Welcome to the Annual Shareholders Meeting of 2015 of the Fastenal Company. We have a lot of information to share with you today and look forward to it. First of all, I must introduce myself. I'm Michael Dolan, one of the members of the Board of Directors. And I am substituting today for serving as your acting Chairman of this meeting because our Chairman, Will Overton, is at this hour attending the funeral of his mother-in-law, unfortunately, and certainly, that's the right thing to do.
And that's where he is today. So please bear with me. If I commit a foible or 2, please accept my apologies in advance. So that said, at least you know why we're this foreign guy is up here trying to get things started. We'll start the meeting with a invocation by Father Michael Cronin from St.
Anne's Parish Catholic Church Parish in Janesville. Father Cronin, please come forward.
Good morning. This morning, when I was at breakfast at Perkins, I was dressed up and someone who knew me said, Why are you in town? And I said, I'm coming to pray at the Fastenal Shareholders Annual Meeting today. And he said to me, Pray hard, my children's college depends upon it. He said I could tell you his name, Joel Hennessy.
Gracious God, thank you for the wonder and beauty of this day. Please watch over this annual meeting of the shareholders of Fastenal Company. May your love shine on all those who are present here today, those who cannot be with us and all the dedicated management staff and employees who work hard each day for this company. Watch over our families and friends and keep us all healthy in mind, body and spirit. May the future of the Fastenal company be bright, and may the successes we experience remind us always to be grateful.
Help us to understand that in the midst of the successes that Fastenal experiences, we are also called to do our part as individuals and as a corporation to help contribute to a brighter and more successful world, a world so much in need of a renewed sense of the dignity of the human person and the common good of all people. We ask all these things in your great name. Amen.
Thank you, Father. First, I would like to introduce some members of our Board, all the members of our Board. And after I read their names, I would ask them to stand up and be recognized by this gathering today. Michael Anzius, Michael Dolan, that's me. Michael Gostomski, Michael is nursing a new knee, so he'll we'll exempt him.
Lee Hine, Rita Heisey, Darren Jackson, Hugh Miller, Scott Satterley and Renee Weiskop. Of course, as I mentioned, Will Overton is not with us, but he also needs to be recognized. Then I guess I would like to not forget our founders. We're here for many reasons, but getting this company started was important. And I think it's appropriate that we ask that the founders be recognized and ask they to stand as their name is read as well.
Bob Kerlin, please stand. Steve Sloggy, Henry McKonnen, I doubt he is here, but we recognize Henry anyway and Jack Remick. Jack is here, I know that. And Michael Zestomski, who we are going to hear a lot about later today. So he is with us as well.
That said, I am going to leave most of the administrative things to John Millich, who is our General Counsel. Bob Kerlan used to handle all these things that dealt with legal matters, but takes 2 or 3 of us now to handle these matters. I'll ask John please come forward. He's going to report on the number of shares present at the meeting, and he'll conduct the matters relating to voting on proposals, all to be considered at this meeting, after which Lee Hine, our Chief Executive Officer and President, will, along with others from our organization, report to you on the company. So with that said, John Millich.
Thank you, Mike, and good morning. The record date for the determination of the holders of company's stock entitled to receive notice of and to vote at this meeting was fixed by the Board of Directors as February 20, 2015. I present to this meeting a certified list of the holders of shares of the company's issued and outstanding common stock as of the close of business on the record date. This list will be kept open and subject to inspection of any shareholder during this meeting. I also presented this meeting an affidavit of a manager of Broadridge Financial Solutions Inc.
Attesting that a notice of the meeting, together with a proxy statement, a proxy card and certain other documents were mailed on or about March 10, 2015, 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. A 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 295,492,719 shares of common stock. Each share of common stock is entitled to one vote.
For a quorum to be present, a majority of the 295,492,719 votes entitled to be cast must be present in person or by proxy at this meeting. On a preliminary count, they were represented at this meeting either in person or by proxy, majority of the votes entitled to be cast at this meeting. Therefore, a quorum is present for the transaction of business today. Is there anyone present who has not submitted either a proxy or a registration form? A record of the proxy submitted to this meeting and the ballots of the individuals appointed as proxies and the shareholders voting in person at this meeting will be filed with the books and records of the company.
Jan DeGaglier is hereby 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 will be 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 22, 2014, are available at the registration desk. We will therefore dispense with the reading of those minutes of that meeting.
All shareholders of record as of the close of business on February 20, 2015, 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 given 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 on at this meeting rather than separate ballots for each matter. We will now take up the business of the meeting.
We have 3 matters to be considered by our shareholders today. The first is the election of the directors for the coming year. The Board of Directors of the company has nominated the following 9 persons for election to the Board to serve until the next regular meeting of shareholders or until their successors are elected and qualified: Willard D. Overton, Michael J. Ancias, Michael J.
Dolan, Leland J. Hine, Rita J. Heisey, R. Jackson, Michael Miller, Scott A. Satterlee and Renee K.
Wyskop. I will now open the floor to a motion to formally place before this meeting the nomination of these individuals. I recognize Mr. Jacob Bryan.
My name is Jacob Bryan, and I'm a shareholder of the company. I move to formally place before this meeting the nomination of the 9 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 also recognize Jared Tixson.
My name is Jared Tuxin. I am a shareholder of the company, and I second the motion.
Thank you. As no other nominations have been made in accordance with procedures established by the company's bylaws, I declare the nominations to be closed. The next matter of consideration today is the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2015. I would like to introduce Ms. Angela Dossedel, a partner of that firm, who is here today to answer any questions that you may have.
And Angela, there she is. 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 2015. I recognize Randy Fillabaughn.
My name is Randy Fillabaughn. I'm a shareholder of the company. I move that the following resolution be adopted: Resolve that the appointment of KPMG LLP as independent registered public accountant firm for the company for the fiscal year ending December 31, 2015, be and hereby is ratified. Thank you.
I also recognize Mr. Chris Van Dahlen.
My name is Chris Van Dahlen. I'm a shareholder of the company, and I second the motion.
Thank you. Is there any discussion of this motion? It has been moved in second that the appointment of KPMG LLP as independent public accounting firm for the company for the fiscal year ending December 31, 2015, 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.
Michael Anderson. My name is Michael Anderson. I'm a shareholder of the company. I move that the following resolution be adopted. Resolve 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 2015 Annual Meeting of Shareholders captioned Executive Compensation.
Thank you. I also recognize Mr. Robert Fiedler.
My name is Robert Fiedler. I'm a shareholder of the company,
and I second the motion.
Is there any discussion on this motion? It has been moved in second that the compensation of certain of our executive officers be approved. Now 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. I will turn the floor back over to Mr. Dolan to introduce our next speaker.
Thank you, John. I think that deserves a round of applause. Flawlessly executed, I might say. Next, while the ballots are being counted, it is my pleasure to introduce Mr. Lee Hine, our Chief Executive Officer and President, together with some other individuals whom he will be.
After the conclusion of this report or these reports, we'll be taking any questions that you have relating to company matters and its activities. So with that said, Lee?
Thanks, Mike. Good morning. 2014 was really a year of 2 stories. The first half in January, 6.7% growth, double digit growth in March and then really double digit growth every month after that. And it was a story of really we decided to leverage the stores to add people, and we executed that plan.
And so really, as you look at the graphs here behind me, you can see it really is a story of 4 things: we're taking market share when you look at our net sales we're not opening stores as we did really in the old days And I want to park on that a minute because I know that's a question. What about stores? What's happening? I want you to know that we're comfortable today with the battle at hand of taking market share. We know that's what it's about today.
Let's fight it out with the competition. We think we're well poised. And today, you're going to hear some things about what we're doing to take market share, really from Joe and Bill when they come up. Number of employees, as you can see from the graph, we're adding people. In fact, from the end of the Q3 to basically now, we're up about 1,000 people.
And then, of course, the earnings. We know what our role here is at Fastenal, and that is to generate cash and to take care of our shareholders, our employees and most importantly, our customers. And so how do we do that? It's really 2 major points, and I like to say it out loud. We know the value we bring our customers.
That's deadly, I got to tell you. When we know what we provide a customer and we charge for that, that's something that, I'd tell you, you just can't take for granted. The second thing, and we learned this from Bob, we live within our means. And in this day and age, I know that's a little old fashioned, but I'm okay with that. We don't try to spend money foolishly.
We think about it. We try to be wise, a very key word. Now, Fastenal at a glance. This is this kind of gives you a nice overview of what we're doing. 22 countries, and I know there's some questions on international.
I'll try to head some of these questions off today. But about 11.1% of our sales today is through our international stores, so to speak, our customers. That includes Canada, Mexico and, of course, overseas. As you can see, about 19,000 employees. We're one day, we're hoping we can take that thing to 30,000, 40000 employees, 2,600 stores.
And then the other thing is you see the little bin stock, we're going to really start to talk about this. And I'm going to really do my very best during the next 30 minutes to really lay out the case of why I think Fastenal is the best industrial supplier in the world. But 30,000 bin locations or 30,000 active customers, excuse me, and you can see on the bottom there about 48,000 vending machines. And I'm going to spend a little time on that in these next few slides. So now what I'd like to do is my goal over the next 30 minutes, along with Joe and Bill, is to try to clearly present why we feel Fastenal is the best industrial supplier to serve both our customers and our shareholders.
And so when you look at this map that's about to come up, I'm going to take do my very best to tell you the Fastenal story, and I don't want to sell you. What I want to do here is I want to say again that we care about 3 groups of people. We care about our employees. We care about our customers. But I want you to know, we care about our shareholders.
I think about you. Our leadership team thinks about you. And when I say that, I mean district managers, folks in the warehouse, everybody, for the most part, we think about you. And so with that, I think there's a little responsibility on the shareholders to really know the company that you're investing in. So that's our goal today, is to really lay out our case so that you, when asked, can answer questions about us.
In fact, what I'm really saying is you can become evangelists for Fastenal. Weird word, but it kind of works. And so now as you see this map, this is the Fastenal store footprint. And I'd like you to just watch, if you would, just bear with me, watch what happens as you see 30, 45 60 minute drive coverage. That's what our stores can do to provide service.
Now think if you were a customer and you had a critical part, you had a machine down, you had a job site that, you know what, we're in trouble today. Hey, could you stock this part at your store for me? My bins are empty. Could you come out and help me with my vending machine? Think about if you were a customer, look what we do.
This is our footprint. Nobody can do this. This is kind of when I start to talk about our value, this is it. Now in the next slide. In this day and age, what's going on is people are talking about same day service.
It's a buzzword in the industry today. Nobody is better positioned. This next slide. Here is what our bin stocks look at, and I'm going to give you look like, and I'm going to give you a little help. The bigger the dot, the more bins we have in that location, about 25.
Some facts. We have 48,000 active customers that have bins within their facility. We have several 100,000 bins out there. So when you really begin to think about it, who can go out and service these bins daily, weekly, whenever, the local store. So when you look at the footprint of our bins and you think about this, when I'm out checking bins, and I can tell you this firsthand, I did this.
When you're out there, what happens? Lee, can you get me this? Hey, Lee, could you take a look at this? And pretty soon, we begin to creep, okay? We asked the question.
We need to get closer to the customer. So we started Bob started going, You know what, let's get bins in our customers' business. You want to know why? It's very sticky business. You put bins at a customer, you serve them well, I cannot tell you what happens, how the business can grow after that, okay?
That's what we did years ago. Today, we've got more bins, I think, around the U. S. Than almost any other supplier that I could think of. Then what we did is we decided we go, you know what, the faster thing is working, now the customers are going, hey, what about tapes?
What about gloves? What about eyewear, ear plugs, etcetera? So then we said, Well, how can we get closer on those items, nonfasteners, the vending machine. Now once again, bear with me, but from 2010 to 2014, look what happens. Again, the bigger the dot, the more machines we have.
If we put every machine up there, it would look just blue, which is cool. But you can see as it fills in from 2010 to 2014, the number of machines that we have out there. And so we wanted to get closer. Again, another way that it's very sticky business, somebody has to service the machines and no one better than our local teams with the support of our folks behind the scenes. We call it the machine behind the machine.
And so some facts, 50,000 roughly 50,000 machines and 40% of our sales go to a customer that has a machine. In fact, most of our stores have a vending machine at a customer's location today. Massive footprint, very sticky. And I'll tell you, when I look at it and if I was a competitor, very tough to get us out. Now that's 2 growth drivers.
We have many more. But I want to keep putting this puzzle together for you to understand what drives the business. So we're on job sites around the world. We have bin stocks. We have vending machine.
We have walk in traffic. And then we have what really drives some of our best stores in the company is our national accounts, our large regional accounts. You got to really understand this because when you think about what they're looking for, what is the national customer looking for? They have several facilities. They're looking for someone that's consistent and that can move to their music, so to speak.
Nobody can do that better than a company with local stores and a local presence. And so national customers today represent about 43% of our sales but almost half of our growth. A key growth driver for us. Many of our national customers have vending machines, have bin stocks that require us to be at their facilities almost every day, every hour, sometimes twice a day on the weekends. We'll do that.
So you can see, and you can see a few of the names that we put up there. Now that being said, who does the work? Our local stores? Sure. Our local people?
Yes. We need about 3,000 people this year that we'd like to hire. How many companies today are standing up saying, We are looking for people? But let me ask for a clear warning. When I say we're looking for people, it's, again, old fashioned, and I don't apologize, but we're looking for honest people, hardworking and common sense.
We'd hire 3,000 people if we could find them by the end of October. And so we're in a hiring mode. We're optimistic. We need people. Joe is going to talk to you not at length but in-depth, kind of funny, in-depth about our personnel strategy.
So I would like to continue to wrap this together. And I'd like you to imagine again if you were a customer, and I'd like you to think about, well, Lee, in this day and age, I would like to engage you, me, the supplier or a supplier, you would like to engage us a certain way. Not every customer is the same, and we get that. As you can see, the customer is in the middle here. We have our store.
You can walk in. We have our dedicated sales folks. We'll come see you. We have vending machines. Yes, we'll put those in your facility.
We'll save you footsteps. We'll reduce your consumption. Great. This vending thing is huge. Great thing for the customer.
We'll have we have our bin stock program, VMI, FMI. E Commerce, many of our customers today, and I know this probably isn't really popular, but they don't want to see anyone. They want to order something. They want it to go through the web. They want the product to show up, and they don't want to see us.
No eyeball to eyeball, no handshake. I don't like that because we like to be entrenched. But if that's the way you want to buy, that's fine with us. And of course, now we have this what we call an on-site program, meaning if this were a manufacturing facility, we would move in. I think about the store, we're kind of dating.
I'm here, you're there, we come see you once in a while. But the on-site, we're there every day. It's like a marriage. And so we go into their facility. We could be there 7, 8 hours, 2 shifts, 3 shifts.
But you talk about sticky business and think about the possibilities of how many customers are out there that would love to have a supplier come into their manufacturing facility, reduce their consumption, have backup inventory at the local store and then move to their music. This on-site program is going to take, I believe, Fastenal well into the future as I see it. So it's major ways that we try to engage. But following Joe, Bill Drazkowski, local guy, is going to talk to us and answer the question, why Fastenal? So in closing, one of my favorite slides really today is why are we so optimistic and really why should you?
It's a tough economy, I get it. Oil and gas, we don't like it, we can't control it. Currency, that's a headwind. But we're optimistic today, and here's why. We have a small percentage of the market.
We have about 3% of the industrial market. It's fragmented. It's up for grabs. Those that provide the greatest value, they will get their fair share. We love to earn our customers' business.
We continue to generate cash, very important, to support our growth. We try to pour back in. I love that phrase. We try to pour back in to our people, to our customers, to the business, and we try to do it wisely. Thirdly, we continue to make wise investments to support our growth, vending, the automation that you can see around you today even at this facility.
We try to be very wise in where we spend our money that for efficiencies that makes us better, not that we look better. And then we believe in our people. I mean, I tell you, that's BK right there. He'd be getting I remember in the old days, he would get question after question about FAFSA. How do you grow?
I mean, why do you, how does this happen? We believe in our people. I look around, I see our support folks all around here. We trust them. Run the business.
If you owned it, what would you do? How would you spend that money? And so we believe in people. We believe in their ability to make great decisions. Let them make decisions.
In fact, let them make a few mistakes. That's okay. That is what I grew up with Bob and Will, and it's what's made us, I think, a great company today. And then finally, we feel strong that the highest level of service comes when you are face to face with your customer. And today, what we're telling our people is we're accepting our role as a servant to our customer.
I know that's weird and old fashioned in some circles. Let it go. Today, we are saying to our customers, not this, Hey, how can I help you? Need anything? No.
What we're saying to our customers today over and over, how can I serve you? And we're proud to say that. With that, I'm going to turn it over to Joe, and I appreciate your time today. Good morning.
When Lee told you I wouldn't talk at length, I'm pretty sure that was directed at me, not you. Like you said, my name is Joe Stephens, and I'm the Regional Vice President for the Center of the United States. Missouri, Kansas and Nebraska are the states I cover. As a geography lesson, that's the ritzy part of the Midwest. And to build on what Lee is saying, there are many things that
we need to do to
be successful as a company. But the foundation of that is how well we recruit, train and develop people. I've been managing that process in some capacity for almost all of my 24 years with Fastenal, and I am convinced that it is the true regulator of our growth. It's not part of the strategy, it is the strategy. But the environment that we're operating in is changing rapidly around us.
Today's market is considerably different than when I started my career and many others. The purchasing decision that's made today by a buyer is incredibly more complex in that buyers are more informed. With a click of a mouse, they can check pricing against our competitors. They can host an online auction and compete us against each other. They can wait they can wait at average our services.
They can actually place values on our services and compare them. They have more information available to them than they've ever had. But in their defense, they're under a great deal more pressure as well. Decisions are no longer made by intangible things like relationship or loyalty. They're made on whether or not we make an impact in their business and there's a great deal of pressure from on them and for them to hit the bottom line.
And so this means that to communicate Fastenal's value proposition, we need to understand that environment and how we operate within that. More importantly, we have to be able to articulate our value proposition quickly. And so consider what Fastenal has become. We are in fact the technology leader in our industry. We provide more technology than any of our competitors and that's become our identity.
Industrial vending has transformed not just our own company, but our customers as well and some of our competitors even have transformed to try and follow. With that, we turned our industry upside down. But along with that, we've also created an appetite for data among our customers. They've come to expect innovation from us. They're not surprised by it anymore.
They actually anticipate it. And so the Fastenal employee in the marketplace today has more access to tools, but they also have to function in this different environment. We need to find people that are comfortable with technology, but that are also comfortable in those industrial environments, and they need to be able to comprehend, disseminate and communicate what the data means to our customers quickly. And so let's talk about what our employee needs are over the next 5 years. When you use modest projections from the last few years, let's just look since 2,009, we've added about 6,400 employees.
In 2015, we'll add another 3,000. And over the next 5 years, we'll add as many and possibly more, but as many as 16,000 people to our role. Consider that we currently have or we ended 2014 with over 18,000. But it's not that simple. And so to hire the best person, you're going to need to interview approximately 7 candidates.
So we're not just looking for 16,000 people. We need for, and as you can see from the graph, we need 113,000 people to apply for a job with Fastenal over these next 5 years. But again, not everyone that hears the Fastenal story is going to want an opportunity with us. And so when you consider a very generous 1 in 5 people may want to work here, that means that 565,000 people need to hear the Fastenal story over the next 5 years, which seems like a large task because it leaves us with a bit of a problem. Where can we find 565,000 people that are comfortable with technology, very comfortable in our industrial environment, they're intelligent, articulate, great communicators, the best and brightest amongst their peers, but also are currently unemployed.
Yes, it's a lot to ask.
So the highest concentration though of talented unemployed people does exist and exist today on college campuses. Consider what a business student in a college campus has in their arsenal of weapons. Let's think about how we train them and teach them in higher education. They're trained in accounting and cost coding. They understand why GL coding on an invoice is important and they understand how to explain it to a customer.
They're trained in finance and they understand balance sheets and data and they know how to, again, articulate to the customer how we impact their business. They're trained in marketing. They can segment their customers and make marketing plans. They understand full well how to view their customers. They're trained in organizational behavior.
They understand how to interpret behaviors and how to react to them. They are well prepared to function in the environment that I described previously. And so we focused our recruiting efforts as a company on schools whose student populations are interested in our industry. We stopped spending money on hundreds of schools and focused on fewer partner schools. Often these schools are in rural markets, not always.
They are often D1 or D2 schools, small D1 or D2 schools. But the most important characteristic of a partner school, and to put it in perspective, I have about 150 stores. I have 7 partner universities. But the most important is that they have a robust business department, 1,000 students or more. But the way that we engage these schools, if they're a partner, is somewhat unconventional.
We stopped recruiting at job fairs at those hundreds of schools. It's kind of like speed dating. You have a 5 minute conversation with hundreds of candidates and then they have 100 more 5 minute conversations and neither one of us really understands the other person. So we began engaging these partner schools at a deeper level. And we start by engaging the faculty in a way that we help them educate.
We start by explaining to them that we want to help them in the classroom by explaining what Fastenal does in line with their curriculum. And we promise them right upfront that we won't recruit in the classroom. Now I realize that sounds kind of weird. Our big recruiting plan is that we won't recruit, but stick with me for a minute and I'll explain why. In addition to classroom presentations, we take their students to the hubs for tours.
We allow them to job shadow us in stores. Recently, at our customer show in Nashville, we had over 100 faculty and students in attendance to find out what we do. Again, in the classroom, we get to demonstrate our accomplishments in a very non selling way. With students, we connect with them on social media and this allows us to post videos and case studies and stories about our company so that they understand. We brand ourselves to them.
We also hand out T shirts, but we started handing out Under Armour or sport T shirts because the one thing that we found is the college student had an absolute unlimited supply of free T shirts. And so that was our way of getting our T shirt to the top of the pile. But we trade them for it. We'll trade them a tweet or a Facebook post for the shirt. And when we walk on the campuses now, we'll see the shirts all over branding to those students.
In some areas, we've created internship incubators where we can handle up to 7 or 8 interns in a single store to generate more candidates as they move back home to work in other stores. But this is what's important. By coming alongside students and teachers, we're providing them experiences that assist with their education. And the beautiful result that we get from that is that students begin to self select. They know long before they ever graduate what we're about and who we are.
And they choose those opportunities on their own. We also get to observe them and their work ethic. We get the best and brightest. On average, a student in one of our partner schools will have heard a presentation by one of our district managers 8 times before they graduate and will probably have attended one event. So they know what we're about by the time they get there.
Let's consider a few cases. Sally? This is Matt Michaels. And so he came to work for us in 2010. He's from one of our oldest partnership schools, University of Central Missouri.
That relationship is managed by Nathan Gebar, our district manager. He does a great job. And so Matt started working for us as a part time student while he was graduating, and he did that for about 6 months. On the day after Matt graduated, he started with us full time in Warrensburg, Missouri. When he started with us as an outside sales person, we gave him a territory of $25,000 and over 3 years, he worked in that territory and grew it to $80,000 And so with that kind of success, one thing you can count on in Fastenal is another job.
So we promoted him, and we made him a general manager in our Lee's Summit branch. And when he walked into that store, it was doing $65,000 That was in 2013. And last month, that store billed $175,000 So over 5 years, Matt continued to have success. He will likely be a DM in the future. So let's look at the DM group.
In 2013, we added 58 DMs in an effort to get more support to our stores. And so let's look at that group. All of those 58 people were promoted from within. They all averaged about 7 years with the company. This group of employees averaged in excess of $100,000 in annual pay.
And even since then, we've created 47 more district manager opportunities. And so the question I'm left with is, how many college students, when they're looking at their career horizon, upon graduation can expect to have 50 employees, run a $12,000,000 business unit, make over $100,000 and all before they turn 29. How many of those opportunities could exist out there? Let's talk about in summation what Fastenal really is. If you were to ask anyone what a college student wants when they graduate, you would get a very practical answer.
You would get answers like pay or benefits or upward mobility. And in fact, those answers are somewhat true on the surface. But think about what's been going on in their life for the last 4 years. They've been studying the best companies, companies like 3 ms and Microsoft and Facebook, and they do research papers on them and they watch videos and read case studies. And all while they're doing this, they're building this anticipation on what they'll do when they get to the workplace.
They want to be relevant. They want their 4 years that they spent studying to count for something. But the problem is that at Fastenal, we're kind of a humble group of people. We go to work and we work hard. We don't brag.
We don't boast. We walk around with our hat in our hand. But in this instance, it's not the time. When you think about what our story is, the impact that we've had on our industry, we are one of the greatest companies in America, but we have to tell the story. Because when we do, students line up for opportunities.
In those partner schools, when we're in a partnership, we still attend the career fairs, to be polite. But the line at those fairs, people are lined up to talk to us because they already know what the opportunity. But again, we have to tell the story. We love stories in America. We love success stories.
They are they give us hope. They get us excited about the prospects for ourselves. But when you consider these great companies that I mentioned, let's take, for instance, Facebook. That's a story about Mark Zuckerberg. Microsoft is a story about Bill Gates.
Apple is a story about Steve Jobs. But Fastenal is 19,000 success stories, all happening at the same time. There are more Matt Michaels. In fact, there will be 16,000 more over the next 5 years. I can tell you that I'm personally proud of the success that I've enjoyed at this company.
I've accomplished much more than I ever anticipated when I started, and I'm sure many of you feel the same way when you came in contact with Fastenal that this has been tremendously successful compared to what we expected at the start. But I assure you that what the next 16,000 people accomplish over these next 5 years will make that pale in comparison. If we do this right, if we get this part correct, they will accomplish more than we ever have. And so training and developing them is what we do, and I'm going to turn it over to Bill in just a moment. We have a video.
So once we hire them, Bill is going to talk to you about what they do and how we develop them and how we bring our services and products to the customer. Thank you.
Why fasten all? Because we are where you are. Most national industrial distributors are set up to do one thing and that's fulfill transactions. You place an order, it's processed in a remote warehouse and it's delivered by a third party Because the product is hundreds of miles away, it physically can't arrive any faster than 24 to 48 hours later. Tomorrow or the next day may be okay for some purchases, but wouldn't it be better to receive today's needs today?
This is the heart of Fastenal's value proposition and here's how we make it happen. Just like the other guys, we have a website and a catalog, but we also have something much more substantial, nearly 2,700 local stores positioning and product near the customers we serve. When you walk into your local Fastenal store, you'll find a broad mix of products you can grab right off the shelf. But the real value of our local presence unfolds as our business relationship grows. The rings on this target represent the different levels of service we provide.
That's our target, same day service. At first, the rings are pretty balanced. That begins to change as we learn more about your business and bring more of your product needs into our store. That big blue bullseye means your most important products can be fulfilled today, not 24 or 48 hours later. The lifeblood that makes this possible is our network of North American distribution centers, monitoring local usage patterns, tailoring their stocking models to match that demand and keeping the right products going to our local stores on our own fleet of trucks.
While other suppliers can only react to your orders coming in, we've built our system to analyze, adapt and anticipate your needs. It's easy to see how this model enables us to take the next step and manage a lean flow of inventory from the store to your points of use, whether that's through a manual bin stock or an industrial vending solution. We carry the inventory on our shelves so you don't have to. Visit regularly to make sure that you always have the right amount, not too much and not too little and provide detailed reporting right down to the location or GL code. It's the kind of service that you can't get from a catalog, which brings us to another important Fastenal advantage.
With other industrial distributors, if it's not in the catalog, they can't supply it. Our local people specialize in thinking outside the book, drawing on a spectrum of resources to provide solutions for your business. Need a non standard item? Your local store can source and stock it for you. Need a manufactured part?
Our in house manufacturing division can quickly produce it. Need industrial services? Our regional service centers can fix it, fabricate it, weld it or cut it to length. What if you need an expert? Your Fastenal store is supported by highly trained specialists in key areas of our business, including government sales, engineering, safety, metalworking and Lean 6 Sigma.
We also offer national accounts programs for those companies that have multiple locations and can meet minimum spend requirements. With all of these resources at their fingertips, your local Fastenal account representative is the most important resource of all, a go to relationship that lives in your community and will work to become a vital part of your operation. It's like having an industrial supply chain expert on your staff, but not on your payroll. Don't get us wrong, catalogs and web sites are great tools, but they can anticipate need or answer questions or manage your inventory or think on their feet to solve problems and introduce new ideas. If looking for that kind of service, you know where to find it.
Right around the corner at your local Fastenal store. Fastenal, we are where you are.
Good morning.
Good morning.
I was when I was asked to talk about why people buy from Fastenal, the first thing I thought was, well, how long do I get to speak because I can wear you out with stories in terms of why people buy from Fastenal. And Lee reminded me that while our meetings in the distribution center, we kind of got to get product out to the customers tonight. So let's keep it brief, right? So that video and what Lee and Joe talked about really sum up how we go to market and what really gives us our competitive advantage. And the first thing I want to do today is kind of tie it up with what that actually looks like out in the market.
What does a bin stock look like? Does it look like when we go and successfully implement a vending program? What does it look like on the street? So the first thing we're going to talk about is the market and the customers that we serve. And so, Lee mentioned our locations, mentioned our stores.
We located we have almost 2,700 stores, but where do we put them? We don't put them next to the ice cream parlor or the yoga studio. In fact, many of our customers probably see our trucks and our semis a lot more than they see our store. We locate our stores as close as we can to our customers. And those are typically industrial type customers, contractors, power plants, manufacturing facilities, things of that nature.
And so customers also range in size greatly. Some customers we have might be a 1 man landscaping company, some might be a 1,000 person multinational corporation. We have to be ready to serve those customers of all shapes and sizes of all with all different types of technology and service levels. Doing this and with our 2,700 stores, locations close to the customer, what it really allows us to do is to serve our customer better than anybody else in the business. In fact, what it really does, it makes our customers feel like they are the small fish or the big fish in a small pond.
And doing that allows us to go above and beyond, take care of them through emergency services, local bin stocks and really gives them a sense of community, a sense that we care about them as a customer, we care about their business, we're investing in their business. But like Joe talked about, what really separates us in the market is our people. And our people, no matter whether they work in distribution, manufacturing, in our stores and accounting or IT, we all share the same values. And if you go to any Fastenal facility, you're probably going to see posters that are very similar to this. And within our group, what we do is we try to grow our customer grow our company through the best customer service in the industry.
And it all starts with people. And when I've had the privilege to talk to customers all over the country, and when we talk to those customers, the first thing they always talk about is a person. They don't talk about our building per se, they don't talk about our truck or, hey, you have that cool NASCAR thing. They'll give us a story about a person. They'll tell us about how Sally delivered to us late last night.
They'll tell us about your representative here, Keith or Kyle, do a great job on my bin stock and managing my materials. They'll talk about what a great idea Kylie had for a vending option that saved us a lot of money through consumption reduction. And so what they'll really talk about, they'll identify what we do with a person. And that's where people and putting the right person in every market is so incredibly critical to our business. Kind of like Joe defined how he has to go and look for those folks, how many interviews he has to do to make sure that they'll fit into what our cultural values are.
And so whether it's keeping the store open late, making a delivery after hours, opening the store early, going and delivering and implementing technology through vending machines, through working as a team. I look at today's event of great teamwork within Fastenal. For example, all the trucks got out to our stores last night and all of our trucks get out to the stores today despite this event going on. So how does our team do it? They get in early, they stayed late to make sure they could have all the tables, chairs and everything else set up so that you could all sit here today and share this moment with us.
But at the same time, as soon as the meeting is done, everybody will clear out, chairs will go out and the trucks will go out. So great team effort by our distribution team just to get this ready. One example of what they did to serve our customers out there, so that if today, if a store in Duluth, Minnesota or Rice Lake, Wisconsin or Des Moines, Iowa need a product, and if they let us know by 6, 7 tonight, tomorrow morning before 7 a. M, we're going to have that product at their facility. So now we're going to get back to our stores.
And the guy of the day is Matt. Matt runs our local store, right? Matt is also the face of Fastenal in the market that he's in. Matt's our brand. So when you're in Missouri and you're in Matt's store and you're in Matt's market, that's Fastenal to our customers, Matt and his team.
It truly is. And if you went around and you asked all of his customers about how Fastenal is doing, they're probably going to tell you about Matt. They're going to tell you about what Keyur's team did for you. They're going to tell you about how much value they've invested in their business. They'll probably give you a story of Matt delivering late or coming in early.
And I can't accentuate that enough how important that is in our market. But Matt out there, he's not alone, ported through a lot of different vehicles that we offer. The first thing, we have a great school of business here at Fastenal, Career Development. People started Fastenal because they know we're promoting within company. We have a school of business that even if you don't have the skill set or knowledge of a nut or a bolt or a grinding wheel, much like I didn't have that knowledge when I started.
We're going to help get you that knowledge. We'll train you at Microsoft Excel because the world is always changing. And we have programs to help keep our employees continuing to be developed, continuing to grow and continue to be excited about what we're doing. And that's a very important piece of developing our markets in our stores. We also have we are met with great reporting.
Joe mentioned data and Lee mentioned data. We give customers great information, how much product they use, how much money they've saved, what kind of value we bring to their business. They also mentioned national account programs. So when we're going out, what my team does is we go out to large customers that have multiple locations, and we create programs that are the same in Winona, Minnesota Des Moines, Iowa Jupiter, Florida and everywhere in between. So you have multiple locations, we can create the same program everywhere for you around the world really.
We have a great manufacturing division. If you have an emergency part where you need a special, special length, special thread, very short lead time, small quantity, We have a great facility to help you get that product. Distribution. I just talked to our Vice President of Transportation this morning, and he let me know that 66% of our trucks get to our stores before 7 am. So even they talked to him in the video about the catalog houses and getting that product there the next day, well, their product is getting there via the brown trucks and the Federal Express and the 3PL carriers.
Ours is on our own trucks, and it's getting there before 7. Some cases, 4, 5, 6 in the morning, depending where you are on the route. That's powerful. When you can have your truck there and you come in the morning at 6 a. M, a customer is coming into your store to pick up their product when they order at 7 the night before from you, that's power.
That's a connection. That's a competitive advantage that nobody else can touch. We take a lot of drones out there in the world to match that service, that's for sure. We also have a great marketing team and a great product development team that really arms Matt with a lot of different brands he can sell. So we don't sell just one brand of tape measure or just one brand of screwdriver.
We offer a variety for customers. So they can find they need a very low price point product, we have it available. If they need something that's a different level of quality, we have that available as well. So Joe's store is armed with that. E commerce, they mentioned in the video, Lee mentioned it.
That's the vehicle a customer is comfortable using to purchase from us. We have that available. But also in the e commerce, we integrate well into other into our customer systems, which gives us a great advantage in the accounting side of the world. And of course, our industry specialists, from government to safety, metalworking, these folks are there to help support Joe's business and the customers in his or her market, because what we need done there is if we land an account, just much like Lee said, we're selling them fasteners, they want us to look at cutting tools or gloves or something like that, we can go in with our specialists, give our store that knowledge they need, help them connect with the customer and make sure they get the right product every time. But our goal as a company in each market is to find the right solution for our customers.
So we flip to the next slide, give you a little look at what we do in the market. What does the bin stock look like? So I thought it would be good to show you some before and after pictures. So we're out there and Matt's out making sales calls in his market and he goes to an account that doesn't have fast and all. In many cases, he might run into a storeroom or a showroom where you see something like that.
You see the before picture. And what a customer wants is, hey, can you help me organize my material? Can you make it look good? My people are wasting a lot of time trying to find products every day. Can you help us out?
So we'll come in with a plan. We'll say, we have a great what's called a planogram. We'll come to the customer. We'll show them it. They'll agree to it.
And then we'll do all the work. We have teams to help our stores set these programs up quickly and efficiently so that all this so that products so that these programs, you can start seeing the benefit right away. And so when you look at that picture, if you were the customer, what would you rather have? The before vendor or the after vendor? I think I know where I'd want to go.
So not just in Vince Dax, we also mentioned vending. And the things that we bring to the table in terms of what does it look like? Who are our vending customers? Well, in many cases, customers have lost control of types of products we sell, gloves, glasses, just about anything. And they want to know how can we keep product transparent, available, How can we know how much of it we use?
How can we control it? That's where our vending solution comes in. And as you can see through this, would you rather have the before picture or the after picture? And after, simple, you now have accountability, you have traceability, you have visibility. And you can do that all from the click of your mouse at your desktop wherever you are.
You always know where your supplies are. In fact, in many cases, our vending programs will start with just one site, one machine in one location, and they grow from there. In fact, at Team Industries, where this picture is taken up in Begley, Minnesota, they have 7 facilities around the country and actually one facility in Mexico. The very first machine was put in Bagley, worked so well, it spread to another one of their shops and another shop. And the good news kept spreading.
And eventually, the machines went in every facility team had. And that picture we took was at their facility in Mexico. And by the way, that machine will also talk to the customer in Spanish. So just to give you a little example of the breadth of our program, what it can do around the world, it's not just a it's customizable for whatever our customers need. Leit mentioned our on-site.
What does a store look like inside a facility? How does that look? And here it gives you a little peek at what that actually looks like, what it can look like before, what it can look like after and why we're doing it. And at the end of our the Q1, Fastenal actually had 223 of these customer facilities or customer on-site stores in play, 223. I remember I opened a 300 store for Fastenal in Albert Lea, Minnesota.
And I think we almost have as many on-site stores now as we had public stores back in 'ninety six when I opened Albert Lea. So great turnkey solution. And again, our teams do all the work. Next one, this is our fast scale. So if you have expensive parts, OEM fastener type parts, and you want to always see what kind of inventory do I have?
How can I organize it better? How can I get visibility of it? We might run into a customer that has the before picture, just an open VIN system. But they want to know, they want more control. They want to be able to know from anywhere in the world how many of these products I have in each bin.
Great way to track it. And anywhere from any desktop in the world, this customer can view their inventory. Now this also allows us to go into places we don't have stores, places that are more remote, places that they maybe the purchasing department is located in Winona, but the factory is in Tennessee. This would allow the person in Winona to actually manage that inventory and keep that investments and that footprint under control. And so by the way, this picture, this after picture was one of our national account customers, and we took that picture at their facility in Dubai.
So it tells you where we can take that technology. But no matter what solution customers choose to take from us, the common thing is we partner with our customers. We listen to them. We listen to what their needs are. We don't try to pigeonhole them into one solution.
We listen to what solution we feel is right for their business and we partner with them and we work together on these projects. So what are we going after now? What's left? So here you see our sales last year, dollars 3,730,000,000 And in the video, they talked about some of our publicly our public national competitors, the catalog houses. So we know they do around $13,000,000,000 In North America, the kind of types of products we sell, we estimate that market to be $110,000,000,000 just North America.
So as you can see, we have a small sliver. Our national competitors have a small sliver. The rest is local and regional and kind of specialty type competitors, integrators, cutting tool houses, folks like that. And when I look at that, I can't help but get excited about not just today, but the future. And I'm, as well as everybody up here, really proud of the first almost $4,000,000,000 we've done as a company.
But I tell you what, I'm really, really excited for the next $4,000,000,000 we're going to do and the $4,000,000,000 after that and the $4,000,000,000 after that. And hopefully, 25 years from now, sitting out there and listening to somebody come up here and talk about the $20,000,000,000 to $30,000,000,000 company that the Fastenal company will become. So that's what we have today. I appreciate your time. And I would like to turn it back over to our CEO and President, Lee Hine.
Thanks. Thank you, Bill. Thank you, Joe. A few minutes for questions, if there would be any. We'll take a few questions.
I have Dan Floronis up front, CFO Mike Dolan from the Board. And so we'll try to do our very best to answer questions. The name is Duane Carlson. I'm a stockholder. There's a process called 3 d printing where you can actually print components.
I know you make some components. Is that a part of your endeavors? Tim Borkowski works over manufacturing. I see Corey out in the audience. And we've kind of we've used it.
We've I think we've probably got it in place somewhere in our facilities, but it's something that's kind of cutting edge. But I'd say Tim and Corey know a lot about it, but we are familiar with it, and we are using it. Thank you. Question in the middle here?
Hi. Yes. My name is Fred Orlowski and I've been an employee for 18.5 years with Fastenal and retired last July. I'm still a shareholder, of course. But anyway, a couple of friends of mine that I was stationed within the Navy, one out in Roseburg, Oregon, what he is, is a do it yourselfer.
And then I have another guy down in Tampa, Florida, where he builds custom bikes. And I always encourage these people to go ahead and, hey, check out Fastenal for your specialized fasteners or bolts, whatever you need. And what I get back is, well, hey, Fred, are you feathering your retirement bed? Fastenal is so overpriced, I can't afford to go there. And I won't go there anymore.
Then, well, how does that make me feel as an individual? So I see we got the credit card swipers. We got the receipt printers. We got everything for people walking in off the street. And I know our model has been industry and construction and all.
Well, can we take and kind of change that around a little bit and maybe have, I don't know, rewards program or some type of incentive to get these do it yourselfers get their business?
Thanks, Brett. Yes, that's a tough question really in the fact that we have to really think about the customer trying to serve and who are we. We need to know who we are. And we know for a fact that we're here today to service a certain customer real well, manufacturing OEM, MRO and that. When we get into the do it yourselfers, it begins to get real difficult to be able to hit the price and compete with some of the other houses in the Internet because of the value we bring to market.
It isn't a great answer for you, Fred, but it's exactly the fact that we know there is a floor that we will go to, another lesson we learned from Bob, that when we can't make money and it doesn't make sense transaction by transaction, then you know what? We will pass on some of that. And it's not what you like to hear, but we actually know that the value we provide, here's the price. And could we do better in some cases? Absolutely.
But that's kind of really how we look at some of the smaller users.
Hi, Lee. Don Anderson, I'm a shareholder. Could you talk about your vending business a bit, just about your strategy, your goals and your competitors and what you think?
Sure. Welcome, Don. Yes. The vending, it started out, and I'll give Steve Ruszynski, Steve is an EVP, International credit here, but we kind of got into the vending. And I don't think, honestly, in those early days, we knew what we were really getting into.
But it is such a means to deploy product. And as Bill laid it out, it's visible. But here's the thing. Our customers today, they don't wonder about what's being used on the floor. They know.
And because they know, the employee knows they know, weird, they use less. It really what it does is it perpetuates best practice. So let me give you some real examples how vending plays out in the real world. Here's Lee. He takes he has a pair of gloves.
He sets it on the forklift. The forklift takes off. I have a decision to make. I need gloves. I can either go get mine or I'll just go get another pair.
Heck, I'll just go get a box of gloves. I need them all week. But now when vending comes into play and those gloves are in a machine and I have to swipe it, and now when I swipe it, my boss, Little Joe there, knows that I got a pair of gloves. I'm going to go get my gloves, right? That is a real life example of how vending plays out in the real world.
It's visibility and it's accountability and it reduces consumption. And let me tell you, in America today, customers are desperate to save money. Thank you. Yes, sir. Yes.
Good morning. I'm Tim Medley from Mississippi, a stockholder. There are a lot of businesses in America today that are really struggling with Amazon. Tell us about Amazon supply and how you think about them in relation to Fastenal. We get this question often.
And again, Tim, right? Tim, we get that question often because, again, as I we try to lay out today is why we feel that we are just a completely different value proposition than Amazon or really any company via the web. And we try to lay out that sticky business piece, right? They can't duplicate that. There's a this is a capitalistic world.
We love that. And there's a place for Amazon, and they do a nice job. And sure, some of our customers use Amazon, but we also have e com. We also can satisfy their needs through the web. And I we get it, and I know they're out there, But I got to be honest with you, we just do not see where they're starting to infringe on our core customer, our core business because of the service level our customers demand, okay?
We're going to miss lunch at this rate. Just kidding. We're not going to miss lunch. Take it easy. People are freaking out now.
I'm John Graf from Investment Minnesota. And you really emphasized service to grow. And of course, that's been everything in the United States is service. How about growing with new product? Does that emphasize much?
Yes, sir. Yes. Good question. We have our product managers. I can see them.
They're all standing around, sitting around. So we have a group of product managers that we're always looking for lost opportunity. I'll give you a couple of examples. We quote a large government contract. And we look at our rates of what we actually quote, so we quote 98% of a quote or 70% of a quote, we look at those items that we no quote and we go, man, why aren't we supplying this?
The other thing that we do is we look at when we get a customer, when we get in their facility, we're always going, well, I don't know what that is, but I'll get it for you. That's always been one of our I mean, how we used to sell in the old days. We're just like, Whatever it is, man, we'll get it for you. And so we're we have this drive to sell our customers anything. And now we have this determination to really seek out those parts that aren't in our core.
We have to be wise to know we don't have it all. So every not every day, often we're looking to add to that product mix. Good question. Yes.
Hi. My name is Dave Zimmerman, owner of stock. And I was wondering how long have you owned Hollow Chrome? Hollow Chrome? Yes.
And are you doing any other acquisitions of other companies too for growth?
Good question. Thank you. Yes, Holochrome is about 8, 9 years. What's that? 2,009.
And so that was a real Holochrome was really suffering. And they were a great company. When I was in the branch, Holochrome had a name that when you brought it up, it was recognized and it was high quality. Well, they began they were purchased and they began to suffer. And so we came in and purchased talichrome and really incorporated that into our daily business here.
And we've actually resurrected Holochrome and taken that name for a ride again because of the quality and also the manufacturing capabilities that they bring. And it's been a great partnership for us or acquisition for us. As far as your second half of your question, we're a company that's we're always looking for opportunity. But again, I will say this publicly, we will not acquire, buy, do anything that's going to infringe on our culture at Fastenal. We're very protective of the culture here.
But we have an appetite to always look at those things that will help us grow. And if it's acquiring other companies, we're not foolish not to look at it, but it's, again, very protective of our core and our culture. Yes, ma'am? Yes.
My name is Jim Hansell, and I'm a shareholder. And I was noticed in this year's proxy statement that 2 of the principal shareholders from last year are no longer listed as qualified principal shareholders. What does that say?
I'm not yes, Dan?
My name is Dan Flores. I assume you're referring to Mr. Kirtland and Mr. Slaghi. They were listed in our proxy in prior years because as a director, they're considered an insider in the eyes of the SEC.
And we disclose their ownership as we disclose the ownership of all the other directors and the officers of the company. They retired from the Board last spring, so they're no longer required to be shown, but I suspect Steve and Bob still have some stock. We just aren't required to disclose anymore. Thank you.
Classic answer from a CFO.
Yes, sir. Hi, good morning. John Dowling, Austin, Texas. I have a question about share buybacks. I know historically you bought back about enough to offset dilution, but it seems like you've been more aggressive so far
at the beginning of this year.
I was wondering if you could comment on that strategy. Sure.
We'll let Dan answer. We've been answering these questions recently, too.
Yes. We've been public now since 1987. And quite frankly, in most of that time, we've been really blessed from the standpoint the market has embraced our business really well, and we've had a very high valuation relative to our earnings. And so in if I think back to much of our history, most of the cash we generated in the business, we I think you used the impression, we poured it back into the business and because we needed all that cash to keep funding our growth. In today's world, where we're growing 10%, 15%, 18%, 6%, depending on the quarter or the month you're looking The cash needs of the business have changed.
And so in the last 10, 12 years, we've dramatically increased what we pay out in dividends. In recent months, recent years, we've had some opportunities where the stock, quite frankly, has been a little bit on sale. And so one of the things we try to do as an organization is we always try to make we as the directors and the officers of Fastenal and the employees of Fastenal have a covenant with you, our shareholders. And that is every day, we'll try to make good wise decisions and investments for the future. One of those investments was vending over the last 5 years.
One of those investments was investing in our distribution centers over the last 5 years. We talked about the investment in Holochrome back in 2,009. Right now, we have been in the process of making another acquisition, an acquisition in ourselves. And so we've taken some of the cash from the business, and we've also looked at it and said, right now, we think it's a very compelling time to invest in that acquisition of Fastenal and buy back shares a little more aggressively. And I'll start by saying we're not a fan of debt.
Because of the strong cash flow of our business, we've operated largely debt free for much of our history. But we've been willing to take on a little debt in the last few months and buy back some stock because we believe fundamentally in our future, and we think it's a good wise investment for our shareholders. Thanks.
Maybe one more. Yes, ma'am.
Okay. All right. Thank you. I usually don't hold these close enough. I'm a shareholder and it's so nice to meet my fellow shareholders and see blue shirts standing in the back there.
I have a few basic questions. I could go a little while, but I'm not going to embarrass myself or leave starving people fainting here. 52 week high and yesterday's price, the 52 week high on the Fastenal shares is $50.98 Yesterday's price was $40.80 So there is a difference there. As a treat to myself last night, I went on the computer and looked up store locator and I typed in Rochester, Minnesota. I got a locator that directed me to Elmira, New York.
Somebody might want to look into that. And I went back and made sure I put in Minnesota and not Rochester, New York, but I'm sure that I did. So store locator is having a bit of a difficulty. And then did not see Cambria on our friends and neighbors list, a very viable and exciting Minnesota industry, a neighbor of mine and a manufacturing and distribution big guy in the state of Minnesota. I'm hoping that we're soliciting with them if we're not already in the door.
Also, I'm just on Page 13 of our annual report, there's something addressing They're called conflict minerals. Why in the world do we need to be involved in a foreign enterprise that has conflict minerals that we have to kind of dance around to make viable in the business? Isn't there another way to do business and not expose Fastenal to this kind of activity? And I will stop, but I got more guys.
Yes. So question on the your question is on the conflict mineral part. What's your what's the burning question? Well, the locator, ma'am, could be absolutely anything. It could be an absolute just a minute, it's a glitch.
It could be Yes. I'll tell you one thing, we don't do it on purpose. And it's like kids, you wish they were all perfect, but they surprise you and they surprise you. That's the truth. And so it's not our intent to do that.
And I apologize, but we'll
Drop $10 in a year.
Okay.
Yes. That's upsetting.
Okay. Well, I apologize for that. But it we'll fix it. I mean, we strive to be perfect. But again, we're moving quick and a lot of moving parts.
The conflict mineral piece comes up with there are certain states, and we've ran into some problems where we've had certain products that have certain materials that we've identified or it's been brought to our attention that can't be sold in that state. And we go ahead, Dan, if you got some Dan can add some color to this also that we've got to move to we
have to make some changes.
I'll just take that a step further. The conflict minerals provisions, and I'm probably going to say enough to get myself in trouble in the conversation. But essentially, when Dodd Frank came through a number of years ago, one of the provisions of Dodd Frank was companies have to certify, be in a position to certify that their supply chain is conflict minerals free. So think tungsten coming out of the Congo. So there's companies look at the products they sell.
And some of our many of our products, it doesn't apply to. But let's say we have an abrasive that is diamond tipped or a cutting tool that's diamond tipped. We have to be able to peer back into our supply chain and say to our suppliers, can you certify for me that the diamond tip here does not come from a mine in the Congo? And so that was a requirement that came out. We had to start disclosing that a year ago.
And essentially, the disclosure is the problem is most companies on the planet can't do that certification. So what we put in our 10 ks, and that's required disclosure, and we do a filing in the May of each year, is explaining what we do to talk to our suppliers because we don't want to source products from parts of the country or parts of the planet, excuse me, that are conflict zones. We really don't want to source from there. But when we're buying product from a supplier down the street or across the country or somewhere around the planet, for them to provide that certification, in many cases, that certification doesn't exist. And so that's what our disclosure is.
But at the end of the day, we have absolutely zero desire to source product, but we can't certify at this point nor can any other company out there certify that absolutely nothing in their supply chain comes from the Congo or some other conflict area on the planet.
Thank you. All righty, moving right along. Will is not here today, and for obvious reasons, but it's really a chance with you here for us to really celebrate Will's time with us as CEO, and he's held many positions. And so a little awkward and really unfortunate that he couldn't be here. But on leadership, it's a big topic.
It's many opinions, no one right answer, and there's a lot of methods. So you have to really see leadership in action. And I've had the pleasure over my 29, 30 years to be able to work for Bob and for Will. And while they're 2 different men, their goals are the same and they're actually their absolute belief in people, in regard for people, in regard for the company has never nor will it ever be questioned. I believe that.
And so one of the themes today really is, is just absolute core belief in our people and what they do. One of the best examples of that philosophy, I think, is really Will. And you'll see in a video shortly just how we really think about what he's done and the impact he's had on us. Will was hired in 19 80 out of St. Cloud Tech.
He managed our Owatonna store. He went on to become a district manager, was heavily entrenched in our operations and, of course, later became our CEO. As you know and probably aware, Will's transition now into CEO from CEO into the Chairman role. Although he'll continue to help guide the company as Chairman of the Board, it definitely marks a new chapter for Will and in his life and for our company. Let's take a moment to celebrate a remarkable career, a great example of the power of Fastenal People.
I first met Will when I hired him and it was in St. Cloud, Minnesota and we had just opened the St. Cloud store and I had gotten to know some of the instructors at a school that he went to and we were starting to hire quite a few people. I'll never forget the day he walked in because he was working for a welding supply. And he had his name Willie, I believe it was Willie, embroidered right on the shirt.
And he was selling all these supplies and he came in and we started talking about the current company he was working for. I explained who I was working for and how we were starting to open all these branches. As we talked, you could just tell, his eyes lit up and he could see, well, that's going to be progress in the future. We are really going to grow. And from there, I think he met Bob Kierland and liked the story and all of a sudden he's working for us.
When I could see that he was willing to do anything to better the company, he took on challenges, ready to go any place, got his CD license to drive semis when we needed to. All of those things kind of added up to here's a person that really had no fears about taking on any additional risks.
I really felt that I had a connection with Will immediately when I met him. We're both from North Central Minnesota. He's a farm kid from there. I'm from a small town, also had a farm that we worked. And so I think that his upbringing of getting up in the morning, getting things done, getting early, Stanley, had a huge impact on how he approaches his life as well as work.
Will is mentally tough. He's driven, and he's structured, he's disciplined. Those things, I guess, I'm just trying to give you insight. Those things wrapped up. I see that in the company yet today.
We're trying to hang on to those things today.
He has a number of characteristics that make him a great leader. One is that he has total respect for the people that are working with him. I saw many cases where if somebody had a problem outside of the business, he would do everything he could to help them offline, giving his time to help the employee get out of a jam, whatever it was. It was just that kind of attention to the people, plus his total honesty and integrity, not just within Fastenal, but with our suppliers and our customers. There was just you could just put 100% trust in the guy.
He's talked a lot over the years about the concept of the Fastenal Tree and what that means to him. And what I gleaned from those conversations was whether that person is somebody you brought into the organization or somebody that you mentored or somehow influenced over your years at the organization. It's somebody that you have a connection with and not losing that connection. And being I might have somebody that I worked with 5 or 10 years ago that if they stopped into my office to see me right now, it's as if I saw them 5 minutes ago. And Will has always operated that way.
So for me personally, the biggest thing was that sense of a tree, that sense of we're a family, if you will, And the family will call for each other.
Will's ability to see good in people, his ability to see if somebody will work in a particular position or not was probably the biggest thing that I ever saw in his ability to lead the company. He could tell who was doing an extremely good job in certain areas and others that might be struggling and would go in and help the struggling people try to figure out their career path. He's done it for a lot of people. He's done it for
us. I can remember a number of times when we're going to roll something out, you name it, a freight program, a freight change, a margin program, a sales initiative. And while the economy could be in rough shape, I can remember and even to this day, I still look back and go there was one person that really always said, no, no, no, hold on, don't worry about what's going on outside, let's worry about what we can control, let's push this forward.
When Will was named the top CEO in the United States by Morningstar, I thought it was a tremendous honor for him, but I kind of gave myself a little pat on the back because our philosophy here at Fastenal has been to develop our own leadership. And my role as CEO, I always felt was to monitor about 3 people that could take my position. And then when I selected Will to be that person to see him get to be named the top CEO in America, that says that we were doing this right. When you hear discussions
that are going on inside or decisions that are being made inside, they typically center on people and how people can do great things and allow the organization to grow. And Bob started that tradition many years ago, will continue that tradition and I think improved it.
Every person in their at the end of their life is going to leave a wake of some sort. It's either going to be positive or it's going to be negative. And I look at the wake, so to speak, that Will is going to leave on this company, and it's going to be good. It's going to be we'll still be hardworking, we'll be driven better than our competition, we'll service our customers. Probably one of his proudest accomplishments has really been the number of opportunities that have been created at Fastenal due to the success of the company.
I think we've got well over 18,000 people on our team now and that will quickly go to 28,000 and it won't be long before it will you'll have a hard time walking through an airport without seeing somebody with a blue shirt on.
The impact on the company is, of course, seen in the growth that we've had while he's been the CEO, President of the company. It says something that we got over the range, the middle range. Now we're in the next step to become as I think Will still wants to see this company become the largest seller of maintenance and construction supplies in North America. And I think it will happen, but it's because of the Fastenal people and the ability of people like Will to bring everybody on board and get and use their potential.
Bob Kerlin built and put in place a great foundation. Will Overton really has built the house.
Thanks, Will. A great tribute. Now we come to another important part of our agenda today, and that's to celebrate and remember the 40 7 plus years of contribution to the success of this company by our Michael Gostomski. There's nobody who more passionately wears and believes and bleeds fast and all blue than does Mike. And the when you think about all the things that people bring in, what they add to our Board and add to our company and the leadership and guidance they give, Mike's great Mike is so passionate, but he brings to our Board the perspective of a customer.
He quickly reminds us when we're not living up to the service levels we should or the pricing may be challenged or whatever the case might be, but he does it because he cares. That's who Mike is. But before I go into any further on this, I want for him or to introduce his support system. Some of them are here today, and I will ask them to stand up. His wife, Joette, of course, please, and son, James and Alicia, daughter, and I believe it's a granddaughter and I'm really it's Jim's daughter Eliana and she's a student at Winona State University.
So Mike has a significant support, Susan, and we welcome him. In a moment, we're going to play a video about Mike, but I wanted to think of try to think of some things that were important. And I think the Board, in its January 14 meeting, articulated in a resolution as best it could how they and I believe everybody feels about Mike. And we resolved at that time that the Board of Directors recognizes, honors and thanks Michael Gostomski for his more than 47 years of service to the company. His participation and willingness to make an investment in the founding of the company, his entrepreneurial instincts and insights and many selfless personal contributions to this company, Fastenal, have been endless and ongoing.
His willingness to involve himself in the varied needs of a developing company to provide seasoned leadership as the company grew, to unwaveringly support Fastenal's people, its culture, its mission, always reminding us that we must remember and respect those things. The Board of Directors take special note of Mike's special fervent commitment and focus on the needs of Fastenal's customers, all in the interest of making Fastenal a better and more successful organization. His love of his family, the Winona community, his faith and the unwavering support of his friends and colleagues and all the employees of Fastenal are the finest examples to all of us who have had the good portion to work with him. We thank you, Mike, as our colleague and good
friend.
My grandpa Mike was born, August 21, 192040. He lived with his parents, Irene and Dan, in this duplex in Winona, where his grandparents, Bessie and Milton, lived downstairs. Most of the family is Polish, which is why Great Grandpa Dan was known to all as Dan. They seem normal enough. That is until you place them in their natural habitat, a bowling alley.
Grandpa honed his skills here at the Winona Athletic Club, and he was eventually elected to the Minnesota Bowling Hall of Fame alongside with his father and his mother. That's right. All 3 are in the Hall of Fame. Do you know how much pressure that creates on family bowling night? Mike's family ran a heating and ventilating company in Winona, cleverly named Winona Heating and Ventilating.
He started working here in 1952 at the age of 12. He's been punching the clock for 63 years now, and apparently, he's thinking of making a career of it. He received a solid Catholic education at Saint Dan's and Cotter High School, thus the perfect penmanship and callous knuckles. It was at Cotter where he met his Bassanell co founders Bob Kierlin, Steve Sloggy, and Van McCommon. Grandpa Mike followed Steven's van to St.
Mary's University where he deconstructed works by proofs by night and constructed school buildings by day. In fact, he was part of the crew that built St. John's back there. Yeah, and as you can see, the building is still standing. Nice job, grandpa.
After graduation, he went to work full time at Winona Heat and Vent, earning steady pay as a contractor. That's a good thing because in 1968, Bob, Steve Van, and Jack Remick were struggling to get their start up fastener business known as Fastenal off the ground.
1 night as they made their usual rounds at the bars, Van made Grandpa Mike an interesting offer.
We're out of cash and we need $3,000 to keep this business afloat. You win?
For some reason, grandpa jumped at the opportunity. He won the later raise the price to $4,000
To this day, no one was sure how he was able to make such a sober business decision or even if he was sober when he made it. They used these highly official grocery store receipts to drop his ownership shares of the company. And with that, he became fabulously wealthy. 20 years later when Fastenal went public and the founders finally received a return on their investment. Speaking of investments, grandpa made a wise one when he picked up his IPO chest at an office building in Minneapolis.
Someone pointed out that he had a hole in his shoes, so he ducked into a shoe store in the same building and bought a new pair.
His new life had begun. Actually, his new life wasn't really all that new. It still revolves around his wife, Joette, and his children, James, Ryan, and Melissa, AKA, grandma, dad, uncle Ryan, and auntie Melissa. He stayed in the same town, he's worked at the same business, and he's remained close with friends he's known for Amber. Oh, and rumor has it that he's remained a loyal patron here at the Winona Athletic Club Bar.
Isn't that right, Terry?
Mike Estomski? I never heard of him.
The big difference is that he's had the good fortune to be able to give back to the communities he grew up in. Over the years, that includes his generous contributions to local churches, local schools, and of course St. Mary's University, where he donated this field house and sponsors all kinds of programs to support students. Of course, he's also served as a member of Fastenal's Board of Directors for nearly 5 decades, playing an active role in guiding the company to help get off the ground. During that time, he's seen Fastenal grow from this to this.
Yep. That risky investment he made 47 years ago has sure paid off. It's created opportunities for thousands of people at Fastenal. It's also up thousands of people in the community. And plus he's the best to unplug the whole room.
So let's put our hands together to fake 1 of the 5 people who founded Fastenal. And made so many things possible for so many people. Our grandpa. Michael Dusowski. Michael Dusowski.
I don't know how you follow that, but
I'm going
to ask Bob Kerlin to come to the podium to say a few words and make a presentation. Bob?
Well, first, I have to tell you how we brought Mike into the original four founders. What happened is, of course, we started in 1967. By the end of 'sixty 8, our sales per month were probably about $2,000 We were losing money, needed some additional cash. And it was Van MacKinnon who suggested that Mike Ostumpski might be a good member of our founding group. And I said, well, what does he bring to the company?
He said, well, he's a roofer. And I said, well, what good is that going to be? He says, because when Mike is on these flat roofs, he can hear everything going on in the offices below him. So he knew everything that was going on in business here in Winona. But even with that, we made him pay a 15% premium for his stock because we thought we were so smart by that time.
But he did come in and it really helped us. It turned the corner for us. By the end of 'sixty nine, we were breaking even. So I have a little presentation for Mike. And what it is, is again showing the 3 original receipts that he got from Van McConan for his stock.
And you have to appreciate that these sheets were in these packs of 50 that you would get 100 packs at Johnson Carter for about $9 and they had duplicates sheets with a carbon paper that was attached that only served each book. Van evidently had a great deal of respect for Mike because the numbers here are 16, 11 33. If they had been over 40, you wouldn't be able to read these because the carbon was all burned out by that time. So before I read this, I also want to say something about Mike and Joette. I can't tell you how much they have given back to this community.
You see the visible structures at Cotter and St. Mary's, but there are so many other things that they have done for the people in this area that you don't know about. I only know about it because I talk to a lot of roofers. Let me read the inscription here. Mike Ostomski, years of service, 1968 to 2015.
These receipts from early 1969 document your original investment in Fastenal. Your leadership and service over the ensuing 46 plus years aren't as easy to sum up. In our early days, you helped Fastenal get off the ground and take flight. In more recent years, you provided seasoned leadership and made sure we stayed true to our culture and our mission. Through it all, we could always count on your entrepreneurial instincts, your unwavering focus on our customers and improving our service, your deep appreciation of our employees and a quietly generous spirit that extends well beyond the walls of our company.
From everyone on the Blue team, thank you, Mike, for helping create so many opportunities for so many people within Fastenal and throughout the Winona community. It's amazing to think that such a lasting legacy began with 3 small pieces of paper.
Bob says I get to say a few words. I've never said a few words. But I know that everybody's wanting that lunch pretty soon. But that isn't the most important thing. We got to get this place empty so those trucks can get going because we got to have that product to the customers tomorrow morning.
But anyhow, first of all, I'm glad that you all here today to experience the beginning of the acting careers of my grandkids. And that one that kept repeating, Michael Gostomski, he just liked to hear his own name because he's the second Michael Gostomski. But as you can all see today, how much fun this whole Fastenal experience has been by the presentations that you saw today, the talented people from our Mr. Dolan, our Board of Director to Lee and
Bill.
And also Dan Flores getting up there and answering giving a civil answer to some really tough questions where you probably would have seen a number of politicians just ducking the answer and heading for the door. And but it's been so much fun to be around all these people. And I don't only mean them, I mean them all over. I mean, we just you heard the mention of our customer show in Nashville 2 weeks ago. And Joette and I were down for went down in Nashville for it.
And just to be around the Fastenal people for 3, 4 days is an awful lot of fun. And they're real people. I mean, that is one of the reasons the company has successes is because our people are real people, and they know how to talk to real people. So anyhow, I'll now say thank you. Thank you most especially, I guess, to Van McConnell because he was the guy that talked me into this over a couple of beers someplace, in a couple of bars that don't exist anymore.
But if I would have known how tough things were at the time because I just heard BK tell me that, I would have negotiated a little harder when I got that stock and put that 15% on my side instead of of on their side. But also the mentoring I have got from my fellow Board of my fellow founders, Bob, Steve Sloggy, Jack Remick, Van himself and their generosity. I mean, it really makes it fun to give and give of yourself and give of your resources to help others. And that is one of the and I think that is one of the best things that ever came that came to me out of this company just to be around those people. So thanks a lot.
I hope the company continues to grow the way it has. I'm not going away. You'll still see me at the customer shows and so forth and down and hang around here. But it's been a lot, a lot of fun over these, my gosh, 47 years. So thank you very much.
One other thing before I leave. I just had to tell everybody, I'm not losing my I'm not dying or anything. I had knee replacement surgery 4 days ago in Rochester. So that's why I'm limping around here like a helpless cripple.
Yes, Mike always has one more word. That's great. Now we'll start to wrap up the official part of this meeting. I have now been told the ballots have been counted. Report of the Inspector of the election indicates that Willard D.
Oberton, Michael J. Ancias, Michael J. Dolan, Leland J. Hine, Rita J. Heisey, Darren R.
Jackson, Hugh L. Miller, Scott A. Satterlee and Renee, K. A. Weiskop have received the required number of votes and are hereby elected directors of the company.
The report of the Inspector of the election also indicates that number 1, the resolution for ratification of KPMG LLP as the independent registered public accounting firm for the company for the fiscal year ending December 31, 2015, has received the required number of votes and has been adopted. And secondly, 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. 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 minutes of the meeting as in Exhibit C. That concludes that part.
I have important things here, namely the prize winners. We have 2 prize winners. First, Ms. Patty Bond. Are you here?
Yes, she is here. And David or Dave Mample, Dave Mample. So I guess you hope you can report to somebody over here and pick up your prize, however that works. Now I think we have a final video, if I am correct. Thank you.
My script says we have a final video. I guess we don't have a final video. I will now entertain a motion for adjournment, and I recognize Mr. Kevin Fitzgerald.
My name is Kevin Fitzgerald. I am a shareholder of the company, and I move that the meeting be adjourned.
Thank you. I recognize Ms. Christine Holverson.
Hi. My name is Christine Holverson. I'm a shareholder of the company, and I second the motion.
Thank you. It has been moved and seconded that the meeting be adjourned. All those in favor, say aye. And anyone