2023 Cleveland Research Company Intercollegiate Stock Pitch Competition - Finalist

2023 CRC Intercollegiate Stock Pitch Competition
Oscar Arenas | Sydney Onest

I Investment Thesis
II Company Overview
III Industry Dynamics
IV Catalysts
V Valuation
VI Channel Research & Risks
VII Appendix
Table of Contents
2

Meet the Analysts
Oscar Arenas
jacqueoi@miamioh.edu
Class of 2025
Adventis FMC & FINRA SIE Certified
Sydney Onest
onestsm@miamioh.edu
Class of 2025
Adventis FMC & Bloomberg Certified
3

Source: Company Filings, Team Projections
Note: Figures in $MM USD
Investment Thesis
5
FY22
Financials
Key
Catalysts
Bull
Bear
Buy
Target Price Upside
Recommendation
Investment Thesis
$60 17%
Fastenal’s market dominance in the highly
fragmented industrial distribution market
enables scale-driven cost advantages that
drive bargaining power with suppliers. It
captures customers through its high-touch
business model and supply chain solutions
that other industrial distributors and online
players like Amazon Business don’t offer.
Wide Economic Moat
Projected EPS
Fastenal is a quality asset trading at a reasonable price, with room for further multiple expansion
Fastenal is in the early innings of innovating a historically steady industry which
will improve bull market operating margins by 200 bps to 22%. The Street currently
weighs a manufacturing recession and gross margin pressures but fails to account
for the potential high market penetration from reshoring tailwinds and operating
margin expansion from the shift to onsite locations and national accounts.
We believe that management’s current initiatives will result in improved pricing, mix
shift, productivity, and allow it to outgrow competitors in market share.
24.8%
22.5%
27.6% 27.6%
2020 2021 2022 2023
ROIC EVA Spread
$6,981
$3,216
$1,454
$1,087
$230
$1,253
$802
Revenue
Gross Profit
Operating Income
Net Income
Cash
Net PP&E
Total Debt
Reshoring and infrastructure tailwinds
Supply chain relief and bullwhip effect
Recession resilience
▪ TAM growth and extra market share capture
from reshoring and infrastructure spending
▪ Onsite signings and average sales growth
▪ Operating margin expansion
▪ Manufacturing sector remains strong
▪ Demand fades from cyclical downturn in
manufacturing end markets
▪ Lower onsite signings and sales growth
▪ Unfavorable mix eroding operating margin
▪ Loss of key suppliers
Base Case Projections
Analyst Consensus
Bear Case
Fastenal will beat consensus EPS over the
medium term as The Street becomes
increasingly negative. Recent EPS
downgrades reflect pessimism around the
macro slowdown and unfavorable mix but
overlook strength from operating leverage
and strong performance during downturns.
$1.30
$1.80
$2.30
$2.80
$3.30
$3.80
2020 2021 2022 2023 2024 2025 2026 2027

With >96% of FY22 sales being from
North America, Fastenal is able to
capitalize on the reshoring trend and
capture additional market share
Fastenal Overview FY22 Product Revenue Breakdown
Global Presence
Fastenal: Overview
Fastenal is an industrial goods distributor and pioneer in value-add digital solutions
7
Source: Bloomberg, Company Filings
Overview
Strategy
Integration
▪ Implemented in 2019
as successor to
FastStock
▪ Provides electronic
inventory
management
solutions
▪ Optimizes stocking
levels based on
usage data, patterns,
and trends
▪ Bins that contain high
volume consumables
▪ Planograms and
labeling provide
greater inventory
visibility
▪ Reduces freight
expenses through
careful inventory
planning
▪ Most widely used
industrial vending
platform with >100k
units
▪ Diverse lineup of
machines
▪ Dynamic reporting
and real-time data
▪ Helps reduce
consumption and
drive productivity
▪ Founded in 1967 in Winona, MN as a distributor
of industrial goods
▪ Offers array of supply chain and distribution
solutions with focus on proximity to customer
▪ Streamline shift to onsite locations
▪ Prioritization of national accounts
▪ Continue technological innovation of distribution
▪ Extensive fleet of trucks that allows for 90% of
product tonnage to be shipped using own trucks
Value-Add
▪ Competes on value proposition and proximity to
clients instead of cost, resulting in high retention
Locations
US
CA & MX
Other
$6.9B
34%
21%
8%
8%
7%
6%
5%
12%
Fasteners
Safety Supplies
Tools
Janitorial Supplies
Hydraulics
Material Handling
Cutting Tools
Other
$6.98B
Distribution centers provide over 4.9M sq. ft. of capacity globally
3,306 Locations
1,625 Onsite
1,683 Branches

Value-Add
Supply Chain In-Depth Analysis
Suppliers Customers
96% of Fastenal FY22 net sales were attributable to products
manufactured by other companies
Seeks to become an end-to-end supply chain partner instead
of a middleman by going the extra mile for customers
Made of commercial players ranging in sizes that are less
price sensitive due to Fastenal’s proximity and efficiency
Fastenal’s key differentiator among distributors is its complex and innovative capabilities
8
Source: Company Filings, Team Projections
Note: Labor productivity calculated as total revenue / total employees
Labor Productivity
Direct control over distribution and utilizes its
own capacity to provide LTL services through
Blue Lane Freight, lowering freight costs
Operates 9 facilities for in-house
manufacturing, serving as a differentiator and
creating sticky customer relationships
Shift toward onsite locations, branch closures, and
automation in warehouses has led to greater sales/employee
King of Efficiency
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
2019 2020 2021 2022
▪ Low concentration (<5% of FY22 sales)
▪ E-commerce channel, integrated
purchasing, warehouse automation,
and its proximity through onsite
locations are difficult for small players to
replicate
▪ Vending solutions cut consumption
42.6% of FY22 Sales 29.6% of FY22 Sales 10.9%
10.3%
6.6%
▪ Due to Fastenal’s size, suppliers offer
volume-based rebates and other sales
incentives unavailable to small players
▪ Suppliers give preferential treatment to
Fastenal through marketing support and
product training
▪ Allows it to cost-efficiently
promote its product catalog
▪ Only one supplier accounted for 5% of
inventory purchases in 2022
Fastenal uses a process called Fastenal Managed Inventory (FMI) that allows inventory to remain as lean as possible. Its industrial
vending solutions also allow for greater tracking and planning of inventory through RFID chips, IoT, and data analytics.
JIT
Inventory
▪ Fastenal retains ownership of inventory within onsite locations until
supplies are consumed, taking just-in time management to a new level
▪ Headwind to gross margins during deflation, tailwind in inflationary periods
▪ 11 distribution centers operate automated
storage and retrieval systems
▪ Make up 95% of picking activity
▪ Lowers labor costs, improving margins
145.0
150.0
155.0
160.0
165.0
170.0
175.0
180.0
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2015 2016 2017 2018 2019 2020 2021 2022
Working Capital
Days Inventory

Since 2008 Apex and FAST worked closely to
bring industrial vending solutions to clients.
Apex designed and created the software and
equipment while FAST brought industry
expertise and a leading market presence. On
March 20, 2020 FAST acquired assets relating
to the perpetual and unfettered use of patents,
designs, software and licenses, as well as direct
access to their supply chain for $125M.
Commentary
Management Team & Highlighted Transaction
Management Team
Fastenal is led by a dedicated management team with long tenures and vast experience
9
Source: Company Filings
Daniel Florness
CEO
▪ Began career with Fastenal in 1996
▪ Previously CFO from 2002 – 2015
▪ Spearheaded shift from branch to
onsite locations
▪ Involved in Apex Industrial
Technologies (2020) and Fasteners
(2015) deals
▪ BS from University of Wisconsin-
River Falls
Holden Lewis
CFO
▪ Began career in equity research with
industrials coverage from 1994-2016
▪ Joined Fastenal in 2016
▪ EVP and CFO since 2022
▪ Manages and executes company
strategy relating to profitability,
efficiency, and assets
▪ Involved in Manufacturers Supply
Company (2017) deal
Bill Drazkowski
Executive VP
Sales
▪ Became district manager in 2007
▪ From 2016 – 2019 was EVP of
national account sales and promoted
to EVP of sales in October 2019
▪ Responsibilities include sales and
operational oversight of Fastenal’s
western US business
▪ BBA from Winona State University
1987
Historical Events
IPO – raised $5M
1992
200 locations and
introduction of onsite
1997
644 stores with $398M
in revenue
1996
484 stores with $287M
in revenue
1993
Begins new product
lines to diversify
2013
Stores peak at 2,687
locations
2014
Branch closures and
focus on onsite growth
Current Strategy and Guidance
Digital channel growing to >80% of sales
Expansion of onsite locations
Focus on national accounts
Diversifying non-fastener revenue
Trusted end-to-end supply chain partner
▪ Growth strategy used to be focused on opening
branches; now focused on expansion of onsite
▪ Onsite locations provide stickier and
contractually-bound revenues
▪ National accounts have longer terms and better
labor leverage but more negotiating power
$125M

1,300
1,350
1,400
1,450
1,500
1,550
1,600
1,650
1,700
1,750
2022 2023 2024 2025 2026 2027
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2022 2023 2024 2025 2026 2027
Analysis
Analysis
Revenue Build
Financial Analysis
Historical and projected financials show strong growth and diversification initiatives
10
Source: Bloomberg, Company Filings, Team Projections
Note: Underinvested sectors include nonresidential construction, oil & gas, and mining
Company Statistics
Market Cap ($M) $30,735
Shares Out. (M) 571
Net Debt/Total Capital 1.8%
Dividend Yield 2.6%
Enterprise Value ($M) 31,307
52 Week High $60.72
52 Week Low $43.73
FY22 Financials ($M)
Revenue $6,980
Gross Profit $3,215
Gross Margin 46.1%
Operating Income $1,454
Operating Margin 20.8%
EBITDA $1,742
EBITDA Margin 24.9%
Net Income $1,086
EPS $1.89
Capital Structure
Fastenal historically has relied
on using little or no debt, which
allows it to maintain its
financial flexibility through the
business cycle. It currently
has a 0.16 debt/equity ratio.
Branch/Onsite Projections
Analyst Consensus
Average Sales Per Branch ($M)
Onsite location
growth higher than
consensus due to
reshoring prospects
Average Sales Per Onsite ($M)
Branch locations lower
than consensus due to
mix shift
Projected Revenue
CAGR: 8.4% CAGR: 11.8%
Branch Revenue
Onsite Revenue
Other Revenue
Consensus
Expenses Build
FY Beg. Gross Margin Mix Price/Cost Freight End. Gross Margin YOY bps
2022 -0.30% -0.20% 0.28% 46.1% -22
2023 46.1% -0.75% -0.20% -0.20% 44.9% -115
2024 44.9% -0.50% 0.0% 0.0% 44.4% -50
2025 44.4% -0.50% 0.0% 0.0% 43.9% -50
2026 43.9% -0.30% 0.0% 0.0% 43.6% -30
2027 43.6% -0.30% 0.0% 0.0% 43.3% -30
43.0%
43.5%
44.0%
44.5%
45.0%
45.5%
46.0%
46.5%
2020 2021 2022 2023 2024 2025 2026 2027
Gross Margin Projections
Gross Margin Consensus
Gross margin forecasted to decline as
Fastenal diversifies into lower margin
products and services
Gross margin erosion slowing over time
as onsite signings slow down in 2026 and
2027
Branch %
Onsite %
Other %
Operating Margin
Consensus
As mix shifts to onsite,
operating margin
increases
Capital Allocation
▪ Onsite location growth higher in earlier
years from national accounts and pent up
demand from underinvested sectors
▪ Average sales/branch increasing due to
branch closures and steady revenue
▪ Better labor leverage and lower
administrative costs associated with
onsite locations and national accounts
▪ ~200 bps operating margin increase from
2021 to 2027
Began paying cash dividends
in 1991 and has consistently
increased dividends since.
Share buybacks are less
frequent but the most
significant buyback activity
was in 2015 when Fastenal’s
stock was viewed as under-
valued and took on debt to
repurchase 7.1M shares
for $239M.
Margin Profile
Fastenal’s margin profile has
changed significantly since
its diversification into lower
margin products. In 1992,
the year before Fastenal
began diversifying beyond
threaded fasteners, its
gross margin was 53.8%
from 2014 onward, gross
margin began to steadily
decline, bottoming out at
45.5% in 2020
$2.4
$2.8
$3.0
$3.3 $3.5 $3.6
2022 2023 2024 2025 2026 2027
$1.6
$1.9
$2.2
$2.5 $2.6 $2.8
2022 2023 2024 2025 2026 2027
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2020 2021 2022 2023 2024 2025 2026 2027
20.0%
20.5%
21.0%
21.5%
22.0%
22.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2020 2021 2022 2023 2024 2025 2026 2027
CAGR: 12.1%

$1.30
$1.80
$2.30
$2.80
$3.30
$3.80
2020 2021 2022 2023 2024 2025 2026 2027
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2023 2024 2025 2026 2027
Projected EBITDA
Financial Analysis
Fastenal boasts exemplary capital allocation and growth among distribution peers
11
Source: Bloomberg, Team Projections
EPS
EBITDA ($M)
CAGR: 11.8%
EBITDA ($M)
Consensus ($M)
Analyst Consensus
Bear Case
Capital Allocation ($ M)
Projected FCF
$3.61
$2.82
$2.45
Bearish EPS projections assume an
unfavorable mix with higher gross
margins but higher operating expenses
FCF ($M)
Consensus ($M)
FCF driven by strong growth, profitability, and
increasing inventory efficiency (low Days
Inventory)
CAGR: 13.6%
0%
20%
40%
60%
80%
100%
120%
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2014 2015 2016 2017 2018 2019 2020 2021 2022
Dividends
Share Repurchases
% CFO
Operations generate high
degree of excess cash
flow, organic growth
strategy minimizes
acquisitions
Provides floor to short-
term weakness in equity
markets
Capital Expenditures
Daily Sales Growth
1%
2%
3%
4%
5%
$0
$50
$100
$150
$200
$250
$300
2015 2016 2017 2018 2019 2020 2021 2022
Capex ($ M)
Capex/Revenue
Grainger Capex/Sales
MSC Capex/Sales
Capex/Revenue significantly
higher than peers
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
2022
2021
2020
2019
2018
2017
2016
2015
Fastenal
MSC Industrial
Grainger
Outgrows peers during downturns (2019 and 2020)
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2020 2021 2022 2023 2024 2025 2026 2027
$1,421
$1,500
$1,743
$1,959
$2,272
$2,580
$2,854
$3,096
2020 2021 2022 2023 2024 2025 2026 2027

Fastenal ROIC Among Best For Distributors
High ROIC indicative of further shareholder value creation
12
Note: NOPAT defined as tax-effected EBIT, Invested Capital defined as shareholders’ equity plus net det
ROIC Decomposition Across Distributors
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x 5.0x
NOPAT
Margin
IC Multiplier
NOPAT Margin X IC Multiplier = ROIC
NOPAT Margin: Tax-effected EBIT/Revenue
IC Multiplier: Revenue from invested capital base
ROIC improves through increasing either factor;
companies grow ROIC by improving margins or through
generating more revenue from existing capital base
ROIC > WACC: several outlets for value creation
• Increasing Invested Capital base
• Improving IC multiplier
• Improving NOPAT margin
WACC > ROIC: increasing invested capital is value
destructive unless underlying components improve
ROIC Curve
10% 20% 30%
10%
20%
30%
2020
2021
2022
2020
2021
2022
2021
2020
2022
2020
2021
2022
2022
2021
2020
2020
2022
2021
Rising capital
efficiency
Rising margins
ROIC
Distributors on a ROIC curve of
>20% typically trade at much
higher P/E ratios than peers
Boasts highest in-class margins

3 Year Annotated Share Price Performance and Analyst Ratings
1 2 3
13
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
$55.00
$60.00
$65.00
$70.00
2020 2021 2022 2023
Q1 – ’20 EPS of
$0.35 beat
consensus by 2%
Q2 – ’20 EPS of
$0.42 beat
consensus by 15%
Q3 – ’20 EPS of
$0.38 beat
consensus by 2%
Q4 – ’20 EPS of
$0.34 beat
consensus by 3%
1
2
Reopened doors of 900
branches and shifted sales mix
to safety products (PPE, etc.)
Concerns about spot prices for
inputs due to inflation weighed
on the industrials sector
Q1 – ’21 EPS of
$0.37, beat
consensus by 1%
Q2 – ’21 EPS of
$0.42 beat
consensus by 2%
Q3 – ’21 EPS of
$0.42 beat
consensus by 1%
Q4 – ’21 EPS of
$0.40 beat
consensus by 7%
Q1 – ’22 EPS of
$0.47 beat
consensus by 5%
Q2 – ’22 EPS of
$0.50 beat
consensus by
0.2%
Q3 – ’22 EPS of
$0.50 beat
consensus by 4%
Q4 – ’22 EPS of
$0.43 beat
consensus by 3%
3
Ongoing branch closures,
larger accounts (buyer power),
and negative price/cost mix
Analyst Ratings Earnings Call Analyst Questions
0%
50%
100%
$40
$45
$50
$55
$60
Strong Buy Hold
Sell Strong Sell
Target Price
Projected EPS
$0.50
$0.52
$0.50
$0.44
$0.51
$0.54 $0.54
$0.48
1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24
FAST EPS (Last 5 Years) Count Average Surprise Average Price Performance (1 Day)
Beats 17 4.3% 0.0%
Misses 4 -0.7% -1.1%
“Is the Fastenal cost
structure more or less
variable today”
Operating leverage from
onsite location signings
“Have you seen any
softening in
manufacturing”
Gross margin pressures
in 2023 from current mix
and price/cost

Industry Operators
Industrial Distribution Overview
2 Types
Service and Selection Turnover and Velocity
A glimpse at the highly fragmented and competitive industry
15
Source: Bloomberg, Baird, BCG, IBISWorld, IndustrialDistribution.com
Note: Market share estimated from FY22 revenue for the most relevant reported operating segments
Overview
▪ Distributors move industrial goods through the supply chain to key end markets
including manufacturing, construction, and retail customers
▪ Fastenal’s management estimates that the TAM of the space is $140B
▪ Industry expected to grow at a 5.12% CAGR to 2027
▪ Pandemic and geopolitical tensions spurred interest in more transparent supply
chains and need for industry services
Trends & Success Factors
▪ Carry wide array of inventory with low turnover
▪ Derive revenue and supplies from a wider base meaning more
negotiating power and less customer concentration
▪ Products tend to be specialized and hard to find like plumbing and
auto parts, resulting in gross margins of 20% or more
Key
Trends
Success
Factors
Omnichannel connectivity and IoT technology
to track, predict, and report inventory
Connectivity
AI and machine learning tools to automate
back office roles and overhead functions
Automation
High demand and competition for analytics
and technologies that illuminate supply chains
Visibility
Vendor consolidation toward large national
distributors weighing on small players
Consolidation
Effective inventory management leads to
lower inventory costs and thus better pricing
Efficiency
Large players in distribution have greater
purchasing power and economies of scale
Scale
Diversification of products and services and
expanding channel coverage creates value
Expansion
Differentiation and building trust as a end-to-
end supply chain partner creates strong ties
Client Focus
▪ Have valuable or perishable inventory resulting in high turnover
▪ Tend to have smaller and less diverse supplier and customer base,
limiting pricing flexibility and increasing customer concentration
▪ Compete on efficiency, quality, and low delivery costs instead of
availability and convenience, resulting in gross margins of <20%
Industry Rivalry
4%
4% 2% 3%
0%
87%
WW Grainger
Fastenal
Ace Hardware
MSC Industrial
DSGR
Other
$140B
Price sensitivity
greater for simple
products than
specialized ones
Low barriers to
entry though
unprofitable for
smaller players
High supplier
power due to
high region
concentration
High due to low
product and
service
differentiation
Buyers Entrants Suppliers Substitutes
Operating
Margin
21%
15%
13%
9%
7%
4%
FAST
GWW
MSM
AIT
WCC
DSGR

Macroeconomic and Market Overview
16
Source: Bloomberg, FRED, IBISWorld, ISM, P&M Corporate Finance
Note: Fastenal proxy PPI calculated as weighted Total Manufacturing PPI (65%) and Threaded Fastener PPI (35%)
Commentary Key Industry Revenue Drivers
Industrial Production Index PMI Producer Price Index
70.0
75.0
80.0
85.0
90.0
95.0
100.0
105.0
110.0
1/19
5/19
9/19
1/20
5/20
9/20
1/21
5/21
9/21
1/22
5/22
9/22
1/23 30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
1/19
5/19
9/19
1/20
5/20
9/20
1/21
5/21
9/21
1/22
5/22
9/22
1/23
Value above 50 indicates expansion
80
100
120
140
160
180
200
220
240
260
280
1/19
5/19
9/19
1/20
5/20
9/20
1/21
5/21
9/21
1/22
5/22
9/22
1/23
Despite slowing manufacturing indicators, a recent survey
by PwC found that 70% of CEOs are confident in continued
growth due to secular growth trends from reshoring and
legislation like the IIJA and IRA
Even with rising interest rates and supply chain disruptions,
nonresidential construction has pent up demand from
underinvestment during the pandemic, as evidenced by the
Architecture Billings Index in expansion for the last 15 months
-10.00%
-5.00%
0.00%
5.00%
10.00%
2015 2016 2017 2018 2019 2020 2021 2022
Revenue IPI Construction
Inflation and Pricing
1.43%
-7.7%
4.4%
Commodity markets were shaped by the dollar in 2022 and
will likely be shaped by underinvestment in 2023. To
prevent shortages, capex will have to go into oil & gas,
mining, and agriculture – all key Fastenal end markets
Deflation in steel and transportation costs may lead to lower fastener
pricing in 2023 and erode gross margins. We don’t believe this is a
headwind for Fastenal if utilization remains strong as its business
model isn’t built on pricing, but rather its value proposition to
customers. Its national accounts program may also impact its
pricing power in order to win larger national contracts. This will be
offset by a gain in market share and improved operating
margins because of the lower administrative costs associated with its
onsite services that national accounts prefer.
PMCF’s index of public distribution companies’ mean
EV/EBITDA fell in 4Q22 (9.4x) relative to 4Q21 (14.0x) due to
concerns of rising interest rates, inflation, and geopolitical
factors. Currently lower than the S&P500 average of 12.5x
Manufacturing PPI
Fastenal Proxy PPI
Fastener/Bolts PPI
During high overall pessimism, there’s conflicting indicators and great potential

Market TAM 2023 TAM 2024 TAM 2025 TAM 2026 TAM 2027
Industrial Distribution 140.0 147.1 154.6 162.5 170.8
Growth % 5.1% 5.1% 5.1% 5.1%
Fastenal % Penetration 4.0% 5.0% 6.0% 7.0% 8.0%
Revenue $5.6 $7.4 $9.3 $11.4 $13.7
Thesis
Reshoring Tailwinds
Fastenal’s onsite model is tailored to manufacturers that are more likely to reshore
18
Source: Baird, Bloomberg, Company Filings, Reshoring Initiative, Team Projections, Thomas’ State of North American Manufacturing Report
Reshoring Fastenal National Accounts Program
Legislation
Where Infrastructure Dollars Are Going (in $B)
▪ Rising costs in China and
other countries, export
restrictions, and legislation
are incentivizing the shift
▪ 83% of North American
manufacturers are likely or
extremely like to reshore
▪ Can drive as much
as $443B in US
economic value
▪ Helps mitigate IP & ESG risk
579,811
manufacturing
businesses in the
US
12,000
potential
clients for
onsite
Fastenal management estimates
for customer locations with
potential to implement the onsite
model
Using our model’s average sales per
location of $1.8M per onsite location in
2023, this represents a $21.6B opportunity
for Fastenal since new sites need
significant MRO and OEM parts to begin
operations
$22B
▪ $1T Infrastructure Investment & Jobs Act signed in late 2021 with a
spending cycle likely beginning in early 2023
▪ Executive Order 14017 which states that components used to
manufacture products that are mined, produced, or assembled in the US
must be >55% of the total cost of all components
▪ Manufacturing production tax credits from the Inflation Reduction Act
$110
$66
$39
$25
$17
$27
Roads & Bridges
Passenger & Freight Rail
Public Transit
Airports
Ports & Waterways
Other
Transportation
Infrastructure
$65
$65
$55
$50
$21
$8
Power
Broadband
Water
Climate
Environmental
Other
51.0%
52.0%
53.0%
54.0%
55.0%
56.0%
57.0%
58.0%
59.0%
0
200
400
600
800
1000
1200
1400
1600
1800
2019 2020 2021 2022
Onsite Locations
National Accounts (as % of sales)
58%
42%
40%
60%
FY12
Sales
Top Down Analysis (in $B)
FY22
Sales
National
National
Non-
National
Non-
National
▪ Reshoring will drive Fastenal’s TAM growth
▪ With prioritization of national accounts, it will
likely outcompete peers in market share, given
national accounts’ higher probability of
reshoring
▪ Analysts assume growth in market share due
to reshoring will be distributed evenly
3
1
2
1 Management estimates for addressable market size
3
2 Taken from Industrial Distribution CAGR of 5.12%
Assumed 100 bps of annual growth from reshoring

Bullwhip
Effect
Supply Chain Relief and Bullwhip Effect
OEM and MRO customers need support during supply chain turmoil and related effects
19
Source: Bloomberg
Strong Need for Inventory Management Manufacturing Inventory/Sales Ratio
What The Market Isn’t Seeing
Demand whip
Overestimates
orders and forecasts
Overestimates
demand
Overproduces
Bullwhip Effect Illustration
▪ Supply chain phenomenon in which small
demand changes from end markets are
magnified by upstream manufacturers and
suppliers that boost production beyond a level
supported by those end markets
Manufacturers
Customers
Impacts
▪ Increased storage costs
▪ Increased labor costs
▪ Deflationary due to price cuts
Government stimulus during the pandemic and
underinvestment in nonresidential construction, oil & gas,
and mining sectors led to demand shocks that are
outpacing manufacturing and general production capacity
1.40
1.50
1.60
1.70
1.80
1.90
▪ As reshoring and infrastructure spending tailwinds continue,
OEM and MRO customers are going to want to prevent a
repeat of 2020’s bullwhip effect, creating more onsite signings
▪ Analysts focus on IPI and PMI but overlook inventory/sales or
bullwhip effect indicators in reports
▪ Supply chain visibility through Fastenal Managed Inventory
(FMI), IoT technology, data analytics, and fast lead times
all help prevent the bullwhip effect and cater to client’s working
capital needs during a difficult environment.
Supply chain disruptions have spurred technology
investments in areas of inventory and supply chain
visibility, which Fastenal’s FMI technologies, FAST360,
and lean solutions all provide
The distribution landscape has shifted toward a “what can
you do for me?” mentality among customers. Fastenal’s
integrated capabilities allows it to provide real time cost
savings and build strong relationships with customers.
By embedding its presence within a customer site,
Fastenal has a direct window into conditions and
inventory replenishment needs, and mitigates excess
consumption through its industrial vending solutions
Metric Current YOY M/M
Machinery Inventory/Sales 1.7 -19.3% -26.0%
Component Inventory/Sales 2.3 25.1% 31.6%
Fabricated Metals Inventory/Sales 1.7 -1.2% -2.3%
Component Inventory/Sales ratio still rapidly
increasing month over month – indicating future
demand for FAST products
Fastenal’s position in the supply chain allows it to curtail the bullwhip effect
Retailer Distributor

Recession Resilience
Fastenal’s ability to adapt to many different macroeconomic environments will boost sentiment
20
Source: Alta Fox Capital, Company Filings
Fastenal Relative Performance
Incoming Recession Makings of a Multibagger
▪ An analysis of best performing stocks (>350% TSR) in the
past 8 years found that EBITDA growth and multiple
expansion were the greatest contributors to TSR
59.82%
44.78%
1.63%
33.65%
65.71%
EBITDA Growth
Mutliple Expansion
Dividends
Median Average
Total Shareholder Return Drivers
91%
Of outperforming companies had moderate competitive
advantages relative to peers
27%
Of outperforming companies launched transformative new
products or services like the FAST Solutions platform
12%
Of outperforming companies realized multiple expansion as
a result of mitigating a crisis
▪ Consensus for the probability of a recession in 2023 is 58%
▪ Outperformed the S&P500 during COVID-19 as a result of its
Customer Fulfillment Centers having less customer-facing
presence (low labor) and shift to sale of safety equipment
▪ Inelastic need for MRO parts also helps offset demand slumps
▪ As geopolitical tensions rise and clients prepare for the
incoming slowdown, onsite signings may increase
▪ During both the manufacturing recession in 2019 and
the 2020 recession onsite locations grew more YOY
than in 2021 (25% and 14%, respectively)
▪ Posted better sales growth than top competitor in 2019 and
2020 (5.9% and 7.4%, respectively) vs Grainger’s (2.7% and
2.4%, respectively). Operating margin also expanded 40 bps
in 2020 vs Grainger’s 235 bps contraction.
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
FASTENAL S&P 500 PR
Large economic moat and competitive advantages
FCF increase during downturns due to change in NWC
Increase in onsite signings = recurring revenues
Operating margin expansion = higher ROIC
Increase in investor sentiment
Total Return (%) 2020 - 2021 2021 - 2022 2022 - 2023
FAST 36.6% 34.0% -24.0%
S&P 500 18.4% 28.7% -18.3%
MSCI USA Industrials 11.1% 21.1% -5.5%
Total Return (%) Recession 2008 - 2009 2019 - 2020 2020 - 2021
FAST -12.1% 45.0% 36.6%
S&P 500 -37.0% 31.5% 18.4%
MSCI USA Industrials -41.3% 29.3% 11.1%

V. Valuation & Key Assumptions

Value
Drivers
Discounted Cash Flow Analysis
22
Base Case Value Driving Assumptions
Value
Detractors
▪ 15.9x EBITDA multiple one turn below its 10-year median of 16.9x
▪ Sales growth erosion in later years due to potential for generics entering the market
▪ Higher Capex/Revenue than peers
Key Assumptions Projections
Sensitivity Analysis
▪ High sales growth from onsite signings due to reshoring and onshoring prospects
▪ Operating margin expansion from favorable sales mix (more onsite signings and national accounts)
▪ Improving inventory efficiency and lower change in NWC due to higher Days Payable during downturns
▪ Assumed a 15.9x EV/EBITDA
exit multiple – 1 turn below its
10-year median of 16.9x
▪ Assumed a 3.5% PGR based
on the maturity of the industrial
distribution industry and the
current rate of inflation
▪ WACC of 8.32%
Unlevered FCF
Discounted Cash Flow Analysis 2023 2024 2025 2026 2027
Revenue $8,267 $9,466 $10,651 $11,640 $12,523
% Growth 14.5% 12.5% 9.3% 7.6%
Less: COGS 4554 5261 5973 6563 7098
Gross Profit $3,713 $4,205 $4,678 $5,077 $5,425
% Margin 44.9% 44.4% 43.9% 43.6% 43.3%
Less: Operating Expenses 2002 2217 2388 2540 2670
Operating Income $1,711 $1,988 $2,290 $2,538 $2,755
% Margin 20.7% 21.0% 21.5% 21.8% 22.0%
Less: Taxes at 25% 428 497 572 634 689
NOPAT $1,283 $1,491 $1,717 $1,903 $2,066
Plus: Depreciation & Amortization 248 284 290 317 341
Less: Change in NWC 192 372 297 319 216
Less: Capital Expenditures 211 241 272 297 319
Unlevered Free Cash Flow $1,128 $1,162 $1,439 $1,604 $1,872
Years 1.0 2.0 3.0 4.0 5.0
PV of Unlevered Free Cash Flow 1,042 990 1,132 1,165 1,255
PV of Projection Period $5,584
Growth Rate 3.5%
Terminal Value $40,194
PV of Terminal Value $26,953
Enterprise Value $32,538
Implied Share Price $56.00
Perpetuity Growth Rate
2027 EBITDA $3,096
EBITDA Exit Multiple 15.9x
EBITDA Exit Multiple
$56.00 $66.60
$60.00
65% 35%
$56.00 3.0% 3.3% 3.5% 3.8% 4.0%
7.8% $57.02 $59.77 $62.84 $66.29 $70.20
8.1% $54.05 $56.51 $59.24 $62.28 $65.70
8.3% $51.35 $53.56 $56.00 $58.70 $61.72
8.6% $48.91 $50.90 $53.09 $55.50 $58.18
8.8% $46.68 $48.48 $50.45 $52.62 $55.01
WACC
$66.60 15.3x 15.6x 15.9x 16.2x 16.5x
7.8% $65.87 $66.98 $68.10 $69.22 $70.33
8.1% $65.14 $66.24 $67.35 $68.45 $69.55
8.3% $64.42 $65.51 $66.60 $67.69 $68.78
8.6% $63.71 $64.79 $65.87 $66.95 $68.03
8.8% $63.02 $64.08 $65.15 $66.21 $67.28
WACC
$1,128 $1,162
$1,439
$1,604
$1,872
2023 2024 2025 2026 2027

Value
Drivers
Discounted Cash Flow Analysis – Bear Case
23
Bear Case Value Driving Assumptions
Value
Detractors
▪ Higher gross margins due to higher branch and non-national accounts sales mix
▪ Assumed same unlevered capital structure
▪ Assumed fairly stable operating margins with a 50 bps increase in later periods as onsite locations slowly grow
▪ Lower operating margins than base case due to sales mix (non-national accounts and branches)
▪ Revenue growth erosion from macro headwinds and sales team being unable to expand branch and onsite average sales
▪ Higher payment terms of customers (Days Receivable) leading to higher NWC. Assumed higher Capex.
Projections
Key Assumptions
▪ Assumed a 14.9x EV/EBITDA
exit multiple – 2 turns below its
10-year median of 16.9x
▪ Assumed a 3.5% PGR based
on the maturity of the industrial
distribution industry and the
current rate of inflation
▪ WACC of 8.32%
Unlevered FCF
$39.00 $43.80
$40.70
65% 35%
Sensitivity Analysis
Discounted Cash Flow Analysis 2023 2024 2025 2026 2027
Revenue $7,564 $8,091 $8,513 $8,855 $9,135
% Growth 7.0% 5.2% 4.0% 3.2%
Less: COGS 4137 4442 4682 4871 5024
Gross Profit $3,427 $3,649 $3,831 $3,985 $4,111
% Margin 45.3% 45.1% 45.0% 45.0% 45.0%
Less: Operating Expenses 1907 2026 2077 2161 2229
Operating Income $1,520 $1,623 $1,754 $1,824 $1,882
% Margin 20.1% 20.1% 20.6% 20.6% 20.6%
Less: Taxes at 25% 380 406 438 456 470
NOPAT $1,140 $1,217 $1,315 $1,368 $1,411
Less: Change in NWC 250 166 71 75 94
Less: Capital Expenditures 227 243 255 266 274
Unlevered Free Cash Flow $869 $1,039 $1,208 $1,257 $1,280
Years 1.0 2.0 3.0 4.0 5.0
PV of Unlevered Free Cash Flow 802 886 951 913 858
PV of Projection Period $4,410
Growth Rate 3.5%
2027 EBITDA $2,118
$39.01 3.0% 3.3% 3.5% 3.8% 4.0%
7.8% $39.71 $41.60 $43.70 $46.06 $48.72
8.1% $37.68 $39.36 $41.22 $43.31 $45.64
8.3% $35.83 $37.34 $39.01 $40.85 $42.92
8.6% $34.15 $35.52 $37.01 $38.66 $40.49
8.8% $32.62 $33.85 $35.20 $36.68 $38.32
WACC
$43.79 14.3x 14.6x 14.9x 15.2x 15.5x
7.8% $43.24 $44.01 $44.77 $45.54 $46.30
8.1% $42.77 $43.52 $44.28 $45.03 $45.79
8.3% $42.30 $43.05 $43.79 $44.54 $45.29
8.6% $41.84 $42.58 $43.32 $44.05 $44.79
8.8% $41.38 $42.11 $42.84 $43.57 $44.30
WACC
EBITDAExit Multiple
$869
$1,039
$1,208
$1,257 $1,280
2023 2024 2025 2026 2027

Comparable Companies Analysis
Premium asset, with room for further multiple expansion
24
P/E Multiples
Forward EV/EBITDA Multiples
3.5X
5.5X
7.5X
9.5X
11.5X
13.5X
15.5X
17.5X
19.5X
21.5X
3/30/2022 6/30/2022 9/30/2022 12/31/2022 3/31/2023
FAST
GWW
MSM
DSGR
WCC
▪ FAST’s differentiated product offerings are scalable
and have high growth potential, mitigating risk of
new entrants
▪ Risk pushes down peers’ multiples due to
decreased competitive advantages that eat into
probable growth rate and margins
▪ Doesn’t compete on cost – competes on value-add
▪ While it is great to buy at a low multiple, many top
performers already traded at healthy multiples that
expanded further
FAST
Peers
▪ The market rewards high ROICs as Fastenal and
WW Grainger both trade at a premium to other
distributors and have the highest operating margins
▪ Fastenal has industry leading exposure to
innovative solutions and product offerings, allowing
it to trade a premium
Share % of Market Enterprise Price
Company Name Ticker Price 52-Wk. High Cap Value Earnings LTM 2023E LTM 2023E LTM 2023E LTM EBITDA NTM EBITDA LTM Revenue NTM Revenue
Wesco International WCC 142.54 81.5% 7,593 12,808 8.6x 1,689 1,867 21,420 22,925 7.9% 8.1% 7.6x 6.9x 0.6x 0.6x
Grainger GWW 656.68 92.6% 33,929 35,681 22.2x 2,398 2,652 15,228 16,495 15.7% 16.1% 14.9x 13.5x 2.3x 2.2x
MSC Industrial Direct MSM 83.64 92.9% 4,640 5,507 12.8x 585 571 3,900 3,879 15.0% 14.7% 9.4x 9.6x 1.4x 1.4x
Distribution Solutions Group DSGR 42.88 76.6% 863 1,270 20.0x 123 147 1,115 1,401 11.0% 10.5% 10.4x 8.6x 1.1x 0.9x
Applied Industrial Technologies AIT 135.54 90.7% 5,380 5,716 17.3x 478 503 4,165 4,347 11.5% 11.6% 12.0x 11.4x 1.4x 1.3x
Fastenal 30,838 28.0x 1631 1,678 6981 7355 23.4% 22.8% 18.9x 18.4x 4.4x 4.2x
EBITDA Revenue Enterprise Value
EBITDA Margin

Sales
Local businesses transitioning into national accounts
Nonresidential construction
Managers
Channel Research
Select Insights from Customer Fulfillment Centers (CFCs)
26
Source: Proprietary surveys of several Fastenal CFCs across Ohio, Indiana, and Illinois
Jack Bishop
District Manager
Cincinnati, OH
▪ DM for four years and experience in
running an onsite from 2015-2019
▪ Sees Fastenal as more of a strategic
business partner than a distributor
▪ Current industry is a "what have you
done for me lately" business
▪ Sees uptick in nonresidential
construction for the summer
▪ Became general manager in 2020
▪ Very prideful of Fastenal’s
technology integration – though he
sees technological developments
outpacing implementation
▪ Believes using data-driven findings
can convert customers that are more
resistant to tech integration
Brandon Daggy
General Manager
Bloomington, IN
▪ DM since 2021 with experience in
account management
▪ Although looms of an incoming
recession, sees strong outlook in
construction and heavy machinery
manufacturing
David Vyskocil
General Manager
Lombard, IL
Channel Insights
Trends
Growth Relative to Last Year Outlook
Current staffing situation and labor market
Onsite signings and sales
Fasteners and specialty items for national accounts
Key Insights and Outlook
▪ Customers become excited about offloading purchasing or inventory
management burdens to Fastenal when they look at Fastenal's services
through a total cost lens rather than a piece price lens.
▪ Expects inventory to be inflated in later 2023 and Fastenal's strong
inventory management allows customers to receive lower prices sooner than
competitors, allowing for more sticky revenue
▪ Biggest barrier to technology is simply people's fear of change, however when
Fastenal provides data and efficiencies that they could drive back into their
business, it's hard for customers to turn away from Fastenal.
▪ Labor situation has improved slightly – labor market is still very tight
▪ Anticipates increased usage of OEM products vs MRO products
▪ Fasteners and specialty items for national accounts have been big drivers
▪ Seeing a lot of success in safety products (PPE) – more competitive space
▪ Not as connected to nonresidential construction but believes it will go up and
will be big for onsite signings
▪ Difficult implementing technological innovations in an “old economy” industry.
Some customers are less receptive to the change though seeing the tangible
impact and cost savings from solutions may make them change their view.
▪ Midwest region (OH, KY, IN, MI) is expecting 13% - 18% YOY sales growth for
the next quarter (next 3 months)
▪ Sees a lot investments in technological capabilities with 150 IT jobs added
▪ Seeing an increase in national accounts throughout the Midwest (~25%)
▪ Local clients Baxter and Cook Group recently became national accounts
▪ Seeing strength in nonresidential construction and heavy manufacturing
▪ Sales breakdown for customers in his region are: Government (30%), Local
Businesses (35%), Construction (10%), and National Accounts (25%)
Heavy manufacturing
Safety product sales
OEM products demand Inventory
MNPI MNPI

SWOT
Risks & Mitigating Factors
Key considerations for valuation
27
Source: IBISWorld
Strengths Weaknesses Opportunities Threats
Risks Mitigating Factors
▪ Strong brand recognition
▪ Long history of organic
growth
▪ Exemplary capital
allocation
▪ Large distribution network
▪ Focus on innovation
▪ Reliance on Asian
suppliers
▪ Smaller amount of
product offerings relative
to competitors
▪ Foreign exchange
currency devaluation risk
▪ Manufacturing slowdown
▪ Competition from online
retailers
▪ Technological integration
not fulfilled
▪ Generic vending solutions
entering market
▪ Broadening product
offerings
▪ Further expansion in
technology and new sales
channels
▪ ESG initiatives to capture
EV and renewable energy
customers
E-commerce and players like Amazon Business can
disrupt the space and take market share from Fastenal
Gross margin erosion from mix shift to non-fastener
sales, national accounts, and onsite locations
Suppliers concentrated in Asia and changes in trade
policies due to geopolitical pressures may weigh on them
Industry consolidation in the industrial distribution space
may challenge Fastenal’s product selection and pricing
ESG risk = human capital risk due to a tight labor market
and emission regulations on its fleet of trucks
High touch business model insulates it from E-commerce threats
and Amazon Business is tailored to small players vs national accts
Headwinds to gross margin offset by the lower operating leverage
associated with the mix shift and operating margin expansion
Sourcing capabilities through its wholly-owned Asian subsidiary –
FASTCO Trading and finding manufacturers in North America
Automation of key processes is leading to lower labor costs.
Fastenal may also evolve or invest in its fleet to reduce emissions.
Competes on value proposition and proximity to customers instead
of prices. Its business model allows it to create sticky relationships.

Thesis
Final Thoughts
Key considerations
28
Projected EPS Key Highlights
$40.00
$45.00
$50.00
$55.00
$60.00
$65.00
2022 2023
Team Projections
Analyst Consensus
$60 Target Price
Bullwhip
effect and
supply chain
relief
Recession resilience
and investor
sentiment
Reshoring
and
infrastructure
tailwinds
$1.30
$1.80
$2.30
$2.80
$3.30
$3.80
2020 2021 2022 2023 2024 2025 2026 2027
Analyst Consensus
Bear Case
$3.61
$2.82
$2.45
Investment
Highlights
Wide economic moat due to large scale – value proposition
unlikely to be replicated by small to mid sized players
Moat
Cash Flow
Innovation
Best in-class margins and cash flow generation with strong capital
returns to investors. Exemplary capital management
Technological innovation of the industrial distribution space;
provides data-driven solutions to maximize efficiency
Findings
▪ Channel checks see anticipated demand in key Fastenal
end markets (nonresidential construction & heavy mfg.)
▪ Looking at strong growth for the next quarter (13-18% in the
Midwest region)
▪ Expect inventory to be inflated at some point in 2023
▪ Seeing more transitions to national accounts

VII. Appendix and Commentary on Financial Model

Income Statement
30
FY Mix Price/Cost Freight Ending Gross Margin Y/Y bps
2022 -0.30% -0.20% 0.28% 46.07% -22
2023 -0.75% -0.20% -0.20% 44.92% -115
2024 -0.50% 0.00% 0.00% 44.42% -50
2025 -0.50% 0.00% 0.00% 43.92% -31.7
2026 -0.30% 0.00% 0.00% 43.62% -15
2027 -0.30% 0.00% 0.00% 43.32% -13
Gross Margin Build
Sales Mix
0%
20%
40%
60%
80%
100%
Other
Onsite
Branch
Revenue Build 2020 2021 2022 2023 2024 2025 2026 2027
# of Beginning Branches 2114 2003 1793 1683 1548 1409 1395 1381
# of New Branches 12 10 12
# of Closed Branches -123 -220 -122
# of Ending Branches 2003 1793 1683 1548 1409 1395 1381 1436
Growth % -10.5% -6.1% -8% -9% -1% -1% 4%
Branch Revenue $3,587 $3,726 $4,162 $4,449 $4,479 $4,671 $4,902 $5,124
Average Sales Per Location 1.7 2.0 2.4 2.8 3.0 3.3 3.5 3.6
Avg Sales Growth % 12.7% 22.0% 15% 10% 10% 6% 3%
# of Beginning Onsite Locations 1114 1265 1416 1623 1927 2196 2350 2467
# of Ending Onsite Locations 1265 1416 1623 1927 2196 2350 2467 2591
Growth % 12% 15% 19% 14% 7% 5% 5%
Onsite Revenue $1,486 $1,898 $2,466 $3,456 $4,616 $5,599 $6,348 $6,999
Average Sales 1.2 1.4 1.6 1.9 2.2 2.5 2.6 2.8
Growth % 13% 15% 20% 15% 10% 7% 5%
Other Revenue 575 387 354 362 371 381 390 400
Growth % -32.7% -8.6% 3% 3% 3% 3% 3%
Total Revenue $5,647 $6,011 $6,981 $8,267 $9,466 $10,651 $11,640 $12,523
Income Statement 2020A 2021A 2022A 2023E 2024E 2025E 2026E 2027E
Revenue
Branch 3587 3726 4162 4449 4479 4671 4902 5124
Onsite 1486 1898 2466 3456 4616 5599 6348 6999
Other 575 387 354 362 371 381 390 400
Total Revenue $5,647 $6,011 $6,981 $8,267 $9,466 $10,651 $11,640 $12,523
% Growth 6.4% 16.1% 18.4% 14.5% 12.5% 9.3% 7.6%
Cost of Sales 3080 3234 3765 4554 5261 5973 6563 7098
Gross Profit $2,568 $2,777 $3,216 $3,713 $4,205 $4,678 $5,077 $5,425
Gross Profit Margin % 45.5% 46.2% 46.1% 44.9% 44.4% 43.9% 43.6% 43.3%
Selling General & Administrative 1426 1560 1762 2002 2217 2388 2540 2670
Operating Income $1,142 $1,217 $1,454 $1,711 $1,988 $2,290 $2,538 $2,755
Operating Margin % 20.2% 20.3% 20.8% 20.7% 21.0% 21.5% 21.8% 22.0%
EBITDA $1,304 $1,388 $1,630 $1,959 $2,272 $2,580 $2,854 $3,096
EBITDA Margin % 23.1% 23.1% 23.4% 23.7% 24.0% 24.2% 24.5% 24.7%
Net Interest 9 10 14 20 19 20 22 20
Earnings Before Taxes $1,133 $1,208 $1,440 $1,691 $1,968 $2,270 $2,515 $2,735
Taxes @ 25% 274 283 353 414 482 556 616 670
Net Income $859 $925 $1,087 $1,277 $1,486 $1,714 $1,899 $2,065
EPS $1.90 $2.23 $2.60 $3.00 $3.32 $3.61
Consensus Deviation % 13.4% 23.7% 30.5% 29.3% 28.0%
Commentary
1
2
3
1 Onsite revenue growth anticipated to
erode over time due to pricing
pressures from generic vending
solutions entering market
2 Gross margin forecasted to decline
as Fastenal diversifies into lower
margin products
3
Operating margin expansion
projected; operating leverage seen
from G&A efficiencies (low
administrative costs associated with
onsite locations and national
accounts)
Onsite locations projected to be a
large contributor of revenue, driven
by reshoring and infrastructure
tailwinds
4
4

Balance Sheet
31
PP&E Schedule
Property, Plant & Equipment Schedule 2020A 2021A 2022E 2023P 2024P 2025P 2026P 2027P
Beginning Balance 1253 1216 1173 1155 1135
Plus: Capital Expenditures 158 148 162 211 241 272 297 319
Less: Depreciation 153 160 166 248 284 290 317 341
Ending Balance $1,274 $1,262 $1,253 $1,216 $1,173 $1,155 $1,135 $1,114
Metrics & Drivers 2020A 2021A 2022E 2023P 2024P 2025P 2026P 2027P
Revenue 5,647
$ 6,011
$ 6,981
$ 8,267
$ 9,466
$ 10,651
$ 11,640
$ 12,523
$
Net Capital Expenditures (% of Revenue) 2.8% 2.5% 2.3% 2.6% 2.6% 2.6% 2.6% 2.6%
Depreciation (% of Revenue) 2.7% 2.7% 2.4% 3.0% 3.0% 2.7% 2.7% 2.7%
1
1 Depreciation expected to increase in 2023 and 2024 as a result of added onsite locations, modeled to decline slightly as branch closures
resume
Working Capital Schedule 2022E 2023P 2024P 2025P 2026P 2027P
Inventories 1708 1934 2220 2443 2710 2861
Trade & Other Receivables 1013 1164 1328 1479 1579 1681
Prepaids 8 12 14 16 17 19
Other Current Assets 165 198 227 256 279 301
Non-Cash Current Assets $2,895 $3,309 $3,789 $4,194 $4,585 $4,861
Trade/Accounts Payable 295 437 505 573 611 642
Accrued Expenses 106 165 189 213 233 250
Other Current Liabilities 95 116 133 149 163 175
Non-Debt Current Liabilities $496 $718 $826 $935 $1,007 $1,068
Working Capital 2,399 2,591 2,963 3,259 3,578 3,794
Change in Working Capital 192 372 297 319 216
Performance Statistics & Assumptions
Revenue 6,981
$ 8,267
$ 9,466
$ 10,651
$ 11,640
$ 12,523
$
COGS 3,765
$ 4,554
$ 5,261
$ 5,973
$ 6,563
$ 7,098
$
Days Sales in Receivables 54.4 51.4 51.2 50.7 49.5 49.0
Days Inventory 158.5 155.0 154.0 149.3 150.7 147.1
Prepaids (% of Revenue) 0.1% 0.2% 0.2% 0.2% 0.2% 0.2%
Other Current Assets (% of Revenue) 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%
Days Payable Outstanding 29.9 35.0 35.0 35.0 34.0 33.0
Accrued Expenses (% of Revenue) 1.5% 2.0% 2.0% 2.0% 2.0% 2.0%
Other Current Liabilities (% of Revenue) 1.4% 1.4% 1.4% 1.4% 1.4% 1.4%
Balance Sheet 2022 2023P 2024P 2025P 2026P 2027P
Cash 230 551 850 1370 2055 3010
Inventories 1708 1934 2220 2443 2710 2861
Trade and Other Receivables 1013 1164 1328 1479 1579 1681
Prepaids 8 12 14 16 17 19
Total Current Assets $3,125 $3,860 $4,639 $5,564 $6,640 $7,872
Net PP&E 1253 1216 1173 1155 1135 1114
Other Non-Current Assets 171 171 171 171 171 171
Total Other Assets $1,424 $1,387 $1,344 $1,326 $1,306 $1,285
Total Assets $4,549 $5,246 $5,983 $6,890 $7,946 $9,156
Current Debt and Capital Lease Obligations 294 294 294 294 294 294
Total Current Liabilities $790 $1,011 $1,120 $1,229 $1,301 $1,361
Long-Term Debt 353 353 353 353 353 353
Other Long-Term Liabilities 242 242 242 242 242 242
Total Liabilities $1,385 $1,607 $1,716 $1,824 $1,896 $1,957
Total Shareholders' Equity $3,163 $3,639 $4,267 $5,066 $6,050 $7,200
Total Liabilities & Owner's Equity $4,549 $5,246 $5,983 $6,890 $7,946 $9,156
Check - - - - - -
Commentary
2
2 Better inventory management modeled as Fastenal leverages its lean practices and inventory management technology
3
3 Days payable increase to reflect better vendor terms and maximizing their credit window during a potential downturn

Cash Flow Statement
32
Cash Flow Statement 2023P 2024P 2025P 2026P 2027P
Net Income 1277 1486 1714 1899 2065
Less: Change in NWC (192) (372) (297) (319) (216)
Cash Flow from Operations $1,332 $1,398 $1,707 $1,897 $2,190
Capital Expenditures (211) (241) (272) (297) (319)
Cash Flow from Investing -$211 -$241 -$272 -$297 -$319
Change in Debt - - - - -
Dividends Paid (801) (858) (915) (915) (915)
Cash Flow from Financing -$801 -$858 -$915 -$915 -$915
Net Change in Cash $321 $299 $520 $685 $955
Beginning Cash 230 551 850 1370 2055
Ending Cash $551 $850 $1,370 $2,055 $3,010

DCF and WACC Calculation
33
Source: Aswath Damodaran, Bloomberg, Company Filings, Team Projections
WACC Calculation
Pre-Tax Cost of Debt 2.5%
Corporate Tax Rate 24.5%
After-Tax Cost of Debt 1.9%
Cost of Debt Calc.
Debt Outstanding Amount Interest Rate Maturity % of Total Weighted
Unsecured Revolving Credit Agreement 225 5.35% 9/28/2027 28.1% 1.5%
Senior Unsecured Promissory Notes 70 1.69% 6/24/2023 8.7% 0.1%
Leased Vehicles 22 - 12/31/2025 2.7% 0.0%
Leased Facilities and Equipment 225 - - 28.1% 0.0%
Total Debt 802 100.0% 2.5%
Risk Free Rate 3.5%
Equity Risk Premium 5.4%
Levered Beta 0.9
Cost of Equity 8.5%
Cost of Equity Calc.
Company Name Beta D/E Tax Rate Unlevered Beta
WW Grainger 1.17 0.5 21.9% 0.84
Wesco International 1.97 1.3 24.2% 0.99
MSC Industrial 0.96 0.4 24.5% 0.75
Distribution Solutions Group 1.04 0.8 42.8% 0.72
Applied Industrial Technologies 1.19 0.5 21.9% 0.87
Average 0.83
Unlevered Beta Calc.
Unlevered Beta 0.8
D/E 0.2
Tax Rate 24.5%
Levered Beta 0.94
Capital Structure
Amount % Total
Market Value of Debt 802 2.7%
Market Value of Equity 29415 97.3%
WACC
WACC Calculation
8.32%
Cost of Capital
1.9%
8.5%
Commentary
1
1 Damodaran ERP for April 2023
2
2 Higher of spot or 3.5% for US10Y
DCF 2020 2021 2022 2023 2024 2025 2026 2027
Branch Revenue 3587 3726 4162
% Growth 3.9% 11.7%
Bear Case 2.00% 1.80% 1.75% 1.70% 1.65%
Base Case 6.91% 0.67% 4.29% 4.94% 4.53%
Onsite Revenue 1486 1898 2466
% Growth 27.8% 29.9%
Bear Case 20.00% 15.00% 10.00% 7.00% 5.00%
Base Case 40.16% 33.57% 21.30% 13.38% 10.25%
Other Revenue 575 387 354
% Growth -32.7% -8.6%
Bear Case 2.00% 1.80% 1.70% 1.60% 1.50%
Base Case 2.50% 2.50% 2.50% 2.50% 2.50%
EBIT 1142 1217 1454
% of sales 31.83% 32.67% 34.93%
Bear Case 20.10% 20.06% 20.60% 20.60% 20.60%
Base Case 20.70% 21.00% 21.50% 21.80% 22.00%
Tax Rate 23.96% 23.23% 24.29% 24.50% 24.50% 24.50% 24.50% 24.50%
D&A 162 171 177
Bear Case 2.60% 2.60% 2.50% 2.50% 2.50%
Base Case 3.00% 3.00% 2.72% 2.72% 2.72%
Capex 158 148 162
Bear Case 3.00% 3.00% 3.00% 3.00% 3.00%
Base Case 2.55% 2.55% 2.55% 2.55% 2.55%
3
Growth Rate 3.5%
2027 EBITDA $2,118
Bear
Base
Growth Rate 3.5%
2027 EBITDA $3,096
3
Blended share price weighted
toward PGR method (65%) since we
believe the residual value is more
relevant than the exit multiple (no
intended exit strategy for Fastenal)
due to Fastenal’s age and the
maturity of the distribution industry
4
4
Exit multiple taken as 1 turn below
its 10-year median EV/EBITDA
multiple of 16.9x

Working Capital Schedule 2022E 2023P 2024P 2025P 2026P 2027P
Inventories 1708 1813 1953 2001 2082 2147
Trade & Other Receivables 1013 1161 1197 1236 1262 1301
Prepaids 8 11 12 13 13 14
Non-Cash Current Assets 2,895
$ 3,189
$ 3,380
$ 3,480
$ 3,596
$ 3,709
$
Non-Debt Current Liabilities 496
$ 541
$ 565
$ 593
$ 635
$ 655
$
Working Capital 2,399 2,649 2,815 2,886 2,961 3,054
Change in Working Capital 250 166 71 75 94
Performance Statistics & Assumptions
Revenue 6,981
$ 7,564
$ 8,091
$ 8,513
$ 8,855
$ 9,135
$
COGS 3,765
$ 4,137
$ 4,442
$ 4,682
$ 4,871
$ 5,024
$
Days Sales in Receivables 54.4 56.0 54.0 53.0 52.0 52.0
Days Inventory 158.5 160.0 160.5 156.0 156.0 156.0
Prepaids (% of Revenue) 0.1% 0.2% 0.2% 0.2% 0.2% 0.2%
Other Current Assets (% of Revenue) 2.4% 2.7% 2.7% 2.7% 2.7% 2.7%
Days Payable Outstanding 29.9 25.0 23.9 23.7 25.0 25.0
Accrued Expenses (% of Revenue) 1.5% 2.0% 2.0% 2.0% 2.0% 2.0%
Other Current Liabilities (% of Revenue) 1.4% 1.4% 1.4% 1.4% 1.4% 1.4%
Income Statement 2020A 2021A 2022A 2023E 2024E 2025E 2026E 2027E
Revenue
Branch 3587 3726 4162 4245 4321 4397 4472 4545
Onsite 1486 1898 2466 2959 3402 3743 4005 4205
Other 575 387 354 361 367 373 379 385
Total Revenue $5,647 $6,011 $6,981 $7,564 $8,091 $8,513 $8,855 $9,135
% Growth 6.4% 16.1% 8.4% 7.0% 5.2% 4.0% 3.2%
Cost of Sales 3080 3234 3765 4137 4442 4682 4871 5024
Gross Profit $2,568 $2,777 $3,216 $3,427 $3,649 $3,831 $3,985 $4,111
Gross Profit Margin % 45.5% 46.2% 46.1% 45.3% 45.1% 45.0% 45.0% 45.0%
Selling General & Administrative 1426 1560 1762 1907 2026 2077 2161 2229
Operating Income $1,142 $1,217 $1,454 $1,520 $1,623 $1,754 $1,824 $1,882
Operating Margin % 20.2% 20.3% 20.8% 20.1% 20.1% 20.6% 20.6% 20.6%
Net Interest 9 10 14 24 26 27 27 27
Earnings Before Taxes $1,133 $1,208 $1,440 $1,496 $1,597 $1,727 $1,797 $1,855
Taxes @ 25% 274 283 353 367 391 423 440 454
Net Income $859 $925 $1,087 $1,130 $1,206 $1,304 $1,357 $1,400
EPS $1.90 $1.98 $2.11 $2.28 $2.37 $2.45
Consensus Deviation 0.3% 0.3% -0.7% -7.6% -13.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Other
Onsite
Branch
Bear Assumptions
34
Sales Mix
Commentary
1
2
3
1 Assumes sharp macro slowdown
with lower onsite signings and sales
growth
2 Gross margin forecasted to increase
slightly as Fastenal retains its
current operating structure and mix –
higher margin products
3 Higher receivables turnover as
collection may become hard due to
customer cash flow problems
4
5
4 Inefficient inventory turnover,
gradually expected to improve
5 Stricter vendor terms due to macro
environment

2023 Cleveland Research Company Intercollegiate Stock Pitch Competition - Finalist

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to 2023 Cleveland Research Company Intercollegiate Stock Pitch Competition - Finalist

Similar to 2023 Cleveland Research Company Intercollegiate Stock Pitch Competition - Finalist (20)

Recently uploaded

Recently uploaded (20)

2023 Cleveland Research Company Intercollegiate Stock Pitch Competition - Finalist