Fastenal Company Q4 FY2025 earnings call

• Thanks to the Fastenal Blue team and employees for their performance in 2025. - Achieved double-digit Q4 growth with daily sales up over 11%, gaining market share despite a sluggish industrial economy. - Focused on increasing sales effectiveness by winning key accounts, new contracts, and deepening relationships with large customers; contract customer count improved by 241 (+7%) in 2025. - Enhanced services by expanding FMI devices and strengthening digital footprint, with nearly half of Q4 sales transacted through digital channels. - Expanded market reach by winning new sites/markets and strengthening presence in manufacturing, construction, etc. - Q4 financials: net sales $2.3B (+11% y/y), net income $294.1M (+12.2% y/y); full year: record sales $8.2B (+9% y/y), net income $1.26B (+9.4% y/y). - SG&A as a percentage of sales declined to 25.4% in Q4, with pricing contributing ~340 basis points of sales growth in Q4.

Fastenal delivered a strong fourth quarter with net sales of $2.3 billion in Q4, up 11% year over year. For the full year 2025, record annual sales reached $8.2 billion, up nearly 9% versus 2024. Net income in Q4 was $294.1 million, up 12.2% year over year, and full-year net income was $1.26 billion, up 9.4%. The number of active 50k+ sites rose 14% year over year, accounting for just over half of revenue. The 10k+ customer category grew roughly 8% to just over 11,700 sites in Q4. Fastener product line growth outpaced non-fastener categories. E-business sales grew 6.4% year over year, now accounting for about 30% of sales. The installed base of active FMI devices grew 7.6% year over year to about 136,600 units, with 46.1% of Q4 sales dispensed or managed through FMI technology.

• Expect double-digit net sales growth in 2026 supported by FMI technology and digital solutions. - CapEx expected to be approximately 3.5% of net sales in 2026, focusing on hub capacity, additional FMI device purchases, and IT enhancements. - Continued focus on key account strategy, expanding FMI and digital footprint, and deepening business in various segments.

• Macro environment mixed with industrial sector headwinds and trade/tariff uncertainty. - Supplier rebate timing factors impacting gross margin. - Pricing challenges, especially in non-fastener products due to branded supplier dynamics. - Seasonal holiday timing impacting December sales sequentials.

Q: David Manthey from Baird asked about double-digit net sales growth in 2026 and price contribution.

A: Dan Florness said it's about momentum, not guidance, and pricing is complex with cost increases and customer discussions.

Q: Ryan Merkel from William Blair asked about incremental margins in 2026 and price growth.

A: Dan Florness said high 20s incremental margin possible, price growth slower due to fatigue and non-fastener challenges.

Q: Tommy Moll from Stephens asked about large manufacturing markets stabilizing and Max Poneglyph's capital allocation.

A: Jeffery Watts said manufacturing markets flat, Max said no change in capital allocation framework.

Q: Ken Newman from KeyBanc Markets asked about price impact on volume and holiday timing impact.

A: Dan Florness and Max Poneglyph discussed price impact on volume and holiday timing normalizing in January.

Q: Chris Snyder from Morgan Stanley asked about 2026 price expectations.

A: Max Poneglyph said positive price compare with carryover, but many moving parts.

Q: Stephen Volkmann from Jefferies asked about e-business trends and impact on margins.

A: Jeffery Watts said e-business focus to accelerate, Dan Florness said e-business component small impact on gross margin.

Q: Chris Tinker from Loop Capital Markets asked about Q1 gross margin and 2026 investment spending.

A: Max Poneglyph said Q1 gross margin seasonal, 2026 investments in distribution and tech.