Fastenal : Form10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

• Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2019, or

• Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________

Commission file number 0-16125

FASTENAL COMPANY

(Exact name of registrant as specified in its charter)

Minnesota	41-0948415
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2001 Theurer Boulevard, Winona, Minnesota	55987-1500
(Address of principal executive offices)	(Zip Code)

[phone]

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $.01 per share	FAST	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ý No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	ý	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý As of October 10, 2019, there were approximately 573,527,178 shares of the registrants common stock outstanding.

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FASTENAL COMPANY

INDEX

	Page No.
Part I Financial Information:
Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	1
Condensed Consolidated Statements of Earnings for the nine months and three months ended September 30, 2019 and 2018	2
Condensed Consolidated Statements of Comprehensive Income for the nine months and three months ended September 30, 2019 and 2018	3
Condensed Consolidated Statements of Stockholders' Equity for the nine months and three months ended September 30, 2019 and 2018	4
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018	5
Notes to Condensed Consolidated Financial Statements	6
Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Quantitative and Qualitative Disclosures About Market Risks	20
Controls and Procedures	20
Part II Other Information:
Legal Proceedings	21
Risk Factors	21
Unregistered Sales of Equity Securities and Use of Proceeds	21
Exhibits	21

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PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in millions except share information)

				(Unaudited)
		Assets		September 30,		December 31,
			2019		2018
Current assets:
	Cash and cash equivalents	$	191.2	167.2
	Trade accounts receivable, net of allowance for doubtful accounts of $11.5 and $12.8, respectively		817.3			714.3
	Inventories		1,354.7	1,278.7
	Prepaid income taxes		0.4			9.0
	Other current assets		137.2	147.0
	Total current assets		2,500.8			2,316.2
Property and equipment, net		997.7			924.8
Operating lease right-of-use assets		238.4		-
Other assets		77.3			80.5
	Total assets	$	3,814.2			3,321.5
		Liabilities and Stockholders' Equity
Current liabilities:
	Current portion of debt	$	3.0			3.0
	Accounts payable		215.2	193.6
	Accrued expenses		241.3			240.8
	Current portion of operating lease liabilities		95.6		-
	Total current liabilities		555.1			437.4
Long-term debt		442.0			497.0
Operating lease liabilities		144.8		-
Deferred income taxes		86.6			84.4
Stockholders' equity:
	Preferred stock: $0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding		-		-
	Common stock: $0.01 par value, 800,000,000 shares authorized, 573,526,178 and 571,803,838 shares issued and		2.9			2.9
	outstanding, respectively
	Additional paid-in capital		50.3	3.0
	Retained earnings		2,581.5			2,341.6
	Accumulated other comprehensive loss		(49.0)	(44.8)
	Total stockholders' equity		2,585.7			2,302.7
	Total liabilities and stockholders' equity	$	3,814.2	3,321.5

See accompanying Notes to Condensed Consolidated Financial Statements.

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FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings (Amounts in millions except earnings per share)

		(Unaudited)			(Unaudited)
		Nine Months Ended September 30,		Three Months Ended September 30,
		2019	2018		2019	2018
Net sales	$	4,056.8	3,733.5	$	1,379.1	1,279.8
Cost of sales		2,139.8	1,922.4		728.0	664.0
Gross profit		1,917.0	1,811.1		651.1	615.8
Operating and administrative expenses		1,099.5	1,045.8		369.2	353.8
Gain on sale of property and equipment		(0.8)	(0.5)		-	(0.3)
Operating income		818.3	765.8		281.9	262.3
Interest income		0.3	0.3		0.1	0.1
Interest expense		(11.3)	(8.9)		(3.6)	(3.0)
Earnings before income taxes		807.3	757.2		278.4	259.4
Income tax expense		195.1	174.1		64.9	61.8
Net earnings	$	612.2	583.1	$	213.5	197.6
Basic net earnings per share	$	1.07	1.02	$	0.37	0.34
Diluted net earnings per share	$	1.07	1.01	$	0.37	0.34
Basic weighted average shares outstanding		572.9	574.5		573.5	574.0
Diluted weighted average shares outstanding		574.0	574.9		574.4	574.5

See accompanying Notes to Condensed Consolidated Financial Statements.

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FASTENAL COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Amounts in millions)

		(Unaudited)			(Unaudited)
		Nine Months Ended September 30,		Three Months Ended September 30,
		2019	2018		2019	2018
Net earnings	$	612.2	583.1	$	213.5	197.6
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (net of tax of $0.0 in 2019 and 2018)		(4.2)	(11.6)		(9.6)	(0.8)
Comprehensive income	$	608.0	571.5	$	203.9	196.8

See accompanying Notes to Condensed Consolidated Financial Statements.

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