Fastenal Company
FAST · Nasdaq
FAST · Nasdaq
Reports Oct 14, 2026, before the open.
Consensus is $0.34 EPS for Sep 2026 across 7 estimates, ranging $0.32 to $0.35.
Fastenal's second quarter was a strong growth print that met, rather than exceeded, expectations. EPS of $0.33 matched consensus, but revenue of $2.39 billion, operating income of $501.8 million and net income of $382.8 million increased 14.7%, 15.1% and 15.9% from the year-ago quarter. Sequentially, revenue rose from $2.20 billion in Q1, operating income from $447.6 million and EPS from $0.30. The result also extended the company's acceleration from Q3 2025, when revenue was $2.13 billion and EPS was $0.29.
The defining feature was continued share capture among larger contract and manufacturing customers. Contract daily sales grew 17.6%, heavy manufacturing grew 18.1%, and high-volume customer sites expanded materially. Fastenal's digital and onsite-like model remained central, with Digital Footprint sales up 16.2% and FMI sales up 16.4%. Profitability was resilient rather than expanding: gross margin fell to 44.6% from 45.3% because of unfavorable price/cost, mix and transportation, but SG&A fell to 23.5% of sales from 24.4%, preserving a 21.0% operating margin. Cash conversion was weaker in the quarter because receivables absorbed cash amid strong late-quarter sales, although first-half operating cash flow rose 19.1% to $644.1 million.
Fastenal's growth continued to be concentrated in customers where its service model, inventory management and technology can drive share gains. Contract customers accounted for 75.8% of quarterly sales, compared with 73.2% a year earlier, and their daily sales increased 17.6% versus 7.3% for non-contract customers. Manufacturing, which contributed 75.9% of sales, grew 14.9% on a daily-sales basis, led by heavy manufacturing at 18.1%.
Digital tools remained a major growth engine and a mechanism for deepening customer relationships. Digital Footprint sales grew faster than company revenue, while the installed base of weighted FASTBin and FASTVend devices expanded 6.5% year over year to 140,789 MEUs. Fastenal signed 6,993 devices in the quarter and 13,943 in the first half.
Fastenal absorbed gross-margin pressure without sacrificing operating profitability. Gross margin declined 75 basis points to 44.6%, primarily because of roughly 40 basis points of unfavorable net price/cost, with additional pressure from customer mix, transportation and rebates. The mix shift toward larger customers carries lower gross margins, but management said it produces higher absolute profit dollars and improves fixed-cost absorption.
Quarterly cash generation lagged earnings because of working-capital timing, not inventory buildup. Operating cash flow fell 4.6% year over year to $265.7 million, or 69.4% of net income, versus 84.4% a year ago and a five-year second-quarter average of 79.6%. June sales increased 20.5% year over year, driving a larger use of cash in accounts receivable.
Fastenal continued to prioritize shareholder distributions while maintaining modest leverage. The company returned $305.1 million in the quarter, equal to 79.7% of net income, through $275.4 million of dividends and $29.7 million of share repurchases. It repurchased 650,000 shares at an average price of approximately $45.72.
