Good morning, everybody and welcome to Fastenal's 2026 Annual Meeting of Shareholders. My name is Scott Satterlee, Chair of the Board. First off, I'd like to thank and appreciate the global Fastenal Blue Team for that intro video. Before we move on to official business, actually, I want to make sure I thank everybody here for taking the time, as well as those watching the webcast. We appreciate your connection and your investment in Fastenal. So thank you very much. Before we move on to official business, I would like to introduce Pastor Mark Dumke, the retired pastor of Faith Lutheran Church, to lead the invocation.
Thank you, Scott, for the invitation. Friends, it's good to be here with you again this morning. I'm thinking of two words this morning, gratitude and confidence. Dan, I've known you since you moved to town in 1996, and with your wife, Jenny, and your four wonderful kids who have now grown to be outstanding adults. It's been a pleasure to watch you and Fastenal and your family grow. Likewise, it's been a pleasure along with all of you to watch the growth of Fastenal all of these years. I'm grateful for your integrity and for your leadership and stewardship of the Fastenal Company, especially as CEO these past 10 years. Congratulations. I am also confident in the ability of Fastenal to continually raise up leaders who are the best in the industry.
I am confident in your successor, Jeff Watts, who will build on your legacy of excellence, bringing out the very best of all the coworkers of Blue Team. I invite you all to reflect on your confidence and gratitude as we offer our prayer. Creator God, your goodness and bounty of your creation are the rich soil that blesses and nourishes and holds firm the roots of our gratitude and confidence. As we gather to review our accomplishments, challenges, and plans for the future, bless the work of this assembly and this corporation. Bless the hands of those who labor. Bless the minds of those who devise strategies and creative solutions. Bless the vision of leaders who bring out the best in their coworkers. Bless the faithfulness and trust of shareholders who provide encouragement and accountability.
Let our work be done not only for our gain, but for the betterment of all. Amen.
Thank you, Pastor. Okay, this annual meeting of shareholders of Fastenal Company is now convened. Again, I'm Scott Satterlee, Chair of the board of the company, and I will act as Chair of the meeting. Mr. John Milek, who is Vice President and General Counsel for the company, will act as the secretary of the meeting. We'd like to recognize the founders of the company, led by Robert A. Kierlin, Henry K. McConnon, John D. Remick, Stephen M. Slaggie, and Michael M. Gostomski. We also have our entire board of directors here today, so I'd like to recognize them. We have Michael J. Ancius, Stephen L. Eastman, Brady D. Ericson, Daniel L. Florness, Rita J. Heise, Hseng-Hung Sam Hsu, Daniel L. Johnson, Sarah N. Nielsen, Irene A. Quarshie, and Reyne K. Wisecup.
I will now ask Mr. Milek to report on the number of shares present at this meeting and to conduct the voting on the proposals to be considered at this meeting. Following the vote, our President and Chief Sales Officer, Jeffery M. Watts, and our Chief Executive Officer, Daniel L. Florness, will report to you on the company. John.
Thank you, Mr. Satterlee, and good morning, everyone. Before starting, I want to remind shareholders of the rules of this meeting, copies of which are available at the registration desk in the back. Most importantly, if you wish to speak, please raise your hand and a microphone will be brought to you. Upon being recognized, please state your name clearly and limit your statements to no more than three minutes. There are five management proposals and one shareholder proposal to be voted on. A designee of the sponsoring shareholder proponent is in attendance and will have three minutes to introduce the proposal and make a statement in support. The board of directors has already made available the position in the proxy statement that you have received.
The record date for the determination of the holders of the company's common stock entitled to receive notice of and to vote at this meeting was fixed by our board of directors as February 23rd, 2026. I present to this meeting a certified list of the holders of shares of the company's issued and outstanding stock as of the close of business on the record date. This list will be kept open and subject to inspection by any shareholder during this meeting. I also present to this meeting an affidavit of a manager of Broadridge Financial Solutions, Inc., attesting that the notice of the meeting, together with a proxy statement, a proxy card, and certain other documents, were mailed on or about March 13th, 2026 to each holder of record of the company's common stock as of the close of business on the record date.
The affidavit of mailing of the notice of this meeting will be attached to the minutes of this meeting as Exhibit A. The certified list of holders of the company's common stock will be filed with the books and records of the company. As of the close of business on the record date, there are outstanding and entitled to vote at this meeting, 1,148,328,513 shares of common stock. Each share of common stock is entitled to one vote. For a quorum to be present, a majority of the 1,148,328,513 votes entitled to be cast must be present in person or by proxy at this meeting. On a preliminary count, there are represented at this meeting, either in person or by proxy, a majority of the votes entitled to be cast at this meeting. Therefore, a quorum is present for the transaction of business.
A record of the proxies submitted to this meeting, and the ballots of the individuals appointed as proxies, and of the shareholders voting in person in this meeting, will be filed with the books and records of the company. Ellen Stoltz has been appointed to act as the Inspector of Election with respect to all matters to be voted upon at this meeting or any adjournment thereof. The oath of the Inspector of Election has been administered and will be attached to the minutes of this meeting as Exhibit B. We are hereby making available to the Inspector of Election the list of shareholders, the registration forms, and a record of all proxies submitted to this meeting. Copies of the minutes of the last annual meeting of the company, held on April 24th, 2025, are available at the registration desk.
We will therefore dispense with the reading of the minutes of that meeting. All shareholders of record as of the close of business on February 23rd, 2026, are eligible to vote on the matters to be considered today. We will now take up the business of the meeting. We have six matters to be considered by our shareholders today. The first of these is the election of directors for this coming year. The Board of Directors of the company has nominated the following 11 persons for election to the board to serve until the next regular meeting of shareholders or until their successors are elected and qualified. Scott A. Satterlee, Michael J. Ancius, Stephen L. Eastman, Brady D. Ericson, Daniel L. Florness, Rita J. Heise, Hseng-Hung Sam Hsu, Daniel L. Johnson, Sarah N. Nielsen, Irene A. Quarshie, and Reyne K. Wisecup.
I will now open the floor to a motion to formally place before this meeting the nomination of these individuals. I recognize Mr. Pat Jolliff.
I'm supposed to have a microphone available to me, but since I don't, I'll yell.
Okay.
My name is Pat Jolliff, and I am a shareholder of the company. I move to formally place before this meeting the nomination of the 11 individuals identified for election to the Board of Directors to serve until the next regular meeting of shareholders and until their successors are elected and qualified.
Thank you. As no other nominations have been made in accordance with the procedures establishing the company's bylaws, I declare the nominations to be closed. The next matter for consideration today is the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2026. I would like to introduce Mr. Ryan Lepper, a partner with PwC LLP, and Ms. Lauren Carew, a director with PwC LLP, who are here today to answer any questions that you may have. I will now open the floor to a motion to formally place before this meeting a resolution concerning the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2026. I recognize Mr. Ken Lyons.
My name is Ken Lyons. I'm a shareholder of the company. I move that the following resolution be adopted. Resolved, that the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for the company for the fiscal year ending December 31st, 2026, be and hereby is ratified.
Thank you. Is there any discussion of this motion? It has been moved that the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for the company for the fiscal year ending December 31st, 2026, be ratified. I will now open the floor to a motion to formally place before this meeting a resolution concerning the approval of executive compensation. I recognize Mr. Dan Norris.
My name is Dan Norris, and I'm a shareholder of the company. I move that the following resolution be adopted. Resolved, that the shareholders of the company approve, on an advisory basis, the compensation of the company's named executive officers as disclosed in the compensation discussion and analysis, compensation tables, and related disclosures contained in the section of the proxy statement for 2026 annual meeting of shareholders captioned Executive Compensation.
Thank you. Is there any discussion of this motion? It has been moved that the compensation of certain of our executive officers be approved. I will now open the floor to a motion concerning the approval of the Fastenal Company Employee Restricted Stock Unit Plan. I recognize Ms. Kate Hazelton.
My name is Kate Hazelton. I am a shareholder of the company, and I move that the following resolution be adopted. Resolved, that the shareholders of the company approve the Fastenal Company Employee Restricted Stock Unit Plan.
Thank you. Is there any discussion of this motion? It has been moved that the Fastenal Company Employee Restricted Stock Unit Plan be approved. I will now open the floor to a motion concerning the approval of the Fastenal Company Non-Employee Director Stock and Restricted Stock Unit Plan. I recognize Ms. Betsy Jerby.
My name is Betsy Jerby, and I am a shareholder of the company. I move that the following resolution be adopted. Resolved, that the shareholders of the company approve the Fastenal Company Non-Employee Director Stock and Restricted Stock Unit Plan.
Thank you. Is there any discussion of this motion? It has been moved that the Fastenal Company Non-Employee Director Stock and Restricted Stock Unit Plan be approved. The last matter for consideration today is the shareholder proposal relating to EEO-1 Report Disclosure Policy, if the shareholder proposal is properly presented at this meeting. This shareholder proposal was submitted by the Comptroller of the City of New York, Mr. Brad Lander, on behalf of the New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Police Pension Fund, and the New York City Board of Education Retirement System, and was included in the proxy statement. The board makes no recommendation on this proposal. I understand that the designee for the sponsor of the proposal is in attendance and will present the shareholder proposal. Please begin, and limit your remarks to three minutes.
Good morning, Mr. Chairman, members of the board, and fellow shareholders. My name is Andrew Elcock. I am a senior investment analyst for the New York City Comptroller's Office. I'm presenting Proposal Six on behalf of the New York City Comptroller and four New York City pension funds, which are substantial long-term shareholders with roughly 1 million shares of the company, worth approximately $47 million. Proposal Six asks the board to adopt a policy requiring the company to disclose on its website a consolidated EEO-1 report, which is a comprehensive breakdown of its workforce by race, ethnicity, and gender that the company is required to submit annually to the EEOC. Fastenal's website states, "Because we value people, we prioritize safety, we foster a culture of diversity, equity, and inclusion, and we strive to improve communities and the planet.
We remain strongly committed to promotion from within, creating pathways for employees to branch out, build rewarding careers, and become leaders in our organization. We commend the company on its commitment to racial equity and diversity. However, without robust and comparable disclosure of its workforce demographics, shareholders have no way to benchmark the company's diversity performance and hold it accountable for its commitments. We appreciate our engagement with management this year, but we urge you to go further to provide shareholders with consistent and comparable decision-useful information. I would like to point out also that the board elected not to take a position on this proposal. We urge shareholders to vote for proposal number six. Thank you.
Thank you. I remind shareholders that the board makes no recommendation in regards to voting on this proposal. Shares of record who wish to vote on these motions by ballot had an opportunity to vote in person at the registration desk. The polls are now closed, and the ballots will be counted. While the ballots are being counted, Mr. Jeffery M. Watts, our President and Chief Sales Officer, and Mr. Daniel L. Florness, our Chief Executive Officer, will report to you on the company. After the conclusion of the report, we will answer any questions that you may have relating to the company and its activities. Thank you.
Good morning, everyone. I'm Jeff Watts. I'm Fastenal's President and Chief Sales Officer and it's an honor to stand before you today to review our company's performance and share our vision for the road ahead. Let me first start by saying just how proud I am of what Fastenal achieved in 2025. We navigated a challenging environment and we delivered remarkable results. Even more than that, I'm excited about where we're headed and the strong foundation we've built for our future growth and our value. Getting started, if I had to sum up 2025 in one word, it would be execution. Last year, it demanded discipline and focus, and throughout the year, we faced uneven industrial demand, continued tariff pressures, and customers who are understandably cautious of trying to control their risk in their supply chains.
The Purchasing Managers' Index, or the PMI, at the end- of- the- year, had spent 36 of the previous 38 months below 50, indicating contraction in the industrial sector. In other words, the environment was far from simple, and yet Fastenal rose to the challenge. We stayed close to our customers, we concentrated on the factors that we could control, and we executed our game plan with consistency across the organization. In a difficult climate, our disciplined execution, it protected our margin and really positioned us to resume our growth, benefiting both our customers and our shareholders.
Now, our performance last year, it wasn't really just about the numbers, it was about how we delivered them and where we got the growth from. As you can see, Fastenal delivered approximately $8.2 billion in total sales, fueled by strong contributions from across our geographies, across our customer base, and our product lines.
United States remains our core market, accounting for $6.8 billion, roughly 83% of company sales. This business unit, it grew revenues over 9% and remains the engine driving our growth. Internationally, our business continues to expand. In Canada and Mexico, it generated $1.1 billion, or about 14% of sales. Our other global markets, including Europe and Asia, it provided about $250 million, or 3% of total revenues. Now, while our U.S. business is strong, these international gains, particularly in Canada and Mexico, it shows that Fastenal's value proposition resonates globally. We have a significant runway for growth in our international markets. Now, when we look at our customer site spend data, what really stands out is the scale and strength across our customer spend tiers. We're accelerating our growth by deepening relationships with our largest customers.
The last year, there were just over 19,000 customer sites, each doing over $5,000 per month with Fastenal. Collectively, these larger accounts generated about $7.3 billion, 11% more than the previous year. Within this group, almost 2,700 sites spent over $50,000 per month, contributing $4.3 billion to the company. The number of sites in the 50k plus tier grew by 12%, with revenues surpassing 15% growth. The takeaway is clear. Our largest customers are expanding with us, and a strong indicator of customer trust and the value that we deliver. This consistent momentum across tiers, not just at the top, it shows strong, durable demand and a healthy pipeline for our future expansion. Now, when it comes to product lines, our mix spans both direct and indirect categories. Now, Fastenal's product offering continues to diversify and in 2025, almost 40% of our sales were direct materials.
Those are the production components and supplies that become part of our customers' finished goods or products directly consumed in that production, like cutting tools and abrasives. Manufacturing customers now represent about 76% of our sales, and roughly 50% of that subset is direct materials. On the other side, indirect materials, the MRO type items like safety supplies and non-production type items, they make up 60% of our revenues. This balanced mix between direct and indirect product shows how we've evolved into a broad spectrum supply chain partner. This diversification, it's a strategic strength. It expands our market opportunity and makes us more valuable to each customer by fulfilling a wider range of their needs. In summary, we succeeded by growing the right way, through trust, through partnership, and delivering real value to our customers.
Now, let's take a step back and look at the year in a longer term type context. Now, this chart on this slide, it shows Fastenal's key financial metrics in 2015, 2020, and 2025, alongside our future milestones of $10 billion and $15 billion in revenues. These figures, they reflect 10 years of strong, sustainable growth. In 2015, Fastenal's annual sales were $3.8 billion. By 2020, we'd reached $5.6 billion and in 2025, we'd reached $8.2 billion. That's an annual growth rate of approximately 8% over the past decade. Essentially, we doubled our revenue in 10 years, turning the vision we all had of an $8 billion Fastenal into reality. This consistent growth, it reflects our ability to gain market share and expand our range of products and services. Our aspiration looking ahead is continue this trajectory towards $10 billion and eventually $15 billion in sales.
Hitting $10 billion will represent roughly a 22% increase from last year, and reaching $15 billion will nearly double 2025's revenues again. These are ambitious goals, but achievable with the large market opportunity that we see and our track record of growth. Now, importantly, we've grown profitably. Operating income reached nearly double over the past decade, reaching $1.6 billion in 2025. Our operating margin has held steady at around 20% every year, even as we've scaled. I think that's a testament to our productivity and our cost discipline. Our return on invested capital rose to 31% in 2025, up from 25.6% in 2015, demonstrating again how efficiently we're deploying capital to generate returns. Most importantly for you, our shareholders, we've returned significant value. In 2025, we paid over $1 billion in dividends, the first time our regular dividend crossed that milestone.
That's about 80% of our net income. Over the past five years, we've generated $5.6 billion in net income and returned more than $4.5 billion of that, over 80%, through dividends and share repurchases, all while continuing to invest in our people, technology, and inventory for future growth. This is what balanced growth looks like, expanding our business, maintaining strong margins, and delivering meaningful returns to our shareholders. How do we continue this momentum? Our strategy is built on a simple, powerful idea from our founder, Bob Kierlin. Organizations succeed to the extent that all their members pursue a common goal. That shared purpose is what drives us forward. As supply chains grow more complex, our customers need more reliability, visibility, and efficiency. We're meeting that challenge not by reinventing Fastenal, but by sharpening how we win.
We've aligned our entire organization around three core objectives, increase sales effectiveness, enhance our services, and expand our total addressable market. These goals, they're supported by key accelerators that are already starting to deliver results like leveraging artificial intelligence to work smarter and more efficiently, by expanding our reach through eCommerce, and empowering our customers with FAST 360, which is our digital front door for analytics and visibility and control, and scaling our Onsite FAST Grip service models to embed Fastenal directly into customers' entire operations. This isn't just a strategy on paper, it's a living game plan. It's guided us through last year's challenges and will continue to shape how we grow and invest and create value in the future. Now by deepening customer relationships, expanding our offerings, and driving innovation, we're building a stronger, more valuable Fastenal for our customers and for you, our shareholders.
Before I close, I want to highlight an example of our strategy in action, and it was this year's 2026 Fastenal Customer Expo. We had over 3,000 customers there, over 4,500 total attendees, and it was more than an event. It was a showcase of partnership and innovation and the value that we deliver. We hosted sessions tailored to evolving customer needs, and we created space for collaboration between customers and employees and our supplier partners. The focus wasn't on immediate sales. It was on deepening relationships and accelerating solution adoption and building long-term value. That's how we grow with our customers. We believe efforts like this will pay dividends for years to come, fueling growth, strengthening loyalty, and reinforcing Fastenal's role as a trusted supply chain partner. With that, I want to finish up by saying thank you. Thank you for your continued trust and investment in Fastenal.
We're proud of what we've accomplished, and we're even more excited about what's coming in the future. Now, before I turn it over to Dan, as many of you know, this is Dan's last annual shareholder meeting as the CEO, with a planned leadership transition later this year. Before he begins, I want to say publicly what I've told him privately, and it's been extraordinary to work with you. Thank you for your steady leadership through every challenge and opportunity and for your clarity of vision, and for really guiding this company with integrity. It's truly an honor to have been your colleague and to now follow in your footsteps. On behalf of our entire team and the shareholders, again, thank you. Congratulations on an incredible tenure. Dan.
Jeff, thank you for the comment. I'll tell you, I don't know. There were moments, and for what it's worth, 30 years ago when I started, I did have hair. But I did want to address one of the first questions I heard today, and I repeated the question to my team because I had the same question. There are chocolate chip cookies. I don't know what box they're in. The day started kind of interesting. My wife and I moved up to the Lake Pepin area a couple of years ago after our daughter graduated. We still have a home here in Winona, so I stayed down here the last couple of days. This morning, I get up, and my wife's up in Lake Pepin area. First off, I couldn't find the keys to my truck.
I get in my truck and I'm driving to work. The low gas light comes on, and I'm thinking, "Boy, this is a great start to the day." Then I get a call from my wife and she says, "Okay, Florness, what suit are you wearing? Does it have wrinkles?" I can't see wrinkles. When we're 85 and 90 years old, that's a good thing. I can't see wrinkles, so my wife did show up at my office at 8:00 A.M. with a steamer. I do have a burn on my left leg because you should take your pants off when you use a steamer. As always, Pastor Mark Dumke, thank you for the last 30 years. Thank you for what you did to help Jen and I raise, I think, four great kids, and it's great to see you once again.
Mark, I'm not sure if I'm doing it. I guess I'm driving it. First off, one of the pleasures of this annual meeting and one of the pleasures of being in this role, I get to recognize folks that have given to the Blue Team over a long career. As you can see, we were quite a much smaller organization 25, 30, and 40 years ago. The folks that joined saw something special in the people they met, and they decided to stick around. I'd like to start by recognizing five people who have been here for 40 years, and if after I run through the list, if they would stand to be recognized, I'd appreciate it. Dan Norris, Jim Stanek, Pat Jolliff, Ken Lyons, and John Beckman.
This comment is no slight to those five individuals, but I would ask the room to recognize their guests. We are successful based on who we choose to surround ourselves with, and we're blessed for that in life. Trying to figure out what I was going to talk about this year, my wife reminded me, "Florness, nobody's here to hear you talk. They're actually here for lunch." I thought I'd share a view of what these individuals have seen in their 40 years. I went back to the first annual report I could find. It was from 1987. I remember making a comment to Bob when I first saw this annual report many years ago when I joined the organization. I said, "You know, Bob, by 1987, you had the Big Ten covered." Because if you notice those states, that's the original Big Ten states.
I popped into Casey Miller this morning, and I said, "Casey," I need to apologize to you up front. I noticed something that I never mentioned to Bob, but there was an error in our 1987 annual report. We had two locations in Kentucky. You can see them right there south of the Ohio River, but in the years that I've been in this role, I've had the opportunity to discuss the business with a lot of individuals within the company, because we're not an $8 billion organization. Jeff, with all due respect, I disagree. We're not an $8 billion organization. We're actually 240 district business units that average about $35 million a year. That's where our business, the strength of our organization comes from.
30% of my time over the last decade has been spent in one-on-one discussions with those district managers, understanding their business, how they go to market, and how do they discover ways to be special for the customers in their market, and how they grow. I want to also thank, it was a discussion back in 2019, before the world got weird in the COVID year. In 2019, I was having a conversation with our district manager in southwestern Minnesota, and it was one of those kind of a light bulb moments. Because I was looking at this district, and Jason, I don't know if you're in the room, but, or if you're listening, but Jason Knutson, thank you for that conversation, by the way.
I was looking at his district, and he had moved from Nebraska up to southwestern Minnesota in around the 2017 timeframe. Quite frankly, that district, that area of Fastenal, had grown 2% to 4% for a decade. Now, it was nicely profitable. It was a nice business, but it wasn't special. In a few short years, Jason turned that business into a business growing in the teens, and it really came from the standpoint, he had about 30 customers doing more than $10,000 a month in that business. In over about a five, six-year period, he grew that 30 to about 80. That $20 million district became a $60+ million district.
We discovered something that was really special in one of our oldest business units of, yes, we can make a difference for our customers and be really successful by being a supply chain partner to them, not merely a purveyor of goods. It had changed a lot of how the business has developed ever since. Getting back to the premise. Back in 1987, this was the organization that these five individuals would have experienced back in the day. I want to show you how it's changed a little bit, and I normally don't have notes in front of me. I have the slide deck because when I'm up here, I really can't see what's on that screen with the lights coming in. Back in 1987, we did about $20 million in revenue.
For Casey's benefit, I flagged that there was $1 million in Kentucky. We probably opened those 2 branches in December, and it was probably $10,000, but we'll round up. By 1995, that organization had grown to $223 million. You can see we had to kind of estimate because we didn't have the actual detailed numbers by state. You can see those eight states that were the Big Ten circa 1990 when Penn State joined. We had about $100 million in revenue in that area. It had grown fivefold in those eight years, and then we'd added about another $120 million in the rest of the United States as we'd expanded. We expanded beyond the United States in that timeframe. We opened up in 1994 in Southern Ontario, and it was a couple of years later that Jeff Watts joined the organization in Southern Ontario.
You can see we grew to about a $1.5 billion organization. Look at the growth that's happening in those oldest business units. Even though we'd been there for years, the market was immense. We had to figure out how to tap into that market. By 2015, we were a little over $3.5 billion. Here's what it looked like last year. Again, $8.2 billion organization. Almost $7 billion in the United States, $1.1 billion outside the United States and the rest of the Americas, and about a $250 million business between Europe and Asia. Incredible opportunity to grow the business. The market is immense. The thing that's most important to me when I look at this is to this day, we've figured out how to grow in those original eight states, which gives me confidence.
This isn't a forward-looking statement, so I don't want to get in trouble with the SEC here, but it gives me confidence in Fastenal's ability to grow in the future because the market exists. We have to decide if we're going to go take it. The market exists for us to keep expanding for years to come if we so choose. I also thought I'd take a quick look at the business from the standpoint of, in our earnings release last week, we mentioned that our return on invested capital was just over 30% in the first quarter. For 2025, it was in the low 30s as well. When I had that 1987 annual report out, I looked at it and said, "I wonder what it was back then." We were in the high 20s.
I was surprised it was that high because we weren't as profitable back then. We also didn't have as much capital deployed in business, and so we had a really attractive business, probably one of the reasons the marketplace embraced us when we decided to go public back in 1987. Here's what it looks like in between. In the 1990s, we actually expanded into the low 30s. Again, I was surprised by that. I learned from one of our board members a number of years ago, and it's a board member where English is a second language. He taught me a piece of the English language I didn't appreciate, and it was a concept. It was strategy, and strategy is about choice. We chose, as we went through the 1990s and into the 2000s, to expand the breadth of products that we distribute.
We chose to expand the breadth of customers we sell to. In the mid-1990s, we added national accounts, and that's a different game from what we were doing prior to that. We also decided to start sourcing more product directly, which meant we needed a lot more working capital because you're not buying weeks and months of supply, you're buying months, maybe a year of supply in order to source that item at a different cost point. We allowed the return on invested capital to move down into the mid-20s%, because that was the right long-term decision for Fastenal and its shareholders, its customers, and its employees. I'm pleased to say in the last decade, we were able to, again, through choice, move the return on invested capital back up into the low 30s%.
That's a testament to Bob Kierlin and the original founders and the ability of the Blue Team to execute and choose a path for them that was different than the path we had. It also required a lot of change in the organization in that timeframe, and I'll touch on that in a few minutes. If you're curious, here's a few more, and again, this is my last time to talk, so I want to share some of this stuff because I find this fascinating and I hope everybody isn't sitting there like, "When is this guy going to shut up so we can have lunch?" Fixed assets to sales, we didn't have a lot back in the 1980s and 1990s. We needed more distribution capacity to do the things we wanted to do.
We needed more trucking capacity to do the things we wanted to do. You can see how that third column in the middle section there, 9% of sales, 10% of sales, 14%. We actually had for every dollar in sales, 20 cents in fixed capital a decade ago. Now I put that little 17% in there. A decade ago, we were really in the early innings of this thing we call Fastenal Managed Inventory or vending, is what it started as. If you'd have gone down to Des Moines, Iowa, you would have found a warehouse full of vending machines because we had bought a bunch and we weren't deploying them quite as fast as we thought we would. We had about $130 million worth of vending machines stacked to the ceiling in this warehouse. We were looking around like, "Oh, God.
What do we do?" We decided, again, strategy is about choice. We decided we need to pick up the pace and deployment. I'm pleased to say we worked that capital off. If I remove that, we didn't really have 20% of sales. We had about 17. Look how that number has dropped over the last decade because of the Blue Team going to market in a responsible way. We also made a choice to close about 40% of our branch locations over the last decade because we moved where we do business. It wasn't strictly out of a Fastenal branch. Today, over 50% of our business is with customers doing more than $50,000 a month in that location, and most of that business goes through what we call an Onsite, where we're physically in their facility.
It changed our real estate needs and it allowed us to accomplish that. Then on the far right, you can see again, our invested capital and what that is. It's kind of funny when I look back to 1987 to think our total invested capital in the organization was $7 million. Today it's just over $4 billion. If you want an exercise in finance, that is the definition of compounding your growth over a long period of time. What have the last 10 years taught me? One of the things I try to do in the president's letter or in more recent years, the shareholder's letter in general, is try not to use the word I or me, but if you would allow me, I'd like to share a few things I've learned over the last 10 years.
One of them was these 10 rules that Bob had carried a lot more meaning when you're the CEO than when you're the CFO. Especially Rule number one, challenge rather than control. The adversity of the situation really challenges leaders to emerge, and I'm particularly impressed with the folks on the Blue Team, on the leaders that have emerged over the last decade to assist me in the cause and to assist the organization in the cause, to get us through periods of uncertainty. COVID's a perfect example. You're not sure if the step you're taking is the right step, and you rely on the folks around you. Rule number nine. Let people learn.
A key to a leader is what is your habit every day to develop yourself and to develop those around you so you continually make the organization and everybody better and bring more ideas to the customer and the marketplace? That's what allows us to grow for the last 40 years. This year, maybe you've seen this chart if you've participated in some of our earnings calls. There's an index out there called the Purchasing Managers' Index, and it's a survey that's done of purchasing managers where they look at the backlog in their business. Being the Blue Team, we consider red bad. Those periods that you see that are red are bad. I remember when stepping into the role back in the fall of 2015, you can see a few months there of red.
We actually went negative in sales growth for the last four months of 2015. There was a lot of uncertainty. There was a lot of folks wondering, "Geez, what's happening to Fastenal?" If you would allow me, I would like to add five rules to Bob's list that I learned over the last decade. Rule number 11: don't be a victim. I think Jeff's letter to shareholders this year said it well. He said, "We didn't wait for the market to lift us. We leaned into our strengths, our people, our service, and our ability to solve problems for our customers." The other thing about not being a victim is you need to have empathy, but you have to have a plan and you have to decide to execute on that plan. It's our destiny, not what we're victims of. Rule number 12: own everything that goes wrong.
Share the rewards on everything that goes right. Always understand the math and the story behind it, and you can replicate success in many different places because you can share that story throughout the Fastenal organization. Finally, I learned this from Bob, believe in people. All else fails, believe in people. They'll surprise you and impress you every time. Life has some special phrases. "I'm wrong" is a good phrase. "I'm sorry" is a good phrase. If you don't have a phrase, maybe a simple smile, because that is a phrase in and of itself. Usually, it means hello or you're trying. "I believe in you" is a great phrase, but I don't think there's anything better than the phrase, "Thank you." To the shareholders in the room, thank you for placing your trust in the Blue Team.
Since 1987, for me more personally in the last decade, thanks for cutting us slack on the things we messed up and believing that having a plan for the long term works for the long term. Although I do have to say, every year when we're doing the vote, you get updates to the voting, and I saw the update this morning, and I was thinking in the final year, I wonder if the directors will get more votes than our external auditors. We didn't make it, and I guess that's just life. I just thought I'd share that, but thank you for everything you've done as far as allowing us the opportunity to take the investment you entrusted us with and growing it into something special. Oop, I got ahead of myself there.
To the board, and Scott in particular, thank you for the partnership over the last decade, and thanks for allowing me to vent. I was probably a pain to have around most of the time, but thank you. We all need a shoulder to cry on sometimes or to vent with, and so thank you for providing that shoulder. From a mentors and peers standpoint, two that stand out early in my career, Mike Dolan, one of our former directors. When I first was out of college, I worked for Mike. I learned a lot from Mike over the last 40 years of knowing him, so thank you for that. For Bob Kierlin, thank you for the opportunity of a lifetime and the mentorship you provided to me over the last 30 years.
From a peer standpoint, when I first stepped into this role, Nick Lundquist and Reyne Wisecup could have chosen to look at it and say, "Okay, we'll do our job, but we won't do more than that." They did just the opposite. They pushed me and pushed us in every way they could to make Fastenal a better organization until the last day they were in the office. I thank them for that. A few of the Fastenal folks are going to laugh when I mention this next one, when I say selfless leader, because if you know the person, he has kind of an in-your-face persona. Maybe a little bit of an arrogant persona, but he's an incredible teacher of people, and that's Randy Miller. Randy joined us back in February of 1987.
He lived in Winona for a number of years, and then we asked him to relocate down to Indianapolis to lead our business down there. Randy has developed more leaders within Fastenal. We often talk about our tree and who sprang from your tree. If I think about our regional and district leaders, nobody has developed and mentored more people in this organization from Randy Miller. Randy will be hitting 40 years next year, and I hope he comes to the annual meeting to be recognized. I'm coming to see Randy recognized a year from now. He's been an incredible person for me to talk to over the last decade of bouncing stuff off of and getting some very blunt feedback, which is well appreciated. Randy, thank you for that.
In the letter to shareholders this year, I generically mentioned four people, and I'd like to call those four people out by name. In 2014, I asked Bill Drazkowski to step out of a regional leadership role and lead our national accounts. Nothing was more eye-opening for me than working with Bill in roughly a year directly in national accounts, because I really realized in a lot of discussions with customers how truly big the opportunity was and what some of our priorities should be in the decade that followed. Bill, thank you for that. First decision that was presented to me is I chose a leader for the Eastern United States, and Casey Miller, who's originally from Kentucky, I tapped him on the shoulder, I said, "Hey, Casey, can you move up to this cold area for a few years?
What you've done in Kentucky and Tennessee is special in the organization, and we need to bring that special to more places. Casey assisted from the standpoint of. If all my decisions over the last decade would've been as good as that, we'd have been a lot bigger today. Casey made me look smarter than I actually am, and Casey, thank you for everything you've done for the Blue Team in the last decade. In 2016, John Soderberg. John started in a branch for us on the East Coast. John once showed me this app on his phone where you can look up at the sky, and it'll tell you what you're looking at. "Hey, there's Jupiter. There's Mars.
This is that constellation." I came to John in the summer of 2016, and I said, "John, how would you like to run IT?" I said, "We have great people in IT. They're not close enough to the business, and we need a great leader to bring them closer to the business." John didn't give me the sideways look. He said, "What do you need me to do?" John has led that group for the last decade and done amazing things for Fastenal's employees, our shareholders, and our customers. John, thank you for that. Jeff and I, we actually met in the late 1990s. He was a district manager out, I think, in British Columbia at the time. We've had a close relationship ever since because he always asked really good questions, even if sometimes they were questions I didn't want to hear.
I'm really excited for what the next decade means with Jeff and this leadership team going after an incredibly large opportunity in the marketplace. Finally, to the 25,000 people on the Blue Team, thank you for cutting me slack on the dumb decisions and supporting me on the ones that were better and fixing, again, the dumbest decisions I made. Finally, what Fastenal has taught me over the last 30 years, recruiting is hard work, but it's really simple. Just find great people, ask of them to join, and give them a reason to stay. Always remember, regardless of where you go in life, no culture or geography has a monopoly on talent or ambition. You can find it everywhere. In fact, if you were talking to a bunch of leaders here today, you would discover a lot of them are native Spanish speakers.
Not because we're trying to teach Spanish to everybody in the organization, because we found some incredibly talented people down there, as we did in every place else we went, and we asked them to take a step forward and bring their leadership to more people within the organization. Finally, I've talked about quite a few people today and hopefully everybody isn't sitting there like, "Okay, does this mean he's almost done?" Because yes, it does mean I'm almost done. Surround yourself with people better than you. That's the biggest advice I can give to the leadership team for the next decade. On that note, and I'll try to keep my composure on this one, Jen, thanks to you for the last 30 years. My wife and I got married. I met Jenny Ann Gustafson late in 1993 timeframe. We got married in the fall of 1995.
We celebrated 30 years last year. Thanks, and thanks for our four great kids. In case you're wondering, so we got the chocolate chips covered. In case you're wondering what Florness is doing next, I have a plan. In February, you know we sponsor NASCAR. In the NASCAR, our team, the Roush Fenway Keselowski Racing team, gave me a fire suit. That's the suit the pit crew wears when they're doing the things they do on that stop that takes a split second. Yeah. I put my name in to join the pit crew, although I talked to him in February, and I haven't heard back yet, so I'm not sure what that means. With that, thank you, and I'll turn it back over to Scott.
I promised Dan that we weren't going to embarrass him too much. After that last slide, I realized he has no problem embarrassing himself. Dan Florness has had an exceptional career at Fastenal. For those of you who don't know, he joined the organization in 1996, coming from the public accounting sector. Like most CFOs, Dan's great with numbers. In his case, he'll tell you a long story about them sometimes, but he's exceptional with numbers, like most CFOs. Dan did something very different. He embraced Fastenal's culture. What I mean by that is, early on in his career as CFO, he started visiting offices, getting out to the field, going to distribution centers, interacting with customers, talking to employees at all levels.
Understanding the business and then applying his financial acumen to be able to produce solutions that could be delivered out in the field. For that reason, he was promoted to CEO in 2016. That ability to be able to embrace the culture and learn the business and be part of the Blue Team. Now, there are a number of key milestones, both financially and strategically, and I'm only going to touch on a couple few extras because both Jeff and Dan mentioned a number of them. Doubling revenue, operating margin or operating income. Providing the dividends, consistent dividends over the years. Achieving market capitalization beyond $50 billion, and a number of others. As well as some strategic milestones that are critical. Thinking about adjusting the network. Like Dan said, there's been a shift.
There's been an expansion of physical offices and onsites, but mainly onsites and that infrastructure to get closer to customers and provide growth through customer service. As well, one of the things that wasn't mentioned is during this time period, things like eCommerce, the international business, vending, all surpassed $1 billion in revenue. Most importantly, and Dan alluded to it, Dan was critical in working with the leadership team to help shift Fastenal from a transactional distributor to a data-informed supply chain partner. Dan has many skills, many achievements during his career, but I want to focus on one that I think goes a little bit underrated.
One of his skills, one of his strongest skills, and you can see it when he presents, and if you spend enough time with him, you can see how he interacts, but he has a tremendous ability to connect with people. I wrote down a number of comments as I prepared for this from employees that I've interacted with. From the very start, Dan has prioritized the importance of customers and employees through interaction and recognition. One of the things he regularly does for the board and for employees is provide updates via video, and every single one of those videos, outside of the information that he's presenting, recognizes key individuals just like he did for the 40-year employees. It's a signature component of Dan's leadership style. During COVID, as we all know, a very difficult time for society.
His message always prioritized employees' health and safety, while also emphasizing that Fastenal's goal was helping customers to do the same. Dan believes in people and their ability to do great things when given the chance. He also cares more about employees' success and well-being than his. It comes out when you listen to him. He also leads by example with practical frugality. That doesn't mean he's cheap. He's frugal, practically. He also insisted that honesty and integrity are non-negotiable leadership qualities. The founder of Fastenal, Bob Kierlin, wrote a book called "The Power of Fastenal People." I'm probably guessing many of you have read it. It's an exceptional read. The book outlines the core cultural pillars that make Fastenal a special company. Within it, as you saw from Dan's slides, Bob outlines the 10 key leadership characteristics, now maybe 15, that embody the culture.
Dan embraces these leadership characteristics, and it's one of the many reasons he is so admired in the field and why he's going to be very missed, not only from the organization, but also at the board. He's been an exceptional board member and provided the same sort of integrity and guidance and cultural understanding to all of us. Dan's leaving the organization in the very capable hands of an exceptional leadership team, led by Jeff Watts, all of whom also embody the power of Fastenal people. Unfortunately, Bob Kierlin is no longer with us, but if he were, Bob would be very proud. Please join us in thanking Dan Florness for everything he has accomplished for Fastenal. Now with that, we're going to make Dan take some Q&A. Actually, no.
Probably good if Jeff leads it right now, but I think both of you are going to do it, right?
If there is any.
Yeah.
You want me to take those?
Yeah.
You're pretty emotional. I think you need this. Now we're going to ruin that moment by having Florness and Watts answer some questions. Are there any questions from the room? Pardon?
Okay. There's one person over here on this side.
Dan, you're a numbers guy. Hi, Dan.
Hi there.
Nice to see you.
Thank you.
Over the tenure that you've put in, the 10 years, the revenues have grown about double?
Just over doubled. It was about 3.82.
What has the stock done in 10 years?
We're off a little bit in the last week. We were almost up five-fold, but a little over four-fold. Yeah, we were about $11 billion in market cap back in the fall of 2015, and we're just over $50 billion today.
Yep. Any other questions? I like a question where I can just say, "Yep.
There's one right here in the front.
I have a question about the vending machines.
Yes.
Over the last five years, how has the projection been on the growth of the vending machines?
I'll answer it in pieces. If I go back to a decade ago, and then I'll kind of plug in halfway, because I don't have the exact number from five years ago. If I go back a decade ago, about 24% of our revenue went through either a vending machine or through eCommerce, and it was probably about 18% and 6% making up that 24%. Today, that number is 62%. I think last October, we were about 62%, maybe we're 63% now. Inside of that, the vending is about 46%, 47%. It's gone from about 18% of sales to about 47%. Biggest piece of that increase is vending. If I kind of walk that back, you're probably looking around 30% to, well, 25% to about 45%, is what the vending is as a percentage of our business. Not all of that is pure growth.
A lot of it is growth. A lot of it is introduced into existing customer relationships, and it makes the business more efficient. Because one of the challenges in supply chain is knowing what's on the different shelves and what's close to the point of use, which is the person working in that manufacturing plant or that distribution center. What the vending machine does, as well as all the adjacent things we do, like the RFID and all these different systems, it puts a gas gauge on that supply of inventory that's inside your customer's facility. It's like my car this morning. If I wouldn't have had a gas gauge, I wouldn't have made it to work. I would've called my wife and I'd have said, "Hey, Jen, when are you getting down here?
I'm somewhere on County 17 out of gas." By having that in our customer's facility, our replenishment becomes very efficient from a labor perspective, and we can actually lower the amount of inventory that our customer needs in their facility. To get back to your question, it's gone from mid-20s% to mid-40s% of our business.
Thank you. Thank you for all your service, too.
Thank you. Anybody else? Oh, there's one question over here. There's a mic coming up right behind you.
I agree. Thank you for your service.
Thank you.
This last year has been a lot of ups and downs with tariffs and what's good and what's bad and what's been converted. What's the process for Fastenal with the tariffs that have been extended to you, and what's the future going to hold?
The future changes about every 15 minutes, and so that one I can't spec. I can say it'll be interesting. As far as what we try to do as an organization is we immediately have a great team that goes about studying what was just announced, and we communicate as quickly as possible with our customer of what this means for their supply chain, and we try to give them as much time as possible to make decisions. Because when you do that, you create optionality for your customer. I believe our customers really value that aspect of us because when tariffs come along, we're not raising prices.
We're sharing with our customer their supply chain has just become more expensive, and then we're giving them options of how to reduce some of that increase or eliminate it altogether by modifying source supply, by modifying the product selection, by being creative with our solutions, and our team in the field are particularly good at that. Since 2018, they've had a lot of practice. That's the biggest thing to do, is give information so people can make decisions. Jeff, I don't know if you want to add anything to that.
No, you did a good job.
All right. Any other questions? Before we switch it back over, I'm going to close out the question part then. Before we switch it back over to the final part of the meeting, voting results, I do have a gift for Jeff. Now, Jeff is Canadian. Now, normally I would say, "Jeff's Canadian," so when I talk to him, I use small words. But I'm not going to say that today. We're good friends as well.
I'm used to this.
I don't have a baton to pass off to Jeff, so I thought I'd get something that resonated more for this circumstance. Give me one second.
I don't know much about hockey, and Jeff will agree with that. I'll make two comments. One is goalies are known for maybe having a screw loose once in a while, and so it's okay to have some crazy ideas once in a while. Vet it with the team. Secondly, always remember, and this is as funny as I get, the puck stops here. Thanks, everybody.
Okay. The ballots have now been counted, and the report of the Inspector of Elections indicates that Scott A. Satterlee, Michael J. Ancius, Stephen L. Eastman, Brady D. Ericson, Daniel L. Florness, Rita J. Heise, Hseng-Hung Sam Hsu, Daniel L. Johnson, Sarah N. Nielsen, Irene A. Quarshie, and Reyne K. Wisecup have received the required number of votes and are hereby elected directors of company. The report of the Inspector of Election also indicates that, one, the resolution for the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the company for the fiscal year ending December 31st, 2026, has received the required number of votes and has been adopted. Two, the resolution for the approval on an advisory basis of the compensation of certain of our executive officers has received the required number of votes and has been adopted.
Three, the resolution for the approval of the Fastenal Company Employee Restricted Stock Unit Plan has received the required number of votes and has been adopted. Four, the resolution for the approval of the Fastenal Company Non-Employee Director Stock and Restricted Stock Unit Plan has received the required number of votes and has been adopted. Five, the resolution for the consideration of the shareholder proposal related to an EEO-1 report disclosure policy has not received the required number of votes and has not been approved. All ballots and a record of all proxies will be filed with the books and records of the company. The certificate of the Inspector of Election will be attached to the minutes of the meeting as Exhibit C. The meeting is now adjourned.
Thank you all for coming, and we invite you to join us for lunch, which is available outside in the tent. Thank you.