Fastenal's Q2 2026 sales rose 14.7% to $2.39B, and EPS rose from $0.29 to $0.33, on heavy-manufacturing and contract-customer growth. Tariff-driven price/cost pressure cut gross margin 75 bps, and cost control held operating margin flat at 21.0%.
Revenue
$2.4B
+14.7% YoY
Net income
$383M
+15.9% YoY
Diluted EPS
$0.33
+15.9% YoY
Operating margin
21.0%
Overview
Fastenal sells the unglamorous parts that keep factories and job sites running: bolts, screws and other fasteners, safety gear, cutting tools and janitorial supplies. In the second quarter of 2026 (April–June), net sales rose 14.7% to $2,386.9 million, an acceleration from the first quarter (first-quarter sales grew about 12.4%, derived from the 10-Q's six-month and three-month figures). Q2 2026 and Q2 2025 both had 64 selling days, so daily sales, which is how Fastenal measures growth, also rose 14.7%, to $37.3 million per day.
Profit rose slightly faster than sales. Operating income increased 15.1% to $501.8 million, net income rose 15.9% to $382.8 million, and diluted earnings per share went from $0.29 to $0.33. The story behind those numbers has two sides. Fastenal kept less of each sales dollar as gross profit because its costs, including tariffs, rose faster than the prices it charged. It made up for that by keeping its overheads growing more slowly than sales.
Key Metrics
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$2,386.9M
$2,080.3M
+14.7%
Daily sales (64 days)
$37.3M
$32.5M
+14.7%
Gross margin
44.6%
45.3%
-75 bps
SG&A (% of sales)
23.5%
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Diluted EPS growth is the 15.9% shown in the 10-Q's own table, which Fastenal calculates on unrounded figures. The rounded $0.33 vs. $0.29 works out to about 13.8%. A basis point (bp) is one-hundredth of a percentage point, so 75 bps is 0.75 points.
What drove sales: more volume, with some help from price
Fastenal says higher prices added about 2.9 percentage points to growth, compared with 1.4–1.7 points a year earlier. Currency added about 0.1 point. That leaves roughly 11–12 points of the 14.7% from selling more, or selling a different mix of products. The 10-Q credits "improved customer contract signings since the first quarter of 2024, product pricing, and a modest improvement in industrial production." Demand also picked up toward the end of the quarter: the filing says June sales were up 20.5% year over year.
By end market (daily sales growth, share of sales):
End market
Q2 2026 growth
Q2 2025 growth
Share of sales
Heavy manufacturing
+18.1%
+7.5%
44.1%
Other manufacturing
+10.8%
+11.5%
31.8%
Total manufacturing
+14.9%
+9.2%
75.9%
Non-residential construction
+17.0%
+3.0%
8.2%
Other (reseller, government, transportation, warehousing, data centers)
+14.1%
+8.7%
15.9%
Heavy manufacturing did most of the work. Fastenal says its manufacturing growth came mainly from "key account customers with significant managed spend." Non-residential construction grew 17.0%, a large jump from 3.0% a year earlier. It is still only 8.2% of sales, though, and the company notes this was only the fifth quarter of growth in the last fifteen for that market. One strong quarter doesn't yet make a construction recovery.
By product: fasteners, Fastenal's original business and the most sensitive to production volumes, led the way. Direct fasteners (parts that go into customers' finished products) grew 16.8%, and indirect fasteners (parts for maintenance and repairs) grew 14.6%. Safety supplies grew the slowest, at 13.1%, and slipped to 21.0% of sales from 21.4%. Direct materials as a whole grew 16.5%, against 14.1% for indirect, which fits the picture of factories producing more.
Big customers are getting bigger, and small ones are fading
Contract customers (national, regional and government accounts with signed agreements) grew 17.6%, and non-contract customers grew only 7.3%. Contract sales now make up 75.8% of revenue, up from 73.2%.
This 10-Q does not give a count of Onsite locations (Fastenal branches run inside a customer's facility). Instead it reports customer "Sites" grouped by monthly spending, and calls the $50,000-plus-per-month group "Onsite-like." That group grew from 2,683 to 3,125 Sites. Sales from those Sites rose about 26% to $1,381.2 million, or roughly 58% of total sales, up from about 53%. The total number of active Sites, meanwhile, fell about 8% to 93,283. Most of that decline came from small accounts spending under $5,000 a month. Fastenal is getting more of its sales from fewer, larger customers. That is the deliberate strategy, and it has costs as well as benefits (see margins below).
Vending and digital: device signings goal cut
Fastenal signed 6,993 weighted FASTBin/FASTVend devices in the quarter, up 8.3%. These are automated bins and vending machines on customers' premises that restock themselves, counted in standardized "machine equivalent units." Year to date the total is 13,943. Even so, management lowered its 2026 signings goal to 27,000–29,000, from 28,000–30,000. The low end of the new range implies second-half signings of about 13,060, below the first half's pace. Sales through these devices plus scanned stocking locations (FMI) rose 16.4% to $1,081.0 million, or 44.6% of sales. The broader "Digital Footprint," which also includes online and electronic ordering, reached 61.6% of sales.
Margins: the price/cost squeeze
Gross margin is the share of revenue left after paying for the products sold. It fell 75 bps to 44.6%. Fastenal attributes about 40 bps of that to "unfavorable net price/cost," meaning product costs rose faster than its selling prices. The rest came from smaller headwinds: a shift toward larger customers who get better prices, higher fuel-driven transportation costs, and customer rebates that the company describes as timing-related. Gross margin was flat from Q1 to Q2 at 44.6%. The six-month discussion adds a warning: benefits from Fastenal's fastener expansion project, which had partly offset this pressure, "largely anniversary early in the second quarter." In other words, they stop showing up as year-over-year gains from here on.
Operating costs fixed the problem. SG&A (selling, general and administrative expenses, meaning mostly salaries, buildings and overhead) grew only 10.9%, against 14.7% sales growth, and fell to 23.5% of sales from 24.4%. Full-time-equivalent headcount grew only 1.9% year over year, so each employee sold considerably more. Employee costs improved by 70 bps as a share of sales and occupancy costs by 40 bps. Other expenses, mainly fuel and travel, rose by 30 bps. The result: operating margin held at 21.0%, the share of revenue left after running the business and before interest and tax, because SG&A savings "fully offset gross margin pressure." A tax rate of 23.8% (24.4% a year earlier) helped net income grow a bit faster than pre-tax income (+15.9% vs. +15.0%). Management expects an ongoing rate of about 24.6%, so this boost won't repeat.
Takeaway: Fastenal's growth is real and speeding up (June sales rose 20.5%), but none of it reached operating margin, which stayed at 21.0%. The company is winning more business from large contract customers who pay lower prices, while tariffs and freight push its costs up. So far it has covered the gap by holding back overhead. That only lasts while sales keep growing quickly.
Tariffs
After the U.S. Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA) in February 2026, Fastenal filed refund claims for the imports where it was the direct importer. It says refunds received through June 30 were not material. It has not booked any receivable for further refunds, although it notes it "may recognize additional benefits in future periods." Its direct exposure is limited because most of its products come through domestic suppliers. The bigger risk points the other way: Fastenal estimates tariffs and import shipping costs had an immaterial effect on net income in the first half. It warns they "may become more impactful in subsequent quarters as our lower tariff inventory is depleted" and replaced with stock bought under the new tariffs. Replacement tariffs have already been introduced under different legal authority.
Cash flow and shareholder returns
Operating cash flow fell 4.6% to $265.7 million, or 69.4% of net income, compared with 84.4% a year earlier. The fast late-quarter sales tied up cash in customer receivables, which rose 17.6% year over year, partly because larger customers get longer payment terms. Inventory was nearly flat (+0.5%). For the first half, operating cash flow rose 19.1% to $644.1 million. Fastenal returned $305.1 million to shareholders in the quarter: $275.4 million in dividends plus $29.7 million to buy back 650,000 shares. It declared a $0.26 quarterly dividend on July 10.
Six months at a glance
Metric
H1 2026
H1 2025
Change
Net sales
$4,588.6M
$4,039.7M
+13.6%
Gross margin
44.6%
45.2%
-0.6 pts
Operating margin
20.7%
20.5%
+0.2 pts
Net income
$722.6M
$628.9M
+14.9%
Diluted EPS
$0.63
$0.55
+14.8%
Outlook
Fastenal doesn't give sales or earnings guidance. Its stated 2026 targets are 27,000–29,000 device signings (lowered) and net capital spending of $310–330 million, up from $230.6 million in 2025. That money goes to replacing its Atlanta distribution hub, adding trucks, and IT projects delayed from 2025. The quarter ended with momentum: what the filing calls "strong mid- and late-quarter sales growth", higher prices, and a recovery in heavy manufacturing. The risk is in gross margin. Tariff-inflated inventory is still to come, the fastener-expansion benefit has run its course, and customer mix keeps shifting toward lower-price large accounts. If sales growth slows, SG&A leverage would no longer be enough to hold the 21% operating margin. The Q3 report, due October 14, 2026 per Fastenal's investor-relations calendar, should show whether price increases are keeping up with costs.
Source: Fastenal Form 10-Q for the quarter ended June 30, 2026 (filed July 16, 2026). All figures in millions of USD unless noted. Figures described as "about" or "roughly" are derived from the filing's own numbers.