AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Customer-specific stocking, automated replenishment and frequent regional deliveries establish an integrated service structure. Expense leverage supports its economics, although comparative superiority is incompletely evidenced.
durability · 2/4 · Customer-specific arrangements persist across annual disclosures and FMI expanded in 2025. Multisourcing and potential competing platforms limit confidence in enduring switching costs.
customer dependency · 2/4 · Inventory and replenishment integration imply operational reliance, but this is indirect evidence. Widespread multisourcing and absent account-level retention data prevent a strong dependency assessment.
erosion resilience · 2/4 · First-half growth and second-quarter operating margin stability offset evidence of unfavorable price/cost. These operating achievements support resilience, while supplier dependence and competing platforms remain prospective risks.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 2/4 · Pricing contributed approximately 350 basis points to first-quarter 2026 sales, demonstrating realized increases. First-half unfavorable net price/cost of approximately 45 basis points shows incomplete cost recovery and mixed pricing power.
retention · 2/4 · Customer-specific integration, installed-base expansion and contract-supported growth provide indirect evidence of engagement and continuing demand. New signings do not establish retention of existing accounts, and customers commonly multisource.
margin resilience · 3/4 · First-half operating margin rose to 20.7% from 20.5%, and second-quarter operating margin held at 21.0% despite gross margin pressure. Demonstrated expense leverage supports resilience, but does not itself prove pricing strength.
contractual freedom · — · The passages do not disclose customer repricing rights, price guarantees or binding duration terms. Observed price changes cannot establish contractual freedom.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 5.05
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.41
Financial strength100
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 100.00
- netDebtEbitGrade
- 100.00
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 100.00
- Debt / FCF (x)
- 0.12
- Net debt / operating income (x)
- -0.09
- Interest coverage (x)
- 267.05
- Current ratio (x)
- 4.85
Capital allocation98
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 44.32
- 3-year average dilution (%)
- 0.00
- 3-year average SBC / revenue (%)
- 0.10
- cashConversionGrade
- 91.39
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual capital investment accompanies growth and operating cash generation. However, first-half 2026 operating cash flow of $644.1 million less net capital expenditures of $118.2 million did not cover $601.2 million of cash dividends and repurchases, and cash declined. Delayed projects and higher planned spending also temper the assessment.
incentive alignment · 3/4 · Actual executive option grants with five- or eight-year vesting provide long-term exposure, while cash incentives depend on year-over-year profit growth. Quarterly targets create some short-term emphasis; actual executive ownership levels are missing. Proposed RSUs are excluded.
execution · 3/4 · Installed FMI expansion, contract-supported sales growth and expense leverage demonstrate execution through operating outcomes. Attribution to management is indirect, and delayed capital projects qualify the record.
governance · 3/4 · An independent chair, majority-independent board, independent committees, annual majority-vote elections and a related-person transaction policy establish strong governance arrangements. Disclosures do not establish exceptional long-term oversight effectiveness.
Evidence
Each Site may incorporate one or more service models, including Fastenal Managed Inventory (FMI) programs (FASTStock, FASTBin, FASTVend), integrated supply programs, eBusiness capabilities, and advanced manufacturing services.
Business / customer Site service models · Filed 05/02/2026
Our computer system monitors the inventory level for all stock items and triggers replenishment, or prompts a buyer to purchase, as necessary, based on an established minimum-maximum stocking level.
Business / automated inventory replenishment · Filed 05/02/2026
Similarly, non-branch selling locations (primarily Onsites) stock inventory exclusively based on customer-specific arrangements.
Business / customer-specific Onsite inventory · Filed 05/02/2026
Similarly, non-branch selling locations (primarily Onsites) stock inventory exclusively based on customer-specific arrangements.
Business / customer-specific inventory arrangements in 2023 · Filed 06/02/2024
We continued to expand our installed base of FMI technology and lift the proportion of sales that run through our Digital Footprint.
MD&A / 2025 installed FMI base expansion · Filed 05/02/2026
The large majority of our customers utilize multiple channels, from a single distributor or a range of distributors, to procure the products they need in their operations.
Business / customer purchasing channels and multisourcing · Filed 05/02/2026
Our competitive advantage in FMI solutions, which includes industrial vending (FASTVend) and bin stock (FASTStock and FASTBin) tools, could be eliminated and, in the case of FASTVend and FASTBin, the loss of key suppliers of equipment and services could be impactful and result in failure to deploy devices.
Risk factors / FMI advantage and supplier dependence · Filed 05/02/2026
These advantages have developed over time; however, other competitors could respond to our expanding industrial vending and bin stock position with highly competitive platforms of their own.
Risk factors / potential competing inventory platforms · Filed 05/02/2026
Similarly, contract accounts and Onsite customers typically have a lower gross profit percentage than smaller customers by virtue of their scale, available business, and broader offering of products which typically have lower gross profit percentages.
Risk factors / large-customer gross margin economics · Filed 05/02/2026
These distribution centers are located so as to permit deliveries of two to five times per week to our in-market locations using our trucks and overnight delivery by surface common carrier, with approximately 79% of our North American in-market locations receiving service four to five times per week.
Business / regional delivery frequency in 2024 · Filed 06/02/2025
Inventory held at our selling locations, close to customers and available on a same-day basis, accounted for approximately 54% of our total inventory at the end of 2025.
Business / local inventory available for same-day service · Filed 05/02/2026
Building on our core business strategy of the local branch, the Onsite model provides value to our customers through customized service while giving us a competitive advantage through stronger relationships with those customers, all with a relatively low incremental investment given the existing branch and distribution structure.
Business / management assessment of Onsite incremental investment · Filed 05/02/2026
21 Table of Contents SIX MONTHS ENDED JUNE 30, 2026 VERSUS SIX MONTHS ENDED JUNE 30, 2025 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 2026 2025 Net sales 100.0 % 100.0 % Gross profit 44.6 % 45.2 % SG&A expenses 23.9 % 24.7 % Operating income 20.7 % 20.5 % Net interest 0.0 % 0.0 % Income before income taxes 20.7 % 20.5 % 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 2026 2025 Net sales $ 4,588.6 4,039.7 Percentage change 13.6 % 6.0 % Business days 127 127 Daily sales $ 36.1 31.8 Percentage change 13.6 % 6.8 % Daily sales impact of currency fluctuations 0.2 % -0.2 % Net sales increased $548.9, or 13.6%, in the first six months of 2026 when compared to the first six months of 2025 (both periods had the same number of selling days).
MD&A / first-half 2026 sales and operating results · Filed 16/07/2026
Growth in net sales was above growth in SG&A expenses, resulting in our leveraging of costs in the first six months of 2026.
MD&A / first-half 2026 expense leverage · Filed 16/07/2026
Our gross profit, as a percentage of net sales, decreased to 44.6% in the first six months of 2026 from 45.2% in the first six months of 2025, driven primarily by unfavorable net price/cost of approximately 45 basis points, and headwinds from customer mix, transportation costs and certain customer rebates.
MD&A / first-half 2026 realized price/cost and gross margin · Filed 16/07/2026
Disruptions at distribution centers or shipping ports may affect our ability to both maintain core products in inventory and deliver products to our customers on a timely basis, which may in turn adversely affect our results of operations.
Risk factors / distribution disruption exposure · Filed 05/02/2026
We believe we have a competitive advantage in industrial vending and bin stock due to our hardware and software, our local presence (allowing us to service devices and bins more rapidly and with less burden on our customers), our depth of products that lend themselves to being dispensed through industrial vending devices or bin stocks, and, particularly in North America, our distribution strength.
Risk factors / management assessment of FMI differentiation · Filed 05/02/2026
The impact of product pricing on net sales in the first quarter of 2026 was an increase of approximately 350 basis points, compared to being immaterial in the first quarter of 2025.
MD&A / first-quarter 2026 observed pricing contribution · Filed 16/04/2026
Net sales increased $242.2, or 12.4%, in the first quarter of 2026 when compared to the first quarter of 2025 (both periods had the same number of selling days.) Sales performance reflects the contribution from improved customer contract signings since the first quarter of 2024, as well as a slight improvement in industrial production in the first quarter of 2026.
MD&A / contract signings and first-quarter 2026 sales growth · Filed 16/04/2026
Operating income as a percentage of net sales was 21.0% in the second quarter of 2026, remaining consistent year-over-year as SG&A leverage fully offset gross margin pressure.
MD&A / second-quarter 2026 operating margin resilience · Filed 16/07/2026
4 Table of Contents FASTENAL COMPANY Condensed Consolidated Statements of Cash Flows (Amounts in millions) (Unaudited) Six Months Ended June 30, Three Months Ended June 30, 2026 2025 2026 2025 Cash flows from operating activities: Net income $ 722.6 628.9 $ 382.8 330.3 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property and equipment 84.8 84.4 42.8 42.4 Loss (gain) on sale of property and equipment 0.2 (1.6) (0.8) (1.3) Bad debt expense 3.3 1.9 1.9 0.2 Deferred income taxes (1.6) 1.4 0.2 0.7 Stock-based compensation 5.2 4.1 2.6 2.0 Amortization of intangible assets 5.4 5.4 2.7 2.7 Changes in operating assets and liabilities: Trade accounts receivable, net (320.2) (206.4) (116.0) (36.4) Inventories 7.7 (67.7) (44.8) (41.2) Other current assets 2.4 25.6 (17.9) 15.5 Accounts payable 84.1 24.7 37.4 (20.6) Accrued expenses 28.6 30.1 45.7 38.9 Income taxes 24.2 12.5 (68.0) (58.4) Other (2.4) (2.5) (3.0) 3.8 Net cash provided by operating activities 644.1 540.8 265.7 278.6 Cash flows from investing activities: Purchases of property and equipment (123.0) (125.0) (64.1) (69.3) Proceeds from sale of property and equipment 4.8 6.9 3.6 5.0 Other (2.0) (0.2) (2.0) (0.1) Net cash used in investing activities (120.2) (118.3) (62.5) (64.4) Cash flows from financing activities: Proceeds from debt obligations 407.0 675.0 360.0 520.0 Payments against debt obligations (412.0) (645.0) (365.0) (490.0) Proceeds from exercise of stock options 10.4 17.3 2.8 6.1 Purchases of common stock (50.3) — (30.0) — Cash dividends paid (550.9) (499.1) (275.4) (252.5) Net cash used in financing activities (595.9) (451.8) (307.6) (216.4) Effect of exchange rate changes on cash and cash equivalents (0.1) 11.3 0.5 8.2 Net (decrease) increase in cash and cash equivalents (72.0) (18.0) (103.9) 6.0 Cash and cash equivalents at beginning of period 276.8 255.8 308.6 231.8 Cash and cash equivalents at end of period $ 204.7 237.8 $ 204.7 237.8 Supplemental information: Cash paid for interest $ 2.0 4.2 $ 1.3 2.7 Net cash paid for income taxes $ 203.0 185.3 $ 187.0 163.4 Leased assets obtained in exchange for new operating lease liabilities $ 63.0 73.2 $ 31.0 42.7 See accompanying Notes to Condensed Consolidated Financial Statements.
Financial statements / first-half 2026 cash flows and capital uses · Filed 16/07/2026
Set forth below is a recap of our 2025 and 2024 net capital expenditures in dollars and as a percentage of net sales and net income: 2025 2024 Manufacturing, warehouse and packaging equipment, industrial vending equipment, and facilities $ 160.1 145.8 Shelving and related supplies for selling location openings and for product expansion at existing selling locations 27.3 23.5 Data processing software and equipment 34.7 25.5 Real estate and improvements to branch locations 6.9 8.7 Vehicles 16.3 23.0 Purchases of property and equipment 245.3 226.5 Proceeds from sale of property and equipment (14.8) (12.4) Net capital expenditures (1) 230.6 214.1 % of net sales 2.8 % 2.8 % % of net income 18.3 % 18.6 % (1) Amounts may not foot due to rounding.
MD&A / actual 2025 and 2024 capital expenditures · Filed 05/02/2026
For 2026, we continue to expect our net capital expenditures to be between $310.0 and $330.0, an increase from $230.6 in 2025.
MD&A / expected 2026 capital expenditure commitment · Filed 16/07/2026
We pay our named executive officers cash incentive bonuses each quarter if we exceed 100% of pre-tax income (and for the chief financial officer, net income) for the comparable quarter of the previous year.
Executive compensation / existing quarterly incentive formula · Filed 25/02/2026
The stock options granted to executive officers vest and become exercisable over a period of five or eight years from the date of grant, with such staggered vesting designed to ensure continuity of leadership.
Executive compensation / executive option vesting periods · Filed 25/02/2026
Of these grants, options to purchase an aggregate of 295,900 shares were awarded to our named executive officers.
Executive compensation / actual 2025 named executive option grants · Filed 25/02/2026
Board composition and governance highlights: •Our roles of board chair and CEO are separated; •Our board chair is independent; •Nine of our 11 directors are independent; •The board has three committees: audit, compensation, and nominating and corporate governance.
Corporate governance / independent chair and board composition · Filed 25/02/2026
The charters of each of these committees can be viewed on Fastenal's investor website; •All committees of our board are composed exclusively of independent directors; •Director participation in board and committee meetings was 75% or more for each incumbent director in 2025; •We have stock ownership guidelines (detailed later in this document) requiring each non-employee director and each officer subject to Section 16 reporting requirements to achieve a specific equity ownership level; •A full slate of director nominees is submitted to shareholders annually and elected using a majority voting standard; •We have one class of shares; •Our corporate governance guidelines provide that the maximum number of employees or former employees serving on the board will not exceed thirty percent of the total number of directors on the board, which limitation may be waived by the board.
Corporate governance / independent committees, attendance and shareholder voting · Filed 25/02/2026
Related Person Transaction Approval Policy Our board of directors has a formal written related person transaction approval policy, which sets out our policies and procedures for the review, approval, or ratification of 'related person transactions'.
Corporate governance / related-person transaction approval policy · Filed 25/02/2026
We were below our anticipated range due to delayed projects that are expected to resume in 2026.
MD&A / delayed 2025 capital projects · Filed 05/02/2026
