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FY2026 Q1
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Fastenal Company earnings call
Buzzberg read
Pricing actions fell short of cost increases in Q1
Fastenal reported a strong Q1 2026 with 12.4% daily sales growth, driven by market share gains and broad-based end-market strength, particularly in non-residential construction. While gross margin faced pressure from tariff-related pricing lags, operating margin expanded due to SG&A leverage and the company reaffirmed its confidence in future growth and its 2026 capex plan. Q1 daily sales grew 12.4%, the third consecutive quarter of double-digit growth, with operating margin improving 20 bps to 20.3%.
Buzzberg read Pricing actions fell short of cost increases in Q1 Fastenal reported a strong Q1 2026 with 12.4% daily sales growth, driven by market share gains and broad-based end-market strength, particularly in non-residential construction. While gross margin faced pressure from tariff-related pricing lags, operating margin expanded due to SG&A leverage and the company reaffirmed its confidence in future growth and its 2026 capex plan. Q1 daily sales grew 12.4%, the third consecutive quarter of double-digit growth, with operating margin improving 20 bps to 20.3%. Read full analysisCollapse analysis
Fastenal reported a strong Q1 2026 with 12.4% daily sales growth, driven by market share gains and broad-based end-market strength, particularly in non-residential construction. While gross margin faced pressure from tariff-related pricing lags, operating margin expanded due to SG&A leverage and the company reaffirmed its confidence in future growth and its 2026 capex plan. Q1 daily sales grew 12.4%, the third consecutive quarter of double-digit growth, with operating margin improving 20 bps to 20.3%.
- Non-residential construction sales accelerated to 17% growth, a major turnaround from recent quarters.
- Gross margin remained ~40 bps below target due to pricing actions lagging tariff-related cost increases; management expects to regain price-cost neutrality over coming quarters.
- International business grew ~24% in March, signaling accelerating growth outside the US.
Revenue$2.2017B+9% QoQ
EPS$0.30+15% QoQ
Gross margin44.64%Reported
Operating margin20.33%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Pricing
Q2 pricing continues challenging with expected recovery in H2
International
International business accelerating with 24% March growth
Show 3 more callouts
Capex
Capex expected at 3.5% of sales in 2026
Technology
FMI driving stickier customer relationships
Capital Allocation
Share repurchases to offset dilution going forward
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $2.2017B | +9% QoQ |
| EPS | $0.30 | +15% QoQ |
| Gross margin | 44.64% | Reported |
| Operating margin | 20.33% | Reported |
| Free cash flow | $0.3195B | +4% QoQ |
| Capex | $0.0589B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Capex | FY2026 | $320M | $320M | Maintained |
| UnitsCONTRACT_SIGNINGS | FY2026 | 250 | 250 | Guided |
AI, capex & demand read
Management read
Confident
Management expressed confidence in continued market share gains and strategic execution, despite acknowledging near-term pricing and macro challenges.
Investment and capacity
For full year 2026, management continues to expect net capex of approximately $320 million, investing at the higher end of their historical range, with investments focused on strengthening hub capacity, automation, IT infrastructure, and FMI device capabilities.
External signals
Supply-chain alpha · 4returns since call
Fastenal's non-residential construction business grew 17% in Q1, a sharp acceleration from ~4% growth in 2025, indicating a strong turnaround in this end market.
Evidence
“Through 2025, it grew about 4%. We exited the year growing almost 10. And in the first quarter, that business is growing 17%.”
Branded suppliers in categories like safety and cutting tools have been aggressively raising prices over the past 6-7 months, creating margin pressure for distributors like Fastenal that carry these brands.
Evidence
“Our safety margin is challenged because some of the branded presence. Our cutting tool margin is challenged because some of the branded presence.”
Fastenal's gross margin was ~40 bps below target due to pricing actions not keeping up with cost increases, particularly tariff-related costs moving through the P&L faster than pricing.
Evidence
“What impacted us this quarter, Q1, was pricing versus cost. Tariff-related costs moved through the P&L faster than our pricing, leaving us approximately 40 basis points short of our own targets.”
Fastenal's international business, primarily Europe and Asia, grew almost 24% in March, outpacing overall company growth significantly.
Evidence
“In March, the international business, primarily Europe and Asia, grew almost 24%. And even though today they're a smaller piece of the pie, this performance is exactly what we want to see as we continue to invest in our global expansion.”
Methodology & coverage
Management-only analysis. All 0 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.