AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 31/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Customer-specific inventory, automated replenishment, an established installed base and frequent distribution service establish an integrated operating capability. Comparative superiority and the magnitude of switching friction remain incompletely demonstrated.
durability · 2/4 · Customer-specific stocking persists across annual disclosures and FMI adoption expanded. Multisourcing and potentially competing platforms constrain confidence in enduring switching costs; the evidence does not establish exceptional durability.
customer dependency · 2/4 · Inventory replenishment and embedded technology imply operational reliance, assessed indirectly. Customers commonly multisource, and neither account-level dependency nor the cost of replacing Fastenal is disclosed.
erosion resilience · 2/4 · Strong third-quarter sales and expense leverage demonstrate resilience despite price/cost pressure. Multisourcing, supplier dependence and a reduced device-signing goal temper the assessment. The goal reduction is a planning revision, not proof of realized competitive erosion.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Pricing added approximately 240 basis points to third-quarter sales, demonstrating realized increases. Nevertheless, price/cost reduced third-quarter gross margin by approximately 30 basis points after a 45-basis-point first-half headwind, indicating incomplete cost recovery.
retention · 2/4 · Customer-specific integration, installed-base expansion and continued sales contributions from earlier contract signings support engagement and repeat demand indirectly. Total active-site counts declined while larger-site activity grew; neither those mix changes nor new device signings establish existing-account retention.
margin resilience · 3/4 · Third-quarter operating income of $530.8 million on $2,463.3 million of sales implies approximately 21.5% operating margin. Productivity and occupancy leverage offset gross-margin pressure. This demonstrates operating resilience rather than pure pricing strength; favorable timing also supported gross margin.
contractual freedom · 2/4 · Most revenue contracts are short-term, allowing periodic renegotiation, but pricing is part of negotiated customer terms and contracts can include savings expectations and incentives. This supports mixed flexibility; unilateral repricing rights are undisclosed.
Predictability100
5 consecutive published 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
- observedAnnualPeriods
- 5.00
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, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. 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, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; 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. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. 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 · Nine-month operating cash flow rose 14.9% to $1,065.7 million, funding $190.0 million of net capital expenditures and most shareholder distributions. Dividends and repurchases of $929.9 million exceeded cash flow after net capital expenditures by $54.2 million, while cash fell $64.9 million and net debt repayments were $25.0 million. Working-capital efficiency is constructive, but distributions and previously delayed projects temper the assessment.
incentive alignment · 3/4 · Actual executive option awards vest over five or eight years, providing long-term shareholder exposure. Cash incentives require year-over-year quarterly profit growth, and ownership guidelines exist. Quarterly emphasis and missing actual ownership compliance limit confidence. RSU-plan adoption is established, but grants and vesting are not.
execution · 3/4 · Installed-base growth, continued contract-supported sales growth, actual device signings and improved labor productivity demonstrate execution through operating outcomes. Attribution to management is indirect. Delayed capital projects and the reduced annual signing goal qualify the record.
governance · 3/4 · Disclosures establish an independent chair, majority-independent board, independent committees, annual majority-vote elections, ownership guidelines and a related-person transaction policy. A further independent director was appointed in June. These are strong governance arrangements, without proof of exceptional oversight effectiveness.
Evidence
Q4
2025
Q4
2024
Twelve-month
% Change
Selling personnel - absolute employee headcount (1)
17,166
16,669
3.0
%
Selling personnel - FTE employee headcount (1)
15,439
15,014
2.8
%
Total personnel - absolute employee headcount
24,489
23,702
3.3
%
Total personnel - FTE employee headcount
21,602
20,958
3.1
%
Number of branch locations
1,595
1,597
-0.1
%
Number of $50k+ customer sites
2,657
2,330
14.0
%
Number of $10k+ customer sites
11,712
10,837
8.1
%
Number of $5k-$10k customer sites
7,067
6,948
1.7
%
Number of <$5k customer sites
73,357
82,650
-11.2
%
Weighted FMI devices (MEU installed count)
136,638
126,957
7.6
%
(1)
In the fourth quarter of 2024, we realigned certain employees as a result of a routine review of our organizational structure.
2025 Form 10-K, operating footprint and weighted FMI installed-base table · Filed 05/02/2026
Approximately 74% of our consolidated sales in 2025 were with customers whose spend was subject to a contractual agreement between ourselves and the customer.
2025 Form 10-K, Business, contractual customer sales · Filed 05/02/2026
The terms and conditions of these contracts will vary from customer to customer, with the most common features being the scope of products and services rendered, product and service pricing, payment terms, delivery expectations, quality obligations, warranty and liability exposure, and contract duration.
2025 Form 10-K, Business, customer contract terms · Filed 05/02/2026
Many contracts will also incorporate expectations for direct (e.g., cost) or indirect (e.g., process productivity and efficiency) savings that are expected to be achieved over the course of the contract and the interval at which progress toward these expectations will be reviewed.
2025 Form 10-K, Business, contractual savings expectations · 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.
2025 Form 10-K, Risk Factors, customer scale and gross margin · 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.
2025 Form 10-K, Business, inventory monitoring and replenishment · Filed 05/02/2026
Similarly, non-branch selling locations (primarily Onsites) stock inventory exclusively based on customer-specific arrangements.
2025 Form 10-K, Business, customer-specific stocking · 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.
2025 Form 10-K, Business, customer procurement channels · 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.
2025 Form 10-K, Risk Factors, FMI differentiation 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.
2025 Form 10-K, Risk Factors, competing inventory platforms · Filed 05/02/2026
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.
2025 Form 10-K, Business, inventory available near customers · 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.
2025 Form 10-K, Business, Onsite service and incremental investment; management assessment · Filed 05/02/2026
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.
2025 Form 10-K, Risk Factors, distribution disruptions · Filed 05/02/2026
We were below our anticipated range due to delayed projects that are expected to resume in 2026.
2025 Form 10-K, capital expenditures, delayed projects · Filed 05/02/2026
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.
June 2026 Form 10-Q, first-half gross margin and price/cost · 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.
February 2026 proxy, executive 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.
February 2026 proxy, 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.
February 2026 proxy, actual named-executive option awards · 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.
February 2026 proxy, board independence and leadership structure · 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.
February 2026 proxy, committees, ownership guidelines 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'.
February 2026 proxy, related-person transaction approval policy · Filed 25/02/2026
An Onsite location may also close because local or regional management determines that the business at the location is unlikely to scale sufficiently to justify our being on premise, in which case the relationship often reverts to being managed in a local branch.
2024 Form 10-K, Business, insufficient Onsite scale and branch servicing · Filed 06/02/2025
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.
2024 Form 10-K, Business, distribution delivery frequency · Filed 06/02/2025
Similarly, non-branch selling locations (primarily Onsites) stock inventory exclusively based on customer-specific arrangements.
2023 Form 10-K, Business, customer-specific Onsite inventory · Filed 06/02/2024
Price/cost reduced gross margin by approximately 30 basis points, an improvement of approximately 10 basis points from the second quarter of 2026.
September 2026 Form 10-Q, third-quarter price/cost pressure · Filed 19/10/2026
Approximately 20 basis points of the benefit reflected favorable timing.
September 2026 Form 10-Q, favorable gross-margin timing · Filed 19/10/2026
SG&A Expenses
SG&A expenses, as a percentage of net sales, were 23.3% in the third quarter of 2026 versus 24.6% in the third quarter of 2025, an improvement of 130 basis points.
September 2026 Form 10-Q, third-quarter SG&A leverage · Filed 19/10/2026
Base pay leveraged through increased labor productivity, while bonuses and commissions grew faster than sales as a result of improved business activity and financial performance versus the same period in the prior year.
September 2026 Form 10-Q, labor productivity and incentive expense · Filed 19/10/2026
Using probability assessments, we estimate sales incentives expected to be paid over the term of the contract.
September 2026 Form 10-Q, revenue recognition, contractual sales incentives · Filed 19/10/2026
The majority of our contracts have a single performance obligation and are short-term in nature.
September 2026 Form 10-Q, revenue recognition, short-term contracts · Filed 19/10/2026
Sales performance reflects the contribution from improved customer contract signings since the first quarter of 2024, product pricing, and a modest improvement in industrial production in the first nine months of 2026.
September 2026 Form 10-Q, sales drivers and customer contract signings · Filed 19/10/2026
The impact of product pricing on net sales in the third quarter of 2026 was an increase of approximately 240 basis points, compared to an increase of 240 to 270 basis points in the third quarter of 2025.
September 2026 Form 10-Q, realized third-quarter pricing contribution · Filed 19/10/2026
PERFORMANCE SUMMARY
Nine-month Period
Three-month Period
2026
2025
Change
2026
2025
Change
Net sales
$
7,051.9
6,173.1
14.2
%
$
2,463.3
2,133.3
15.5
%
Business days
191
191
64
64
Daily sales
$
36.9
32.3
14.2
%
$
38.5
33.3
15.5
%
Gross profit
$
3,151.3
2,792.5
12.8
%
$
1,104.7
965.8
14.4
%
% of net sales
44.7
%
45.2
%
44.8
%
45.3
%
Selling, general, and administrative (SG&A) expenses
$
1,671.1
1,521.1
9.9
%
$
573.9
524.3
9.4
%
% of net sales
23.7
%
24.6
%
23.3
%
24.6
%
Operating income
$
1,480.2
1,271.4
16.4
%
$
530.8
441.5
20.2
%
% of net sales
Third-quarter 2026 earnings exhibit, performance summary and operating income amounts · Filed 14/10/2026
4
Occupancy-related expenses, which typically represent 14% to 19% of total SG&A expenses, improved 50 basis points as a percentage of net sales in the third quarter of 2026 compared to the third quarter of 2025, driven mainly by fixed cost leverage.
Third-quarter 2026 earnings exhibit, occupancy fixed-cost leverage · Filed 14/10/2026
$5k+/Mo.
20,557
2,255.0
36,565
19,519
1,908.5
32,592
Other sales (5)
70,202
208.3
989
79,304
224.8
945
Grand total
90,759
$
2,463.3
$
9,047
98,823
$
2,133.3
$
7,149
(1)Sites represent the number of customer locations served by our network.
Third-quarter 2026 earnings exhibit, customer-site counts and sales segmentation · Filed 14/10/2026
FASTBin and FASTVend incorporate highly efficient and powerful embedded data tracking and fulfillment processing technologies.
Third-quarter 2026 earnings exhibit, embedded inventory technology description · Filed 14/10/2026
We signed 7,484 weighted FASTBin and FASTVend devices in the third quarter of 2026.
Third-quarter 2026 earnings exhibit, actual weighted device signings · Filed 14/10/2026
Our goal for weighted FASTBin and FASTVend device signings in 2026 is between 27,000 and 29,000 MEUs (our previous goal was between 28,000 and 30,000 MEUs).
Third-quarter 2026 earnings exhibit, reduced annual device-signing goal · Filed 14/10/2026
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.
Third-quarter 2026 earnings exhibit, migration within digital inventory sales · Filed 14/10/2026
Net cash provided by operating activities was $1,065.7 in the first nine months of 2026, an increase of 14.9% from the first nine months of 2025, representing 94.8% of net income versus 96.2% in the first nine months of 2025 and the most recent five-year average of 96.4%.
Third-quarter 2026 earnings exhibit, nine-month operating cash generation · Filed 14/10/2026
The dollar and percentage change in accounts receivable, net, inventories, and accounts payable as of September 30, 2026 when compared to September 30, 2025 were as follows:
September 30
Twelve-month Dollar Change
Twelve-month Percentage Change
2026
2025
2026
2026
Accounts receivable, net
$
1,615.2
1,347.3
$
267.9
19.9
%
Inventories
1,776.6
1,722.8
53.8
3.1
%
Accounts payable
445.8
344.8
101.0
29.3
%
Trade working capital, net
$
2,946.0
2,725.3
$
220.8
8.1
%
Net sales in last three months
$
2,463.3
2,133.3
$
330.0
15.5
%
The increase in our accounts receivable balance in the third quarter of 2026 was mainly attributable to sales growth, including relative growth with larger customers that tend to carry longer payment terms.
Third-quarter 2026 earnings exhibit, working capital and larger-customer payment terms · Filed 14/10/2026
Purchases of property and equipment
(197.0)
(185.3)
(74.0)
(60.3)
Proceeds from sale of property and equipment
7.0
12.5
2.2
5.6
Other
(2.1)
(0.3)
(0.2)
(0.1)
Net cash used in investing activities
(192.1)
(173.1)
(72.0)
(54.8)
Cash flows from financing activities:
Proceeds from debt obligations
722.0
1,040.0
315.0
365.0
Payments against debt obligations
(747.0)
(1,045.0)
(335.0)
(400.0)
Proceeds from exercise of stock options
17.5
23.9
7.2
6.6
Purchases of common stock
(80.8)
—
(30.5)
—
Cash dividends paid
(849.1)
(751.6)
(298.2)
(252.5)
Net cash used in financing activities
(937.4)
(732.7)
(341.5)
(280.9)
Effect of exchange rate changes on cash and cash equivalents
(1.1)
10.3
(1.0)
(0.9)
Net (decrease) increase in cash and cash equivalents
(64.9)
32.3
7.1
50.3
Cash and cash equivalents at beginning of period
276.8
255.8
204.7
237.8
Cash and cash equivalents at end of period
$
211.9
288.1
$
211.9
288.1
Supplemental information:
Cash paid for interest
$
2.9
5.7
$
0.9
1.5
Net cash paid for income taxes
$
317.4
274.4
$
114.4
89.1
Leased assets obtained in exchange for new operating lease liabilities
$
122.0
109.5
$
58.9
36.4
10
CONTACT:
Dray Schreiber
Accounting Manager
507.313.7324
11
Third-quarter 2026 earnings exhibit, capital spending, financing, distributions and cash · Filed 14/10/2026
Mr. Talwar was elected to serve as an independent director until the Company's next annual meeting of shareholders or until his successor is duly elected and qualified.
June 2026 Form 8-K, independent director appointment · Filed 12/06/2026
Based on the votes set forth above, the resolution for the approval of the Fastenal Company Employee Restricted Stock Unit Plan was adopted by the Company's shareholders.
April 2026 Form 8-K, shareholder adoption of employee RSU plan · Filed 24/04/2026
Based on the votes set forth above, the resolution for the approval of the Fastenal Company Non-Employee Director Stock and Restricted Stock Unit Plan was adopted by the Company's shareholders.
April 2026 Form 8-K, shareholder adoption of non-employee director stock and RSU plan · Filed 24/04/2026
