Fastenal Company (NASDAQ:FAST) reported second-quarter 2026 results Tuesday that showed double-digit sales and earnings growth, with the stock trading lower following the release.
Earnings per share of 33 cents were in line with analyst expectations, while sales rose 14.7% year over year to $2.387 billion, beating the $2.338 billion estimate.
Earnings And Margins
GAAP diluted EPS increased 15.9% from 29 cents a year earlier. Net income rose 15.9% to $382.8 million, while operating income increased 15.1% to $501.8 million.
The daily sales rate increased 14.7%, driven by customer contract wins, pricing actions, and a modest improvement in industrial production. Product pricing contributed about 290 basis points to sales growth, while foreign exchange added roughly 10 basis points.
Gross margin declined 75 basis points to 44.6%, primarily reflecting an approximately 40-basis-point unfavorable price-cost impact. Customer mix, transportation costs, and customer rebates also pressured the margin.
Fastenal said pricing actions continued to mitigate tariff-related costs and other inflation. Fuel inflation increased transportation costs, while a continued shift toward larger customers weighed on gross margin.
SG&A expenses improved to 23.5% of sales from 24.4%, fully offsetting gross-margin pressure. Operating margin remained unchanged at 21%.
Customer And Market Growth
Contract customer daily sales rose 17.6% and represented 75.8% of quarterly revenue. Non-contract daily sales increased 7.3%.
Fastenal’s contract count grew 7.2%, while sites generating at least $50,000 in monthly sales increased 16.5% to 3,125.
Manufacturing represented 75.9% of sales. Heavy manufacturing daily sales rose 18.1%, other manufacturing increased 10.8%, and non-residential construction advanced 17%.
Direct-material daily sales grew 16.5%, compared with 14.1% growth for indirect materials.
Digital Expansion
Digital Footprint daily sales rose 16.2% to $1.49 billion and represented 61.6% of revenue. FMI daily sales increased 16.4% to $1.08 billion, while eBusiness daily sales grew 12.6% to $711.9 million.
Fastenal signed 6,993 weighted FASTBin and FASTVend devices, up 8.3%. The installed device base increased 6.5% to 140,789 units.
Cash Flow And Outlook
Operating cash flow declined 4.6% to $265.7 million, representing 69.4% of net income. Higher receivables reflected strong mid- and late-quarter sales, including 20.5% year-over-year growth in June.
Cash and cash equivalents totaled $204.70 million, while total debt declined to $120 million from $230 million. Free cash flow was not disclosed.
Fastenal returned $305.1 million to shareholders, including $275.4 million in dividends and $29.7 million in share repurchases.
Trailing-12-month return on invested capital increased 180 basis points to 31.4%.
The company continues to expect 2026 capital spending of $310 million to $330 million. It now expects Digital Footprint sales to represent 63%–64% of annual sales and targets 27,000–29,000 weighted device signings.
Management said broader market conditions continued to improve, while it remained focused on pricing neutrality and managing the effects of tariffs.
FAST Price Action: Fastenal shares were down 3.43% at $45.43 at the time of publication on Tuesday, according to Benzinga Pro data.
Photo by T. Schneider via Shutterstock
