Fastenal Company Reports 2025 Second Quarter Earnings

Fastenal Company (‘Fastenal’, ‘we’, ‘our’, or ‘us’), a leader in the wholesale distribution of industrial and construction supplies, announced its financial results for the quarter ended June 30, 2025. Except for share and per share information, or as otherwise noted below, dollar amounts are stated in millions. All historical common stock share and per share information and stockholders’ equity balances for all periods presented in this release, including the financial statements attached to this release, have been retroactively adjusted to reflect a two-for-one stock split effective at the close of business on May 21, 2025.Percentage and dollar calculations, which are based on non-rounded dollar values, may not be able to be recalculated using the dollar values included in this document due to the rounding of those dollar values. References to daily sales rate (DSR) change may reflect either growth (positive) or contraction (negative) for the applicable period.

Quarterly Results of Operations

Sales

Net sales increased $164.1, or 8.6%, in the second quarter of 2025 when compared to the second quarter of 2024. Both periods had the same number of selling days. The results largely reflect the contribution from improved customer contract signings over the past six quarters. Market conditions remained sluggish, providing minimal contribution. Changes in foreign exchange rates positively affected sales in the second quarter of 2025 by approximately 10 basis points and negatively affected sales in the second quarter of 2024 by approximately 20 basis points.

We experienced an increase in unit sales in the second quarter of 2025. This was due to a growth in the number of customer sites spending $10K or more per month with Fastenal and, to a lesser degree, growth in average monthly sales per customer site across all customer spend categories. The impact of product pricing on net sales in the second quarter of 2025 was an increase of 140 to 170 basis points, in contrast to the second quarter of 2024, which experienced a decline of 30 to 60 basis points.

From a product standpoint, we have three categories: fasteners, including fasteners used in original equipment manufacturing (OEM) and maintenance, repair, and operations (MRO), safety supplies, and other product lines, the latter of which includes eight smaller product categories, such as tools, janitorial supplies, and cutting tools. With industrial production still sluggish in the second quarter of 2025, the performance of our fastener product line continued to lag our non-fastener product lines. The fastener category experienced improved growth in the second quarter of 2025, as compared to the second quarter of 2024. This was driven by easier comparisons, increased contribution from large customer signings, better product availability in our distribution centers, and pricing actions implemented in the second quarter of 2025. We achieved growth in our safety category reflecting the lower volatility of PPE demand, which tends to be utilized in more MRO than OEM applications, growth of our vending installed base, and success with warehousing and data center customers. Other product lines experienced higher growth from MRO-oriented lines, such as electrical and janitorial, rather than from OEM-oriented lines, such as cutting tools and welding/abrasives, reflecting continued soft manufacturing demand.

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 markets outperformed primarily 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. This disproportionately benefits manufacturing customers. The non-residential construction end market experienced growth for the first time in ten consecutive quarters. Other end market sales were favorably impacted by growth with warehousing and storage, and data center customers, which were partially offset by declining sales with resellers.

From a customer standpoint, we have two categories: contracts, which include national multi-site, local and regional, and government customers with significant revenue potential, and non-contracts, which include all other customers. Sales with our contract customers continue to outperform as we realize incremental sales from implementing strong customer signings that we have achieved over the last six quarters, which was partially offset by subdued business activity. 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, which remain sluggish.

Gross Profit

Our gross profit, as a percentage of net sales, increased to 45.3% in the second quarter of 2025 from 45.1% in the second quarter of 2024. Price/cost had a slightly favorable impact on our gross profit percentage. Improved margin on fastener sales relating to the fastener expansion project and other supplier-focused initiatives contributed to the increase. The aforementioned positive effects on our gross profit percentage were partly offset by a number of variables. First, customer and product mix diluted our gross profit percentage. This reflects relatively stronger growth from large customers, including Onsite-like customers, and non-fastener products, each of which tend to have a lower gross profit percentage than our business as a whole. Second, we experienced higher import duty costs and higher fleet and transportation costs due to inflation in vehicle costs as we cycle our fleet and in third-party freight costs. Third, customer and supplier incentives were a slight drag on our gross profit percentage.

SG&A Expenses

Our SG&A expenses, as a percentage of net sales, were 24.4% in the second quarter of 2025 versus 24.9% in the second quarter of 2024. This reflects growth in SG&A of 6.3% in the second quarter of 2025 versus net sales growth of 8.6% in the same period of 2025.

Employee-related expenses, which represent 70% to 75% of total SG&A expenses, increased 10.3% in the second quarter of 2025 compared to the second quarter of 2024. We experienced an increase in employee base pay, although at a rate below the growth in sales, due to higher average FTE during the period, and, to a lesser degree, higher average wages during the period. Bonuses and commissions and profit sharing increased at a rate greater than sales as a result of improved business activity and financial performance versus the year-ago period. Additionally, health insurance costs increased at a rate greater than sales.

Occupancy-related expenses, which represent 15% to 20% of total SG&A expenses, increased 3.0% in the second quarter of 2025 compared to the second quarter of 2024. This was primarily a result of general inflation in branch rental costs and slightly higher depreciation from an increase in the installed base of FMI hardware.

Combined, all other SG&A expenses, which represent 10% to 15% of total SG&A expenses, decreased 10.6% in the second quarter of 2025 compared to the second quarter of 2024. Sales-related travel and information technology (IT) expenses increased slightly. These increases were more than offset by an increase in supplier marketing credits and reductions in general insurance expense.

Operating Income

Our operating income, as a percentage of net sales, increased to 21.0% in the second quarter of 2025 from 20.2% in the second quarter of 2024.

Net Interest

We had higher interest income earned during the second quarter of 2025. We had higher interest expense as a result of higher borrowings through the second quarter of 2025. The increase in interest income relative to interest expense resulted in our generating net interest income of $0.5 in the second quarter of 2025, which compared to net interest expense $0.5 in the second quarter of 2024.

Income Taxes

We recorded income tax expense of $106.3 in the second quarter of 2025, or 24.4% of income before income taxes. Income tax expense was $93.7 in the second quarter of 2024, or 24.2% of income before income taxes. We believe our ongoing tax rate, absent any discrete tax items or broader changes to tax law, will be approximately 24.5%.

On July 4, 2025, the U.S. enacted H.R. 1 “A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14”, commonly referred to as the One Big Beautiful Bill Act (OBBBA). Changes in tax laws may affect recorded deferred tax assets and deferred tax liabilities and our effective tax rate in the future and we continue to evaluate the impacts the new legislation will have on the Condensed Consolidated Financial Statements. As a result of the enactment of H.R. 1, we anticipate an impact to the deferred tax liability and the income tax payable related to the provisions for 100% bonus depreciation for assets placed in service after January 19, 2025 and full expensing of domestic research and experimental expenditures. We do not expect any material change to our ongoing tax rate as a result of this legislation.

Net Income

Our net income during the second quarter of 2025 was $330.3, an increase of 12.8% compared to the second quarter of 2024. Our diluted net income per share was $0.29 in the second quarter of 2025, compared to $0.25 in the second quarter of 2024.

Cash Flow and Balance Sheet

Net cash provided by operating activities was $278.6 in the second quarter of 2025, an increase of 8.1% from the second quarter of 2024, representing 84.4% of the period’s net income versus 88.1% in the second quarter of 2024. The decrease in operating cash flow, as a percent of net income, primarily reflects our operating assets and liabilities being a greater use of cash in the second quarter of 2025 as compared to the second quarter of 2024.

Net cash provided by operating activities was $540.8 in the first six months of 2025, a decrease of 8.8% from the first six months of 2024, representing 86.0% of the period’s net income versus 100.5% in the first six months of 2024. The decrease in operating cash flow, as a percent of net income, primarily reflects our operating assets and liabilities being a more significant use of cash in the first six months of 2025 than in the first six months of 2024.

The increase in our accounts receivable balance in the second quarter of 2025 was primarily attributable to growth in sales with our customers, including relative growth with larger customers that tend to carry longer payment terms.

The increase in our inventory balance in the second quarter of 2025 was primarily attributable to three factors. First, we added inventory to support projected growth in our business and, to a lesser extent, the anticipated impact of tariffs. Second, our inventory increased as a result of growth in sales with certain customers and the addition of stock to ensure we can support their future growth. Third, we added inventory to support our fastener expansion and optimal package quantity initiatives, which are intended to improve service to our in-market locations and generate efficiencies in our hubs.

The increase in our accounts payable balance in the second quarter of 2025 was primarily attributable to an increase in our product purchases as reflected in the growth in inventories.

During the second quarter of 2025, our investment in property and equipment, net of proceeds from sales, was $64.3, which was a slight increase from $52.6 in the second quarter of 2024. This was primarily related to an increase in spending for FMI hardware to support growth in our installed base, facility construction and upgrades, IT, and vehicles.

For 2025, we expect our investment in property and equipment, net of proceeds from sales, to be within a range of $250.0 to $270.0, a decrease from our originally anticipated range ($265.0 to $285.0) and an increase from $214.1 in 2024. The expected growth on a year-to-year basis reflects three items. First, we expect higher distribution center spending to complete our replacement Utah hub facility, begin construction on a replacement Atlanta hub facility, and improve our picking capacity and efficiency across our hub network. Second, we expect elevated IT spending as projects that were expected in 2024 experienced delays and will occur in 2025. Third, we expect greater outlays for FMI hardware reflecting an increase in our targeted signings.

During the second quarter of 2025, we returned $252.5 to our shareholders in the form of dividends, compared to the second quarter of 2024 when we returned $223.3 to our shareholders in the form of dividends. During the first six months of 2025, we returned $499.1 to our shareholders in the form of dividends, compared to the first six months of 2024 when we returned $446.5 to our shareholders in the form of dividends. We did not repurchase any of our common stock in either period.

Total debt on our balance sheet was $230.0 at the end of the second quarter of 2025, or 5.7% of total capital (the sum of stockholders’ equity and total debt). This compares to $235.0, or 6.3% of total capital, at the end of the second quarter of 2024.

About Fastenal

Fastenal provides a broad offering of industrial supplies, including fastener, safety, and metal cutting products, to manufacturing, construction, and state and local government customers through more than 3,400 in-market locations (branches and customer-specific Onsite locations) spanning 25 countries. With continual investment in tailored local inventory, dedicated local experts, and flexible FMI^® (Fastenal Managed Inventory) and digital solutions, we help our business partners achieve product and process savings across the supply chain – a “high-touch, high-tech” approach encapsulated by our tagline, Where Industry Meets Innovation ^™ . Our local service teams are supported by 17 regional distribution centers, a captive logistics fleet, multiple teams of industry specialists and support personnel, and robust sourcing, quality, and manufacturing resources, enabling us to grow by getting closer to customers and providing innovative and comprehensive solutions to customer supply chain challenges.

Additional information regarding Fastenal is available on the Fastenal Company website at www.fastenal.com .

Contact:

Dray Schreiber – Financial Reporting & Regulatory Compliance Manager – (507) 313-7324

Source: Fastenal Company