This annual meeting of the shareholders of Fastenal Company is now convened. I am Willard D. Oberton, chairman of the board of the company, and I will act as chair of this meeting. Mr. John L. Milek, who is General Counsel for the company, will act as secretary of this meeting. What I'd like to do to start out, this is a very special meeting. This is our 50th anniversary. What I'd like to do is start out and introduce the people who had the vision and the guts to invest in a little company, a big idea, and they stuck with it. I think the real measure of success is resolve, being willing to stick with something. Today, we're fortunate to have Robert A. Kierlin. Bob, would you please stand up? Is Henry here? I don't believe Henry's here. No, Henry K. McConnon, John D.
Remick, Jack Remick. Stephen M. Slaggie, and Michael M. Gostomski. M. Gostomski, excuse me. These are the people that made it possible for 20,000 of us and the shareholders. 20,000, that's the employees. Thanks, gentlemen. We truly appreciate what you have done for all of us. Next, I'd like to introduce our directors. Present are Michael, and if you'd stand as I read your name. Michael J. Ancius, Michael J. Dolan, Stephen L. Eastman, Daniel L. Florness, Rita J. Heise, Darren R. Jackson, Daniel L. Johnson, Scott A. Satterlee, 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 Chief Executive Officer and President, Daniel L. Florness, together with other individuals from our organization, will report to you on the company.
John? Where? Oh, there's John. I forgot. I apologize. I missed the invocation mark. Please come up, Father. Okay.
Thank you, Will. A corporation doesn't attain the success that Fastenal has just because you've had good ideas, but you've had strong values. I was reflecting on those values of ambition and innovation, integrity and teamwork, and realized that they aren't just printed on posters and placed on walls, but they are embodied in the people of Fastenal. It's our congregations and civic organizations that also benefit from those because your people also bring those values to their homes and into the community, and we thank you for that. It also gave me an opportunity to reflect on my own ambitions. You might not imagine clergy having ambitions, but we do. Together with the famed revivalist, Leonard Ravenhill, it's my ambition to rise to the top of the devil's most wanted list. Mindful of your ambitions and your values, let us pray.
Creator God, you cause the rain to fall and the seed to sprout and grow. You bring forth food from the earth and nourish your whole creation. Sustain our desire to base our decisions and actions on the strong foundation of our values. Open doors of opportunity for this corporation and for every person within it. As we gather to review our accomplishments, challenges, and plans for the future, bless the work of this assembly and this corporation. May our work be done not only for our gain but for the betterment of all who we serve. Amen.
Thank you, good morning, everyone. 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 24th, 2017. I present to this meeting a certified list of the holders of the shares of the company's issued and outstanding common stock as of 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 a meeting, together with a proxy statement, a proxy card, and certain other documents, were mailed on or about March 14th, 2017, to each record of holder 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 in 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 were outstanding, entitled to vote at this meeting, 289,260,924 shares of common stock. Each share of common stock is entitled to one vote.
For a quorum to be present, a majority of the 289,260,924 votes entitled to be cast must be present in person or by proxy at this meeting. On a preliminary count, there were represented at this meeting, either in person or by proxy, a majority of the votes entitled to be cast. Therefore, a quorum is present for the transaction of business today. Is there anyone present that has not submitted a proxy or registration form? 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. Jan DeGalier 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 hereby make 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 19, 2016, 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 24, 2017, may vote on the matters to be considered today. If you wish to vote by ballot, please raise your hand when I ask you to do so, and the ballot will be provided to you.
Shareholders who have appointed others as proxies to vote their shares, whether in writing or by telephone or over the internet, and have not terminated those proxies should not vote by ballot. We will distribute one ballot covering all matters to be voted upon at this meeting, rather than separate ballots for each matter. We will now take up the business of the meeting. We have five matters to be considered by our shareholders today. The first is the election of directors for this coming year. The Board of Directors of the company has nominated the following 10 persons for election to the board to serve until the next meeting of the shareholders, or until their successors are elected and qualified: Willard D. Oberton, Michael J. Ancius, Michael J. Dolan, Stephen L. Eastman, Daniel L. Florness, Rita J. Heise, Darren R. Jackson, Daniel L. Johnson, Scott A.
Satterlee, 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. Greg Campbell.
Good morning. My name is Greg Campbell, and I'm a shareholder of the company. I move to formally place before this meeting the nomination of the 10 individuals identified for election to the board of directors to serve until the next regular meeting of shareholders or until their successors are elected and qualified. Thank you.
I recognize Ms. Ashley Soderberg.
My name is Ashley Soderberg, I am a shareholder of the company. I second the motion.
Thank you. As no other nominations have been made in accordance with the procedures established by the company's bylaws, I hereby declare the nominations to be closed. The next matter for consideration today is the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2017. I would like to introduce Ms. Angela Dosdall and Mr. Tim Forste . Angela and Tim. They are partners with that firm who are here today to answer any questions that you may have. No questions? I will now open the floor to a motion to formally place before this meeting a resolution concerning the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2017. I recognize Mark Malecek.
My name is Mark Malecek, I am a shareholder of the company. I move that the following resolution be adopted. Resolved that the appointment of KPMG LLP as independent registered public accounting firm for the company for the fiscal year ending December 31st, 2017, be and hereby is ratified.
Thank you. I also recognize Mr. Ben Lang.
My name is Ben Lang, and I am a shareholder of the company. I second the motion.
Is there any discussion of this motion? It has been moved and seconded that the appointment of KPMG LLP as independent registered public accounting firm for the company for the fiscal year ending December 31st, 2017, be ratified. I will now open the floor to a motion concerning whether to reapprove the Fastenal Company Incentive Plan. I recognize Ms. Wendy Killen.
My name is Wendy Killen, and I'm a shareholder of the company. I move that the following resolution be adopted. Resolved that the Fastenal Company Incentive Plan, in the form attached to the proxy statement for the 2017 annual meeting as Appendix A, be and is hereby approved.
All right. Thank you. I recognize Mr. Patrick Holahan.
My name is Patrick Holahan. I am a shareholder of the company, and I second the motion.
Is there any discussion of this motion? It has been moved and seconded that the Fastenal Company Incentive Plan be approved. 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. Mike Humphries.
My name is Mike Humphries, 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 the 2017 annual meeting of shareholders captioned Executive Compensation.
Thank you. I also recognize Mr. Carlos Casillas.
My name is Carlos Casillas, and I am a shareholder of the company. I second the motion.
Thank you. Is there any discussion of this motion? It has been moved and seconded that the compensation of certain of our executive officers be approved. I will now open the floor to a motion concerning the frequency of future executive compensation votes. I recognize Mr. Pete Dotlitch.
My name is Pete Dotlitch and I'm a shareholder of the company. I move that the shareholders vote to determine, on an advisory basis, whether they should have a non-binding vote on executive compensation every year, every two years, or every three years.
Thank you. I also recognize Mr. Walter Tate.
My name is Walter Tate, I'm a shareholder of the company. I second the motion.
Thank you. Is there any discussion of this motion? It has been moved and second that a shareholder vote be held as to the frequency with which shareholders of the company should have an advisory vote on executive compensation. If you wish to vote on these motions by ballot, please raise your hand and the ballot will be given to you. If you have appointed another person as proxy to vote your shares and have not terminated that proxy, you should not vote by ballot. After you have executed your ballot, it will be collected and tabulated. The polls are now closed and the ballots will be counted. Thank you.
Hello, welcome to the program. I'm Robert A. Kierlin, founder of Fastenal. I don't want to hold up the proceedings. I just wanted to quickly acknowledge Fastenal's 50th anniversary, which is coming up in 2017, and thank each and every one of you who helped to make these first 50 years such a success. It's been a truly remarkable story. Amazing, really. Well, I encourage you to look into our history sometime when you get a chance. Thanks. Enjoy the program. That is, unless you want to hear some Fastenal history. Well, in that case, let's take a walk down memory lane. The Fastenal story really started when I was an 11-year-old boy working in my father's automotive parts store, BK Auto Supply. Back then, all of our automotive fasteners came in a standard-sized box, that happened to be about the size of a pack of cigarettes.
That got me thinking, "If you could dispense cigarettes out of a vending machine, why not fasteners?" This idea stayed with me for many years, until I was working at IBM and looking to start a business of my own. I envisioned a 20 by 50-foot store lined with fastener vending dispensers. Customers would walk in, insert some quarters, grab their fasteners, and be on their merry way. First, I needed some capital to get the business going. I must have been shot down by at least 30 potential investors before finally convincing four friends to come on board. The first was my former eighth grade and high school friend, Van McConnon.
I didn't have any money to invest. Instead, I invested my time and labor for a meager salary and shares of the company stock. I became the very first Fastenal employee.
The first guy to actually write a check was an IBM coworker of mine named Jack Remick.
I could only come up with a fraction of the money Bob was asking for, so I did what any self-respecting entrepreneur would do. I asked my mom for a loan. Thanks, Mom.
Next up was Steve Slaggie, another high school friend. He was a bit of a tough sell.
When BK told me about selling nuts and bolts out of a vending machine, I said, "BK, are you goofy?
That brings us to Mike Gostomski, who came on board a year later when we needed a cash infusion to keep the company running.
Now, don't you know, it was a real high-powered transaction, you know. You could tell because my stock certificates, you know, were written up on grocery invoices, don't you know.
We set up shop in a 1,000 square foot building adjacent to my dad's auto supply store. The first order of business was to come up with a name for our outfit. My vision was that of having as many as 2,000 vending machines across the country, all serviced by a fleet of gleaming semis bearing our company name, Lightning Bolts, with a streak of lightning underlining the letters for emphasis. Ben, Jack, and Steve rained on my parade by threatening not to invest unless we came up with a different name. I think Steve gets the credit for what came next. He figured people would use our products to fasten all kinds of things, so why not go with Fasten All? Good, but maybe a little clunky, so we lost the hyphen, trimmed the L, and there you have it, a name nobody in the world could pronounce.
The blue team may well have ended up as the yellow team, or even the red team, if it weren't for a college textbook entitled Human Engineering. This is where I learned that blue on white is the easiest color combination to read for text. It looked great on our first store sign, despite the fact that I miscalculated the spacing, thus the traffic jam of letters on the right side. Did I mention that I went to engineering school? We ordered an initial inventory to eventually go into the machines. 1,400 different bags of fasteners from a place called Industrial Supply out of Chicago. We were still figuring out how to get the machines made, but with all that product lying around, it seemed like a good idea to generate some cash.
We placed this eye-catching ad in the local paper, opened our doors to the public, Lo and behold, about seven people wandered in that week. The few people who did show up asked about sizes and quantities of fasteners that couldn't possibly fit in the vending machine design. This was a major blow. To meet customers' needs, we'd have to have a salesperson in the store. What was the point of having self-service vending machines? I'll turn it over to my fellow co-founder, Van McConnon, to describe what happened next.
This is idiotic. This is going no place. We really didn't discuss the bottom falling out. B.K. just didn't seem alarmed over it. It was his idea, and Jack worked on it. He says, "Well, Van, just start making calls and sell nuts and bolts.
That's exactly what we did. Van climbed into his beat-up Coupe de Ville and started making sales calls to potential customers, blazing a trail that would be followed by thousands of Fastenal salespeople to come.
Hope you enjoyed that. We actually have a couple more we're going to show you that we had pulled them together for our employee meeting back in December. All five of our founders made it to that event, and you could really see the excitement in the room. For a lot of our employees that aren't from the Winona area or haven't been with the company for years, a lot of these stories are new, and there's some great stories. One other thing we did in honor of our 50th year is we pulled together a 50-year book and sent it out to each of our 20,000 employees in December as just a memento to celebrate the first 50 years, but also get ready for the next 50 years. If you look at the I probably should introduce myself.
My name is Daniel L. Florness, and I've been with Fastenal about 21 years, President and Chief Executive Officer, and thank you for being here today. If you go to the next video, please. Because of the videos, we're truncating the center section just to touch on a few tidbits. When I look at 2016, the first thought that comes to mind after being here for 21 years is feeling the need to apologize. It frankly wasn't a great year. There's some things that we did I'm very proud of, as you can see, both 2015 and 2016, our end markets have really suffered. Because of our dispersed network of stores, we've been successful in a lot of markets, in a lot of end markets, a lot of industries. One of those industries is oil and gas.
When the price of a barrel of oil dropped two years ago, we felt it in our business, and we felt a sinking feeling in our business. We had a tough couple of years. You really see it in the lower left corner of the slide where you look at the fastener business. Our fastener business went negative in the spring of 2015, and it stayed there. Meanwhile, we kept adding customers every day, knowing that while we have customers whose business is down, our goal long term is to keep growing the business because the market opportunity for us is tremendous. We stayed focused on that task at hand. I'm pleased to say, when I look at the first quarter we just reported here a few weeks ago.
In the first quarter of 2017, our fasteners once again started to grow, a sign of the overall health we are seeing coming back and improving in our end markets. In the first quarter, our fasteners grew about 1%, and in the month of March, our fasteners grew just over 2.5%. We feel really good about some of the momentum that's building in our end markets. Right below it, you see our non-fasteners. The first 30 years of Fastenal's existence, the company that I joined 20 years ago, was primarily a fastener company. However, Bob and the team really cherished the ability of making decisions close to the customer. We always dabbled in a lot of other products that customers would ask for in the local market. Our local team, in many cases, would go out and source that product on their own.
Over the last 20 years, our non-fastener products have really taken off with customers we already had in the marketplace. In 2016, while most of our competitors, most of our industry was seeing negative growth, our fasteners continued to grow because of the efforts of our 2,400 store managers and the teams they work with every day. We grew our business about 5%. Like we've seen in the fastener business, in the first quarter, our business is improving. Our non-fastener business grew about 9.5% in the first quarter, and we exited the quarter with double-digit growth in our non-fasteners. Feel really good about what's happening there. Another two indicators of some improvements that we're seeing in the end markets. Heavy equipment manufacturing represents just under 20% of our revenue. That business has been negative for us for several years.
That business went positive in the fourth quarter of 2016. We look at what success we're now seeing with fasteners, it's really coming from that heavy equipment manufacturer who's coming back to life a bit after a couple of years, very slow in activity. Finally, in the first quarter of 2017, if I think back to 2008, 2009, at that point in time, construction was 20%-25% of our revenue. A lot of the construction business we had through much of the early 2000 dried up in 2008, 2009. That business for us has never truly recovered, and we've kind of eked along nominal growth over the years, but it's been pretty disappointing. In the first quarter of 2017, our construction business has picked up. We grew north of 5% in both February and March, a welcome return of there is some activity going on.
Generally speaking, we see pretty upbeat news when we're talking to our customers, and I'll touch on that in a second. Finally, what do we do with the profits that we generate? This slide I've covered in previous years in my old role at Fastenal. When I look at what we did in 2016 to establish some of our priorities, I think these four categories speak to that quite well. For every dollar in earnings we generated last year, we spent about $0.28 adding working capital to the organization. Historically, most of the working capital we add, and by working capital, I'm talking about accounts receivable, amounts owed from our customers, inventory that we have on our shelf to serve our customers' needs. Both of those grew last year because of the increase in activity.
We took an added step, we took a look at our store network throughout North America, we decided there was more we could do to serve the needs of our customers. We invested about $55 million of additional inventory into our store network. Some of the success we're seeing right now in construction is directly linked to those investments we made in 2016. This number was about double what I normally would've expected to see us invest in a year like 2016. Second on the list is capital expenditures, investing in the infrastructure for the future. We believe we have years of growth in front of us, that means we need the infrastructure to support that growth. Last year, we spent just over $180 million in capital infrastructure.
That's putting automation into our distribution centers, trucks on the road, vending machines in our customer facilities to serve the needs of our customer and support the infrastructure. We move a very tangible product, good, healthy investment in the future of Fastenal. Finally, as we've always said, if we have dollars we don't need, they belong to you, we will return those dollars to you. Last year, we returned almost $350 million in the form of dividends, almost $0.70 on our earning dollars get returned in dividends last year. Finally, we bought back about $60 million worth of stock. As we'd seen last several years as our markets had weakened, so had our stock price. Sometimes when things go on sale, you buy some, we bought some stock in the last several years.
Coming into 2017, our message is really quite simple to our team when I think back to our meetings in Florida. First and foremost, folks, we need to get back to the business of Fastenal, that's growing our sales. Along with that, we want to grow in a healthy fashion to serve our customers' needs. We want to grow our earnings. Finally, challenge the room to think big about the opportunities that lie in front of us because my guess is those gentlemen 50 years ago, they were thinking big. I don't know if they thought to what we'd be seeing today, 50 years later, they were thinking big about the future, they communicated that to everybody in the team, that creates excitement in and of itself. Last week, next slide, please. Last week, we had roughly 5,600 customers at our annual customer trade show.
We put on an event each year where we ask 275 suppliers to show up and set up booths. We bring in our employees, we ask our customers to come and learn about things we can do to help their business. It was really exciting, I wanted to share two tidbits from that discussion. One is this. This is our message to our customers every day. First off, service is our strategy, proximity is our priority. What I mean by proximity, what we've done that's different from the industrial distribution marketplace in general, is we've always worked on our economics of our business to figure out how can we get as close to the customer as possible and still have the profits in place to provide the level of service to help improve our customer's business. We've done it for years by opening store locations.
We've done it for the last decade by adding vending into our business. In more recent years, Casey will talk about in a few minutes, we've talked about it from the standpoint of introducing Onsites, and you'll get a good dose of what it means to be an Onsite. It's really about getting as close to the customer as we can because that's where we can help their business, understand their business, and impact their business. One of the things that I talked about with the customers last week, next slide, Mark, was measuring how our business has changed over time. Sometimes we need to take a step back and understand where have we come from to understand where we're going. Last week with our customers, I shared this slide.
10 years ago today, in 2007, we were about a $2 billion distributor. In the 10 years that followed, we've about doubled in size. Last year, we did about $4 billion in revenue. Interesting thing that's happening in our business, 22, 23 years ago, we decided to become an international distributor. We opened a location in Stoney Creek, Ontario. Pretty soon, that turned into a couple more locations in Southern Ontario, and we could say we were an international. In the last 20 years, that business has grown wonderfully, but we've gone beyond the Canadian market, and today, when I look at our non-U.S. and non-Canadian business, it's about 5% of what we do. We have a wonderful business in Mexico. We have a wonderful business throughout Latin America, in Europe and Asia.
The beautiful thing, in my opinion, about that business is we brought the Fastenal business model to those markets, philosophy on how you serve customers. Wherever we've gone, we've found great people. Our business in Canada is led by Canadians. Our business in Mexico is led by folks from Mexico. No country, no geographic area has a monopoly on talent. There's great people everywhere. We're blessed in that we've been able to find some of them. Fasteners was 50% of our revenue a decade ago. Today, that business has grown nicely. It's a billion and a half business, but it's about a third of what we do. In the last decade, our non-fastener business has grown tremendously from that billion-dollar business to just over a $2.5 billion business. A lot of that growth came from the fact we've been dabbling in those products for years.
We had great customer relationships, we came to our customers with more ideas for opportunity. The other thing we did is we gave it a little turbocharge, and that was that little vending machine. Bob's idea 50 years ago was a great idea. It was just 40 years ahead of its time. In the last 10 years, we've rolled out 64,000 vending machines around the world, most in North America, but around the planet. Today, 25% of the non-fasteners we sell go through a vending machine. A lot of it's safety products, but there's a mixture of all the product lines in there, bringing that solution close to the customer, but in a machine, a device that's economically viable in the marketplace.
The other thing that's worth jumping out is in the last 10 years, we've added about 300 stores, some in the U.S., a lot outside of the U.S. We've also added about 300 Onsite, and it's something we really haven't talked about publicly. We have with our customers, obviously, for years. We have with some of our shareholders, at investor conferences, but we really haven't talked that much about it at this meeting, and Casey's going to give a great overview of it. Finally, Bin Stocks, a piece of our business that's about 10% of our revenue.
We have about 43,000 Bin Stocks scattered across a quarter of a million customers in North America, and that business continues to grow nicely for us because a lot of the products we sell for our customers are nuisance items, and we solve the nuisance of their life by being a great supply chain partner. Next slide, please. If you flip inside the annual report sometime, you see a list of our directors, photos of our directors. You also see a list of the officers of Fastenal. Fastenal is blessed with roughly 20,000 employees scattered around the planet, and those 20,000 employees are 20,000 leaders in what they do every day. We have 255 district managers that oversee our 2,400 locations. We have 24 regional VPs scattered throughout the planet, most in North America. Today, this group represents them.
There's four new faces on our list from last year, and I thought I'd just take a brief second here to introduce some from the standpoint of a little bit about them, and I'll keep it brief because we have those videos to watch as well. If you look at the second person down on the left-hand column, Bill Drazkowski. Bill grew up in Winona. I met Bill about 20 years ago. I was traveling across southern Minnesota, and I stopped in Albert Lea, and a young Bill Drazkowski was our new store manager there. Didn't know him very well other than a five-minute conversation that day. Quite frankly, I've gotten to know Bill really well over about the last two to three years when he stepped in to lead our national accounts role. Bill makes great business decisions every day.
He makes great personnel decisions every day, and I'm pleased to say we added him to our leadership formally in January of this year. If you go over to the far right, second down, you see Jeff Watts. Jeff's one of those Canadians. He's our only foreigner on our officer list right now. I love the guy. I met him the first time 20 years ago. I don't know if he was a store manager then. I think he was a district manager, and he was working out in British Columbia. He's originally from Ontario, but he was working out in British Columbia for us. Young, brash kid. Didn't realize how much he didn't know, although 20 years ago, I didn't either. It's been a pleasure to see Jeff develop over the last 20 years ago.
We asked him to move several years ago to Europe. He spent five years in Europe building that business, came back, ran our business in central Canada. Slowly over the last two years has been stepping into more and more of international business. I made that official here in January of this year. I'm really excited for what Jeff's going to bring to that business in the years to come. Two additional people I'd introduce. If I look on the upper, just left of center, Holden Lewis is really new to Fastenal. Everybody on this list, almost everybody, I think Casey's not quite there, but everyone on this list has 20-plus years with Fastenal. Holden has seven months. Holden has 15 years plus of relationship with Bob Kierlin, Will, and me.
From the standpoint, Holden used to be one of those nuisance voices on the earnings calls, asking questions that really made us think. I would get home every night, and my wife Jenny would ask, "How was the call today?" She said, "What did Holden ask?" He always asked great questions. I jokingly say nuisance questions because sometimes they put you on the spot. There was never a question where I didn't look at it and say, "He's asking the right question." When the opportunity came up that he was willing to move to the Midwest, we joined forces with him immediately. I'm really excited to have Holden on our team. Finally, Casey, who's going to come in in a few minutes. I've known Casey for, like Holden, the better part of 15 years. He's almost at 20 years.
I think he's at 18. Casey hails from Tennessee. Kentucky. I always do that to him. He's a glass half full individual. He developed a great business in the SEC. He developed great people and great customer relationships. I'm blessed to have him part of this team. When I look at this, my wife and I are blessed with four kids. Number three on the list of ideas or rules for life is you surround yourself with people better than you. When I look at the list up on here on the wall and the 20,000 people they represent, I know that I've done what I ask my kids to do and surround myself with people better than me. Next slide, please. The last year, we talked about personnel within Fastenal.
The upper left-hand corner, Reyne K. Wisecup came up and talked about what it means to be a Fastenal employee and how we develop people. Terry came up and talked about our international business in the lower-left corner. We've been talking a bit about Onsites in recent years. We're going to watch a quick video. Casey Miller's going to come up. He's going to talk a bit about what it means to be an Onsite within Fastenal. Thank you.
Let's take a moment to appreciate an unglamorous but absolutely pivotal figure in Fastenal's history, the fastener keg. Back in the early years, we would save money on furnishings by using fastener kegs as chairs. Because we saved on things like that, we were able to pour every penny into growing the business, including buying more and more fastener kegs. Before long, we had a three-year supply of certain items sitting in our store basement and garages. It occurred to us that we could use all that inventory to open additional stores without spending a lot of money. That was a real turning point in our business model. Our first store outside of Winona was Rochester, Minnesota, followed by La Crosse, Wisconsin, Dubuque, Iowa, Eau Claire, Wisconsin, and a sprinkling of other locations in the area.
That said, as you can see in this photo of our company meeting in 1977, we were still a pretty small operation. To clarify, this isn't just a random group shot from the event. This was the entire company at the time, all 10 of us. It was really thanks to the resourcefulness of the people in our stores and their ability to provide great service without spending a lot of money. Long distance calls were always made before 8:00 A.M. to cut down on phone bills. The Winona headquarters was known as the 55 Club because in the dead of winter, the thermostat was set to a refreshing 55 degrees.
If you walked into a Fastenal store in the 1980s, you probably would have thought we were in the toothpaste business because all of our orders were packed in surplus Ipana toothpaste boxes, which we picked up for $0.03 apiece.
Fresh, clean, and minty. You'll like it. New Ipana toothpaste.
We saw the same kind of ingenuity when it came to meeting our customers' needs. Anchors, threaded rod, duct tape, marking paints. These and countless other now commonplace items began with a single customer inquiry. We discovered that many of our personnel had the ability to oversee multiple stores and help grow the business in an entire state or area. These young leaders had talent, ambition, and most important of all, mustaches. Lots and lots of mustaches. Driven by our belief in people and what they could accomplish, by the mid-1980s, Fastenal had grown to roughly 50 stores. We were faced with a couple of challenges. One was that we didn't have enough cash flow to fully leverage our purchasing and grow the company at full throttle.
The other was that we wanted to find a way to give employees an ownership stake in the company they were helping to build. Making Fastenal a public company would take care of both issues. My fellow co-founder, Steve Slaggie, started testing the waters to see if we could find a firm willing to help us out with an IPO, an initial public offering of stock. How'd that go, Steve?
We got more than turned down. They weren't very nice to me. Well, I had a relationship with another broker in town, and he said, "Well, maybe our firm would take a look at it", Robert W. Baird in Milwaukee. We presented our stuff and had lunch, and they didn't ho-hum, but said, "This is kind of interesting, and we'll let you know." We're back home, and the next day, or at least no more than two days, an aircraft appears at the Winona Airport. A prop. We don't get many private aircraft in Winona. It was the people from Robert W. Baird, and they came to the company
Said, "We'd like to take you public." Well, you scrape Bob and I off the floor. Said, "You will?
Of the 1 million shares sold during our initial public offering, more than 285,000 were sold to create a charitable education foundation. Another 100,000 shares were allocated for purchase by our 252 employees. The total value of the IPO was only $9 million, but people who invested in our company had to be happy with the results. In fact, at the end of 1987, The Wall Street Journal ranked all 500 IPOs held during the year in terms of return on investment. There, at number 1, was little old Fastenal. The capital raised by the IPO set the stage for remarkable growth. Fastenal sales soared from roughly $20 million in 1987 to around $400 million in 1997, a 20-fold increase. Fastenal's store count, which stood at 52 at the time of the IPO, surpassed 800 by the end of the 1990s.
The big blue machine had been set into motion. We've been barreling along pretty nicely ever since.
Thanks to Dan for the kind introduction. Again, my name's Casey Miller. I'm the Executive Vice President of Sales for the Eastern Business Unit. Started with Fastenal like a lot of the employees in the room, right out of college. I think I graduated on a Saturday. I went to work for Fastenal on a Tuesday. I gave myself a nice, healthy one-day break before going to it. I was really just looking for a company with a lot of opportunity. You guys can probably pick up on the fact I'm not from Winona originally. I'm from just a little bit south of here, down in Kentucky, where I spent most of my life and career. Moved to Winona in May of 2016.
I've been in this role since November of 2015. I just want to take a second to thank the community for being so welcoming to my wife and my kids and me. It's been a really great transition. Our two daughters, Claire and Grace, are very active in sports, speech, and choir. They're both enrolled in Winona Area Catholic Schools. The sports, in particular, have given me an opportunity to spend a lot of time in the stands with my fellow Winonans. I think I'm saying that right. Is it Winonans? I think it is. I can tell you guys really embody the spirit of Minnesota nice that I hear so much about. Now, I'm still working on that myself. I'm a work in progress. I'm a little honest when it comes to some of the shoddy officiating here in Southeast Minnesota.
Got a lot to work on there. When I started with Fastenal, just like today, we were the fastest growing supplier in a massive industry, so the company was a really good fit. Throughout the years, I've spent my entire career in the stores. I've been an outside salesperson. I've been a general manager. I was a district manager. I couldn't believe it when they let me become a regional vice president, but I was an RVP in parts of nine states, and now I get to represent the company as the Executive Vice President of Sales for our Eastern Business Unit. My job is really to make sure that we create programs within the regions to implement the growth drivers that you hear so much about. Dan introduced Bill Drazkowski a little earlier, our VP of National Accounts. I kind of keep his promises.
That's kind of my role in the company. We drive vending, construction, government, national accounts at the store and customer level. Most of you understand that no matter how well an idea may be formed here at corporate, nothing really happens until it happens at the store and the local level. That's the way BK designed our company 50 years ago, and it's still how we do things today. I want to take the opportunity to speak for a few minutes about one particular growth driver many of you are becoming more familiar with, and that's our Onsite concept. This particular driver was a very big deal in my old neighborhood, and the success that we had as a region probably attributed to my recent change in address. We opened the first Onsite as a company in Fisher Hamilton in Two Rivers, Wisconsin, in 1992.
As Dan mentioned, this is not an entirely new concept for Fastenal as an organization. Today, we have over 450 Onsites company-wide. The market potential for this type of customer is massive. We've identified over 20,000 potential Onsite customers in North America alone, tremendous opportunity for growth. Over the last 18 months, we've added 263 Onsite customers. We have 450 total as a company, and 263 of them have been added in the last 18 months. The concept is one that works very well for all three groups of people we care about here at Fastenal. Now, we care about a lot of people away from work. The preacher's looking at me, I'm getting a little nervous. Here at work, there's three groups of people that we care about. We care about, obviously, our customers, our employees, and our very important shareholders.
An Onsite is very simply a Fastenal store within our customer's four walls. With dedicated staff, inventory, and communications. Many times, whenever the routes allow, the Fastenal semis will deliver directly to our Onsites. In cases where we can't deliver an Onsite, we drop the product at the closest available store. The level of staffing, inventory, and dedicated capital can be adjusted to meet the customer's needs at any given point in the business cycle. The solution that we offer with Onsites is extremely scalable. The advantage for Fastenal is very simple. We add committed revenue levels from the customer. They always commit to specific revenue levels in an expansion within the customer's supply chain. We also gain the ability to pick off spot buys or unplanned spend because of our proximity to the end users. Think of it as kind of our vending program on steroids.
Vending and Onsites work hand in hand as most of our Onsites also include vending. After we implement Onsites within the customer's four walls, we really become a vital link in that customer's supply chain. The concept works, and it works well. Today, Onsites represent over 15% of our total revenue as an organization. I can assure you, we are just getting started. Let's take a closer look at what an Onsite program can do for some individual business units within Fastenal. The goal is for every single region and district to truly have an Onsite program the way we do with vending today. I know I'm from the South and I talk slow, I want to reiterate the importance of every single district in every region having a program to drive Onsite business within those units.
When we do that as an organization, you're going to be a whole lot happier with the fellows up here on the stage. Let's look first at the Wisconsin and Illinois region currently managed by Bill Reichenbacher. They've been successful with Onsites for some time, and we continue to see progress. Let's look at the very recent past. In 2013, approximately 10% of Bill's store count was made up of Onsite customers and 23% of the region's revenue was generated from Onsites that year. At that time, we were really starting to embrace the concept corporately. In that region, we already had a significant portion of the revenue coming from Onsites. Let's fast-forward a bit. In 2016, 19% of Bill's store count was represented by Onsites. 31% of the region's revenue was generated from Onsite customers.
Obviously, we all know, and we don't need to belabor this, we did not have a tremendous lift from the economy over the last three years. The Onsite program in Bill's region has continued to grow nicely. Let's look at my old region, Kentucky and Tennessee, a place that's near and dear to my heart. Jim Tornstrom currently runs that business unit. We have focused on Onsites over the last few years now, and we've seen some nice growth as a result. Three years ago, 13% of our region's revenue was coming from 9% of our stores coded as Onsites. Last year, again, despite some tremendous economic headwinds, we generated 19% of our region's revenue from Onsites. That was despite one being down over $2 million that year because they sell into gas and oil. Let's look specifically at the Onsite revenue gains for these particular regions.
Again, looking at a 2013 to 2016 run rate. In Wisconsin and Illinois, we grew our Onsite revenue 47% during that period. In Kentucky and Tennessee, we achieved 111% revenue growth. I tried to talk Mark into just leaving that particular slide up here for the rest of the day, the stage would get in the way, and there would be a lot of other issues with that, very proud of that number. The question on your mind as a shareholder has to be: what does this do to the profitability of the business? It's a very good question. At the end of the day, the bottom line is always the bottom line, and we never take our eyes off of that here at Fastenal. Combined, these regions run a little below our company average for product gross margin, no doubt about it.
The business that we have with large customers, and particularly our Onsite, drive our margins slightly lower. However, we are able to aggressively leverage our Onsite program and drive those operating expenses down. Onsites help us do this. The lower operating expenses allow us to achieve operating margins well above the company average in those regions. The program really works for us. DMs are starting to understand the positive financial impact that our Onsite program can have on their district business units. As many of you know, that's when we really start to gain ground. When things start happening in the districts because the district managers understand the success associated with a program like this, things take off, and that's where we are with Onsite. We can look forward to some really nice success in the future with this program.
I want to switch gears and speak on behalf of so many people out there on the blue team. Recently, I wrote an article for our annual employee report. I hope some of you guys read that. My wife said it was fantastic. In it, I tried to express my sincere gratitude for the opportunities Fastenal, specifically our founders, have given so many people in the field. Today, I truly stand before you as a representative of thousands of individuals in the field that have had their lives changed because of Fastenal's ideals and founding principles. The philosophy of decentralization and a culture built on trusting individuals has allowed so many to create fulfilling and financially rewarding careers. Fastenal is more than a company. It's truly an idea that an environment that challenges rather than controls creates the absolute best results.
Fastenal promotes from within, and there are many success stories that people in our community are very aware of. People start working out in the stores, next thing you know, we're living in Winona, Minnesota. We got folks from Alabama, Kentucky, all over the country. It's a unique Fastenal story and one we like to talk about with good reason. Fastenal has a defined strategy promoting from within, and we're very thankful for that. Will Oberton , Dan Florness, Lee Hein, Nick Lundquist, and the rest of the leaders you as shareholders are so familiar with are all products of our promote from within philosophy. I want to talk about another type of success story that is far more vital to the company's long-term success.
I want to talk about the thousands of people who promote themselves at Fastenal without ever leaving their home areas or changing their title four times like I have. These are the people who run Fastenal stores and territories within their hometowns. We have challenged these people to grow our company at a level that has made us the best supplier in North America. In my career at Fastenal, all my success as a leader is a result of the people that I've been responsible for in the stores. The national account and industry specialists have helped, no doubt about it. Right now, I want to focus on those people that every single day put a key in the door in the morning and do the same thing in the afternoon. BK's vision was to put our company in these folks' hands.
Let me tell you right now, as shareholders, that future, the future of our company, your company, is in very good hands. I want to frame my story around a couple of guys I met back in 2002 when I moved to Western Kentucky, first family move, to become a district manager. Jimmy and Chris Lockett are both 20-plus-year employees who I have had the true privilege of working with for the last 15 years. These guys are as responsible for any success I have had as a leader as anyone I can think of outside of my wife, Chris. Chris Lockett started with us in 1995 at our Paducah, Kentucky store that had just been opened by our current VP of Procurement and Supply Chain, Mike Wilkinson. Jimmy started just a few months after Chris. Chris became the second manager of our store, our Paducah store in 1999.
Think about that. In a day and age when people switch jobs five times before they are 30, switch careers, we have had two managers at our Paducah store since 1991. In 1997, Jimmy opened our Calvert City store. He has been the general manager there ever since. These guys have only had three DMs in the history of their careers at Fastenal, and they had to put up with this guy for about seven years. They have been through floods, break-ins, economic slowdowns, changes in the market, our CSP project, store moves and expansions. About three years ago, Jimmy was diagnosed with cancer. With the help of his great faith, I got a front row seat in watching him beat that disease. These guys have added staff of over 20 dedicated employees in their two stores. They have also helped hire and train all of our managers in Western Kentucky.
Through all the challenges, they have grown Fastenal's business in a way that I know would make BK proud. These guys have gotten out of bed in the middle of the night. They have gotten out of tree stands in the middle of the day to take care of their customers and make Fastenal's local business great. Last year, the two stores that they represent generated over $1.8 million in profit. It is not gross margin dollars. That is profit. The four stores in Paducah's original servicing territory generated over $2.5 million in profit. Now, Jimmy has got a real nice head of hair, and he looks like a really nice guy, but let me tell you something. The competition does not like these guys very much.
Not only have they created a great business for Fastenal because of our decentralized model, they have created great careers for themselves, and sure, they have been financially rewarded, but I think it goes a whole lot deeper than that. This story is very unique. You do not hear about this in American business. Here is the thing. This story is not unique at Fastenal. I could tell you the same story about Arden, North Carolina, about Cullman, Alabama, Maysville, Kentucky, Danville, Kentucky, Murfreesboro, Tennessee, Gallatin, Tennessee. The list goes on and on. We are so blessed as a company to have the best employees of any organization I have ever been associated with. I just want to take one more second, and I want to thank our founders and BK personally. I do not know where I would be without Fastenal.
Thanks most of all for believing and trusting that empowering people is the best way to run an organization. Let's go out there and make the next 50 years as fun, successful, and profitable as the first 50. Thank you very much. Go blue.
Thank you, Casey. I hope you can all see why Casey's in that role. He embodies Fastenal in every sense of the word. Love the guy. Casey mentioned a few minutes ago about some folks that have enjoyed success at Fastenal. I want to talk about an individual that's been with Fastenal for a big part of our 50-year history. Bob Strauss recently retired from Fastenal after 40 years at the company. I asked Bob at our meeting in Florida with our employees. I said, "Would you mind coming up?" Every year, one of the things we started doing I'm going to share this. Yep, slide's up there. One of the things we started doing years ago, I think it was probably 12, 13 years ago, we said, "You know what?
We actually have a handful of people that have been here more than a quarter of a century. Maybe we should recognize those folks. We started to recognize those folks in front of their peers. The first year, we did probably eight, nine people because we were kind of doing catch-up. After that, it was one person, two people. This year on stage, the stage was full from side to side because we're getting to the point, if you think back to the video I saw earlier, 25 and 30 years ago, that company went public, we had fewer than 500 employees. Now, 25 and 30 years later, it's hard to add up that many people that have been here that long. If you add up all those spots behind me, today we have 162 people that have been here longer than 25 years.
I'm thinking about the stage in Florida and thinking, usually we give people the mic. We have too big a group. We'll be here all night. I said to Bob Strauss, "Would you mind saying a few words?" Bob Strauss, for those of you that know him, you give him a microphone, it's hard to get it back sometimes. He gave a wonderful talk to our team in Florida. There was a piece that jumped out. He told some good stories about the past. One of the responsibilities when you have family and friends is to embarrass them every now and then. He did that that night, talking about some of the stories from back in the '70s, the '80s, '90s, 2000s.
There was a spot where he stopped talking about the past, this is going to have kind of an awkward start, this video clip we have. He stopped talking about the past for a second and he talked briefly about the future, and I thought I'd share that with the room because it resonated with me, and I think it resonated with folks in that room. With that, show the video, please.
We talked about $1 billion. Can we do it? Somebody said, "Well, I think we could do $4 billion or $5 billion." That's where we stopped. We stopped at that $4 billion or $5 billion, and here we are today. Dan, I can tell him what to do. 40 years, I can do anything I want. I think. For a couple of months, anyway. You people should be looking at $10 billion and $15 billion. Don't stop. You have to look that far out, partly because some of us are going to be on a fixed income, and we're going to need that.
Again, one thank you I have for Bob Strauss. When Jenny and I moved to Winona back in 1996, he and Mary Jo and their children could not have been more welcoming to the Florness family within Winona. I want to thank you for that. 40 years, that's a huge milestone. With that, we'll turn it over now to some Q&A. Hopefully you won't hit me too hard with questions, but fire away and I'll try to answer everything you have. There's over there in the red shirt. We have a microphone, I believe, coming your direction, sir. To your right.
Over there. Over there. That's right. Thank you. Yes. Why should you be the CEO for this next 2017?
Why should I be the CEO? Good question. Earlier, when Casey was talking about the business, a lot of times we talk about the growth drivers of the business, when I think about the growth drivers, the message to our team in the field is really about we're not telling you how to grow your business. We're telling you what we're investing in that we think is good based on what your peers have been doing for years. The organization that I joined 20 years ago, I joined because I had met Bob Kierlin, I'd met Will, I'd met Steve Slaggie, I'd met a handful of folks from Fastenal organization, and I truly believed in what we could accomplish, and that belief is as strong today as it was 20 years ago.
When I think about our opportunity and the growth that comes, it's going to come from the folks that Casey talked about. I think that's an important part of our ability to grow in the future is culturally we're successful because we find great people, we believe in great people, and we get the heck out of their way and let them grow their business. I think that's the biggest piece. I believe in that philosophy on growing a business. Is that a one and done? Either I answered it really well or you're like, "We're giving up on this guy already." I believe there's a hand up over here. Oh. Go back there first, sir, then we'll catch you.
All right. I'm Al Golden from Buffalo, I'm just curious why we're taking on debt in the last three years.
The real reason, when I think about what we've done from a debt perspective, the organization, again, that went public back in the late '80s had taken on some debt because of investments we were making. The organization I joined 20 years ago had taken on some debt because of investments we were making. There's nothing wrong with taking on debt. What you want to focus on, are you getting a return on what you're doing with deploying of capital? Coming out of the 2008-2009 recession, our business took off like a rocket because we kept investing through the slow period. In 2010, 2011, and 2012, our business just exploded with growth, and our stock price did too. Truth be told, maybe the stock price got ahead of itself a little bit.
Get into 2013, 2014, and then into 2015, the economy was slowing down, at least our end markets were slowing down, our stock came under pressure. One of the things we've been doing for many years, especially the last decade, last 15 years, excuse me, is every year we've been increasing our dividend because we were generating more cash than we could reasonably deploy and get a return. I believed a lot of our shareholders had grown accustomed to that level of dividend, we were reluctant to pull it back. When the stock price had fallen back, over the last several years, we looked at it and said, "You know what? Let's do an acquisition. Let's acquire a piece of that company called Fastenal.
It's a great business, and right now the stock's on sale a little bit." We bought back a bunch of stock. If you look at the debt we have right now, it's solely attributed to the fact that we went out and bought back a bunch of our shares because we think that's a great investment for the future. Yes, sir.
Herb Peter. I'm a member of the Iowa Investment Club of Winona. The success of Fastenal has been shown by the results of the investment clubs. I saw in the April issue of BetterInvesting that Fastenal was rated among the top 100 companies in the U.S., last year they were ranked at 42 as far as the amount of investments of the investment clubs. There was a little asterisk by the name Fastenal, it was that they had gone up in popularity by over five from the previous year. I thought that was really good.
Thank you for that, sir. Often with my travels, I believe it was a couple years ago, Steve Slaggie read a letter that came from somebody that invested us back in 1987, what his firm had been able to do with the advance of that stock over time. On a more personal note, I had a dose of that about five, six years ago. After an annual meeting, individual came up to me and she said, "Are you Danny Florness from Maiden Rock , Wisconsin?" I hadn't been called Danny for a number of years, so it took me a second, I realized it was my fourth grade teacher from my grade school in Maiden Rock, Wisconsin. She had retired in the early 1990s, fortunately for her, she bought some Fastenal stock.
She said, "I've been coming to the meeting for these years, and our retirement has been a completely different experience from that investment we chose to make in the early 1990s when I retired." I asked her the next year if she'd do me a favor, and if she would come. She was one of the folks a few years ago that the motions that are made for the annual meeting, she conducted one of them. She really enjoyed it, but it was just exciting to hear the story firsthand because that's what we all do, is we enjoy the aspect of we have some competitive blood here in Fastenal. We enjoy that.
We enjoy it for what we see in the success of each others and what it means for the communities in which we live, wherever that might be, and the good we can do with the money, with what that produces, and what we can do for our own families. Our families isn't necessarily just the folks that live in our house, it's the folks in our community. That's very rewarding, and Bob has instilled that in all of us.
Well, I'm sorry. I'd like to hear you talk. My name is Brad Dorr, with Dorr's General Parts, Dorr's Fuel. We were right around BK. Our store was right next to BK. We were competitors.
Yes, sir.
on NAPA Auto Parts. What are you doing to find new target markets, new revenues of income?
The biggest thing we do, and this might come as an answer you've heard before, we really listen to our people. With 2,400 stores out there and store managers like the two individuals that Casey showed, we empower people to make decisions. The biggest place we find success is watching across 255 districts, 2,400 locations, 440-plus Onsite locations. What are they doing to be successful? How do we sprinkle those ideas to everybody else? When you have five or ten people or 100 people in an organization coming up with all the ideas, you can do things, you can advance. If we can empower 2,000, 5,000, 10,000, 20,000 people every day to come up with ideas, we have the competition beaten in that regard.
You have to truly believe in people and listen to the ideas that come up. Everything that we've talked about over the years in annual meeting comes from those ideas. Last week at our customer show, heard a tremendous amount of ideas from our customers, some of those domestic, some of those international, it comes from listening to people.
Very good. Thank you, everybody. A couple things I just noted there. One is if the questions were that easy years ago, I might have stayed in the role. The other is we need to work on Casey's enthusiasm. That guy just needs to pick it up just a notch. No. The ballots have been counted, the report of the Inspector of Election indicates that Willard D. Oberton, Michael J. Ancius, Michael J. Dolan, Stephen L. Eastman, Daniel L. Florness, Rita J. Heise, Darren R. Jackson, Daniel L. Johnson, Scott A. Satterlee, and Reyne K. Wisecup have received the required number of votes and are hereby elected directors of the company.
The report of the Inspector of Election also indicates that the resolution for the ratification of KPMG LLP as the independent registered public accounting firm for the company for the fiscal year ending December 31st, 2017, has received the required number of votes and has been adopted. The resolution reapproving the Fastenal Company Incentive Plan has received the required number of votes and has also been adopted. 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. Every year is a frequency with which shareholders of the company should be entitled to have an advisory vote on executive compensation has received the highest number of votes and therefore is the choice of the shareholders.
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 the Election will be attached to the meeting with the minutes as Exhibit C. We will run the last video.
Welcome back to our journey through Fastenal history. We have to cover a lot of ground in a short amount of time, so fasten your seat belts and let's go. First stop, products. For many years, Fastenal basically sold nuts, bolts, and screws. Fasteners weren't just part of our name, they were the focus of our tagline, "First in fasteners." We had a bright idea. Everyone who buys a fastener needs to apply it with some kind of tool, so why not sell tools to our customer base?
The Brief but Fascinating Life of the FastTool Stores," presented by Fastenal.
We figured we could potentially double our store count in one fell swoop by selling tools and fasteners in separate adjacent locations. One, a traditional Fastenal store, and the other, a FastTool store. The vision was that if we did it right, we might eventually end up with an entire industrial mini mall with five or six stores in a row, each selling a different product concept. It didn't take long for customers to tell us that they didn't like going through two different doors and getting two different invoices. We combined all the product into our regular Fastenal stores. With that, we end our tale of-
The Brief but Fascinating Life of the FastTool Stores".
The story has a happy ending because we discovered that putting tools in our stores basically doubled our sales opportunity in each location. The flip side was that we were able to open stores in towns half the size. Our market opportunity multiplied when we rolled out additional product concepts like Sharp Cut, Power Flow, Equiprite, Clean Choice, Power Phase, all of which were introduced in the mid-1990s. Each of these concepts had its own logo, its own tagline, and its own catalog, which made things a little confusing for our customers. In 1998, we decided to recast them as product categories and to market everything under the Fastenal brand in an all-inclusive catalog.
The transformation was completed when our "First in fasteners" tagline was replaced with a new phrase that summed up everything Fastenal offered, "Industrial and construction supplies." Now let's shift gears and move on to distribution. In the early years, our operations were about as basic as you can get. A store would call in an order to Winona. Jon Newell would jot it down on a scrap of paper and stick it on a screw that had been drilled through a two-by-four. Later in the week, we'd yank the notes off the screw, pull the orders, the store managers would have to drive to Winona to pick up their product.
It wasn't until the mid-1970s that our stores began receiving sporadic deliveries, and it wasn't until 1981 that we hired our first full-time driver, Bob Wittenberg, who just happens to be standing by to extol the virtues of our original trucks.
Well, when I started with the company in 1981, we had two straight trucks, one of which was a General Motors one-ton flatbed truck dubbed the White Knight, that I was told it was a repossession that we acquired from one of the local banks. It chronically broke down. Almost every time we would take it out on the road, it would develop a problem of one sort or another. I can even remember hauling parts to Appleton, Wisconsin one time to have the truck repaired while I was driving a rental. The first tractor-trailer we got was in the fall of 1982. That also was a Mercedes-Benz. We had a Mercedes-Benz straight truck. That was 180 horsepower, 12-speed transmission.
That truck did not have a sleeper on it, so on the nights that I spent away from home, one of the options was to use the sheet of plywood that I had covered with rubber back carpeting, stretch that out across the seats in the cab, and sleep on that.
For the first 20 years, Winona was the company's only distribution center, but eventually, we couldn't reach all of our stores that were opening up to the east and south. In 1987, we opened a second hub in Indianapolis with one truck and one guy running the warehouse. For our next hub opening, we traveled to a distant and exotic land, Scranton, Pennsylvania, then to Dallas, Atlanta, and eventually, we were all over the country and beyond. Shifting over time from a Winona-centric model to a truly regionalized system. Of course, the heart of our distribution system, and really our entire company, is our stores. For years, we stuck to a simple plan of growing our store count by 30% each year. The only reason this formula worked was because we had talented people in the field making it happen.
It was their ability to practice frugality that enabled us to run all these local businesses profitably, something our competition never figured out how to do. It was their innovation and commitment to customer service that really drove the company forward. That energy led us in all kinds of new directions. In 1995, we opened our first store in Canada. In 2000, we started doing business in Mexico. A year later, we opened up in Singapore. We've since opened store locations all over the world, providing local service to our customers as they globalized their operations. Meanwhile, we continued to get closer and closer to our customers here in the U.S. In the 1980s, we started offering our first job site trailers, and in 1992, we opened our first Onsite store within a customer facility, Fisher Hamilton, in Two Rivers, Wisconsin.
Well, it took us more than 40 years, but when we finally got into vending in 2008, we ran faster and farther than I could have ever imagined back in 1967.
That's right, Bob. Within six years, we'd have more than 50,000 machines installed at customer sites, making us far and away the largest industrial vending company in the world.
In summary, the first 50 years of Fastenal have been energizing and productive. All of which has depended upon the performance of the people that make up Fastenal. As we look forward to the next 50 years, the same principles that made us successful in the first 50 years will apply to the second 50. You folks are going to be the leaders of the next 50 years, and any good leader will practice just two things. The first is you have to make sure that everybody that joins our organization is pursuing our common goal of growth through customer service. The second obligation for you as leaders is to find ways to bring out and use the potential of everybody that joins our organization.
Success comes from our people, and our people have to be motivated, have to have the tools to do good things, and more importantly, have to have the ability to make decisions every day. Keep that up, and Fastenal will be as successful in the next 50 years as it was in the first 50. Thank you.
I hope everyone enjoyed the video. I want to thank the people. That video was all done internally with locally grown talent. I've probably watched that video six or seven times, and I have basically the same reaction every time. It just makes me smile. I go, "Wow, this is a great story. Bob did a fantastic job." Well, a lot of people did put a lot of work into it, but that's really what it is.
It's been a great 50 years, and I really believe what they said, or Casey and others said, we have to be thinking big, and the next 50 years should be better. Last thing, last order of business, I want to announce the winners, the prize winners of the drawing. Joanne Brost. Where do they go for their prize? They didn't tell me that. Right over there. Joanne Brost and Len Kaczorowski. I think I have that pretty close. With that, I will now entertain a motion for adjournment. I recognize Ms. Sarah Sobota.
My name is Sarah Sobota. I am a shareholder of the company, and I move that the meeting be adjourned.
For a second, I recognize Mr. Corey Gettleman.
My name is Corey Gettleman. I'm a shareholder of the company, and I second the motion.
It is moved and seconded that the meeting be adjourned. All those in favor say aye.
Aye.
All those opposed say no. The meeting is adjourned. Thank you for coming. We have lunch as it's starting, I believe, right after the meeting, just to the left, to my left. Thank you.