MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying condensed consolidated financial statements and should be read in conjunction with the condensed consolidated financial statements. Dollar amounts are stated in millions except for share and per share amounts and where otherwise noted. All historical common stock share and per share information in this quarterly report on Form 10-Q have been retroactively adjusted to reflect the two-for-one stock split effective at the close of business on May 21, 2025. Percentage and dollar change calculations, which are based on non-rounded dollar values, may not be able to be recalculated using the dollar values 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. Prior to June 30, 2025, we disclosed the number of in-market locations which comprised the total number of branch and Onsite locations. As our focus shifts from measuring metrics primarily addressing development of capabilities to measuring customer sites served by our selling locations, we will disclose only the number of branch locations.
Business
Fastenal is a global leader in the wholesale distribution of industrial and construction supplies. We distribute these supplies through a network of more than 1,500 branch locations. Our largest end market is manufacturing. Sales to these customers include products for both original equipment manufacturing (OEM), where our products are consumed in the final products of our customers, and manufacturing, repair, and operations (MRO), where our products are consumed to support the facilities and ongoing operations of our customers. We also service general and commercial contractors in non-residential end markets as well as farmers, truckers, railroads, oil exploration companies, oil production and refinement companies, mining companies, federal, state, and local governmental entities, schools, warehouse and storage, data centers, and certain retail trades. Geographically, our branch locations and customers are primarily in North America, though we continue to grow our non-North American presence as well.
Our motto is Growth Through Customer Service®and our tagline is Where Industry Meets Innovation™. We are a customer- and growth-centric organization focused on identifying unique technologies, capabilities, and supply chain solutions that get us closer to our customers and reduce the total cost of their global supply chain. We believe this close-to-the-customer, 'high-touch, high-tech' partnership approach is differentiated in the marketplace and allows us to gain market share in what remains a fragmented industrial distribution market.
The global economy continues to experience elevated levels of volatility and uncertainty, including within the commodity, labor, and transportation markets, driven by a combination of geopolitical developments and macroeconomic factors. Recent imposition of new and expanded tariffs have further contributed to disruptions in global capital markets and global supply chains. These developments may impact our operations, financial condition, and results of operations. We are actively monitoring economic conditions in the U.S. and internationally, including the potential ramifications of evolving trade policies, changes in interest rates, foreign currency exchange rate fluctuations, inflationary pressures, and the risk of a global or regional economic recession. In response to these factors, we have implemented various strategies designed to mitigate certain adverse effects of changing inflationary conditions and supply chain challenges, while continuing to maintain market price competitiveness and price/cost neutrality. Historically, our broad and diverse customer base combined with our ability to innovate with our customers have provided a degree of resilience during periods of economic contraction in the industrial market. However, the ultimate impact of ongoing macroeconomic conditions, including recent tariff-related developments, remains uncertain and cannot be predicted at this time.
Executive Overview
The following table presents a performance summary of our results of operations for the six- and three-month periods ended June 30, 2025and 2024.
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Six-month Period
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Three-month Period
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2025
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2024
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Change
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2025
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2024
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Change
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Net sales
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$
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4,039.7
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3,811.3
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6.0
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%
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$
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2,080.3
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1,916.2
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8.6
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%
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Business days
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127
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128
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64
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64
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Daily sales
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$
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31.8
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29.8
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6.8
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%
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$
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32.5
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29.9
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8.6
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%
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Gross profit
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$
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1,826.7
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1,725.1
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5.9
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%
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$
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942.8
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863.5
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9.2
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%
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% of net sales
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45.2
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%
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45.3
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%
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45.3
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%
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45.1
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%
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SG&A expenses
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$
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996.7
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948.0
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5.1
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%
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$
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506.7
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476.6
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6.3
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%
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% of net sales
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24.7
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%
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24.9
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%
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24.4
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%
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24.9
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%
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Operating income
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$
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830.0
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777.1
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6.8
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%
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$
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436.1
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386.9
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12.7
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%
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% of net sales
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20.5
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%
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20.4
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%
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21.0
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%
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20.2
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%
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Income before income taxes
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$
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829.8
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776.2
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6.9
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%
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$
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436.6
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386.4
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13.0
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%
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% of net sales
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20.5
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%
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20.4
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%
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21.0
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%
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20.2
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%
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Net income
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$
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628.9
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590.4
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6.5
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%
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$
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330.3
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292.7
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12.8
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%
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Diluted net income per share
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$
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0.55
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0.51
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6.4
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%
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$
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0.29
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0.25
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12.7
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%
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Note - Daily sales are defined as the total net sales for the period divided by the number of business days (in the U.S.) in the period.
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The table below summarizes our absolute and full time equivalent (FTE; based on 40 hours per week) employee headcount, number of branch locations, number of $50K+ customer sites, and weighted Fastenal Managed Inventory (FMI) devices at the end of the periods presented and the percentage change compared to the end of the prior periods.
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Change
Since:
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Change
Since:
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Change
Since:
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Q2
2025
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Q1
2025
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Q1
2025
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Q4
2024
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Q4
2024
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Q2
2024
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Q2
2024
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Selling personnel - absolute employee headcount(1)
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17,192
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16,995
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1.2
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%
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16,669
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3.1
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%
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16,727
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2.8
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%
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Selling personnel - FTE employee headcount (1)
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15,660
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15,236
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2.8
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%
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15,014
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4.3
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%
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15,341
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2.1
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%
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Total personnel - absolute employee headcount
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24,362
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24,181
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0.7
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%
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23,702
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2.8
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%
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23,629
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3.1
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%
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Total personnel - FTE employee headcount
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21,807
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21,339
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2.2
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%
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20,958
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4.1
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%
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21,249
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2.6
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%
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Number of branch locations
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1,596
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1,587
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0.6
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%
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1,597
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-0.1
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%
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1,599
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-0.2
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%
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Number of $50K+ customer sites
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2,683
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2,502
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7.2
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%
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2,330
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15.2
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%
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2,386
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12.4
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%
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Weighted FMI devices (MEU installed count)
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132,174
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129,996
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1.7
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%
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126,957
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4.1
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%
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119,306
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10.8
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%
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(1) In the fourth quarter of 2024, we realigned certain employees as a result of a routine review of our organizational structure. While there is no change to total absolute or total FTE headcount, it produces minor shifts between headcount categories. Historical numbers have been adjusted to reflect this realignment.
During the last twelve months, we increased our total FTE employee headcount by 558. Our total FTE selling and sales support personnel increased by 319 to support growth and sales initiatives to target customer acquisition. We had an increase in our distribution and transportation FTE personnel of 133 to support increased product throughput at our distribution facilities. We had an increase in our remaining FTE personnel of 106, which related primarily to personnel investments in manufacturing, quality control, IT, and business analytics.
SECOND QUARTER OF 2025 VERSUS SECOND QUARTER OF 2024
Results of Operations
The following table sets forth condensed consolidated statements of income information (as a percentage of net sales) for the periods ended June 30:
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Three-month Period
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2025
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2024
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Net sales
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100.0
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%
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100.0
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%
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Gross profit
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45.3
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%
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45.1
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%
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SG&A expenses
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24.4
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%
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24.9
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%
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Operating income
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21.0
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%
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20.2
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%
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Net interest
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0.0
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%
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0.0
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%
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Income before income taxes
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21.0
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%
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20.2
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%
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Note - Amounts may not foot due to rounding difference.
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Sales
The table below sets forth net sales and daily sales for the periods ended June 30, and changes in such sales from the prior period to the more recent period:
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Three-month Period
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2025
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2024
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Net sales
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$
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2,080.3
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1,916.2
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Percentage change
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8.6
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%
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1.8
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%
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Business days
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64
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|
64
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Daily sales
|
$
|
32.5
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|
29.9
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Percentage change
|
8.6
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%
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|
1.8
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%
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Daily sales impact of currency fluctuations
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0.1
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%
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-0.2
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%
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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 of140 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 OEM and 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.The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
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DSR Change
Three-month Period
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% of Sales
Three-month Period
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2025
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2024
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2025
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2024
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OEM fasteners
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8.4
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%
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-2.3
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%
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|
19.4
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%
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19.5
|
%
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MRO fasteners
|
3.4
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%
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-4.3
|
%
|
|
11.1
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%
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11.5
|
%
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Total fasteners
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6.6
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%
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-3.0
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%
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30.5
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%
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31.0
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%
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Safety supplies
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10.7
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%
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7.1
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%
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|
22.2
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%
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21.8
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%
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Other product lines
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9.0
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%
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3.0
|
%
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47.3
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%
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47.2
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%
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Total non-fasteners
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9.5
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%
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4.2
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%
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|
69.5
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%
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69.0
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%
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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. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
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DSR Change
Three-month Period
|
|
% of Sales
Three-month Period
|
|
2025
|
2024
|
|
2025
|
2024
|
Heavy manufacturing
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7.5
|
%
|
1.8
|
%
|
|
42.9
|
%
|
43.3
|
%
|
Other manufacturing
|
11.5
|
%
|
4.0
|
%
|
|
33.0
|
%
|
32.2
|
%
|
Total manufacturing
|
9.2
|
%
|
2.7
|
%
|
|
75.9
|
%
|
75.5
|
%
|
Non-residential construction
|
3.0
|
%
|
-5.5
|
%
|
|
8.1
|
%
|
8.5
|
%
|
Other end markets
|
8.7
|
%
|
1.5
|
%
|
|
16.0
|
%
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16.0
|
%
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Total non-manufacturing
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6.7
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%
|
-1.0
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%
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|
24.1
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%
|
24.5
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%
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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. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
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|
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|
DSR Change
Three-month Period
|
|
% of Sales
Three-month Period
|
|
2025
|
2024
|
|
2025
|
2024
|
Contract sales
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11.0
|
%
|
6.9
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%
|
|
73.2
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%
|
71.2
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%
|
Non-contract sales
|
2.6
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%
|
-9.0
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%
|
|
26.8
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%
|
28.8
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%
|
Supplemental Data
Prior to 2025, our disclosed metrics primarily addressed development of capabilities, including branch openings, geographic expansion, growth of national accounts, growth of non-fastener products, FMI installations, and Onsite signings, to name a few. The data provided in the chart below measures the number of customer sites that are served throughout our in-market network, categorizing them by monthly customer spend categories and end market, and the sales and average sales per site. We believe this supplemental information may be useful to investors in evaluating Fastenal's business trends and whether and to what degree we are being successful. Historical end market sales have been updated in the table below to categorize by customer site and may not be able to be recalculated due to the rounding of those dollar values.
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Three-month Period
2025
|
|
Three-month Period
2024
|
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Customer Sites (#) (1) (2)
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Sales
|
Mo. Sales per Customer Site (3)
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Customer Sites (#) (1) (2)
|
Sales
|
Mo. Sales per Customer Site (3)
|
Manufacturing
|
|
|
|
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$50K+/Mo. (4)
|
2,250
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$937.5
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|
$138,889
|
|
|
2,021
|
|
$835.8
|
|
$137,853
|
|
|
|
|
|
|
|
|
|
$10K+/Mo.
|
8,827
|
1,373.6
|
|
51,871
|
|
|
8,369
|
|
1,250.3
|
|
49,799
|
|
$5K-$10K/Mo.
|
4,456
|
95.9
|
|
7,174
|
|
|
4,434
|
|
94.9
|
|
7,134
|
|
<$5K/Mo.
|
29,855
|
103.2
|
|
1,152
|
|
|
32,009
|
|
104.6
|
|
1,089
|
|
Other sales (5)
|
-
|
2.7
|
|
-
|
|
|
-
|
|
11.1
|
|
-
|
|
Total manufacturing
|
43,138
|
$1,575.4
|
|
$12,152
|
|
|
44,812
|
|
$1,460.9
|
|
$10,784
|
|
|
|
|
|
|
|
|
|
Non-manufacturing
|
|
|
|
|
|
|
|
$50K+/Mo. (4)
|
433
|
$156.6
|
|
$120,554
|
|
|
365
|
|
$120.0
|
|
$109,589
|
|
|
|
|
|
|
|
|
|
$10K+/Mo.
|
3,141
|
320.4
|
|
34,002
|
|
|
2,849
|
|
267.1
|
|
31,251
|
|
$5K-$10K/Mo.
|
2,922
|
61.6
|
|
7,027
|
|
|
2,849
|
|
59.9
|
|
7,008
|
|
<$5K/Mo.
|
52,239
|
111.4
|
|
711
|
|
|
58,844
|
|
116.6
|
|
661
|
|
Other sales (5)
|
-
|
11.5
|
|
-
|
|
|
-
|
|
11.7
|
|
-
|
|
Total non-manufacturing
|
58,302
|
$504.9
|
|
$2,822
|
|
|
64,542
|
|
$455.3
|
|
$2,290
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
$50K+/Mo. (4)
|
2,683
|
$1,094.1
|
|
$135,930
|
|
|
2,386
|
|
$955.8
|
|
$133,529
|
|
|
|
|
|
|
|
|
|
$10K+/Mo.
|
11,968
|
1,694.0
|
|
47,181
|
|
|
11,218
|
|
1,517.4
|
|
45,088
|
|
$5K-$10K/Mo.
|
7,378
|
157.5
|
|
7,116
|
|
|
7,283
|
|
154.8
|
|
7,085
|
|
<$5K/Mo.
|
82,094
|
214.6
|
|
871
|
|
|
90,853
|
|
221.2
|
|
812
|
|
Other sales (5)
|
-
|
14.2
|
|
-
|
|
|
-
|
|
22.8
|
|
-
|
|
Total
|
101,440
|
$2,080.3
|
|
$6,790
|
|
|
109,354
|
|
$1,916.2
|
|
$5,771
|
|
(1)Customer sites represent the number of customer locations served by our in-market network. Individual customers with multiple locations across multiple in-market locations will have multiple customer sites.
(2)Customer sites are an average of the number of customer sites calculated each month.
(3)Monthly sales per customer site totals do not include the sales from other sales lines, as there is no customer site count associated with it. This column is not rounded to the millions and represents the exact dollar amount.
(4)$50K+ customer sites are disclosed as a representation of Onsite-like customers and are also a subset of $10K+ customer sites.
(5)Other sales represent impacts to sales that are not tied to a specific site or in-market location. This includes certain service fees, cash sales, direct product sales, etc.
FMI Technology comprises our FASTStock℠ (scanned stocking locations), FASTBin®(infrared, RFID, and scaled bins), and FASTVend®(vending devices) offerings. FASTStock's fulfillment processing technology is not embedded, is relatively less expensive and highly flexible in application, and is delivered using our proprietary mobility technology. FASTBin and FASTVend incorporate highly efficient and powerful embedded data tracking and fulfillment processing technologies. The first statistic is a weighted FMI®measure, which combines the signings and installations of FASTBin and FASTVend in a standardized machine equivalent unit (MEU) based on the expected output of each type of device. We do not include FASTStock in this measurement because scanned stocking locations can take many forms, such as bins, shelves, cabinets, pallets, etc., that cannot be converted into a standardized MEU. The second statistic is sales through FMI Technology, which combines the sales through FASTStock, FASTBin, and FASTVend. A portion of the growth in sales experienced by FMI, particularly FASTStock and FASTBin, reflects the migration of products from less efficient non-digital stocking locations to more efficient, digital stocking locations.
We signed 6,458 weighted FASTBin and FASTVend devices in the second quarter of 2025. Our goal for weighted FASTBin and FASTVend device signings in 2025 is 25,000 to 26,000 MEU (our previous goal was 28,000 to 30,000 MEUs).
The table below summarizes signings and installations of our FMI devices and sales through our FMI devices, eBusiness(1)tools, and Digital Footprint(2).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month Period
|
|
2025
|
|
2024
|
|
DSR
Change (3)
|
Weighted FASTBin/FASTVend signings (MEUs)
|
6,458
|
|
|
7,188
|
|
|
-10.2
|
%
|
Signings per day
|
101
|
|
|
112
|
|
|
|
Weighted FASTBin/FASTVend installations (MEUs; end of period)
|
132,174
|
|
|
119,306
|
|
|
10.8
|
%
|
|
|
|
|
|
|
FASTStock sales
|
$
|
263.2
|
|
|
244.4
|
|
|
7.7
|
%
|
% of sales
|
12.5
|
%
|
|
12.6
|
%
|
|
|
FASTBin/FASTVend sales
|
$
|
665.3
|
|
|
567.0
|
|
|
17.3
|
%
|
% of sales
|
31.6
|
%
|
|
29.2
|
%
|
|
|
FMI sales
|
$
|
928.5
|
|
|
811.4
|
|
|
14.4
|
%
|
FMI daily sales
|
$
|
14.5
|
|
|
12.7
|
|
|
|
% of sales
|
44.1
|
%
|
|
41.8
|
%
|
|
|
|
|
|
|
|
|
eBusiness sales
|
$
|
631.9
|
|
|
557.0
|
|
|
13.5
|
%
|
% of sales
|
30.0
|
%
|
|
28.7
|
%
|
|
|
|
|
|
|
|
|
Less: eBusiness and FMI sales overlap
|
$
|
275.7
|
|
|
215.9
|
|
|
27.8
|
%
|
% of sales
|
13.1
|
%
|
|
11.1
|
%
|
|
|
|
|
|
|
|
|
Digital Footprint sales
|
$
|
1,284.7
|
|
|
1,152.5
|
|
|
11.5
|
%
|
% of sales
|
61.0
|
%
|
|
59.4
|
%
|
|
|
(1)Our eBusiness includes eProcurement activities, which are integrated transactions, including electronic data interchange (EDI), and eCommerce (transactional website sales).
(2)Digital Footprint is a combination of our sales through FMI (FASTStock, FASTBin, and FASTVend) plus that portion of our eBusiness sales that does not represent billings of FMI services.
(3)Weighted FASTBin/FASTVend signings and installations reflects the percent change compared to the same period in the prior year.
Gross Profit
Our gross profit, as a percentage of net sales, increased to45.3% in the second quarter of 2025 from 45.1% in the secondquarter 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.
The percentage change in employee-related, occupancy-related, and all other SG&A expenses compared to the same period in the preceding year, is outlined in the table below.
|
|
|
|
|
|
|
|
|
|
Approximate Percentage of Total SG&A Expenses
|
Three-month Period
|
|
2025
|
Employee-related expenses
|
70% to 75%
|
10.3
|
%
|
Occupancy-related expenses
|
15% to 20%
|
3.0
|
%
|
All other SG&A expenses
|
10% to 15%
|
-10.6
|
%
|
Employee-related expenses include: (1) payroll (which includes cash compensation, stock option expense, and profit sharing), (2) health care, (3) personnel development, and (4) social taxes.
In the secondquarter of 2025, our employee-related expenses increased when compared to the secondquarter 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.
The table below summarizes our FTE headcount at the end of the periods presented andthe percentage change compared to the end of the prior periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
Since:
|
|
|
Change
Since:
|
|
Q2
2025
|
|
Q1
2025
|
Q1
2025
|
|
Q2
2024 (1)
|
Q2
2024
|
Selling personnel(2)
|
15,660
|
|
|
15,236
|
|
2.8
|
%
|
|
15,341
|
|
2.1
|
%
|
Distribution/Transportation personnel
|
3,098
|
|
|
3,111
|
|
-0.4
|
%
|
|
2,965
|
|
4.5
|
%
|
Manufacturing personnel
|
966
|
|
|
957
|
|
0.9
|
%
|
|
928
|
|
4.1
|
%
|
Organizational support personnel (3)
|
2,083
|
|
|
2,035
|
|
2.4
|
%
|
|
2,015
|
|
3.4
|
%
|
Total personnel
|
21,807
|
|
|
21,339
|
|
2.2
|
%
|
|
21,249
|
|
2.6
|
%
|
|
|
|
|
|
|
(1)
|
In the fourth quarter of 2024, we realigned certain employees as a result of a routine review of our organizational structure. While there is no change to total absolute or total FTE headcount, it produces minor shifts between headcount categories. Historical numbers have been adjusted to reflect this realignment.
|
(2)
|
Of our Selling personnel, 80%-85% are attached to a specific in-market location.
|
(3)
|
Organizational support personnel consists of: (1) Sales Support personnel (37% to 42% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) information technology (IT) personnel (35% to 40% of category); and (3) Administrative Support personnel (22% to 27% of category), which includes human resources, Fastenal School of Business, accounting and finance, senior management, etc.
|
Occupancy-related expenses include: (1) building rent and depreciation, (2) building utility costs, (3) equipment related to our branches and distribution locations, and (4) industrial vending equipment and bins utilized as part of FMI services (we consider this hardware to be a logical extension of our in-market operations and classify the depreciation and repair costs as occupancy expenses).
In the second quarter of 2025, our occupancy-related expenses increased when 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.
All other SG&A expenses include: (1) selling-related transportation, (2) IT expenses, (3) general corporate expenses, which consist of legal expenses, general insurance expenses, travel and marketing expenses, etc., and (4) sales of property and equipment.
Combined, all other SG&A expenses decreased in the second quarter of 2025 when compared to the second quarter of 2024. Sales-related travel and 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.
Liquidity and Capital Resources
Cash flow activity was as follows for the periods ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-month Period
|
|
Five-Year Average(1)
|
|
2025
|
|
2024
|
|
Change
|
Net cash provided by operating activities
|
|
|
$
|
278.6
|
|
|
258.0
|
|
|
8.1
|
%
|
% of net income
|
83.7
|
%
|
|
84.4
|
%
|
|
88.1
|
%
|
|
|
Net cash used in investing activities
|
|
|
$
|
64.4
|
|
|
52.7
|
|
|
22.3
|
%
|
% of net income
|
16.0
|
%
|
|
19.5
|
%
|
|
18.0
|
%
|
|
|
Net cash used in financing activities
|
|
|
$
|
216.4
|
|
|
185.5
|
|
|
16.6
|
%
|
(1) Five-year average includes 2020 to 2024.
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $20.6 in the second quarter of 2025 when compared to the second quarter of 2024. The decrease in operating cash flow, as a percent of net income, primarilyreflects 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.
The dollar and percentage change in accounts receivable, net, inventories, and accounts payable as of June 30, 2025 when compared to June 30, 2024 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30
|
Twelve-month Dollar Change
|
Twelve-month Percentage Change
|
|
|
2025
|
|
2024
|
|
2025
|
|
2025
|
Accounts receivable, net
|
|
$
|
1,324.2
|
|
|
1,204.8
|
|
|
$
|
119.3
|
|
|
9.9
|
%
|
Inventories
|
|
1,726.3
|
|
|
1,504.6
|
|
|
221.7
|
|
|
14.7
|
%
|
Trade working capital
|
|
$
|
3,050.5
|
|
|
2,709.4
|
|
|
$
|
341.0
|
|
|
12.6
|
%
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
319.3
|
|
|
292.6
|
|
|
$
|
26.7
|
|
|
9.1
|
%
|
Trade working capital, net
|
|
$
|
2,731.2
|
|
|
2,416.8
|
|
|
$
|
314.3
|
|
|
13.0
|
%
|
|
|
|
|
|
|
|
|
|
Net sales in last three months
|
|
$
|
2,080.3
|
|
|
1,916.2
|
|
|
$
|
164.1
|
|
|
8.6
|
%
|
Note - Amounts may not foot due to rounding difference.
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.
Net Cash Used in Investing Activities
Net cash used in investing activities increased $11.7 in the second quarter of 2025 when compared to the second quarter of 2024. This was due to an increase in purchases of property and equipment in the second quarter of 2025 compared to the second quarter of 2024.
Our capital spending typically falls into five categories: (1) purchases related to FMI hardware, (2) purchases of property and equipment related to expansion of and enhancements to distribution centers, owned or leased branch properties, and other company facilities, (3) spending on software and hardware for our information processing systems, (4) the addition of fleet vehicles, and (5) the addition of manufacturing equipment. Proceeds from the sales of property and equipment, typically for the planned disposition of pick-up trucks as well as distribution vehicles and trailers in the normal course of business, are netted against these purchases and additions. During the second quarter of 2025, our net capital expenditures (purchases of property and equipment, net of proceeds from sales of property and equipment) were $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.
Cash requirements for capital expenditures were satisfied from cash generated from operations, available cash and cash equivalents, our borrowing capacity, and the proceeds of disposals. For 2025, weexpect ournet capital expenditures 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.
Net Cash Used in Financing Activities
Net cash used in financing activities increased $30.9 in the second quarter of 2025 when compared to the second quarter of 2024. In the second quarter of 2025, we had higher average borrowings outstanding and were using capital to reduce those balances. In contrast, in the second quarter of 2024, we had lower average borrowings. As a result, we used significantly more capital to reduce debt balances in the second quarter of 2025 relative to the second quarter of 2024. We also increased capital returned to shareholders through dividends in the period.
During the second quarter of 2025, we returned $252.5 to our shareholders in the form ofdividends, 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.
We have authority to purchase up to 12,400,000 shares of our common stock under the July 12, 2022 authorization. This authorization does not have an expiration date.
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. The slight reduction in debt at the end of the second quarter of 2025 versus the prior period reflects strong generation of net cash provided by operating activities over the last 12 months in excess of what was necessary to finance net capital expenditures, payment of dividends, and other investing and financing cash needs.
Our material cash requirements for known contractual obligations include capital expenditures, debt, and lease obligations, each of which are discussed in more detail earlier in this report in the Notes to Condensed Consolidated Financial Statements and in our 2024annual report on Form 10-K.
An overview of our cash dividends paid or declared in 2025 and 2024 is contained in Note 3 of the Notes to Condensed Consolidated Financial Statements.
SIX MONTHS ENDED JUNE 30, 2025 VERSUS SIX MONTHS ENDED JUNE 30, 2024
Results of Operations
The following table sets forth condensed consolidated statements of income information (as a percentage of net sales) for the periods ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-month Period
|
|
2025
|
|
2024
|
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
Gross profit
|
45.2
|
%
|
|
45.3
|
%
|
SG&A expenses
|
24.7
|
%
|
|
24.9
|
%
|
Operating income
|
20.5
|
%
|
|
20.4
|
%
|
Net interest
|
0.0
|
%
|
|
0.0
|
%
|
Income before income taxes
|
20.5
|
%
|
|
20.4
|
%
|
|
|
|
|
Note - Amounts may not foot due to rounding difference.
|
|
|
|
Sales
The table below sets forth net sales and daily sales for the periods ended June 30, and changes in such sales from the prior period to the more recent period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-month Period
|
|
2025
|
|
2024
|
Net sales
|
$
|
4,039.7
|
|
|
3,811.3
|
|
Percentage change
|
6.0
|
%
|
|
1.8
|
%
|
Business days
|
127
|
|
|
128
|
|
Daily sales
|
$
|
31.8
|
|
|
29.8
|
|
Percentage change
|
6.8
|
%
|
|
1.8
|
%
|
Daily sales impact of currency fluctuations
|
-0.2
|
%
|
|
-0.1
|
%
|
Net sales increased $228.4, or 6.0%, in the first six months of 2025 when compared to the first six months of 2024. The effect of adverse weather in the first six months of 2025 was a reduction in sales by 25 to 35 basis points compared to the first six months of 2024 when the effect of adverse weather was a reduction in sales by 15 to 35 basis points. Changes in foreign exchange rates negatively affected sales in the first six months of 2025 and 2024 by approximately 20 and 10 basis points, respectively.
We experienced an increase in unit sales in the first six months of 2025 when compared to the first six months of 2024. This was primarily due to growth with large customers, both those operating out of Onsite locations that have been opened in the last two years and, to a lesser degree, those being serviced from traditional branch operations. Theimpact of product pricing on net sales in the first six months of 2025 was an increase of 70 to 100 basis points, compared to the first six months of 2024, which experienced a decline of 10 to 40 basis points. The increase reflects pricing actions implemented in the second quarter of 2025 to address additional tariffs enacted beginning in February 2025.
From a product standpoint, we have three categories: fasteners, including fasteners used in OEM and 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 first half 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 first half of 2025. 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. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSR Change
Six-month Period
|
|
% of Sales
Six-month Period
|
|
2025
|
2024
|
|
2025
|
2024
|
OEM fasteners
|
6.2
|
%
|
-3.2
|
%
|
|
19.4
|
%
|
19.6
|
%
|
MRO fasteners
|
0.0
|
%
|
-4.7
|
%
|
|
11.0
|
%
|
11.7
|
%
|
Total fasteners
|
3.9
|
%
|
-3.7
|
%
|
|
30.4
|
%
|
31.3
|
%
|
Safety supplies
|
8.9
|
%
|
7.7
|
%
|
|
22.1
|
%
|
21.7
|
%
|
Other product lines
|
7.9
|
%
|
3.4
|
%
|
|
47.5
|
%
|
47.0
|
%
|
Total non-fasteners
|
8.2
|
%
|
4.7
|
%
|
|
69.6
|
%
|
68.7
|
%
|
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 are outperforming primarily due to the relative strength we are experiencing with key account customers with significant managed spend where our service model and technology is particularly impactful. This disproportionately benefits manufacturing customers. Other end market sales are improving primarily as a result of strength with warehousing customers due to market share gains and product mix. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSR Change
Six-month Period
|
|
% of Sales
Six-month Period
|
|
2025
|
2024
|
|
2025
|
2024
|
Heavy manufacturing
|
6.2
|
%
|
2.2
|
%
|
|
43.1
|
%
|
43.4
|
%
|
Other manufacturing
|
10.6
|
%
|
3.3
|
%
|
|
33.0
|
%
|
31.9
|
%
|
Total manufacturing
|
8.0
|
%
|
2.7
|
%
|
|
76.1
|
%
|
75.3
|
%
|
Non-residential construction
|
-0.1
|
%
|
-6.1
|
%
|
|
8.0
|
%
|
8.5
|
%
|
Other end markets
|
4.8
|
%
|
2.7
|
%
|
|
15.9
|
%
|
16.2
|
%
|
Total non-manufacturing
|
3.1
|
%
|
-0.5
|
%
|
|
23.9
|
%
|
24.7
|
%
|
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. The DSR change when compared to the same period in the prior year and the percent of sales in the period were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSR Change
Six-month Period
|
|
% of Sales
Six-month Period
|
|
2025
|
2024
|
|
2025
|
2024
|
Contract sales
|
9.8
|
%
|
7.1
|
%
|
|
73.1
|
%
|
70.9
|
%
|
Non-contract sales
|
-0.5
|
%
|
-8.9
|
%
|
|
26.9
|
%
|
29.1
|
%
|
We signed 12,875 weighted FASTBin and FASTVend devices in the first six months of 2025.
The table below summarizes signings and installations of our FMI devices and sales through our FMI devices, eBusiness(1)tools, and Digital Footprint(2).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-month Period
|
|
2025
|
|
2024
|
|
DSR
Change (3)
|
Weighted FASTBin/FASTVend signings (MEUs)
|
12,875
|
|
|
13,914
|
|
|
-7.5
|
%
|
Signings per day
|
101
|
|
|
109
|
|
|
|
Weighted FASTBin/FASTVend installations (MEUs; end of period)
|
132,174
|
|
|
119,306
|
|
|
10.8
|
%
|
|
|
|
|
|
|
FASTStock sales
|
$
|
502.3
|
|
|
484.2
|
|
|
4.6
|
%
|
% of sales
|
12.3
|
%
|
|
12.5
|
%
|
|
|
FASTBin/FASTVend sales
|
$
|
1,285.2
|
|
|
1,123.9
|
|
|
15.3
|
%
|
% of sales
|
31.4
|
%
|
|
29.1
|
%
|
|
|
FMI sales
|
$
|
1,787.5
|
|
|
1,608.1
|
|
|
12.0
|
%
|
FMI daily sales
|
$
|
14.1
|
|
|
12.6
|
|
|
|
% of sales
|
43.7
|
%
|
|
41.7
|
%
|
|
|
|
|
|
|
|
|
eBusiness sales
|
$
|
1,239.6
|
|
|
1,103.8
|
|
|
13.2
|
%
|
% of sales
|
30.3
|
%
|
|
28.6
|
%
|
|
|
|
|
|
|
|
|
Less: eBusiness and FMI sales overlap
|
$
|
534.5
|
|
|
426.4
|
|
|
26.3
|
%
|
% of sales
|
13.1
|
%
|
|
11.1
|
%
|
|
|
|
|
|
|
|
|
Digital Footprint sales
|
$
|
2,492.6
|
|
|
2,285.5
|
|
|
9.9
|
%
|
% of sales
|
61.0
|
%
|
|
59.2
|
%
|
|
|
(1)Our eBusiness includes eProcurement activities, which are integrated transactions, including electronic data interchange (EDI), and eCommerce (transactional website sales).
(2)Digital Footprint is a combination of our sales through FMI (FASTStock, FASTBin, and FASTVend) plus that portion of our eBusiness sales that does not represent billings of FMI services.
(3)Weighted FASTBin/FASTVend signings and installations reflects the percent change compared to the same period in the prior year.
Gross Profit
Our gross profit, as a percentage of net sales, decreased to 45.2% in the first six months of 2025, from 45.3% in the first six months of 2024. The largest factor behind the decline in our gross profit percentage in the first six months of 2025 was customer and product mix. We continued to experience relatively strong growth from Onsite customers and non-fastener products, each of which tend to have a lower gross profit percentage than our business as a whole. We also 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. These adverse impacts were partly offset by slightly favorable price-cost in the second quarter of 2025 and the ongoing fastener expansion project and other supplier-focused initiatives, which favorably impacted our gross profit percentage.
SG&A Expenses
Our SG&A expenses, as a percentage of net sales, were 24.7% in the first six months of 2025 down from 24.9% in the first six months of 2024. Efforts to control growth in operating expenses in the first six months of 2025 produced a 5.1% expansion of total SG&A expenses in the period. Growth in net sales was above growth in SG&A expenses, resulting in our leveraging of costs in the first six months of 2025.
The percentage change in employee-related, occupancy-related, and all other SG&A expenses compared to the same period in the preceding year, is outlined in the table below.
|
|
|
|
|
|
|
|
|
|
Approximate Percentage of Total SG&A Expenses
|
Six-month Period
|
|
2025
|
Employee-related expenses
|
70% to 75%
|
6.3
|
%
|
Occupancy-related expenses
|
15% to 20%
|
4.7
|
%
|
All other SG&A expenses
|
10% to 15%
|
-0.8
|
%
|
In the first six months of 2025, our employee-related expenses increased when compared to the first six months of 2024.Bonus and commission expense grew faster than the increase in net sales, as a result of improved sales and profit growth versus the prior year period. We experienced an increase in employee base pay due to higher average FTE and average wages during the period. Additionally, healthcare costs increased.
The table below summarizes our FTE headcount at the end of the periods presented andthe percentage change compared to the end of the prior period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
Since:
|
|
Q2
2025
|
|
Q4
2024 (1)
|
Q4
2024
|
Selling personnel (2)
|
15,660
|
|
|
15,014
|
|
4.3
|
%
|
Distribution/Transportation personnel
|
3,098
|
|
|
2,997
|
|
3.4
|
%
|
Manufacturing personnel
|
966
|
|
|
936
|
|
3.2
|
%
|
Organizational support personnel (3)
|
2,083
|
|
|
2,011
|
|
3.6
|
%
|
Total personnel
|
21,807
|
|
|
20,958
|
|
4.1
|
%
|
|
|
|
|
|
|
(1)
|
In the fourth quarter of 2024, we realigned certain employees as a result of a routine review of our organizational structure. While there is no change to total absolute or total FTE headcount, it produces minor shifts between headcount categories. Historical numbers have been adjusted to reflect this realignment.
|
(2)
|
Of our Selling personnel, 80%-85% are attached to a specific in-market location.
|
(3)
|
Organizational support personnel consists of: (1) Sales Support personnel (37% to 42% of category), which includes sourcing, purchasing, supply chain, product development, etc.; (2) IT personnel (35% to 40% of category); and (3) Administrative Support personnel (22% to 27% of category), which includes human resources, Fastenal School of Business, accounting and finance, senior management, etc.
|
In the first six months of 2025, our occupancy-related expenses increased when compared to the first six months of 2024. We had moderate increases in branch costs related to inflation, as well as non-branch expenses from incremental depreciation and other costs associated with hub investments and upgrades. FMI FASTBin depreciation and expense increased, reflecting higher installations.
Combined, all other SG&A expenses decreased in the first six months of 2025 when compared to the first six months of 2024. This reflects a number of items. We experienced higher lease costs in our selling-related vehicle fleet due to an increase in the mix of larger truck types and higher prices on newer vehicles which were only partly offset by reductions in fuel expense. IT, sales-related travel, and supplies expense also increased. These increases were more than offset by increased supplier marketing credits and a reduction in general insurance expense.
Operating Income
Our operating income, as a percentage of net sales, increased to 20.5% in the first six months of 2025 from 20.4% in the first six months of 2024.
Net Interest
We had higher interest income in the first six months of 2025. The increase in interest income relative to interest expense resulted in our generating net interest expense of $0.2 in the first six months of 2025, compared to $0.9 in the first six months of 2024.
Income Taxes
We recorded income tax expense of $200.9 in the first six months of 2025, or 24.2% of income before income taxes. Income tax expense was $185.8 in the first six months of 2024, or 23.9% 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%.
Net Income
Our net income during the first six months of 2025 was $628.9, an increase of 6.5% compared to the first six months of 2024. Our diluted net income per share was $0.55 in the first six months of 2025, compared to $0.51 in the first six months of 2024.
Liquidity and Capital Resources
Cash flow activity was as follows for the periods ended June 30:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-month Period
|
|
Five-Year Average(1)
|
|
2025
|
|
2024
|
|
Change
|
Net cash provided by operating activities
|
|
|
$
|
540.8
|
|
|
593.6
|
|
|
-8.8
|
%
|
% of net income
|
99.2
|
%
|
|
86.0
|
%
|
|
100.5
|
%
|
|
|
Net cash used in investing activities
|
|
|
$
|
118.3
|
|
|
101.1
|
|
|
17.0
|
%
|
% of net income
|
21.2
|
%
|
|
18.8
|
%
|
|
17.1
|
%
|
|
|
Net cash used in financing activities
|
|
|
$
|
451.8
|
|
|
452.9
|
|
|
-0.2
|
%
|
(1) Five-year average includes 2020 to 2024.
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $52.8 in the first sixmonths of 2025when compared to the first sixmonths 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 as compared to the first six months of 2024.
Net Cash Used in Investing Activities
Net cash used in investing activities increased $17.2 in the first six months of 2025 when compared to the first six months of 2024.
During the first six months of 2025, our net capital expenditures were $118.1, which was an increase from $100.9 in the first six months of 2024. This was primarily related to an increase in spending on FMI hardware to support growth in our installed base, facility construction and upgrades, IT, and vehicles.
Net Cash Used in Financing Activities
Net cash used in financing activities decreased $1.1 in the first six months of 2025 when compared to the first sixmonths of 2024. This was primarily due to reducing our net indebtedness less in the first six months of 2025 than we did in the first six months of 2024. This was partly offset by an increase in capital returned to shareholders through dividends in the period.
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.
Critical Accounting Policies and Estimates - A discussion of our critical accounting policies and estimates is contained in our 2024 annual report on Form 10-K. There have been no material changes from the critical accounting policies and estimates disclosed in our annual report on Form 10-K.
Recently Issued and Adopted Accounting Pronouncements - A description of recently issued and adopted accounting pronouncements, if any, is contained in Note 1 of the Notes to Condensed Consolidated Financial Statements.
Forward-Looking Statements -Certain statements contained in this quarterly report on Form 10-Q do not relate strictly to historical or current facts. As such, they are considered 'forward-looking statements' that provide current expectations or forecasts of future events. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of terminology such as anticipate, believe, should, estimate, expect, intend, may, will, plan, goal, project, hope, trend, target, opportunity, and similar words or expressions, or by references to typical outcomes. Any statement that is not a purely historical fact, including estimates, projections, trends, and the outcome of events that have not yet occurred, is a forward-looking statement. Our forward-looking statements generally relate to our expectations and beliefs regarding the business environment in which we operate, our projections of future performance, our perceived marketplace opportunities, our strategies, goals, mission and vision, our expectations related to future capital expenditures, future investment in property and equipment, future tax rates, including anticipated tax impacts from recent legislation, future inventory levels, the declaration and payment of dividends, pricing, weighted FMI device signings, the impact of inflation on our cost of goods or SG&A expenses, the impact of price increases on overall sales growth or margin performance, and our ability to grow our business through the enhancement of sales through our Digital Footprint. You should understand that forward-looking statements involve a variety of risks and uncertainties, known and unknown, and may be affected by inaccurate assumptions. Consequently, no forward-looking statement can be guaranteed and actual results may vary materially. Factors that could cause our actual results to differ from those discussed in the forward-looking statements include, but are not limited to, economic downturns, weakness in the manufacturing or commercial construction industries or any of our end markets, competitive pressure on selling prices, changes in our current mix of products, customers, or geographic locations, changes in our average branch size, changes in our purchasing patterns, changes in customer needs, changes in fuel or commodity prices, inclement weather, changes in foreign currency exchange rates, difficulty in adapting our business model to different foreign business environments and the challenges of operating in foreign business environments, failure to accurately predict the market potential of our business strategies, the introduction or expansion of new business strategies, weak acceptance or adoption of our FMI offering, increased competition in FMI, difficulty in maintaining installation quality as our FMI business expands, the leasing to customers of a significant number of additional FMI devices, the failure to meet our goals and expectations regarding branch openings, branch closings, or expansion of our FMI offering, the failure to realize expected benefits from the completion of our strategic rationalization, changes in the implementation objectives of our business strategies, challenges in developing and expanding our digital capabilities, difficulty in hiring, relocating, training, or retaining qualified personnel, difficulty in controlling SG&A expenses, including FTE growth, difficulty in collecting receivables or accurately predicting future inventory needs, dramatic changes in sales trends, changes in supplier production lead times, short-term inefficiencies in our supply chain may not normalize or result in certain warehousing customer growth, changes in our cash position or our need to make capital expenditures, credit market volatility, changes in tax law or the impact of any such changes on future tax rates, changes in tariffs or the impact of any such changes on our financial results, changes in the availability or price of commercial real estate, changes in the nature, price, or availability of distribution, supply chain, or other technology (including software licensed from third parties) and services related to that technology, cyber-security incidents, potential liability and reputational damage that can arise if our products are defective, difficulties measuring the contribution of price increases on sales growth, acts of war, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission, including our most recent annual and quarterly reports. Each forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any such statement to reflect events or circumstances arising after such date.