Slides
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INVESTORDAY
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AGENDA8:30 AM--8:40 AMHolden LewisSenior Executive VP & CFO8:40 AM--9:00 AMJeff WattsPresident & Chief Sales Officer 9:00 AM--9:25 AMCasey MillerSenior Executive VP, Sales9:25 AM--9:50 AMBill DrazkowskiExecutive VP, Sales9:50 AM--10:15 AMBill ReichenbacherVP, Sales10:15 AM--10:35 AMQ&A10:35 AM--10:50 AMBreak10:50 AM--11:15 AMJeff HicksSenior VP, Solutions11:15 AM--11:35 AMKevin Fitzgerald VP, Sales Operations11:35 AM--11:55 AMDonnaleePapenfussExecutive VP, Strategy & Communications11:55 AM--12:15 PMQ&A12:15 PM--12:35 PMWorking Lunch12:35 PM--12:55 PMJeff HicksSenior VP, Solutions12:55 PM--1:15 PMChristine MollingVP, Digital Solutions1:15 PM--1:45 PMJohn Soderberg/Vic MilesSenior Executive VP, IT / Microsoft Retail Industry Solutions1:45 PM--2:10 PM Q&A2:10 PM--2:30 PMDan FlornessCEO2:30 PM--3:00 PM Q&A3:30 PM--4:15 PMMNT11 Branch Tour, 615 Hale Ave N., Oakdale, MN
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Safe Harbor Statement 3 Thispresentationandtheaccompanyingoralremarkscontainstatementsthatarenothistoricalfacts(e.g.,futureoperatingresults,long-termsharegains,andbusinessactivity,aswellasexpectationsregardingoperations,includinggrossandoperatingincomemargin,futureinventorylevels,pricing,OnsiteandweightedFMIdevicesignings,operatingcosts(includingSG&A),futuretotalcostofownership,capitalexpenditures,salesthroughourdigitalfootprint,cashflowgeneration,thepotentialimpactofourgrowthdriversandsalestrendswithcustomers,andsupplychainmatters)andthatare"forward-lookingstatements"withinthemeaningofthePrivateSecuritiesLitigationReformActof1995.Suchstatementsinvolveknownandunknownrisks,uncertainties,andotherfactorsthatmaycauseactualresultstodiffermaterially.MoreinformationregardingsuchriskscanbefoundinFastenalCompany's(collectivelyreferredtoas'Fastenal'orbytermssuchas'we','our',or'us')mostrecentannualandquarterlyreportsfiledwiththeSecuritiesandExchangeCommission.Anyforward-lookingstatementspeaksonlyasofthedateonwhichitismade,andFastenaldisclaimsanyobligationtoupdateorreviseanysuchstatements,whetherasaresultofnewinformation,futureeventsorotherwise,exceptasrequiredbylaw.Anynumericalorotherrepresentationsinthispresentationdonotrepresentguidancebymanagementandshouldnotbeconstruedassuch.
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Holden LewisChief Financial Officer
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Jeff Watts President & Chief Sales Officer
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6 International: Small but Mighty 0 200 400 600 800 1,000 1,200 1,400 International Market Growth All Non-U.S.Mexico All Non-U.S. Mexico 5-Yr CAGR10.9% 14.1% 10-Yr CAGR11.6% 17.2% 15-Yr CAGR15.4% 24.0% Mills;US$
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7 The Secret of Mexico’s Success Share the VisionWhich enables us to accomplish our goalsBring VisibilityThrough a shared pipelineProvide AccountabilitySet clear expectations of who leads whatShare ResponsibilityOne can’t be successful without the otherShare the Sense of OwnershipWe’re all part of the same team Introductory Meeting TCOA Process Sign Contract Implementation Follow-Ups, QBRs, Continuous Improvements, New Opportunities Sellers Specialists, Solutions, Sourcing Sellers Lean Solutions Sellers, Specialists, Solutions, Sourcing
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8 The Secret of Our Success: Focused Alignment ALIGNMENTACCOUNTABILITYEXECUTIONEnhanced Productivity Improved Communication Ownership Ensure all Teams & Resources are Directed towards our Common GoalClearly Defined Roles, Responsibilities and Expectations Action Necessary to Achieve our Goals
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Casey MillerSenior EVP Sales
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“Old” CSP Model Drove “Active Account” Growth “Retail Store” FeelReactive –Business Runs YouDealing with One Crisis or Issue After AnotherNo Time to Plan/Prepare for GrowthDid Not Prioritize 10
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“New” CFC Model Drives “Key Account” Growth‘Logistics Management’ FeelStreamline Branch OperationsCreating Time to Plan/Prepare for Biggest/Best OpportunitiesEstablished Clear PrioritiesEliminated Chaos 11
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Updated Model, but Same Foundational Value 2013: U.S. Branches Peak at 2,408Current: U.S. Branches are at 1,264Still serve the core function of placing people and inventory close to our customers Within a 30-minute drive of 93.5% of U.S. industrial manufacturing base 12
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Mindset is Critical … Enter Focus40The Goal? Free up time to overserve existing, and find more, supply chain partners. Critical KPIs:Market share gains –consistent double-digit sales growthLabor productivity –rising key ratioAsset efficiency –‘Drive to 35’ The Four Pillars Aligned our Branch Pay Program 13 What isFocus40?Sales Growth +Pretax% ofNet Sales = 40%+ A mindset!
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Focus40 Timeline 2016 2017 2018 2019 2020 2021 2022 2023 202 4 September: Phoenix ProjectOctober: Project CaliJanuary:Focus40 Kickoff –Dallas Focus40Phase 2implemented company-wide June: 80/20 Kickoff –WI/IL March:80/20 Kickoff -Houston Focus40 Phase 1 implemented company-wide 14
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The Outcome of and Outlook for Focus 40 15
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District Success is Measured by … Sustained Double-Digit SalesGrowth Pre-Tax Profit Growth At or Above Sales Growth Achieving and Sustaining a Threshold ROA Optimized Key Ratio 16
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District Success Rests on Certain Non-Negotiables Keep GMs on offense Prioritize winning $10K+ customers Foster successful CSC and ODS programs Deploy effective FMI and digital programs 17 CSC: Customer Solutions ConsultantODS: Onsite Development SpecialistFMI: Fastenal Managed InventoryGM: General Manager of our branches
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Bill DrazkowskiEVP Sales
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Contract Sales Vision ENSURE OUR CUSTOMER WILL BE DIFFERENT AS A RESULT OF DOING BUSINESS WITH FASTENAL Be a Growth DriverWe exist to help the business grow faster with us than without us Embody the ‘Power of Fastenal People’The best salesforce are the Blue Team members in the field Take an Expansive View of OwnershipRegional leadership owns prospecting & portfolio management 19
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GROW SALES AND INCOMEBY CREATING STRATEGIC PARTNERSHIPSWITH SINGLE & MULTI-LOCATION CUSTOMERS Position Fastenal as a global strategic supply chain partnerEngage local leadership on the opportunityPropose and implement the best solution for each customer siteExecute at all levels to ensure customer vision is achievedPrioritize innovation and continuous improvementMaximize profitability and productivity of contract Contract Sales Mission 20
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Our Contract Portfolio Government ProgramGovernment SellersDistrict Managers (DMs)General Managers (GMs)Cust. Sol’nConsultants (CSCs) $307M Shared ServicesLean SolutionsIndustry SpecialistsProduct SpecialistsOnsite Development Regional ProgramRegional VPs (RVPs)District Managers (DMs)Cust. Sol’nConsultants (CSCs)SDS $505M National ProgramCorporate SellersSDS $4,663M 21 61% of sales6% of sales *Sales are based on 2024 reporting 4% of sales
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Rebuild the Culture –Recreate our purposeFlatten the StructureRegionalize the BusinessRebuild Internal Trust, Communication & Execution Re-Qualify our Prospects Our 4Q23 Reset 22
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Prospect Requalification Corporate HQ (multi-location) Prospects Corporate HQ Plant level Prospects Single Location Prospects Government Prospects New Commodity Prospects (Current customers) 23
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Our Customer Sales Ecosystem PlantPlant Plant CommodityCommodityCommodityCommodity HQ NA Sales Reps, Lean TeamCSC (20k+) BSS GM, MM (5,10, 20K)Lean Team GM, MMIndustry SpecialistsAccount SpecialistsOnsiteDevelopmentLean TeamPartPartPartPartPartPartPartPart PartPartPartPartPartPartPartPart BSS: Business Sales SpecialistMM: Market Manager24
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End Result: Customer-Centric Alignment PRIORITIZING BUCKETSKey accounts benefiting from our solutions (5k, 10k, 20k, etc.) NATIONAL ACCOUNT PROGRAMAcquire and grow multi-location key accounts FULFILLMENT CENTERSROLE SPECIALIZATIONExecute key account business GROWING CSC PROGRAMAdd plants/locations for >20k accounts TARGET 5Add key accounts to the market TOP 10Retain, invest in, and grow key accounts GOVERNMENT PROGRAMBiggest prospect in the US and beyond LEANTEAMBuild infrastructure to improve key accounts' business SALES DEVELOPMENTHelp sellers land, manage, and grow key accounts CONTRACT MANAGEMENT75% of business through contract vehicles, runs key accounts INDUSTRY SPECIALISTSImpact and grow current and new key accounts INTEGRATED SALESUsed by key accounts TECHTEAMBuild solutions (vending, FMI Technology, EDI) for key accounts 25 FMI: Fastenal Managed InventoryEDI: Electronic Data Interchange
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End Result: Contract Growth 26
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Bill ReichenbacherVP Sales
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28 Key Account Selling’s ‘Source of Truth’ Contract Vehicle
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29 Prospect Identification Keeping the Pipeline Filled
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30 Prospecting “Fastenal types of customers”
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31 These are our SDR’s(Sales Development Rep) –they landed the meeting with Vandelay Industries
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32 Winning with an Industry Leading Toolbox Sales Cycle
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33 This is one of our Sellers–they will meet with Vandelay leadership to facilitate & negotiate the sales process
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34 Goals vs. Reality Improve Spend Cost Reduction Ensure Supply Continuity Combat Inflationary Price IncreasesAct as a Strategic Advisor to the Business Transform the Operating Model 21345Source: Key Issues Study, The Hackett Group, 2024 2025 PRIORITIES FOR PROCUREMENT
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35 Achieving Procurement KPIs YOUR GOAL
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36 These are our Lean Consultants–they perform TCOAs at each of Vandelay’s sites and present their findings
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37 Total Cost of Ownership Analysis: Proving Our Value
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38 Converting Waste into Savings 21.6%
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39 Vandelay Industries (Actual) TCOA* * Aggregate Data from Four Sites
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40 Bolting on to the Contract VehicleCompany Level:MRO/OEMeBusinessData AnalyticsBusiness TermsPrice FilesProduct Scope Local Level:FMI-TOnsitesSite-Specific Pdts.Specialist ServicesFulfillment Services Our eBusiness includes eProcurement activities, which are integrated transactions, including EDI, and eCommerce (transactional website sales).
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41 A Consistent Model Across a Global Footprint NORTH AMERICACanadaMexicoUnited States* SOUTH & CENTRAL AMERICABrazilChilePanama25 Countries EUROPEUnited KingdomAustriaBelgiumCzech RepublicFranceGermanyHungary` IrelandItalyNetherlandsPolandRomaniaSpainSwedenSwitzerland ASIAChinaMalaysiaSingaporeThailand *Includes United States, Guam, Puerto Rico, and Dominican Republic.
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42 Implementation–these are the specialists that get started at each Vandelay Industries Site
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43 Vandelay Industries (Actual) Services Rendered *Fastenal Investment includes our asset and labor spendduring implementation and excludes inventory investment. Fastenal Investment*:$1,450,000$200,000$525,000$43,000 Solutions Implemented:Indiana: 93 POU coil/locker FASTVenddevices; Onsite supply cribPennsylvania: 8 POU FMI-T devices; migrating to Onsite supply cribWisconsin (3 sites): 76 POU FMI-T devicesKentucky: 15 POU FMI-T devices
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44 Account Management & Expansion Building Trust and Wallet Share
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45 This is one of our BSS’s(Business Sales Specialist) –they manage Vandelay’s contract compliance and expands our footprint, site by site
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46 Keeping Pace with Business Needs Strategic Business Reviews New Site ImplementationsContract CompliancePrice File ManagementDeployment of SME’sReporting and Data Management Operational ExcellenceProduct Category ExpansionContract RenewalsAcquisitions and Divestitures
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47 The Onsite Team –they execute the plan
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48 The Blue Team –Winning Site-by-Site Our high-touch, high-tech model: a deep specialist pool & an industry-best toolbox
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Q & A
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JeffHicksSenior VP Solutions
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FMIT Timeline: Accelerating Innovation Operating Margin:Low-Teens %Operating Margin:Low/Mid-20% 52
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3,600+In-Market Locations16,000+Selling Personnel* 16Solutions Service Centers Local Inventory Fulfillment Terminals16 175+Solutions Specialists24/7Technical Support Weighted FMI Devices115,000+Vending Configurations: Tested and Verified200,000+*Our selling personnel are attached to a specific in-market location.53
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How is an employee interacting with products? What is inventory investment? How deep is my supply chain for an item? What are the behaviors of my assets? What is my inventory days on hand in this workspace and the current inventory state? What is the restock behaviors by stocking location? From Consumption Reduction to Data-Driven Decision Making 54
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Total Cost of Ownership & Planograms 55
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DATA-DRIVEN ENTERPRISESTRANSITIONING SUPPLY CHAINS TO WHERE INDUSTRY MEETS INNOVATION™ 56
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KevinFitzgeraldVP Sales Operations
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Data Analytics Strategy Modernize Data Infrastructure Foster Good Data Governance & Security Develop Business-Led Analytics & LiteracyEnable Self-ServiceIdentify Critical Reporting, KPIs and Metrics 58 STRUCTURE DATA TO CREATE AN ENVIRONMENT OF SELF-SERVICE, ENHANCE DECISION-MAKINGAND DRIVE INNOVATION
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Data Analytics Goals Identify New Opportunities Enhance Decision Making Improve Customer ExperienceFoster InnovationImprove Productivity 59 STRUCTURE DATA TO CREATE AN ENVIRONMENT OF SELF-SERVICE, ENHANCE DECISION-MAKINGAND DRIVE INNOVATION
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Data Analytics Mission Identify New Opportunities Enhance Decision Making Improve Customer ExperienceFoster InnovationImprove Productivity 60 STRUCTURE DATA TO CREATE AN ENVIRONMENT OF SELF-SERVICE, ENHANCE DECISION-MAKINGAND DRIVE INNOVATION
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My Vending Insights(2025)Exclusive BrandsOpportunity(2025) 62 Coming Soon(2025)
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My Vending Insights(2025)Exclusive BrandsOpportunity(2025)Coming Soon(2025) 63
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-My Vending Insights 64
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Our Digital Front Door (FAST360º) DIGITALFRONT DOOR USERMGMTECOMMERCEVENDING/BINSTOCKREPORTING/ANAYLICSFASTCRIBCUST. PROFILEMGMT 65
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DonnaleePapenfussEVP Strategy & Communications
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My Fastenal Journey 67 1999 -2006 Government Industry Specialist // 2006 -2014 Director of Government & Diversity Affairs2014 -2024 Vice President of Contract Development & Support 2024 -Present Executive Vice President of Strategy and Communications
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68 Strategic Planning ENHANCE OUR SERVICESEXPAND TOTAL ADDRESSABLE MARKETMORE EFFECTIVE SELLING Employee Engagement Platforms // Artificial Intelligence (A.I) // eCommerceFAST360˚ // Customer Engagement Platform // FASTCrib Objectives Accelerators
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69 Employee Engagement Strategy Focus on purposeEncourage autonomy Develop expertise
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70 Employee Engagement Platform Design FeaturesCompany communications platformSocial media like featuresRole-based resource curation with A.I. driven insights & recommendations Digital assistant features Access to tools & servicesEngagement features
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71 Corporate Communications & Knowledge Management Volume & Velocity of Communication DemandsPersonalization & Role Curations of Resources
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BLUE Chatbot 72
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BLUE A.I. 73
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Q & A
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We'll be back in 20 minutesLunch
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JeffHicksSenior VP Solutions
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INVENTORY MANAGEMENT SUPPLY CHAIN SERVICESSOFTWARE 77
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Inventory Management Reporting Sourcing & Procurement Preventative Maintenance Asset Management CURRENT EXPERTISEGROWTH OPPORTUNITY 78
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Custom CatalogSupplier Catalog // Customer Catalog Unit ConversionsMin-Max ManagementAuto-Reorder // Pending Order Visibility Product IssuanceCustom Data Capture // FIFO Management Inventory Management FIFO: First In, First Out79
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RFQMultiple SuppliersLead Time QuotingPrice Quoting RequisitionsInventory AllocationProduct Staging OrderingPending Orders // Spot Buys ApprovalsApproval Hierarchy // Minimize Rogue Spending Punchout Catalog.com Website Access // eQuotingProcessing Sourcing & Procurement 80
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TrackingCheck-In/Check-Out // Asset VisibilityUsage Tracking DatabaseChecklists & Forms // WarrantiesCategories // CertificationsTolerances Asset Management 81
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UnplannedWork Order ApprovalsReasons & PriorityRequest Parts PlannedTime Based // Labor TrackingDowntime TrackingParts Lists Preventative Maintenance 82
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FMI Technology Maturity Evolving from Vendor-Managed Inventory to Comprehensive Supply Chain ServicesStrategic Alignment Key Points Data-Driven Decision Making FASTCribCapabilities Expansion of Supply Chain ServicesAlignment with Core CompetenciesNew Revenue StreamsCustomer Centric FocusPotential Customers Sites: 2025 Beta: (200), 2026: 500+, 2027: 2,000+ 83
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ChristineMollingVP Digital Solutions
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Digital Solutions eBusiness Breakdown ContractsLocal17% 24% 76% eCommerceeProcurement CONTRACT CUSTOMERSNational AccountsRegional ContractsGovernment 83%85 NON-CONTRACT CUSTOMERSSmall/MediumCustomer
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eBusiness Vision & Strategy VISIONPositionFastenal as a comprehensivesupply chain partner by delivering innovative digital platforms which serve industry supply chain needs and support strategic objectives. Text TextT Text WHY WHOWHAT HOWStrong Customer Relationships Continuous Innovation Meet Customer & Market Demands Seamless Communication Cross-Functional Expertise Aligned Enterprise Goals Optimize Procurement Enhance Supply Chain Efficiency Integrate Technology & Analytics Align Roadmap with Enterprise Priorities Measure Progress Invest in People & Technology 86
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Roadway To Improved Customer Experience PRODUCT OFFERINGRelevant Product Assortment, Industry Catalogs, Quality Data & Competitive Pricing ROBUSTSEARCHA.I.-AssistedSearch, Personalized Recommendations, Dynamic Filtering ACCURATE & TRANSPARENT FULFILLMENTEnhancing Delivery Operations with Comprehensive Order Visibility, Last-Mile Delivery Optimization and Dynamic Order Routing PERSONALIZED CHECKOUTLeverage Historical Trends to Optimize Our Customer’s Location-Based Delivery Operations REGISTRATION & SIGN-INContinuous Improvementsto RemoveFriction from Registrationand Sign-in Processes FAST360˚Customer’s Digital Front Door 87
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Defining Success Value to CustomerReducing Total Cost of Ownership Value to ShareholdersExpanding Addressable Market Value to FastenalIncreasing Wallet Share & New Market Verticals 88
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JohnSoderbergSenior EVP IT VicMilesMicrosoft Retail Industry Solutions
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+ Navigating the Future Generative AI in Supply Chains 90
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Microsoft’s AI Approach Meaningful Innovation Empowering People Happiness Responsible A.I.91
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How Copilots helpThe role of technology From AutopilotTo Copilot Tools Creative assistant Data inputData output Follows commandsProvides recommendations, with human in the loop Uses specialized languageUses natural language92
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Natural language interface Reasoning engine 93
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Generative AI Content generationAutomatically generate responses to customerinquiries Generate personalized website UIs or marketing images Summarization Summarize customer support conversation logs Summarize social media trends Code generationConvert natural language to data base query language to “ask questions” of your dataComment and document code Semantic searchSearch reviews for a specificproduct/service Discover new products and knowledge mining 94
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Agentic AI Simple Advanced RetrievalRetrieve information from grounding data, reason, summarize, and answer user questions TaskTake actions when asked, automate workflows, and replace repetitive tasksfor users AutonomousOperate independently, dynamically plan, orchestrate other agents, learn and escalate Agents vary in levels of complexity and capabilities depending on your need Agents use AI to automate and execute business processes, working alongside or on behalf of a person, team, or organization 95
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Building on our 1Leveraging FMI data capture to gain supply chain insights 2Industrial supply copilot powered by the Blue Team 3Product landscape: “What is it? What else it? Where is it?” 96
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Leveraging FMI data to gain supply chain insights 1AI USE CASE 97
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Industrial supply copilot powered by ‘the Blue Team’ 2AI USE CASE 98
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Product landscape:>What is it? >What else is it? >Where is it? 3AI USE CASE 99
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Click to edit Master title style 100
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Q & A
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Dan FlornessChief ExecutiveOfficer
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Takeaways & Wrap-Up CONTINUE TO INVEST IN CULTURE, LOCAL SERVICECAPABILITIES ON A GLOBAL SCALE, AND DATA-DRIVEN SOLUTIONS Better Customer-Facing Alignment around a Key Account StrategyReturn to historic levels –or better –of share-related growth Accelerating FMI Innovation Provides a Unique Data AdvantageOur ability to captureuseful information for customers is differentiated Additional Toolbox Development Supports Growth, Expands TAMOur toolbox will add additional capabilities over the next 36 months Success is Built on an Integrated Toolbox, not a Single ToolSite-specific solutions that improve supply chain cost, risk & scalability 103 TAM: Total Addressable Market
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<$5K (92% of Customer Sites) $5K - $10K (4% of Customer Sites) CUSTOMER SITE BUCKET PERFORMANCE $10K+ (5% of Customer Sites) $50K+ (1% of Customer Sites) (5%) 4% 14% 18% CAGR Since 2017 $991M (13% of Sales) $657M (9% of Sales) $5.9B (77% of Sales) $3.6B (48% of Sales) 2024 Sales $119K spend/mo. per site $38K spend/mo. per site $5,700 spend/mo. per site $340 spend/mo. per site Total Sales CAGR (all customers) grew ~8% since 2017 * Sales that are not tied to a specific site or in-market locatio n are excluded from the above. Sales represented above exclude certain service fees, cash sales, direct product sales, customer rebates, etc. ** Customer Sites are an average of the number of customer sites calculated each month. *** $50K+ Customer Sites are presented separately as a representation of Onsite-like customers and are also a subset of the $10K+ bucket.
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2017 to 2022 (5-yr) 2012 to 2017 (5-yr) 2007 to 2012 (5-yr) 9.8%7.0%8.7%CAGR $518M$251M$214M$/year Customer sites added (removed) per year (net) 1,040 244 501 73 343 54 $10K+ $50K+ subset 547405309$5K to $10K 1,587906652$5K subtotal -52,091-5,64529,018<$5K -50,504-4,73929,670Total 20242023 2.8%5.3% $199M$366M 372 236 418 176 -467179 -95597 -34,298-54,379 -34,393-53,782 CUSTOMER BUCKETS 105
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Q & A
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THANKYOU