Fastenal Company Reports 2026 Third Quarter Earnings
FASTENAL CO (FAST) filed an SEC Form 8-K — Results of Operations and Financial Condition. EXHIBIT 99.1 Fastenal Company Reports 2026 Third Quarter Earnings • Daily sales increased 15.5% year-over-year, primarily driven by share gains with larger customers, pricing actions, and broad-based demand across core end markets. • Operating margin was 21.5%, a 90 basis point i
How this was made
The 30-second read
Why it matters
The earnings beat and cash return are likely to attract short‑term buying, especially from investors focused on industrial distributors.
Market read
Fastenal's earnings exceed expectations, providing a clear catalyst for its stock and potentially lifting related industrial stocks.
What to watch
Foreign‑exchange headwinds slightly dampened growth; future guidance not provided.
Fastenal Company Reports 2026 Third Quarter Earnings
Third-quarter net sales increased 15.5%, operating income increased 20.2%, net income increased 19.7%, and operating margin improved to 21.5% as SG&A leverage more than offset gross-margin pressure from customer mix and price/cost.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, three-month periodGAAP | $2.46B | – | 15.5% |
| Daily sales, three-month periodother | $38.5M | – | 15.5% |
| Gross profit, three-month periodGAAP | $1.10B | – | 14.4% |
| Gross margin, three-month periodGAAP | 44.8% | – | decreased approximately 40 basis points |
| SG&A expenses, three-month periodGAAP | $573.9M | – | 9.4% |
| SG&A expenses as a percentage of net sales, three-month periodGAAP | 23.3% | – | improvement of 130 basis points |
| Operating income, three-month periodGAAP | $530.8M | – | 20.2% |
| Operating margin, three-month periodGAAP | 21.5% | – | 90 basis point improvement |
| Income before income taxes, three-month periodGAAP | $531.2M | – | 20.6% |
| Income tax expense, three-month periodGAAP | $129.6M | – | – |
| Effective income tax rate, three-month periodGAAP | 24.4% | – | – |
| Net income, three-month periodGAAP | $401.6M | – | 19.7% |
| Diluted net income per share, three-month periodGAAP | $0.35 | – | 19.8% |
| Net cash provided by operating activities, three-month periodGAAP | $421.6M | – | 9.0% |
| Cash flow from operations as a percentage of net income, three-month periodother | 105.0% | – | – |
| Investment in property and equipment, net of proceeds from sales, three-month periodother | $71.8M | – | – |
| Net sales, nine-month periodGAAP | $7.05B | – | 14.2% |
| Gross profit, nine-month periodGAAP | $3.15B | – | 12.8% |
| Operating income, nine-month periodGAAP | $1.48B | – | 16.4% |
| Net income, nine-month periodGAAP | $1.12B | – | 16.6% |
| Diluted net income per share, nine-month periodGAAP | $0.98 | – | 16.5% |
| Net cash provided by operating activities, nine-month periodGAAP | $1.07B | – | 14.9% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Total direct materialsDirect materials outpaced indirect materials, reflecting greater contribution from fastener sales and continued strength with manufacturing customers. | 39.8% of sales | – | 18.6% DSR Change |
| Total indirect materialsIndirect materials represented the larger share of sales. | 60.2% of sales | – | 14.3% DSR Change |
| Total manufacturingGrowth was mainly due to relative strength with key account customers with significant managed spend, where the service model and technology are particularly impactful. | 76.6% of sales | – | 17.2% DSR Change |
| Non-residential constructionThe end market experienced growth for the sixth quarter in a row. | 8.0% of sales | – | 12.0% DSR Change |
| Other end marketsSales were favorably impacted by growth with transportation and reseller customers. | 15.4% of sales | – | 12.4% DSR Change |
| Contract salesContract customers continued to outperform as Fastenal realized incremental sales from customer signings achieved since the first quarter of 2024. | 76.5% of sales | – | 18.8% DSR Change |
| Non-contract salesNon-contract customers tend to be smaller, utilize fewer tools and capabilities, and more closely reflect overall business trends. | 23.5% of sales | – | 7.8% DSR Change |
| FMI salesFMI sales combine FASTStock, FASTBin, and FASTVend sales. | $1.12B | – | 14.6% |
| Digital Footprint salesDigital Footprint combines FMI sales and the portion of eBusiness sales that does not represent billings of FMI services. | $1.54B | – | 16.1% |
2026 outlook
- Tax rateapproximately 24.6%
- NoteInvestment in property and equipment, net of proceeds from sales, between $310.0 million and $330.0 million.
- NoteWeighted FASTBin and FASTVend device signings between 27,000 and 29,000 MEUs.
Capital returns
- Returned $328.4 million, or 81.8% of net income, to shareholders during the third quarter of 2026.
- Dividends were $298.2 million during the third quarter of 2026.
- Share repurchases were $30.2 million during the third quarter of 2026.
- Purchases of common stock were $30.5 million in the condensed consolidated statements of cash flows for the third quarter of 2026.
- Cash dividends paid were $298.2 million in the condensed consolidated statements of cash flows for the third quarter of 2026.
- Cash dividends paid were $849.1 million in the first nine months of 2026.
What drove it
- Daily sales increased 15.5%, driven primarily by share gains with larger customers, pricing actions, and broad-based demand across core end markets.
- Product pricing increased net sales by approximately 240 basis points in the third quarter of 2026.
- Foreign exchange rates negatively impacted sales growth by approximately 10 basis points.
- Direct materials grew faster than indirect materials, with direct fasteners/hardware DSR up 16.8%, direct cutting tools and abrasives up 19.5%, and direct non-fasteners/hardware up 21.2%.
- SG&A expense leverage reflected increased labor productivity and fixed-cost leverage in occupancy-related expenses.
- Weighted FASTBin/FASTVend signings were 7,484 MEUs, and weighted FASTBin/FASTVend installations were 143,878 MEUs at the end of the period.
Concerns
- Gross margin decreased approximately 40 basis points to 44.8%, primarily as a continuing shift toward larger customers reduced gross margin by approximately 50 basis points.
- Price/cost reduced gross margin by approximately 30 basis points.
- Favorable timing accounted for approximately 20 basis points of gross-margin benefit.
- Accounts receivable increased $267.9 million, or 19.9%, versus September 30, 2025, mainly attributable to sales growth and relative growth with larger customers that tend to carry longer payment terms.
- Cash flow from operations as a percentage of net income declined to 105.0% from 115.3%, primarily due to a larger use of cash for accounts receivable and inventory.
- The 2026 weighted FASTBin and FASTVend signing goal was reduced to between 27,000 and 29,000 MEUs from between 28,000 and 30,000 MEUs.
What to watch
- Progress toward the 2026 goal of between 27,000 and 29,000 weighted FASTBin and FASTVend device signings.
- The mix shift toward larger contract customers and its effect on gross margin and operating-margin leverage.
- Price/cost effects, direct sourcing savings, supplier rebates, tariff refunds, and the impact of favorable timing on gross margin.
- Working-capital investment, particularly accounts receivable associated with strong sales growth and larger-customer payment terms.
- Execution of 2026 property and equipment investment of between $310.0 million and $330.0 million, including the Atlanta hub replacement, hub picking capacity and efficiency, IT projects, and trucking spend.
Balance sheet and cash flow
- Cash and cash equivalents were $211.9 million at September 30, 2026, compared with $276.8 million at December 31, 2025.
- Total debt was $100.0 million at the end of the third quarter of 2026, or 2.4% of total capital, compared with $195.0 million, or 4.8% of total capital, at the end of the third quarter of 2025.
- Accounts receivable, net were $1,615.2 million at September 30, 2026, compared with $1,347.3 million at September 30, 2025.
- Inventories were $1,776.6 million at September 30, 2026, compared with $1,722.8 million at September 30, 2025.
- Accounts payable were $445.8 million at September 30, 2026, compared with $344.8 million at September 30, 2025.
- Trade working capital, net was $2,946.0 million at September 30, 2026, compared with $2,725.3 million at September 30, 2025.
- Net cash used in investing activities was $72.0 million in the third quarter of 2026, compared with $54.8 million in the third quarter of 2025.
- Net cash used in financing activities was $341.5 million in the third quarter of 2026, compared with $280.9 million in the third quarter of 2025.
Analysis
Fastenal reported a strong third quarter ended September 30, 2026. Net sales were $2,463.3 million, up 15.5%, while daily sales were $38.5 million, also up 15.5%, with the same number of business days in both periods. The company attributed growth to 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. Product pricing contributed approximately 240 basis points to sales growth, while foreign exchange reduced growth by approximately 10 basis points.
Demand was broad-based but led by larger and manufacturing-oriented customers. Contract sales produced an 18.8% DSR increase and accounted for 76.5% of sales. Total manufacturing rose 17.2% on a DSR basis and represented 76.6% of sales, led by heavy manufacturing growth of 20.2%. Direct materials rose 18.6%, outpacing 14.3% growth for indirect materials. Digital channels also expanded, with FMI sales increasing 14.6% to $1,121.3 million and Digital Footprint sales increasing 16.1% to $1,536.5 million.
Profitability improved despite gross-margin pressure. Gross margin was 44.8%, down approximately 40 basis points from 45.3%, as a customer-mix shift toward larger customers reduced margin by approximately 50 basis points and price/cost reduced margin by approximately 30 basis points. Direct sourcing savings, supplier rebates, tariff refunds, and approximately 20 basis points of favorable timing provided offsets. SG&A expense as a percentage of net sales fell 130 basis points to 23.3%, supported by labor productivity and fixed-cost leverage. This enabled operating margin to increase 90 basis points to 21.5%, with operating income rising 20.2% to $530.8 million and net income rising 19.7% to $401.6 million.
Cash generation remained positive but working-capital needs increased with growth. Third-quarter operating cash flow was $421.6 million, equal to 105.0% of net income, compared with 115.3% a year earlier. Accounts receivable increased $267.9 million year over year, while inventories increased $53.8 million and accounts payable increased $101.0 million. Fastenal invested $71.8 million in property and equipment, net of proceeds from sales, and ended the quarter with $211.9 million of cash and $100.0 million of total debt.
Capital returns totaled $328.4 million, or 81.8% of net income, comprising $298.2 million of dividends and $30.2 million of share repurchases. The company continues to expect 2026 investment in property and equipment, net of proceeds from sales, of between $310.0 million and $330.0 million, and stated an ongoing tax-rate expectation of approximately 24.6%. Its weighted FASTBin and FASTVend device-signing goal is now between 27,000 and 29,000 MEUs, versus the previous goal of between 28,000 and 30,000 MEUs.
Not in the filing
stated, not guessed- No prior outlook section was provided, so comparison of actual results with prior guidance is unavailable.
- No non-GAAP financial measures, non-GAAP EPS, or non-GAAP reconciliations were reported.
- Free cash flow was not reported.
- A quarterly revenue outlook was not reported.
- Quarterly gross-margin outlook was not reported.
- Quarterly operating-expense outlook was not reported.
- Total debt comparison with December 31, 2025 was not separately stated as a total-debt line in the balance sheet discussion.
- Named executive quotes were not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Fastenal filed a Form 8‑K reporting its third‑quarter 2026 results, highlighting strong daily sales growth and cash generation.
Ticker impact
Fastenal reported Q3 2026 earnings with 15.5% YoY sales growth, 21.5% operating margin and $328M returned to shareholders.
likely upside as investors price in robust sales growth and higher cash returns
The earnings beat and sizable shareholder return indicate better-than-expected performance, which typically drives short-term buying pressure.
Market effects
Positive momentum for industrial distribution and supply‑chain services sector.
U.S. industrial stocks may see modest gains.
Limited; impact confined to U.S. equities.
Counterpoint
If the sales growth is driven by pricing rather than volume, margins could compress later.
Key entities
- companyFastenal Company
U.S. industrial distribution and supply‑chain services firm.
