01—Abstract
Summary
Summary of the 10-Q filed July 16, 2026. Cited figures are marked; the original filing is the authoritative source.
Fastenal Company reported a strong second quarter of 2026, demonstrating robust top-line growth and improved profitability.
Net sales increased by 14.7% year-over-year, driven by a combination of improved customer contract signings, product pricing, and a modest recovery in industrial production. The company also saw a significant increase in net income, up 15.9%, leading to diluted earnings per share of $0.33a. The company's strategic focus on larger customers and digital solutions like FASTStock, FASTBin, and FASTVend continues to yield positive results, with digital footprint sales growing 16.2%.
While gross margins experienced slight pressure due to unfavorable price/cost dynamics and a shift in customer mix towards larger accounts, operating income as a percentage of net sales remained stable year-over-year due to efficient management of selling, general, and administrative (SG&A) expenses. This indicates effective cost control and operational leverage.
02—Key points
Key Highlights
- Net sales for the second quarter of 2026 increased by 14.7% to $2,386.9 million compared to the prior year period.
- Net income for the quarter rose by 15.9% to $382.8 million, with diluted EPS growing to $0.33.
- Gross profit margin saw a slight decrease to 44.6% from 45.3%, primarily due to unfavorable price/cost dynamics and customer mix shifts.
- SG&A expenses as a percentage of net sales improved to 23.5% from 24.4%, demonstrating effective cost management.
- Operating income margin remained strong at 21.0%, consistent with the prior year, as SG&A leverage offset gross margin pressure.
- Sales through the digital footprint, encompassing FMI and eBusiness, grew by 16.2% to $1,492.9 million.
- The company repurchased $29.7 million of its common stock in Q2 2026, in addition to paying $275.4 million in dividends.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Fastenal Co kept $0.16.
- Revenue$2.39B100.0%
- Cost of revenue−$1.32B55.4%
- Gross profit$1.06B44.6%
- Operating costs−$561.8M23.5%
- Operating income$501.8M21.0%
- Interest, other & tax−$119.0M5.0%
- Net income$382.8M16.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed July 16, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $2.39B$2.08B | +14.7% |
| Cost of Revenue | $1.32B$1.14B | +16.3% |
| Gross Profit | $1.06B$942.80M | +12.8% |
| SG&A Expenses | $561.80M$506.70M | +10.9% |
| Operating Income | $501.80M$436.10M | +15.1% |
| Net Income | $382.80M$330.30M | +15.9% |
| EPS (Basic) | $0.33$0.29 | +13.8% |
| EPS (Diluted) | $0.33$0.29 | +13.8% |
| Shares Outstanding (Basic) | 1.15B1.15B | 0.0% |
| Shares Outstanding (Diluted) | 1.15B1.15B | 0.0% |
05—Questions
Frequently Asked Questions
What drove the significant increase in net sales during the second quarter of 2026?
The 14.7% year-over-year increase in net sales was primarily driven by improved customer contract signings that began showing impact from early 2024, strategic product pricing initiatives, and a modest improvement in the overall industrial production environment in the first half of 2026. Foreign exchange rates also contributed positively, albeit to a lesser extent.
How did Fastenal manage its gross profit margin given the cost pressures mentioned?
While gross profit margin decreased slightly to 44.6% due to unfavorable net price/cost dynamics and a shift towards larger customers (which typically have lower gross margins), Fastenal's operational efficiency helped maintain strong operating income. The shift to larger customers, though impacting gross margin percentage, leads to higher absolute profit dollars and improved operating margins through fixed-cost leverage and operating efficiencies.
What is the company's outlook on capital expenditures and shareholder returns for the remainder of 2026?
For the full year 2026, Fastenal expects net capital expenditures to be between $310.0 million and $330.0 million, an increase from 2025, driven by facility upgrades, increased trucking spend, and elevated IT projects. The company demonstrated a commitment to shareholder returns in Q2 2026 by paying $275.4 million in dividends and repurchasing $29.7 million of its stock, and plans to continue returning capital to shareholders.
What impact are tariffs and global economic uncertainties having on Fastenal's business?
Fastenal continues to monitor global economic volatility, including geopolitical developments, commodity, labor, and transportation market fluctuations, as well as evolving trade policies and tariffs. While the company has strategies to mitigate adverse effects, the ultimate impact remains uncertain. Tariffs and import shipping costs had a immaterial impact on net income in the first six months of 2026, but this could become more significant as lower-tariff inventory is replaced.
06—Continue