equipment. During the last twelve months, we reduced our absolute employee headcount by 335 people in our in-market locations and by 74 people in total. The reduction in our absolute employee headcount in our in-market locations reflects efforts to control branch expenses in response to weaker demand, which was only partly offset by increases to support growth in our Onsite locations. The decrease in our total absolute employee count is mostly from personnel reductions at our in-market locations only partly offset by additions in non-branch selling and support roles to support customer acquisition and implementation, particularly as it relates to our growth drivers and to support general corporate functions. We opened three branches in the first quarter of 2020 and closed 26 branches, net of conversions. We activated 87 Onsite locations in the first quarter of 2020 and closed 22, net of conversions. The number of closings reflects both normal churn in our business, whether due to exiting customer relationships, the shutting or relocation of a customer facility, or a customer decision, as well as a review of certain underperforming locations. Our in-market network forms the foundation of our business strategy, and we will continue to open or close locations as is deemed necessary to sustain and improve our network, support our growth drivers, and manage our operating expenses. Results of Operations
The following sets forth condensed consolidated statement of earnings
information (as a percentage of net sales) for the periods ended
Three-month Period
2020 2019
Net sales 100.0 % 100.0 %
Gross profit 46.6 % 47.7 %
Operating and administrative expenses 26.8 % 27.8 %
Gain on sale of property and equipment 0.0 % 0.0 % Operating income 19.9 % 20.0 % Net interest expense -0.2 % -0.3 % Earnings before income taxes 19.7 % 19.7 %
Note - Amounts may not foot due to rounding difference.
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Net Sales The table below sets forth net sales and daily sales for the periods endedMarch 31 , and changes in such sales from the prior period to the more recent period: Three-month Period 2020 2019 Net sales$ 1,367.0 1,309.3 Percentage change 4.4 % 10.4 % Business days 64 63 Daily sales$ 21.4 20.8 Percentage change 2.8 % 12.2 % Daily sales impact of currency fluctuations -0.2 % -0.5 % Daily sales impact of acquisitions 0.0 % 0.1 %
Note - Daily sales are defined as the total net sales for the period divided by the number of
business days (in
The increase in net sales noted above for the first quarter of 2020 was driven by market share gains deriving from our success with our growth drivers, most notably contribution from industrial vending and Onsite locations, and from increases in certain products later in the quarter related to the coronavirus pandemic. A lesser contributor to our sales growth was higher product pricing to mitigate the effect of general inflation and tariffs in the marketplace. The first quarter of 2020 also benefited from an additional selling day and the absence of unfavorable weather in portions ofNorth America that had a 65 to 85 basis point negative effect on the first quarter of 2019. These contributors were only partly offset by lower end market demand. The trends in the first quarter of 2020 are best viewed through the cadence of each month in the quarter. In January and February of 2020, underlying business conditions were sluggish. The Purchasing Managers Index ('PMI'), published by theInstitute for Supply Chain Management , averaged 50.5 during this period, with readings above 50 being indicative of growing demand. This marginally above-50 reading had not yet translated into better demand, withU.S. Industrial Production, a key indicator for our sales trend, being down 0.4% during this period, when compared against the first quarter of 2019. Despite this, in January and February of 2020 we grew our daily sales by 4.1%. We believe this ability to outperform our market derives from two sources. The first source is success within our growth initiatives. In the first quarter of 2020, the most impactful drivers included: • We signed 4,798 industrial vending devices during the first quarter of
2020. Our installed device count on
of 10.4% over
at a low double-digit pace in the first quarter of 2020 when compared to
the same period of 2019 due to the increase in the installed base. These
device counts do not include slightly more than 15,000 vending devices
deployed as part of a lease locker program.
• We signed 85 new Onsite locations during the first quarter of 2020. We had
1,179 active sites on March 31, 2020 , which represented an increase of
24.8% from March 31, 2019 . Daily sales through our Onsite locations,
excluding sales transferred from branches to new Onsites, grew at amid-single digit pace in the first quarter of 2020 over the first quarter
of 2019. The contribution of newer active locations more than offset the
impact of weaker demand on our more mature sites.
• Daily sales from our national account customers grew 5.5% in the first
quarter of 2020 over the first quarter of 2019.
The second, and less meaningful contributor, was product pricing. Since 2017, we
have taken steps to mitigate the impact of higher product costs owing to higher
inflation and tariffs on ourselves and our customers, one of which was to adjust
pricing where appropriate. Though these pressures have moderated as business
activity has slowed and tariff-related actions have cooled, we did realize some
incremental pricing in the first quarter of 2020 related to pricing actions
taken in mid-2019. We estimate pricing contributed 30-60 basis points to growth
in the first quarter of 2020, with January and February 2020 approximating those
levels.
Conditions in March changed significantly. We believe the market share and
pricing discussions above are relevant to the entire month, and that the macro
discussion above is relevant to the first half of March. However, the second
half of March saw levels of business activity weaken significantly in response
to societal actions meant to address the coronavirus pandemic. While the
company's facilities and in-market locations continue to operate, our branches
did restrict public access and many of our Onsite
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locations were closed or operating at a meaningfully diminished capacity (approximately 120 out of 1,136 North American Onsite locations were closed onMarch 31 because the customer was closed), negatively impacting sales at the end of the quarter. As a result, our daily sales growth slowed appreciably in March to 0.2%. The shift in business conditions in March also generated more dramatic splits in our product and customer mix. For instance, in the first quarter of 2020 daily sales of fasteners declined 2.6% while daily sales of safety products and remaining non-fastener products grew 18.4% and 1.6%, respectively. In March specifically, daily sales of fasteners declined 10.1% while daily sales of safety products grew 31.0% and daily sales of remaining non-fastener products declined 2.5%. We saw similar patterns in our customer trends. In the first quarter of 2020 daily sales to manufacturing customers increased 3.0% and daily sales to non-residential construction customers declined 0.2%. In March specifically, daily sales to manufacturing and non-residential construction customers declined 1.1% and 7.8%, respectively. Daily sales to state and local government customers, which is not typically disclosed due to its relatively small size in our mix, grew 16.9% in the first quarter of 2020 but 31.1% in March, with sales to healthcare organizations more than doubling in March. Sales by Product Line The approximate mix of sales from fasteners, safety supplies, and all other product lines was as follows for the periods endedMarch 31 : Three-month Period 2020 2019 Fasteners 32.9 % 34.8 % Safety supplies 19.8 % 17.2 % Other product lines 47.3 % 48.0 % 100.0 % 100.0 % Gross Profit In the first quarter of 2020, our gross profit, as a percentage of net sales, declined to 46.6%, or 110 basis points from 47.7% in the first quarter of 2019. We believe the decline in gross profit during this period is primarily due to two items. (1) From the first quarter of 2019 to the first quarter of 2020, our daily sales of fastener products decreased 2.6% while our daily sales of non-fastener products grew 6.0%. Fasteners are our largest product line and our highest gross profit margin product line due to the high transaction cost surrounding the sourcing and supply of the product for our customers. Over the same period, larger customers, for which national accounts are a good proxy and whose more focused buying patterns allow us to offer them better pricing, grew faster than smaller customers. Relatively slower growth in the first quarter of 2020 in our fastener product line (product mix) with relatively faster growth in sales to our largest customers (customer mix) pushed our gross profit margin lower. Declines in our gross profit percentage, such as we experienced in the first quarter of 2020, is an expected by-product of the success we are having growing sales through our vending and Onsite growth drivers. (2) Slower growth has resulted in our not leveraging near and intermediate term fixed costs, such as manufacturing, our captive fleet, or our international sourcing operation, as we have in past quarters, as well as period costs flowing through our operation. This is slightly exacerbated by more recent sources of growth, as orders related to critical supplies such as masks, gloves, and sanitizer, tend to be direct shipped rather than moved on our fleet or produced in our facilities. The factors described above were relevant throughout the first quarter of 2020. As it relates to mix, in March specifically customer mix remained a factor. However, the widening growth differential between higher-margin fastener sales and lower-margin safety sales produced a greater product mix impact and increased the overall effect of mix on our gross profit percentage. Operating and Administrative Expenses Our operating and administrative expenses (including the gain on sales of property and equipment), as a percentage of net sales, improved to 26.7% in the first quarter of 2020 compared to 27.8% in the first quarter of 2019. The primary contributors to this improvement were relatively lower growth in employee-related, occupancy-related, and all other operating and administrative expenses. 15
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The growth in employee-related, occupancy-related, and all other operating and
administrative expenses (including the gain on sales of property and equipment)
compared to the same periods in the preceding year, is outlined in the table
below.
Approximate
Percentage of
Total Operating Three-month Period
and
Administrative
Expenses 2020
Employee-related expenses 65% to 70% 0.2 %
Occupancy-related expenses 15% to 20% 1.8 %
All other operating and administrative expenses 15% to 20% 0.8 %
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. Our employee-related expenses
increased in the first quarter of 2020. This was primarily related to an
increase in our full-time equivalent ('FTE') headcount and moderate increases in
hourly base wages. This was mostly offset by lower incentive compensation due to
lower growth in net sales and net earnings.
The table below summarizes our FTE headcount at the end of the periods presented
and the percentage change compared to the end of the prior periods:
Change Since: Change Since:
Q1 Q4 Q4 Q1 Q1
2020 2019 2019 2019 2019
In-market locations 12,334 12,236 0.8 % 12,482 -1.2 %
Total selling (includes in-market locations) 14,200 14,060 1.0 % 14,227 -0.2 %
Distribution 2,992 2,895 3.4 % 2,923 2.4 %
Manufacturing 675 674 0.1 % 700 -3.6 %
Administrative 1,368 1,339 2.2 % 1,275 7.3 %
Total 19,235 18,968 1.4 % 19,125 0.6 %
Occupancy-related expenses include: (1) building rent, depreciation, and utility
costs, (2) equipment related to our branches and distribution locations, and (3)
industrial vending equipment (we view vending equipment, excluding leased locker
equipment, to be an extension of our in-market operations and classify the
depreciation and repair costs as occupancy expense). The increase in
occupancy-related expenses in the first quarter of 2020, when compared to the
first quarter of 2019, was primarily related to increases in equipment related
to our distribution locations following investments in capacity in 2019 and
increases in expenses related to industrial vending equipment. Facility costs
were slightly down.
All other operating and administrative expenses include: (1) selling-related
transportation, (2) information technology expenses, (3) net event costs, (4)
general corporate expenses, including legal expenses, general insurance
expenses, and travel and marketing expenses, and (5) the gain on sales of
property and equipment. Combined, all other operating and administrative
expenses increased in the first quarter of 2020 when compared to the first
quarter of 2019 primarily due to higher spending on information technology and
higher net event costs. This was partly offset by lower general corporate
expenses, which includes the absence of a legal settlement that occurred in the
first quarter of 2019.
Net Interest Expense
Our net interest expense was $2.1 in the first quarter of 2020 and $3.9 in the
first quarter of 2019. This decrease was caused by lower average interest rates
and a lower average debt balance during the period.
Income Taxes
We recorded income tax expense of $66.6 in the first quarter of 2020, or 24.7%
of earnings before income taxes. Income tax expense was $63.4 in the first
quarter of 2019, or 24.6% of earnings before income taxes. We continue to
believe our ongoing tax rate, absent any discrete tax items, will be in the
24.5% to 25.0% range.
Net Earnings
Our net earnings during the first quarter of 2020 were $202.6 , an increase of
4.4% when compared to the first quarter of 2019. Our diluted net earnings per
share during the first quarter of 2020 were $0.35 , an increase of 4.0% when
compared to the first quarter of 2019.
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Liquidity and Capital Resources Cash flow activity was as follows for the periods endedMarch 31 : Three-month Period 2020 2019
Net cash provided by operating activities
119.0 % 105.6 %
Net cash used in investing activities
84.7 % 27.2 %
Net cash used in financing activities
38.6 % 69.5 %
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased in the first quarter of 2020
relative to the first quarter of 2019, primarily due to a reduced drag from net
working capital investment relative to what was experienced in the first quarter
of 2019 and, to a lesser degree, higher net income.
The dollar and percentage change in accounts receivable, net and inventories
from March 31, 2019 to March 31, 2020 were as follows:
Twelve-month
March 31
Change Percentage Change
2020 2019 2020 2020
Accounts receivable, net $ 833.9 793.0 $ 40.9 5.2 %
Inventories 1,345.5 1,293.9 51.6 4.0 %
Total $ 2,179.4 2,086.9 $ 92.5 4.4 %
Net sales in last two months $ 904.1 862.4 $ 41.7 4.8 %
Note - Amounts may not foot due to rounding difference.
The growth in our net accounts receivable from March 31, 2019 to March 31, 2020
reflects not only our growth in sales but that our growth is being driven
disproportionately by our national accounts program, where our customers tend to
have longer payment terms than our business as a whole. This is being mitigated
by weaker business activity, which reduces the amount of receivables.
The increase in inventory from March 31, 2019 to March 31, 2020 was primarily to
support higher sales, largely reflecting large increases in the number of
installed vending devices and active Onsite locations, to support higher levels
of service, and from inflation and tariffs. The rate of growth continued to slow
in the first quarter of 2020 based on slowing economic activity and internal
efforts to reduce hub inventory. We intend to continue to invest in the
inventory necessary to support our vending and Onsite initiatives.
Net Cash Used in Investing Activities
Net cash used in investing activities increased from the first quarter of 2019
to the first quarter of 2020. This was due to the acquisition of certain assets
of Apex Industrial Technologies LLC late in the period. This was slightly offset
by lower net capital expenditures.
Our capital spending will typically fall into five categories: (1) the addition
of manufacturing and warehouse property and equipment, (2) the purchase of
industrial vending technology, (3) the purchase of software and hardware for our
information processing systems, (4) the addition of fleet vehicles, and (5) the
purchase of signage, shelving, and other fixed assets related to branch and
Onsite locations. Proceeds from the sales of property and equipment, typically
for the planned disposition of pick-up trucks as well as distribution vehicles
and trailers in the normal course of business, are netted against these
purchases and additions. During the first quarter of 2020, our net capital
expenditures were $46.7 , which is a decrease of 11.6% from the first quarter of
2019. Of the factors described above, lower spending to develop and expand
certain distribution center assets and, to a lesser degree, reduced fleet
vehicle investment primarily explains the decline in our net capital
expenditures in the first quarter of 2020.
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Cash requirements for capital expenditures were satisfied from cash generated from operations, available cash and cash equivalents, our borrowing capacity, and the proceeds of disposals. We have reduced our expectations for net capital expenditures in 2020 to a range of$155.0 to$180.0 , down from our previous range of$180.0 to$205.0 and a decrease from$239.8 in 2019. We had anticipated lower annual spending based on a reduction in projects that would develop and expand certain distribution center assets and, to a lesser degree, reduced fleet vehicle investment. The decline relative to our original projections for 2020 largely reflects a review and deferral of certain building projects in light of an increasingly uncertain business climate and lower vending spend due to a reduction in expected signings and, to a lesser degree, the impact on the cost of our vending equipment following the Apex asset purchase.Net Cash Used in Financing Activities Net cash used in financing activities in the first quarter of 2020 consisted of payments of dividends, purchases of our common stock, and payments against debt obligations, which were partially offset by proceeds from the exercise of stock options and proceeds from debt obligations. Net cash used in financing activities in the first quarter 2019 consisted of payments of dividends and payments against debt obligations, which were partially offset by proceeds from the exercise of stock options and proceeds from debt obligations. During the first quarter of 2020, we purchased 1,600,000 shares of our common stock at an average price of approximately$32.54 per share. During the first quarter of 2019, we did not purchase any shares of our common stock. We currently have authority to purchase up to 3,200,000 additional shares of our common stock. An overview of our dividends paid or declared in 2020 and 2019 is contained in Note 4 of the Notes to Condensed Consolidated Financial Statements. Critical Accounting Policies and Estimates - A discussion of our critical accounting policies and estimates is contained in our 2019 annual report on Form 10-K. Recently Issued and Adopted Accounting Pronouncements - A description of recently adopted accounting pronouncements is contained in Note 1 of the Notes to Condensed Consolidated Financial Statements. Certain Contractual Obligations - A discussion of the nature and amount of certain of our contractual obligations is contained in our 2019 annual report on Form 10-K. That portion of total debt outstanding under our Credit Facility and notes payable classified as long-term, and the maturity of that debt, is described earlier in Note 7 of the Notes to Condensed Consolidated Financial Statements. Certain Risks and Uncertainties - Certain statements contained in this document do not relate strictly to historical or current facts. As such, they are considered 'forward-looking statements' that provide current expectations or forecasts of future events. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of terminology such as anticipate, believe, should, estimate, expect, intend, may, will, plan, goal, project, hope, trend, target, opportunity, and similar words or expressions, or by references to typical outcomes. Any statement that is not a purely historical fact, including estimates, projections, trends, and the outcome of events that have not yet occurred, is a forward-looking statement. Our forward-looking statements generally relate to our expectations regarding the business environment in which we operate, our projections of future performance, our perceived marketplace opportunities, our strategies, goals, mission and vision, and our expectations related to future capital expenditures, future tax rates, future inventory levels, Onsite and industrial vending signings, and the impact of price increases on overall sales growth or margin performance. You should understand that forward-looking statements involve a variety of risks and uncertainties, known and unknown, and may be affected by inaccurate assumptions. Consequently, no forward-looking statement can be guaranteed and actual results may vary materially. Factors that could cause our actual results to differ from those discussed in the forward-looking statements include, but are not limited to, the impact of the COVID-19 pandemic, economic downturns, weakness in the manufacturing or commercial construction industries, competitive pressure on selling prices, changes in our current mix of products, customers, or geographic locations, changes in our average branch size, changes in our purchasing patterns, changes in customer needs, changes in fuel or commodity prices, inclement weather, changes in foreign currency exchange rates, difficulty in adapting our business model to different foreign business environments, failure to accurately predict the market potential of our business strategies, the introduction or expansion of new business strategies, weak acceptance or adoption of our vending or Onsite business models, increased competition in industrial vending or Onsite, difficulty in maintaining installation quality as our industrial vending business expands, the leasing to customers of a significant number of additional industrial vending devices, the failure to meet our goals and expectations regarding branch openings, branch closings, or expansion of our industrial vending or Onsite operations, changes in the implementation objectives of our business strategies, difficulty in hiring, relocating, training, or retaining qualified personnel, difficulty in controlling operating expenses, difficulty in collecting receivables or accurately predicting future inventory needs, dramatic changes in sales trends, changes in supplier production lead times, changes in our cash position or our need to make capital expenditures, credit market volatility, changes in tax law or the impact of any such changes on future tax rates, changes in tariffs or the impact of any such changes on our financial results, changes in the availability or price of commercial real estate, changes in the nature, price, or 18
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availability of distribution, supply chain, or other technology (including software licensed from third parties) and services related to that technology, cyber-security incidents, potential liability and reputational damage that can arise if our products are defective, difficulties measuring the contribution of price increases on sales growth, and other risks and uncertainties detailed in our filings with theSecurities and Exchange Commission , including our most recent annual and quarterly reports. Each forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any such statement to reflect events or circumstances arising after such date.
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