Fastenal (NASDAQ:FAST) used its fourth-quarter and full-year 2025 earnings call to highlight a return to double-digit growth, ongoing market share gains, and the expanding role of its Fastenal Managed Inventory (FMI) technology and digital tools in customer relationships. Executives also discussed margin drivers, pricing dynamics tied to tariffs and supplier actions, and capital investment plans for 2026.
Fourth-quarter results cap a “recovery” year
President and Chief Sales Officer Jeff Watts said Fastenal “delivered a strong fourth quarter,” with daily sales up just over 11% and net sales rising 11% year over year to $2.03 billion. Fourth-quarter net income increased 12.2% to $294.1 million, with earnings per share of $0.26.
Watts also noted that pricing contributed roughly 310 to 340 basis points of fourth-quarter sales growth, describing Fastenal as “essentially neutral on price-cost for the year,” while still using pricing to offset inflationary pressures.
Key accounts and higher-spend sites drive mix shift
Watts emphasized a strategy focused on key accounts, national and global contracts, and deeper relationships with large customers. He said the company’s total contract customer count grew by 241 in 2025, or just over 7%, reflecting new signings and expansions.
Fastenal’s site metrics showed growth concentrated in larger accounts. Watts said Active 50K Plus Sites rose 14% year over year in the fourth quarter and now represent just over half of total revenue. The 10K-plus customer category increased about 8% to just over 11,700 sites.
Smaller customer sites declined, which management said was expected. Watts said 94% of the decline in under-5K sites came from customers spending less than $500 per month, and almost 55% came from sites spending under $100 for the year. He framed the shift as a deliberate choice to prioritize higher-potential relationships rather than “low-volume transactional business.”
Chief Financial Officer Max Tunnicliffe said sales to manufacturing and markets outperformed other end markets on a relative basis, led by key accounts. He added that other segments—including construction, education, healthcare, transportation, and data centers—also showed positive momentum.
FMI and digital channels approach two-thirds of sales
Management repeatedly pointed to FMI technology and digital engagement as central to Fastenal’s customer “stickiness” and efficiency. Watts said nearly half of fourth-quarter sales were transacted through FMI technology or other digital channels.
In the quarter, Fastenal signed more than 5,900 weighted FMI devices, a pace Watts said was slightly below the prior year’s strong fourth quarter but still about 14% above the company’s five-year average. For 2025, Fastenal signed about 25,900 devices, bringing the installed base of active FMI devices up 7.6% year over year to roughly 136,600 units.
Watts said 46.1% of fourth-quarter sales were dispensed or managed through FMI technology, up from 43.9% a year earlier. E-business sales grew 6.4% year over year and represented 29.6% of fourth-quarter sales. Combined, the company’s “digital footprint” (FMI plus e-business) represented 62.1% of total fourth-quarter sales.
During Q&A, Watts said Fastenal expects e-business growth to re-accelerate as the company relaunches its website and further connects e-business tools to its FMI solutions, particularly in the latter half of 2026. CEO Dan Florness added that most e-business volume is tied to large-customer e-procurement tools such as EDI and punchouts, while the website-driven e-commerce portion is comparatively small and not expected to meaningfully swing gross margin.
Margins: timing effects in Q4, efficiency focus continues
Tunnicliffe said gross margin declined 50 basis points year over year in the fourth quarter, attributing the change to timing elements within cost of goods sold, including inventory-related working-capital relief flowing through the P&L and the timing of supplier rebates. He stressed the effects did not represent a change in underlying cost structure.
He also said net price-cost impact was nearly neutral for the quarter, at 10 basis points negative, as teams managed tariffs and input costs through analytics and sourcing strategies. On a full-year basis, Tunnicliffe said Fastenal’s “fastener expansion project” was the largest positive contributor to gross margin and helped keep full-year gross margin flat year over year. The company expects that project to anniversary in the second quarter of 2026, and Tunnicliffe said the modest annual gross margin contraction Fastenal has historically seen should be considered when thinking about 2026, with the expectation that SG&A efficiencies could offset that at the operating margin line.
SG&A was 25.4% of sales in the fourth quarter, down from 25.9% in the prior-year period, which Tunnicliffe said reflected cost discipline that more than offset incentive compensation reloads and continued investments in technology and sales support.
Florness also discussed the impact of incentive compensation as a “shock absorber,” describing how incentive compensation compressed in 2024 and expanded in 2025, influencing reported operating leverage.
Cash flow, shareholder returns, and 2026 investment plans
Tunnicliffe said operating cash flow was approximately $370 million, or 125% of net income. Working capital increased as accounts receivable and inventory rose 8.7% year over year, reflecting growth and the fastener expansion project, while accounts payable increased primarily due to inventory growth.
Net capital spending in 2025 was $230 million, or 2.8% of sales, focused on FMI hardware, facilities upgrades, IT infrastructure, and fleet expansion. Looking ahead, Tunnicliffe said 2026 capital spending is expected to rise to about 3.5% of net sales, with investment targeted toward hub capacity, additional FMI devices, and IT enhancements.
Fastenal returned just over $1 billion in dividends during 2025, which Tunnicliffe said represented about 80% of net income. He also said the company remains “opportunistic on buybacks” while maintaining a conservatively capitalized balance sheet.
Management described the macro backdrop as mixed, with industrial production and PMI data showing softness. Tunnicliffe said PMI averaged in the “low 48s” during the quarter and industrial production was close to flat year over year, with improvement late in the quarter. Holiday timing again affected December, with executives describing extended customer shutdowns and compressed shipping windows. Florness said shutdown activity normalized in early January.
On 2026, Florness said Fastenal anticipates double-digit net sales growth, which he characterized as a view of momentum rather than formal guidance. He also noted supplier and customer actions around tariffs and branded products, describing efforts that include pushing back on suppliers, having direct conversations with customers about price changes, and pursuing product substitution where needed.
The call also included leadership updates, with Florness congratulating Watts on being named the company’s next CEO effective in July, and welcoming Tunnicliffe in his first earnings call as CFO.
About Fastenal (NASDAQ:FAST)
Fastenal (NASDAQ: FAST) is a wholesale distributor of industrial and construction supplies, best known for its broad assortment of fasteners such as bolts, nuts, screws and anchors. Founded in Winona, Minnesota, Fastenal has grown from a regional supplier into a national and international distributor serving a wide range of end markets, including manufacturing, construction, maintenance, repair and operations (MRO), and government customers. The company is publicly traded and operates through a network of locally staffed branches combined with national distribution capabilities.
Product offerings extend beyond fasteners to include tools, safety and personal protective equipment, power transmission components, cutting and welding supplies, janitorial and material handling items, and other industrial consumables.
