Fastenal — 2026 Third Quarter Earnings Summary

Financial Performance

• Net sales for the three months ended September 30, 2026, were $2,463.3 million, a 15.5% increase year-over-year compared to $2,133.3 million in 2025.
• Net sales for the nine-month period ended September 30, 2026, were $7,051.9 million, a 14.2% increase year-over-year compared to $6,173.1 million in 2025.
• Daily sales rate (DSR) for the quarter was $38.5, up 15.5% from $33.3 in the prior year period.
• Gross profit was $1,104.7 million for the quarter (44.8% of net sales), down from 45.3% in the prior year; gross profit for the nine months was $3,151.3 million (44.7% of net sales).
• Selling, general, and administrative (SG&A) expenses were $573.9 million for the quarter (23.3% of net sales), down from 24.6% in the prior year; SG&A for the nine months was $1,671.1 million (23.7% of net sales).
• Operating income was $530.8 million for the quarter, a 20.2% increase year-over-year, with an operating margin of 21.5% compared to 20.7% in the prior year.
• Net income was $401.6 million for the quarter, a 19.7% increase year-over-year, compared to $335.5 million in 2025.
• Diluted net income per share was $0.35 for the quarter, up from $0.29 in the prior year.
• Operating cash flow was $421.6 million for the quarter, representing 105% of net income.
• Net cash provided by operating activities for the nine months was $1,065.7 million, a 14.9% increase year-over-year.
• Total debt was $100.0 million at the end of the quarter, down from $195.0 million in the prior year period.
• Accounts receivable increased 19.9% year-over-year to $1,615.2 million; inventories increased 3.1% to $1,776.6 million; accounts payable increased 29.3% to $445.8 million.

Guidance and Future Outlook

• For 2026, the company expects investment in property and equipment to be between $310.0 million and $330.0 million, an increase from $230.6 million in 2025.
• The company expects elevated IT spending throughout 2026 due to delays in projects originally planned for 2025.
• The company expects increased trucking spend in 2026.
• The company expects to replace its Atlanta hub facility and improve picking capacity and efficiency across its hub network.
• The company's goal for weighted FASTBin and FASTVend device signings in 2026 is between 27,000 and 29,000 MEUs.
• The company expects its ongoing tax rate to be approximately 24.6%, absent discrete tax items or broader changes to tax law.

Business Segments and Product Lines

• Direct materials sales outpaced indirect materials sales in the third quarter, driven by strength in fastener sales and manufacturing customers.
• Heavy manufacturing end market sales grew 20.2% year-over-year, while non-residential construction grew 12.0% for the sixth consecutive quarter.
• Contract sales grew 18.8% year-over-year, outperforming non-contract sales which grew 7.8%.
• Contract sales represented 76.5% of total sales in the quarter, up from 73.8% in the prior year.
• The company signed 7,484 weighted FASTBin and FASTVend devices in the third quarter, a 6.2% increase year-over-year.
• FMI (Fastenal Managed Inventory) sales were $1,121.3 million for the quarter, a 14.6% increase year-over-year, representing 44.8% of net sales.
• eBusiness sales were $721.5 million for the quarter, a 14.8% increase year-over-year.
• Digital Footprint sales (FMI plus non-FMI eBusiness) were $1,536.5 million for the quarter, a 16.1% increase year-over-year.

Market and Competitive Landscape

• Sales growth was driven by share gains with larger customers, pricing actions, and broad-based demand across core end markets.
• Foreign exchange rates negatively impacted sales growth by approximately 10 basis points in the third quarter.
• Product pricing contributed approximately 240 basis points to net sales growth in the third quarter.
• The company continues to experience strength with key account customers with significant managed spend.
• Other end markets, including transportation and reseller customers, saw favorable sales impacts.

Risks and Challenges

• Customer mix shift toward larger customers reduced gross margin by approximately 50 basis points.
• Price/cost factors reduced gross margin by approximately 30 basis points.
• Strong sales growth resulted in increased working capital usage for accounts receivable and inventory, temporarily reducing operating cash flow as a percentage of net income.
• The company notes that actual results may vary materially from forward-looking statements due to risks and uncertainties, including those detailed in its most recent annual and quarterly reports.

Management Commentary and Tone

• Management highlighted continued progress on strategic initiatives including increased sales effectiveness, expansion of digital technologies, and deeper penetration through new customer site growth.
• Management noted that while gross margins were pressured by customer mix, the relationships generate higher absolute profit dollars and are accretive to operating margin through fixed-cost leverage.
• Employee-related expenses improved 90 basis points as a percentage of net sales due to increased labor productivity.
• Occupancy-related expenses improved 50 basis points as a percentage of net sales, driven by fixed cost leverage.

Other Key Points

• The company returned $328.4 million to shareholders through dividends ($298.2 million) and share repurchases ($30.2 million), representing 81.8% of net income for the quarter.
• Total FTE employee headcount increased by 181 over the last twelve months; distribution and transportation FTE personnel increased by 105.
• Investment in property and equipment for the quarter was $71.8 million (2.9% of net sales), directed toward facility construction, industrial vending equipment, and IT spend.
• Net interest income was $0.4 million for the quarter, compared to net interest expense of $0.9 million in the prior year, primarily due to lower debt balances.
• The company has four primary product categories: fasteners, safety supplies, cutting tools, and other product lines.
• The company hosts a conference call to discuss quarterly results, broadcast live over the Internet at 9:00 a.m. central time.