Welcome. 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 and serving as your acting chairman of this meeting because our chairman, Will Oberton, is at this hour attending the funeral of his mother-in-law, unfortunately, and certainly, that's the right thing to do. That's where he is today. Please bear with me. If I commit a foible or two, please accept my apologies in advance. That said, at least you know why this foreign guy is up here trying to get things started.
We'll start the meeting with an invocation by Father Michael Cronin from St. Ann's Parish Catholic Church parish in Janesville. Father Cronin, please come forward.
Good morning.
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?" I said, "I'm coming to pray at the Fastenal shareholders' annual meeting today." He said to me, "Pray hard. My children's college depends upon it." He said I could tell you his name, Joel Hennessey. Gracious God, thank you for the wonder and beauty of this day. Please watch over this annual meeting of the shareholders of the 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.
Amen.
Thank you, Father. First, I would like to introduce some members of our board, all the members of our board. After I read their names, I would ask them to stand up and be recognized by this gathering today. Michael J. Ancius. Michael Dolan, that's me. Michael Gostomski. Michael is nursing a new knee, so we'll exempt him. Lee Hein, Rita J. Heise, Darren Jackson, Hugh Miller, Scott Satterlee, and Reyne K. Wisecup. Of course, as I mentioned, Willard D. Oberton is not with us, but he also needs to be recognized. 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 Kierlin, please stand. Steve Slaggie.
Henry K. McConnon, I doubt he is here, but we recognize Henry anyway. Jack Remick. Jack is here. I know that. Michael Gostomski, who we are going to hear a lot about later today. He is with us as well. That said, I am going to leave most of the administrative things to John Milek, who is our general counsel. Bob Kierlin used to handle all these things that dealt with legal matters, but it takes two or three of us now to handle these matters. We'll ask John to 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 Hein, our chief executive officer and president will, along with others from our organization, report to you on the company.
With that said, John Milek.
Thank you, Mike, and good morning. The record date for the determination of the holders of the company stock entitled to receive notice of and to vote at this meeting was fixed by the board of directors as February 20th, 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 present to 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 10th, 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, there were represented at this meeting, either in person or by proxy, a majority of the votes entitled to be cast at this meeting. Therefore, a quorum is present for the transaction of business today. Is there anyone present who has not submitted either a proxy or a registration form? A record of the proxies 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 Dégallier 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 22nd, 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 20th, 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 a 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 three 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 nine 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. Oberton, Michael J. Ancius, Michael J. Dolan, Leland J. Hein, Rita J. Heise, Darren R. Jackson, Hugh Miller, Scott A. Satterlee, and Reyne K. Wisecup.
I will now open the floor to a motion to formally place before this meeting the nomination of these individuals. I recognize Mr. 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 nine 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 Jerad Tuxen.
My name is Jerad Tuxen. I am a shareholder of the company. I second the motion.
Thank you. As no other nominations have been made in accordance with the procedures established by the company's bylaws, I declare the nominations to be closed. The next matter for consideration today is the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2015. I would like to introduce Ms. Angela Dosedel, a partner of that firm, who is here today to answer any questions that you may have. 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 Philabaum.
My name is Randy Philabaum. I am a shareholder of the company. I move that the following resolution be adopted. Resolved that the appointment of KPMG LLP as independent registered public accounting firm for the company for the fiscal year ending December 31st, 2015, be and hereby is ratified.
Thank you. I also recognize Mr. Chris Van Dolin.
My name is Chris Van Dolin. I'm a shareholder of the company, and I second the motion.
Thank you. Is there any discussion of this motion? No. It has been moved and second that the appointment of KPMG LLP as independent registered public accounting firm for the company for the fiscal year ending December 31st, 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 am a shareholder of the company, and I second the motion.
Is there any discussion on this motion? It has been moved and seconded 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 Hein, our Chief Executive Officer and President, together with some other individuals whom he will name. After the conclusion of this report or these reports, we will be taking any questions that you have relating to company matters and its activities. With that said, Lee?
Thanks, Mike. Good morning.
Good morning.
2014 was really a year of two stories. The first half in January, 6.7% growth, double-digit growth in March, really double-digit growth every month after that. It was a story of really we decided to leverage the stores, to add people, and we executed that plan. Really, as you look at the graphs here behind me, you can see it really is a story of four things. We are taking market share when you look at our net sales. We are not opening stores as we did really in the old days. I want to park on that a minute because I know that is a question. What about stores? What is happening? I want you to know that we are comfortable today with the battle at hand of taking market share. We know that is what it is about today. Let us fight it out with the competition.
We think we're well-poised. 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 third quarter till basically now, we're up about 1,000 people. 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. How do we do that? It's really two 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's something that, I tell you, just can't take for granted. The second thing, and we learned this from Bob: We live within our means. 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. Fastenal at a glance. This kind of gives you a nice overview of what we're doing. 22 countries. I know there's some questions on international. I'll try to head some of these questions off today. 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.
One day, we're hoping we can take that thing to 30,000, 40,000 employees, 2,600 stores. 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 here in the next 30 minutes to really lay out the case of why I think Fastenal is the best industrial supplier in the world. 30,000 bin locations or 30,000 active customers, excuse me. You can see on the bottom there, about 48,000 vending machines. I'm going to spend a little time on that in these next few slides. 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.
When you look at this map that's about to come up, I'm going to do my very best to tell you the Fastenal story, I don't want to sell you. What I want to do here is I want to say again that we care about three 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. When I say that, I mean district managers, folks in the warehouse, everybody, for the most part. We think about you. With that, I think there's a little responsibility on the shareholders to really know the company that you're investing in. 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. Now, as you see this map, this is the Fastenal store footprint. I'd like you to just watch, if you would. Just bear with me. Watch what happens as you see 30, 45, and 60-minute drive coverage. That's what our stores can do to provide service. 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.
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's better positioned. This next slide, here is what our bin stocks 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 hundred thousand bins out there. When you really begin to think about it, who can go out and service these bins daily, weekly, whenever? The local store. 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? "Hey, Lee, can you get me this?" "Hey, Lee, could you take a look at this?" Pretty soon we begin to creep. Okay? We ask the question. We need to get closer to the customer. 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. What we did is we decided, we go, "You know what? The fastener thing's working." The customer's going, "Hey, what about tapes? What about gloves?
What about eyewear, earplugs, et cetera?" We said, "Well, how can we get closer on those items, non-fasteners?" The vending machine. 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. You can see as it fills in from 2010 to 2014, the number of machines that we have out there. 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. Some facts, 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. I tell you, when I look at it and if I was a competitor, very tough to get us out. That's two growth drivers. We have many more. I want to keep putting this puzzle together for you to understand what drives the business. We're on job sites around the world. We have bin stocks. We have vending machine. We have walk-in traffic. 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. 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. You can see, and you can see a few of the names that we put up there. 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"?
Let me, asterisk here, 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. 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. I would like to continue to wrap this together. 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's 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 have our Bin Stock program, BMI, 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.
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. The on-site, we're there every day. It's like a marriage. We go into their facility. We could be there seven, eight hours, two shifts, three shifts. 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. It's major ways that we try to engage.
Following Joe, Bill Drazkowski, local guy, is going to talk to us and answer the question: why Fastenal? 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. 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, 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 it's for efficiencies, that makes us better, not that we look better. We believe in our people. I tell you, that's BK right there. I remember in the old days, he would get question after question about Fastenal. How do you grow? 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? 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. Finally, we feel strong that the highest level of service comes when you are face to face with your customer. 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?" 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.
Good morning.
When Lee told you I wouldn't talk at length, I'm pretty sure that was directed at me, not you. Like he said, my name is Joe Stevens, 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. To build on what Lee's 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. 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 weighted 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. 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, there's a great deal of pressure on them and for them to hit the bottom line.
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. Consider what Fastenal has become. We are, in fact, the technology leader in our industry. We provide more technology than any of our competitors, that's become our identity. Industrial vending has transformed not just our own company, but our customers as well, some of our competitors even have transformed to try and follow. With that, we turned our industry upside down. 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.
The Fastenal employee in the marketplace today has more access to tools, 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, they need to be able to comprehend, disseminate, and communicate what the data means to our customers quickly. Let's talk about what our employee needs are over the next five years. When you use modest projections from the last few years, let's just look since 2009, we've added about 6,400 employees. In 2015, we'll add another 3,000. Over the next five years, we'll add as many and possibly more, as many as 16,000 people to our role. Consider that we currently have, or we ended 2014 with over 18,000. It's not that simple.
To hire the best person, you're going to need to interview approximately seven candidates. We're not just looking for 16,000 people, we need for, as you can see from the graph, we need 113,000 people to apply for a job with Fastenal over these next five years. Again, not everyone that hears the Fastenal story is going to want an opportunity with us. When you consider a very generous one in five people may want to work here, that means that 565,000 people need to hear the Fastenal story over the next five 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? Yeah, it's a lot to ask. The highest concentration, though, of talented, unemployed people does exist, and it exists 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. 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. The most important characteristic of a partner school, and to put it in perspective, I have about 150 stores. I have seven partner universities. The most important is that they have a robust business department, 1,000 students or more.
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 five-minute conversation with hundreds of candidates, and then they have 100 more five-minute conversations, and neither one of us really understands the other person. 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. We promise them right up front that we won't recruit in the classroom. I realize that sounds kind of weird.
Our big recruiting plan is that we won't recruit, 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, we started handing out Under Armour or sport T-shirts because the one thing that we found is that college student had an absolute unlimited supply of free T-shirts.
That was our way of getting our T-shirt to the top of the pile. We trade them for it. We'll trade them a tweet or a Facebook post for the shirt. 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 seven or eight interns in a single store to generate more candidates as they move back home to work in other stores. This is what's important. By coming alongside students and teachers, we're providing them experiences that assist with their education. 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 eight times before they graduate and will probably have attended one event. They know what we're about by the time they get there. Let's consider a few cases. This is Matt Michaels. He's from one of our oldest partnership schools, University of Central Missouri. That relationship is managed by Nathan Gabar, our district manager. He does a great job. Matt started working for us as a part-time student while he was graduating, and he did that for about six months. On the day after Matt graduated, he started with us full-time in Warrensburg, Missouri.
When he started with us as an outside salesperson, we gave him a territory of $25,000, and over three years, he worked in that territory and grew it to $80,000. With that kind of success, one thing you can count on in Fastenal is another job. We promoted him. We made him a general manager in our Lee's Summit branch. When he walked into that store, it was doing $65,000. That was in 2013. Last month, that store billed $175,000. Over five years, Matt continued to have success. He will likely be a DM in the future. Let's look at the DM group. In 2013, we added 58 DMs in an effort to get more support to our stores. Let's look at that group. All of those 58 people were promoted from within.
They all averaged about seven years with the company. This group of employees averaged in excess of $100,000 in annual pay. Even since then, we've created 47 more district manager opportunities. 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 million 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. In fact, those answers are somewhat true on the surface. Think about what's been going on in their life for the last four years.
They've been studying the best companies like 3M and Microsoft and Facebook, and they do research papers on them, and they watch videos and read case studies. 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 four years that they spent studying to count for something. 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. 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. We have to tell the story.
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, the line at those fairs, people are lined up to talk to us because they already know. Again, we have to tell the story. We love stories in America. We love success stories. They give us hope. They get us excited about the prospects for ourselves. 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. 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 five 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. I assure you that what the next 16,000 people accomplish over these next five 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. 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.
Once we hire them, Bill's 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 Fastenal? 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 carrier. 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 people 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. 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 and 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 flowing 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 Six 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 websites are great tools. They can't anticipate needs or answer questions or manage your inventory or think on their feet to solve problems and introduce new ideas. If you're 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.
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? I could wear you out with stories in terms of why people buy from Fastenal. Lee reminded me that while our meeting's in the distribution center, we kind of got to get product out to the customers tonight. Let's keep it brief, right? 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. 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? What does it look like when we go and successfully implement a vending program?
What does it look like on the street? The first thing we're going to talk about is the market and the customers that we serve. Lee had mentioned our locations, mentioned our stores. We have almost 2,700 stores, 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. Those are typically industrial type customers, contractors, power plants, manufacturing facilities, things of that nature. Customers also range in size greatly. Some customers we have might be a one-man landscaping company, some might be a thousand-person multinational corporation.
We have to be ready to serve those customers of all shapes and sizes, 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 big fish in a small pond. 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, and we're invested in their business. Like Joe talked about, what really separates us in the market, it's our people.
Our people, no matter whether they work in distribution, manufacturing, in our stores, in accounting, or IT, we all share the same values. If you go to any Fastenal facility, you're probably going to see posters that are very similar to this. Within our group, what we do is we try to grow our company through the best customer service in the industry. It all starts with people. When I've had the privilege to talk to customers all over the country, 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, or 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. What they'll really talk about, they'll identify what we do with a person. 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. 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 will go out to the stores today despite this event going on. 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. At the same time, as soon as the meeting's done, everybody will clear out, chairs will go out, and the trucks will go out. A great team effort by our distribution team just to get this ready.
One example of what they did to serve our customers out there that if today, if a store in Duluth, Minnesota or Rice Lake, Wisconsin or Des Moines, Iowa need a product, if they let us know by 6:00 P.M., 7:00 P.M. tonight, tomorrow morning before 7:00 A.M., we're going to have that product at their facility. 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. 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. If you went around and you asked all of his customers about how Fastenal's doing, they're probably going to tell you about Matt.
They're going to tell you about what he or his 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. I can't accentuate that enough how important that is in our market. Matt out there, he's not alone. Supported 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 start at Fastenal because they know we're promote-from-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 in Microsoft Excel because the world is always changing. We have programs to help keep our employees continuing to be developed, continuing to grow, and continuing to be excited about what we're doing. That's a very important piece of developing our markets and our stores. We arm Matt 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. 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. 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 length, special thread, very short lead time, small quantity, we have a great facility to help you get that product. Distribution. I was just talking to our vice president of transportation this morning, and he let me know that 66% of our trucks get to our stores before 7:00 A.M. Even they talked about in the video about the catalog houses and getting that product there the next day. Their product's getting there via the brown trucks and Federal Express and the 3PL carriers. Ours is on our own trucks, and it's getting there before 7:00 A.M. Some cases, 4:00, 5:00, 6:00 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 6:00 A.M., a customer's coming into your store to pick up their product when they ordered at 7:00 the night before from you, that's power. That's a connection. That's a competitive advantage that nobody else can touch. It would 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. 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 if 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. Joe's store is armed with that. E-commerce, they mentioned in the video, Lee mentioned it. If that's the vehicle a customer is comfortable using to purchase from us, we have that available. Also into e-commerce, we integrate well 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 specialist, give our store that knowledge they need, help them connect with the customer, and make sure they get the right product every time. Our goal as a company in each market is to find the right solution for our customers. If 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? I thought it would be good to show you some before and after pictures. We're out there and Matt's out making sales calls in his market, and he goes to an account that doesn't have Fastenal. In many cases, he might run into a storeroom or a showroom where you see something like that. You see the before picture. 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?" 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, we'll do all the work. We have teams to help our stores set these programs up quickly and efficiently, so that these programs, you can start seeing the benefit right away. 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. Not just in bin stocks, Lee also mentioned vending.
The things that we bring to the table in terms of what does it look like? Who are our vending customers? In many cases, customers have lost control of types of products we sell. Gloves, glasses, just about anything. 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. As you can see through this, would you rather have the before picture or the after picture? After, simple. You now have accountability. You have traceability. You have visibility. 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 Bagley, Minnesota, they have seven 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, the good news kept spreading, and eventually, the machines went in every facility TEAM had. That picture we took was at their facility in Mexico. By the way, that machine will also talk to the customer in Spanish. Just to give you a little example of the breadth of our program, what it can do around the world. It's customizable for whatever our customers need. Lee mentioned our on-site.
What does a store look like inside a facility? How does that look? Here 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. At the end of the first quarter, Fastenal actually had 223 of these customer facilities or customer on-site stores in place. 223. I remember I opened the 300th store for Fastenal in Albert Lea, Minnesota. It's like we almost have as many on-site stores now as we had public stores back in 1996 when I opened Albert Lea. Great turnkey solution. Again, our teams do all the work. Next one, this is our Fast ScaleSM. 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 bin system. 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. Anywhere from any desktop in the world, this customer can view their inventory. This also allows us to go into places we don't have stores, places that are more remote, places that maybe the purchasing department is located in Winona, but the factory's in Tennessee. This would allow the person in Winona to actually manage that inventory and keep that investment and that footprint under control.
By the way, this after picture was one of our national account customers, and we took that picture at their facility in Dubai. It tells you where we can take that technology. 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. What are we going after now? What's left? Here you see our sales last year, $3.73 billion. In the video, they talked about some of our public national competitors, the catalog houses. We know they do around $13 billion. Okay.
In North America, the kind of types of products we sell, we estimate that market to be $110 billion in just North America. 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. When I look at that, I can't help but to get excited about not just today, but the future. I'm, as well as everybody up here, really proud of the first almost $4 billion we've done as a company. I tell you what, I'm really, really excited for the next $4 billion we're going to do, and the $4 billion after that, and the $4 billion after that.
Hopefully, 25 years from now, sitting out there and listening to somebody come up here and talk about the $20 billion-$30 billion company that the Fastenal Company will become. That's what we have today. I appreciate your time, and I'd like to turn it back over to our CEO and President, Lee Hein.
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 Florness up front, CFO, Mike Dolan from the board, we'll try to do our very best to answer questions. We have one right here with a microphone. Thank you.
The name is Duane Carlson. I'm a stockholder. There's a process called 3D printing where you can actually print components.
Yep.
I know you make some components. Is that a part of your endeavors?
Tim Borkowski works over in manufacturing. I see Cory out in the audience, and we've used it. I think we've probably got it in place somewhere in our facilities, but it's something that's kind of cutting edge. I'd say Tim and Cory 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, I was been an employee for 18 and a half years with Fastenal and retired last July. I'm still a shareholder, of course. Anyway, a couple friends of mine that I was stationed with in the Navy, one out in Roseburg, Oregon. What he is a do-it-yourselfer. 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 and bolts, whatever you need." 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." Well, how does that make me feel as an individual? I see we got the credit card swipers.
We got the receipt printers. We got everything for people walking in off the street, 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 a, I don't know, rewards program or some type of incentive to get these do-it-yourselfers, get their business?
Thanks, Fred. Yeah, that's a tough question, really, in the fact that we have to really think about the customer we're trying to serve who are we. We need to know who we are, 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 a market. It isn't a great answer for you, Fred, 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. You know what?
We will pass on some of that. It's not what you like to hear, we actually know that the value we provide, here's the price. Could we do better in some cases? Absolutely. That's kind of really how we look at some of the smaller users. Okay?
Hi, Lee. Don Anderson. I'm a shareholder.
Hey.
Could you talk about your vending business a bit, just about your strategy, your goals, and your competitors.
Sure
What you think?
Well, welcome, Don. Yeah. The vending, it started out, and I'll give Stephen Brzezinski, Steve's 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. It is such a means to deploy product. As Bill laid it out, it's visible. Here's the thing, our customers today, they don't wonder about what's being used on the floor. They know. Because they know, the employee knows they know. Weird. They use less. Really, what it does is it perpetuates best practice. Let me give you some real examples how vending plays out in the real world. Here's Lee. 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. Now when vending comes into play and those gloves are in a machine, and I have to swipe it, now when I swipe it, my boss, little Joe there, knows that I got a pair of gloves, I'm gonna 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. Let me tell you, in America today, customers are desperate to save money.
Thank you.
Yes, sir. Wow.
Yes. Good morning.
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.
Sure. We get this question often. Again, Tim, right?
Yes.
Tim, we get that question often because, again, as we tried 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. We try to lay out that sticky business piece, right? They can't duplicate that. This is a capitalistic world. We love that. There's a place for Amazon, and they do a nice job. Sure, some of our customers use Amazon, but we also have e-com. We also can satisfy their needs through the web. We get it, and I know they're out there, but I gotta 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 gonna miss lunch at this rate. Just kidding.
We're not gonna miss lunch. Take it easy. People are freaking out now. Yes, sir.
I'm John Graff.
Hey, John
MacBessin, Minnesota. You really emphasize service to grow. Of course, that's been everything in the United States is service. How about growing with new product? Does that emphasize much?
Yes, sir. Yeah. Good question. We have our product managers. I can see them. They're standing around, sitting around. We have a group of product managers that we're always looking for lost opportunity. Give you a couple examples. We quote a large government contract, and we look at our rates of what we actually quote. We quote 98% of a quote or 70% of a quote.
We look at those items that we no-quote, 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, I mean, how we used to sell in the old days, we were just like, "Whatever it is, man, we'll get it for you." 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. Every, not every day, often we're looking to add to that product mix. Good question. Yes, sir.
Hi, my name is Dave Zimmerman.
Hey, Dave.
Customer, owner of stock. I was wondering how long have you owned Holo-Krome?
Holo-Krome? Yeah.
Are you doing any other acquisitions of other companies too, for growth?
Good question. Thank you. Yeah. Holo-Krome is about eight, nine years. What's that? 2009. Holo-Krome was really suffering. They were a great company. When I was in the branch, Holo-Krome 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, so we came in and purchased Holo-Krome and really incorporated that into our daily business here. We've actually resurrected Holo-Krome and taken that name for a ride again because of the quality and also the manufacturing capabilities that they bring. 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 always looking for opportunity.
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. We have an appetite to always look at those things that will help us grow. If it's acquiring other companies, we're not foolish not to look at it's, again, very protective of our core and our culture. Yes, ma'am, yeah.
My name is Jim Hansel, and I'm a shareholder. I noticed in this year's proxy statement that two of the principal shareholders from last year are no longer listed as qualified principal shareholders. What does that say?
I'm not Dan?
Hi, my name's Dan Florness. I assume you're referring to Mr. Kierlin and Mr. Slaggie. 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, they're no longer required to be shown, I suspect Steve and Bob still have some stock. We just aren't required to disclose it anymore. Thank you.
Classic answer from a CFO. Yes, sir.
Hi, morning. John Dowling, Austin, Texas. I have a question about share buybacks. I know historically you bought back about enough to offset dilution, 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 you. We've been answering these questions recently, too.
Yes. We've been public now since 1987, quite frankly, in most of that time, we've been really blessed from the standpoint the market has embraced our business really well, we've had a very high valuation relative to our earnings. If I think back to much of our history, most of the cash we generated in the business, I think you used the impression we poured it back into the business 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 at, the cash needs of the business have changed. 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. 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. 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 five years. One of those investments was investing in our distribution centers over the last five years. We talked about the investment in Holo-Krome back in 2009. Right now, we have been in the process of making another acquisition, an acquisition in ourself.
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. 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. 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 on 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. I went back and made sure I put in Minnesota and not Rochester, New York, but I'm sure that I did.
Your store locator is having a bit of a difficulty. 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. 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 just expose Fastenal to this kind of activity? I will stop. I got more, guys.
Your question is on the Conflict Mineral part. What's the burning question?
What's the locator have in there?
The locator, ma'am, could be absolutely anything. Just a minute. It's a glitch. It could be. I'll tell you one thing. We don't do it on purpose, and it's like kids. You wish they are all perfect, but they surprise you, and they surprise you. That's the truth. It's not our intent to do that, and I apologize. We will.
dropped $10 in a year.
Okay.
Yeah. That's upsetting.
Come here.
Okay. Well, I apologize for that. We'll fix it. We strive to be perfect, again, we're moving quick and a lot of moving parts.
Yeah. The Conflict Minerals piece.
The Conflict Minerals piece comes up with, there's 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. Go ahead, Dan can add some color to this also, that we have to make some changes.
Yeah. I'll just take that a step further. The Conflict Minerals provisions, I'm probably going to say enough to get myself in trouble in the conversation. Essentially, when Dodd-Frank came through a number of years ago, one of the provisions of Dodd-Frank was companies have to certify and be in a position to certify that their supply chain is Conflict Minerals free. Think tungsten coming out of the Congo. Companies look at the products they sell, and many of our products, it doesn't apply to. 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?" That was a requirement that came out.
We had to start disclosing that a year ago. Essentially, the disclosure is, the problem is most companies on the planet can't do that certification. What we put in our 10-K, that's a required disclosure, 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. 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. That's what our disclosure is.
At the end of the day, we have absolutely zero desire to source product, but we can't certify it 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's not here today and for obvious reasons, it's really a chance with you here for us to really celebrate Will's time with us as CEO, he's held many positions. A little awkward and really unfortunate that he couldn't be here, on leadership, it's a big topic. It's many opinions, no one right answer, there's a lot of methods. You have to really see leadership in action. I've had the pleasure over my 29, 30 years to be able to work for Bob and for Will. That while they're two different men, their goals are the same, 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.
One of the themes today really 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. 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 1980 out of St. Cloud Tech. He managed our Owatonna store. He went on to become a district manager, was heavily entrenched in our operations, later became our CEO. As you know, probably aware, Will's transitioned now 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. 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. 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, Willy, I believe it was Willy, embroidered right on his shirt. He was selling welding 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. From there, I think he met Bob Kierlin 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 anyplace. Got his CDL 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. I think that his upbringing of getting up in the morning, getting things done, getting early, staying late, 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, where 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. His total honesty and integrity. Not just within Fastenal, but with our suppliers and our customers. 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. 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. I might have somebody that I worked with five or 10 years ago, that if they stopped into my office to see me right now, it's as if I saw them five minutes ago. Will's always operated that way. For me personally, the biggest thing was that sense of a tree, that sense of we're a family, if you will. Family look out 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 were going to roll something out, you name it, a freight program, a freight change, a margin program, a sales initiative. 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. 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 U.S. by Morningstar, I thought it was a tremendous honor for him. I kind of gave myself a little pat on the back because our philosophy here at Fastenal has been to develop our own leadership. My role as CEO, I always felt, was to monitor about three people that could take my position. 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. Bob started that tradition many years ago. Will continued that tradition, and I think improved it.
Every person at the end of their life is going to leave a wake of some sort. It's either going to be positive. It's going to be negative. I look at the wake, so to speak, that Will's going to leave on this company, and it's going to be good. 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'll quickly go to 28,000, and it won't be long before 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 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. I think it'll happen, but it's because of the Fastenal people and the ability of people like Will to bring everybody on board and use their potential.
Bob Kierlin built and put in place a great foundation. Will Oberton really 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 47 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 Fastenal blue than does Mike. When you think about all the things that people bring and what they add to our board and add to our company and the leadership and guidance they give, Mike's so passionate. What 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. Before I go into any further on this, I want to introduce his support system.
Some of them are here today. 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. It's Jim's daughter.
Iliana.
Iliana, she's a student at Winona State University. Mike has a significant support system, and we welcome them. In a moment, we're going to play a video about Mike, but I wanted to try to think of some things that were important. I think the board, in its January 14th meeting, articulated in a resolution as best it could, how they, and I believe everybody feels about Mike. 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, of 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 fortune to work with him. We thank you, Mike, as our colleague and good friend. Thank you, Mike. Play the video.
My grandpa Mike was born August 21st, 1940.
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 State USBC Hall of Fame, alongside his father and his mother.
That's right, all three 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 & Ventilating.
He started working here in 1952 at the age of twelve. 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 St. Stanislaus School and Cotter High School, thus the perfect penmanship and calloused knuckles. It was at Cotter where he met his Fastenal co-founders, Bob Kierlin, Steve Slaggie, and Van McConnon.
Grandpa Mike followed Steve and Van to Saint Mary's University, where he deconstructed works by Proust by night and constructed school buildings by day.
he was part of the crew that built St. John's Center.
Yeah, as you can see, the building is still standing. Nice job, Grandpa.
Nice job, Grandpa. After graduation, he went to work full time at Winona Heating & Ventilating, 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 startup fastener business, known as Fastenal, off the ground.
One 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 in?
For some reason, Grandpa jumped at the opportunity, even when they later raised 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 draw up his ownership shares of the company, and with that, he became fabulously wealthy.
Actually, he didn't see a dime until nearly 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 check at an office building in Minneapolis.
Someone pointed out that he had a hole in his shoes, he ducked into a shoe store in the same building and bought a new pair.
The new life had begun.
Actually, his new life wasn't really all that new. It still revolved 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 forever.
Oh, rumor has it that he's remained a loyal patron here at the Winona Athletic Club bar. Isn't that right, Terry?
Mike Gostomski? I never heard of him.
The big difference is that he's had the good fortune to be able to give back to the community he grew up in.
Over the years, that's included generous contributions to local churches, local schools.
Of course, Saint 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 five decades, playing an active role in guiding the company he helped 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.
Plus, he's the best grandpa in the whole world.
Let's put our hands together to thank one of the five people who founded Fastenal.
Made so many things possible for so many people.
Our grandpa.
Michael Gostomski. Michael Gostomski. Michael Gostomski.
I don't know how you follow that, but gonna ask Bob Kierlin to come to the podium to say a few words and make a presentation. Bob?
First I have to tell you how we brought Michael into the original four founders. Of course, we started in 1967. By the end of 1968, our sales per month were probably about $2,000. We were losing money, needed some additional cash. It was Van McConnon who suggested that Michael Gostomski might be a good member of our founding group. I said, "What does he bring to the company?" He said, "He's a roofer." I said, "What good is that going to be?" He says, "Because when Michael is on these flat roofs, he can hear everything going on in the offices below him." He knew everything that was going on in business here in Winona.
Even with that, we made him pay a 15% premium for his stock, because we thought we were so smart by that time. He did come in, and it really helped us. It turned the corner for us. By the end of 1969, we were breaking even. I have a little presentation for Michael. What it is showing the three original receipts that he got from Van McConnon for his stock. You have to appreciate that these sheets were in these packs of 50, that you would get 100 packs at Jones & Carter for about $9, and they had duplicate sheets with a carbon paper that was attached that only served each book. Van evidently had a great deal of respect for Michael because the numbers here are 16, 11, and 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. Before I read this, I also want to say something about Michael 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's 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. "Michael Gostomski, 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, Michael, 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 three small pieces of paper.
You get to say a few words.
I get to say a few words. Bob says I get to say a few words. I've never said a few words. I know that everybody's wanting that lunch pretty soon, 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. Anyhow, first of all, I'm glad that you're all here today to experience the beginning of the acting careers of my grandkids. That one that kept repeating, "Michael Gostomski, Michael Gostomski," he just liked to hear his own name because he's the second Michael Gostomski. 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 Mr. Dolan, our board of director, to Lee and
Joe
Joe and Bill. Also Dan Florness getting up there and giving a civil answer to some really tough questions where you probably would've seen a number of politicians just ducking the answer and heading for the door. It's been so much fun to be around all these people, I don't only mean them, I mean them all over. You heard the mention of our customer show in Nashville two weeks ago, Joette and I went down to Nashville for it. Just to be around the Fastenal people for three, four days is an awful lot of fun, and they're real people. 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. Anyhow, I'll now say thank you.
Thank you most especially, I guess, to Van McConnon 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. If I would've known how tough things were at the time, because I just heard BK tell me that, I would've negotiated a little harder when I got that stock and put that 15% on my side instead of on their side. Also the mentoring I have got from my fellow founders, Bob, Steve Slaggie, Jack Remick, Van himself, and their generosity. It really makes it fun to give of yourself and give of your resources to help others, I think that is one of the best things that came to me out of this company, just to be around those people. 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. It's been a lot of fun over these, my gosh, 47 years. Thank you very much. One other thing before I leave. I just had to tell everybody I'm not dying or anything. I had knee replacement surgery four 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. Ancius, Michael J. Dolan, Leland J. Hein, Rita J. Heise, Darren R. Jackson, Hugh L. Miller, Scott A. Satterlee, and Reyne K. Wisecup have received the required number of votes and are hereby elected directors of the company. The report of the inspector of the election also indicates that number one, 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.
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 an Exhibit C. That concludes that part. I have important things here, namely the prize winners. We have two prize winners. First, Ms. Patty Bond. Are you here? Yes, she's here. David or Dave Mample. Dave Mample. I guess 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, I recognize Mr. Kevin Fitzgerald.
My name is Kevin Fitzgerald. I am a shareholder of the company. I move that the meeting be adjourned.
Thank you. I recognize Ms. Christine Halverson.
Hi. My name's Christine Halverson. I'm a shareholder of the company. I second the motion.
Thank you. It has been moved and seconded that the meeting be adjourned. All those in favor say aye.
Aye.
anyone opposed?