Fastenal Company Reports 2026 Third Quarter Earnings

5% year-over-year, primarily driven by share gains with larger customers, pricing actions, and broad-based demand across core end markets. 5%, a 90 basis point improvement year-over-year, as selling, general, and administrative expense leverage more than offset customer mix-related gross margin pressure. Operating cash flow was $422 million, representing 105% of net income, reflecting the timing of working capital changes associated with strong sales growth. Returned $328 million to shareholders through dividends and share repurchases, representing 82% of net income.

Continued progress on strategic initiatives, including increased sales effectiveness through key account wins, expansion of digital technologies, and deeper penetration through new customer site growth. Fastenal Company (Nasdaq:FAST) ('Fastenal,' 'we,' 'our,' or 'us'), a global leader in supply chain services, today reported results for the third quarter ended September 30, 2026. Results reflected strong daily sales growth, operating expense leverage, and continued growth with larger customers supported by our Onsite, digital, and supply chain solutions. Except for share and per share information, or as otherwise noted, amounts are stated in millions.

Percentage and dollar calculations, which are based on non-rounded dollar values, may not be recalculated or footed using the dollar values included in this document due to the rounding of those dollar values. ) in the period. 5%, in the third quarter of 2026 when compared to the third quarter of 2025 (both periods had the same number of business days). Sales performance reflects the contribution from improved customer contract signings since the first quarter of 2024, product pricing, and a modest improvement in industrial production in the first nine months of 2026.

Foreign exchange rates negatively impacted sales growth by approximately 10 basis points in the third quarter of 2026 as compared to the third quarter of 2025 when foreign exchange rates contributed approximately 10 basis points to sales growth. The impact of product pricing on net sales in the third quarter of 2026 was an increase of approximately 240 basis points, compared to an increase of 240 to 270 basis points in the third quarter of 2025. From a product portfolio standpoint, we classify our offerings into four primary categories: fasteners, safety supplies, cutting tools, and other product lines.

'Other product lines' encompasses seven smaller product segments, including tools and janitorial supplies. Beginning in the fourth quarter of 2025, we expanded our reporting to provide a more comprehensive view of direct (original equipment manufacturing/production) and indirect (maintenance, repair, and operations/facilities maintenance) business across product categories. Direct materials generally include products incorporated into finished goods or that directly support customers' production processes, while indirect materials support customers' facility operations, maintenance, and safety needs.

During the third quarter of 2026, direct materials outpaced indirect materials, reflecting greater contribution from fastener sales and continued strength with manufacturing customers. 1 % From an end market standpoint, we have four categories: heavy manufacturing, other manufacturing, non-residential construction, and other, the latter of which includes reseller, government/education, transportation, warehousing and storage, and data centers. Our manufacturing end market growth was mainly due to the relative strength we are experiencing with key account customers with significant managed spend, where our service model and technology are particularly impactful.

The non-residential construction end market experienced growth for the sixth quarter in a row. Other end market sales were favorably impacted by growth with transportation and reseller customers. 1 % From a customer standpoint, we have two categories: 1) contracts, which include national multi-site, local and regional, and government customers with significant revenue potential, and 2) non-contracts. Sales with our contract customers continue to outperform as we realize incremental sales from implementing customer signings that we have achieved since the first quarter of 2024.

Non-contract customers tend to be smaller and utilize fewer of our tools and capabilities, providing fewer avenues for share gains and therefore more closely reflect overall business trends. 2 % Customer Sites and Sales Segmentation We engage customers in the local market by delivering services and solutions within or near the customer's business (Sites). Sites represent distinct customer locations where we maintain inventory tailored to local demand, supported by our regional distribution networks. Our strategy prioritizes customer Sites with monthly sales potential of $50,000 or more.

Segmentation by spend level provides insight into the scale and potential of customer relationships served through our network. The following table summarizes average customer Site counts by monthly spend band and related sales metrics. Three-month Period Three-month Period 2026 2025 Sites (#) ((1) (2)) Sales Mo. Sales per Site ((3)) Sites (#) ((1) (2)) Sales Mo.

Sales per Site ((3)) Manufacturing $50k+/Mo. 8 $ 140,596 $10k+/Mo. 5 52,788 $5k+/Mo. 6 $ 12,668 Non-manufacturing $50k+/Mo.

1 $ 121,413 $10k+/Mo. 5 34,583 $5k+/Mo. 7 $ 3,015 Total $50k+/Mo. 9 $ 137,363 $10k+/Mo.

0 47,888 $5k+/Mo. 3 $ 7,149 (1)) Sites represent the number of customer locations served by our network. Individual customers with multiple locations will have multiple customer Sites. ((2)) Sites numbers reflect the monthly average of active Site counts.

((3)) Monthly sales per Site totals are not rounded to the millions and represent the exact dollar amount. ((4)) $50k+ Sites are disclosed as a representation of Onsite-like customers and are also a subset of $10k+ and $5k+ Sites. ((5)) Other sales represent sales to Sites under $5k per month and sales that are not tied to a specific Site. This includes certain service fees, cash sales, direct ship sales, etc.

Digital Technology Fastenal Managed Inventory (FMI(®)) Technology comprises our FASTStock℠ (scanned stocking locations), FASTBin(®) (infrared, RFID, scaled bins, and FASTBin(®) — Click), and FASTVend(®) (vending devices) offerings. FASTStock's fulfillment processing technology is not embedded, is relatively less expensive to deploy and highly flexible in application, and is delivered using our proprietary mobility technology. FASTBin and FASTVend incorporate highly efficient and powerful embedded data tracking and fulfillment processing technologies.

The first statistic below is a weighted FMI measure, which combines the signings and installations of FASTBin and FASTVend in a standardized machine equivalent unit (MEU) based on the expected output of each type of device. , that cannot be converted into a standardized MEU. We signed 7,484 weighted FASTBin and FASTVend devices in the third quarter of 2026. Our goal for weighted FASTBin and FASTVend device signings in 2026 is between 27,000 and 29,000 MEUs (our previous goal was between 28,000 and 30,000 MEUs).

The second statistic is sales through FMI Technology, which combines the sales through FASTStock, FASTBin, and FASTVend. A portion of the growth in sales experienced by FMI, particularly FASTStock and FASTBin, reflects the migration of products from less efficient non-digital stocking locations to more efficient, digital stocking locations. The table below summarizes signings and installations of our FMI devices and sales through our FMI devices, eBusiness ((1)) tools, and Digital Footprint ((2)).

3 % (1)) Our eBusiness includes eProcurement activities, which are integrated transactions, including electronic data interchange (EDI), and eCommerce (transactional website sales). ((2)) Digital Footprint is a combination of our sales through FMI (FASTStock, FASTBin, and FASTVend) plus that portion of our eBusiness sales that does not represent billings of FMI services. ((3)) Weighted FASTBin/FASTVend signings and installations reflect the percent change compared to the same period in the prior year. 3% in the third quarter of 2025.

A continued shift in customer mix toward larger customers reduced gross margin by approximately 50 basis points. While these relationships typically carry lower gross margins, they generate higher absolute profit dollars and are accretive to operating margin through fixed-cost leverage, higher volumes, and operating efficiencies. Price/cost reduced gross margin by approximately 30 basis points, an improvement of approximately 10 basis points from the second quarter of 2026. Gross margin benefited from several factors, including direct sourcing savings, supplier rebates, and tariff refunds.

Approximately 20 basis points of the benefit reflected favorable timing. 3% in the second quarter of 2025. Gross margin improved from the second quarter of 2026 to the third quarter of 2026. 6% in the third quarter of 2025, an improvement of 130 basis points.

Employee-related expenses, which typically represent 70% to 75% of total SG&A expenses, improved 90 basis points as a percentage of net sales in the third quarter of 2026 compared to the third quarter of 2025. Base pay leveraged through increased labor productivity, while bonuses and commissions grew faster than sales as a result of improved business activity and financial performance versus the same period in the prior year. Occupancy-related expenses, which typically represent 14% to 19% of total SG&A expenses, improved 50 basis points as a percentage of net sales in the third quarter of 2026 compared to the third quarter of 2025, driven mainly by fixed cost leverage.

Combined, all other SG&A expenses, which typically represent 10% to 15% of total SG&A expenses, increased 10 basis points as a percentage of net sales when compared to the third quarter of 2025. This slight increase was driven mainly by higher fuel and general insurance expense, partially offset by increased joint marketing efforts with our suppliers. 7% in the third quarter of 2025. 9 in the third quarter of 2025, primarily from lower debt balances.

4% of income before income taxes. 9% of income before income taxes. 6%. 7% compared to the third quarter of 2025.

29 in the third quarter of 2025. 0% from the third quarter of 2025. 1%. The decline as a percentage of net income compared to last year was primarily driven by a larger use of cash for accounts receivable and inventory, reflecting strong sales growth.

This is a common dynamic for a distribution business. This was partially offset by higher accounts payable balances mainly attributable to an increase in inventory spending and an increase in accrued expenses related to incentive compensation and customer rebates from improved business performance. 4%. The decrease in operating cash flow, as a percent of net income, primarily reflects increased working capital associated with accounts receivable, which was partially offset by inventory efficiencies and higher payable balances due to increased purchasing activity.

5 % The increase in our accounts receivable balance in the third quarter of 2026 was mainly attributable to sales growth, including relative growth with larger customers that tend to carry longer payment terms.