Core Viewpoint - A number of quality large-cap stocks have entered oversold territory, presenting new investment opportunities despite the market being near all-time highs. Notable mentions include Cintas Corp, Fastenal Co, and Gen Digital Inc [1] Cintas Corp (CTAS) - Cintas shares have declined nearly 20% since August, primarily due to valuation concerns rather than deteriorating business fundamentals [2][4] - The P/E ratio peaked at around 55 over the summer but has since adjusted to approximately 40, which is more reasonable for the company's consistent performance [3] - The latest quarterly report met expectations for earnings and exceeded revenue forecasts, with management raising full-year guidance, yet the stock continued to decline, indicating oversold conditions with an RSI of 19 [4][5] Fastenal Co (FAST) - Fastenal's stock has dropped over 15% since reaching all-time highs in August, following an earnings report that did not meet investor expectations [8][9] - Despite the decline, analysts remain optimistic, with Robert Baird maintaining an Outperform rating and a price target of $49, suggesting nearly 20% upside from its current price [10][11] - Fastenal's long-term fundamentals are strong, characterized by a broad customer base, disciplined cost control, and a 26-year history of dividend growth, positioning it well for recovery [11] Gen Digital Inc (GEN) - Gen Digital has also seen a nearly 20% decline since August, remaining within a multi-year trading range without breaking new highs since 2017 [13] - The company's August earnings report surpassed analyst expectations for both revenue and earnings, and its market leadership position remains attractive [14] - With an RSI of 27, Gen Digital is considered oversold, making its risk/reward profile appealing, with potential for recovery towards the low $30s if market sentiment stabilizes [15]

Core Insights - Fastenal's international operations are crucial for understanding its financial strength and growth potential [1][2] - The company's total revenue for the recent quarter reached $2.13 billion, reflecting an 11.7% increase year-over-year [4] International Revenue Analysis - Other foreign countries contributed $70.6 million, or 3.3% of total revenue, exceeding analyst expectations by 7.4% [5] - Canada and Mexico accounted for $284.8 million, or 13.4% of total revenue, slightly below expectations by 1.44% [6] Future Revenue Projections - Analysts forecast total revenue of $2.05 billion for the current fiscal quarter, a 12.5% increase from the previous year [7] - For the entire year, total revenue is projected at $8.22 billion, a 9% improvement from the prior year [8] Market Dynamics - The reliance on global markets presents both opportunities and challenges for Fastenal, making international revenue trends critical for future forecasts [9] - Analysts monitor international trends closely due to increasing geopolitical conflicts and interdependencies [10] Stock Performance Trends - Over the past month, Fastenal's stock has declined by 11.1%, while the S&P 500 has increased by 0.7% [13] - In the last three months, the stock price has decreased by 12.5%, contrasting with a 6.2% rise in the S&P 500 index [13]

Core Insights - Fastenal Company is a leading distributor of industrial and construction supplies, known for its extensive product range and robust supply chain, competing with players like Grainger and MSC Industrial Direct [1] - Despite recent challenges, Fastenal continues to show resilience and growth in a competitive market [1] Financial Performance - Fastenal's Q3 revenue grew by 11.7% to $2.13 billion, slightly below the Zacks Consensus Estimate of $2.14 billion, resulting in a revenue surprise of -0.11% [3][6] - The company's earnings per share (EPS) for Q3 were $0.29, up from $0.26 a year ago, but missed the consensus estimate of $0.30, leading to an EPS surprise of -3.33% [4][6] Insider Activity - On October 16, 2025, director HSU Hsenghung Sam purchased 1,000 shares of Fastenal at $42.45 each, increasing his total holdings to 9,000 shares, signaling confidence in the company's future prospects [2][6] Strategic Positioning - Fastenal is expanding its margins and demonstrating growth despite macroeconomic headwinds, with effective supplier initiatives and tariff mitigation strategies benefiting its margins [5]

Table of Contents (Exact name of registrant as specified in its charter) Minnesota 41-0948415 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2025, or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Ac ...

Core Insights - The article discusses the importance of investing in dividend stocks, particularly those with a history of consistent dividend growth, which can provide stability during economic downturns [2][3] Dividend Stocks Overview - Companies that consistently raise dividends are often strong, profitable, and financially stable, making them valuable during economic slowdowns [2] - Dividend-growth stocks tend to have durable competitive advantages, allowing them to maintain profit margins even during high inflation [2] - Historically, dividends have grown at an average annual rate of 5.7% since 1957, outpacing the average inflation rate by over 2% [3] - Stock prices are noted to be more than twice as volatile as their dividend cash flows, indicating that dividend stocks may offer a more stable investment [4] Methodology for Stock Selection - The article outlines a methodology for selecting dividend stocks based on year-to-date highest-returning stocks as of October 9, 2025 [6] Featured Dividend Stocks - **Fastenal Company (NASDAQ:FAST)** - YTD Return as of October 9: 31.55% - Fastenal is linked to the health of the US and global economies and has a strong dividend history with 26 consecutive years of increases [8][10] - Current quarterly dividend: $0.22 per share, with a dividend yield of 1.88% [10] - **General Dynamics Corporation (NYSE:GD)** - YTD Return as of October 9: 31.7% - The company is a major player in military shipbuilding and has raised its dividend for 28 consecutive years [11][12] - Current quarterly dividend: $1.50 per share, with a dividend yield of 1.75% [12] - **Cardinal Health, Inc. (NYSE:CAH)** - YTD Return as of October 9: 33.7% - Cardinal Health is a major distributor of healthcare products and has increased its dividends for 39 consecutive years [13][15] - Current quarterly dividend: $0.5107 per share, with a dividend yield of 1.30% [15]

Market Overview - US stock markets are facing increased volatility due to escalating trade tensions between the US and China, overshadowing a strong start to the third-quarter earnings season [1] - Major indexes opened lower, reflecting investor concerns over Beijing's retaliatory measures, despite a mixed recovery attempt by midday [1][2] Market Performance - The Dow Jones Industrial Average (DJIA) initially dropped by approximately 383 points (0.8%) but narrowed its decline to around 72 points by midday [2] - The S&P 500 (SPX) fell 1% at the open, settling to a loss of about 30 points by midday [2] - The Nasdaq Composite (IXIC) experienced a more significant decline, shedding 1.5% initially and remaining down by approximately 196 points at midday [2] Earnings Season Highlights - Major financial companies such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) reported earnings that exceeded analysts' estimates [6] - Despite beating profit forecasts, JPMorgan Chase (JPM) saw its shares decline by 3.8% in early trading, while Wells Fargo (WFC) shares rose by 3.5% following strong performance [6] Corporate News - Broadcom (AVGO) shares surged nearly 10% after announcing an AI partnership with OpenAI to develop custom chips and networking components [7] - Other AI-related tech stocks, including Nvidia (NVDA) and Micron Technology (MU), also saw gains of about 2.9% and over 6%, respectively [8] - Bloom Energy Corp. (BE) shares soared 26.5% after securing a $5 billion deal with Brookfield Asset Management for fuel cell installations in AI data centers [12] - Fastenal Company (FAST) shares plunged 7.5% after missing third-quarter earnings estimates [12] - Albertsons Cos. (ACI) stock jumped 10% after reporting better-than-expected fiscal second-quarter results and raising its full-year outlook [12] - Ericsson (ERIC) shares rose 15% pre-bell after reporting third-quarter profit above expectations and anticipating increased shareholder distributions [12] - Johnson & Johnson (JNJ) experienced a 1.8% decline after announcing plans to separate its orthopedics business into a standalone company [12] - General Motors (GM) stock fell as the automaker plans to reduce its electric vehicle manufacturing capacity due to decreased demand [12] - USA Rare Earth Inc. (USAR) shares jumped 18.6% amid renewed US-China trade and tariff conflicts concerning rare earth minerals [12] Economic Outlook - Investors are closely monitoring the upcoming Federal Reserve's FOMC meeting scheduled for October 28-29, where a rate cut is widely expected [4] - The anticipated rate cut is driven by concerns over a weakening labor market, with a high probability (97-98%) of a quarter-point reduction [4] - Economic data releases, including CPI and PPI for September, are expected to be delayed due to an ongoing US government shutdown, but updates on industrial production and manufacturing surveys are still anticipated [5]

[Performance Summary](index=1&type=section&id=PERFORMANCE%20SUMMARY) Fastenal reported strong Q3 and nine-month 2025 financial results, showing significant growth across key metrics like sales, profit, and net income Q3 and Nine-Month Period Financial Performance (2025 vs. 2024) (in millions USD, except percentages and per share data) | Metric | 2025 (Nine-month) | 2024 (Nine-month) | Change (Nine-month) | 2025 (Three-month) | 2024 (Three-month) | Change (Three-month) | | :-------------------------------- | :------------------ | :------------------ | :------------------ | :------------------- | :------------------- | :------------------- | | Net sales | $6,173.1 | $5,721.5 | 7.9% | $2,133.3 | $1,910.2 | 11.7% | | Daily sales | $32.3 | $29.8 | 8.5% | $33.3 | $29.8 | 11.7% | | Gross profit | $2,792.5 | $2,583.7 | 8.1% | $965.8 | $858.6 | 12.5% | | Gross profit % of net sales | 45.2% | 45.2% | - | 45.3% | 44.9% | 0.4 pp | | SG&A expenses | $1,521.1 | $1,418.5 | 7.2% | $524.3 | $470.5 | 11.5% | | SG&A % of net sales | 24.6% | 24.8% | -0.2 pp | 24.6% | 24.6% | - | | Operating income | $1,271.4 | $1,165.2 | 9.1% | $441.5 | $388.1 | 13.7% | | Operating income % of net sales | 20.6% | 20.4% | 0.2 pp | 20.7% | 20.3% | 0.4 pp | | Net income | $964.4 | $888.5 | 8.5% | $335.5 | $298.1 | 12.6% | | Diluted net income per share | $0.84 | $0.77 | 8.4% | $0.29 | $0.26 | 12.3% | [Quarterly Results of Operations](index=1&type=section&id=QUARTERLY%20RESULTS%20OF%20OPERATIONS) Q3 2025 results showed broad growth from customer signings, pricing, and digital initiatives, improving profitability [Sales Analysis](index=1&type=section&id=Sales) Q3 2025 net sales grew significantly from higher unit sales and pricing, with broad growth across product categories, end markets, and digital channels [Overall Sales Performance](index=1&type=section&id=Overall%20Sales%20Performance) Q3 2025 net sales grew **11.7%** to **$2,133.3 million**, driven by customer signings, FX, unit sales, and pricing - Net sales increased by **$223.2 million**, or **11.7%**, in the third quarter of 2025 compared to the third quarter of 2024, reaching **$2,133.3 million**[4](index=4&type=chunk) - Foreign exchange rates positively affected sales in Q3 2025 by approximately **10 basis points**[4](index=4&type=chunk) - Unit sales increased due to growth in customer sites spending **$10k** or more per month and, to a lesser degree, growth in average monthly sales per customer site across all customer spend categories[5](index=5&type=chunk) - Product pricing contributed an increase of **240 to 270 basis points** to net sales in Q3 2025, in contrast to an immaterial impact in Q3 2024[5](index=5&type=chunk) [Sales by Product Category](index=2&type=section&id=Sales%20by%20Product%20Standpoint) Fastener product lines, especially OEM and MRO, showed improved growth in Q3 2025, outperforming non-fastener categories - The fastener product line outperformed non-fastener product lines, experiencing improved growth in Q3 2025 driven by easier comparisons, increased contribution from large customer signings, better product availability, and pricing actions[6](index=6&type=chunk) Q3 2025 Product Sales Daily Sales Rate (DSR) Change and % of Sales (YoY) (Daily Sales Rate Change and % of Sales are percentages) | Product Category | 2025 DSR Change | 2024 DSR Change | 2025 % of Sales | 2024 % of Sales | | :--------------- | :-------------- | :-------------- | :-------------- | :-------------- | | OEM fasteners | 15.9% | -3.1% | 19.8% | 19.0% | | MRO fasteners | 12.0% | -5.3% | 11.2% | 11.2% | | Total fasteners | 14.4% | -4.0% | 31.0% | 30.2% | | Safety supplies | 9.8% | 6.8% | 22.1% | 22.5% | | Other product lines | 10.7% | 3.7% | 46.9% | 47.3% | | Total non-fasteners | 10.4% | 4.7% | 69.0% | 69.8% | [Sales by End Market and Customer Type](index=2&type=section&id=Sales%20by%20End%20Market%20and%20Customer%20Standpoint) Manufacturing end markets performed strongly, non-residential construction grew, and contract sales continued to outperform non-contract customers - Manufacturing end markets outperformed primarily due to the relative strength with key account customers with significant managed spend[7](index=7&type=chunk) - Non-residential construction end market experienced growth for the second time in twelve consecutive quarters[7](index=7&type=chunk) - Contract sales continued to outperform, growing **13.2%** in Q3 2025, compared to **7.2%** for non-contract sales[7](index=7&type=chunk) Q3 2025 End Market Sales Daily Sales Rate (DSR) Change and % of Sales (YoY) (Daily Sales Rate Change and % of Sales are percentages) | End Market Category | 2025 DSR Change | 2024 DSR Change | 2025 % of Sales | 2024 % of Sales | | :------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Heavy manufacturing | 12.4% | 0.7% | 43.1% | 42.7% | | Other manufacturing | 12.9% | 6.2% | 32.8% | 32.4% | | Total manufacturing | 12.7% | 3.0% | 75.9% | 75.1% | | Non-residential construction | 7.5% | -3.6% | 8.3% | 8.6% | | Other end markets | 8.9% | -0.3% | 15.8% | 16.3% | | Total non-manufacturing | 8.4% | -1.5% | 24.1% | 24.9% | Q3 2025 Customer Type Sales Daily Sales Rate (DSR) Change and % of Sales (YoY) (Daily Sales Rate Change and % of Sales are percentages) | Customer Type | 2025 DSR Change | 2024 DSR Change | 2025 % of Sales | 2024 % of Sales | | :-------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Contract sales | 13.2% | 6.3% | 73.8% | 72.0% | | Non-contract sales | 7.2% | -8.1% | 26.2% | 28.0% | [Supplemental Customer Site Data](index=3&type=section&id=Supplemental%20Data) Fastenal increased customer sites with higher monthly spending, particularly in manufacturing, boosting average monthly sales per site - The number of **$50k+/Mo.** customer sites increased from 2,401 in Q3 2024 to 2,771 in Q3 2025, with corresponding sales growth[9](index=9&type=chunk) - Average monthly sales per customer site for all customers increased from **$5,929** in Q3 2024 to **$7,149** in Q3 2025[9](index=9&type=chunk) Q3 2025 Customer Sites and Sales per Site by Spend Category (in millions USD for Sales, in USD for Mo. Sales per Customer Site, where applicable) | Category | Customer Sites (2025) | Sales (2025) | Mo. Sales per Customer Site (2025) | Customer Sites (2024) | Sales (2024) | Mo. Sales per Customer Site (2024) | | :---------------- | :-------------------- | :----------- | :--------------------------------- | :-------------------- | :----------- | :--------------------------------- | | **Manufacturing** | | | | | | | | $50k+/Mo. | 2,304 | $971.8 | $140,596 | 2,025 | $827.9 | $136,280 | | $10k+/Mo. | 8,913 | 1,411.5 | 52,788 | 8,318 | 1,240.2 | 49,699 | | **Non-manufacturing** | | | | | | | | $50k+/Mo. | 467 | $170.1 | $121,413 | 376 | $122.9 | $108,954 | | $10k+/Mo. | 3,282 | 340.5 | 34,583 | 2,962 | 277.0 | 31,173 | | **Total** | | | | | | | | $50k+/Mo. | 2,771 | $1,141.9 | $137,363 | 2,401 | $950.8 | $132,001 | | $10k+/Mo. | 12,195 | 1,752.0 | 47,888 | 11,280 | 1,517.2 | 44,835 | | Total | 98,823 | $2,133.3 | $7,149 | 106,276 | $1,910.2 | $5,929 | [FMI Technology and Digital Footprint Sales](index=4&type=section&id=FMI%20Technology%20and%20Digital%20Footprint) FMI Technology and Digital Footprint sales continued to grow, reflecting successful digital adoption and significant FASTBin/FASTVend sales growth - FMI sales increased by **17.7%** in Q3 2025, reaching **$978.4 million**, and represented **45.3%** of total sales (up from **43.0%** in Q3 2024)[11](index=11&type=chunk) - FASTBin/FASTVend sales grew by **19.9%** in Q3 2025 to **$703.6 million**, accounting for **32.6%** of sales[11](index=11&type=chunk) - Digital Footprint sales increased by **12.0%** in Q3 2025 to **$1,323.8 million**, representing **61.3%** of total sales[11](index=11&type=chunk) Q3 2025 FMI and eBusiness Sales Performance (in millions USD for sales, MEUs for signings/installations, where applicable) | Metric | 2025 (3-month) | 2024 (3-month) | DSR Change (3-month) | | :-------------------------------- | :------------- | :------------- | :------------------- | | Weighted FASTBin/FASTVend signings (MEUs) | 7,050 | 7,281 | -3.2% | | Weighted FASTBin/FASTVend installations (MEUs; end of period) | 133,910 | 123,193 | 8.7% | | FASTStock sales | $274.8 | $244.7 | 12.3% | | FASTBin/FASTVend sales | $703.6 | $586.8 | 19.9% | | FMI sales | $978.4 | $831.5 | 17.7% | | eBusiness sales | $628.7 | $582.3 | 8.0% | | Digital Footprint sales | $1,323.8 | $1,181.9 | 12.0% | [Gross Profit](index=4&type=section&id=Gross%20Profit) Gross profit as a percentage of net sales increased to **45.3%** in Q3 2025, driven by fastener expansion, supplier initiatives, and improved incentives - Gross profit as a percentage of net sales increased to **45.3%** in Q3 2025 from **44.9%** in Q3 2024[12](index=12&type=chunk) - The increase was primarily due to the fastener expansion project, other supplier-focused initiatives, and improvements in customer and supplier incentives[12](index=12&type=chunk) - Offsetting factors included customer mix (stronger growth from large, lower gross profit percentage customers) and higher organizational/overhead costs[12](index=12&type=chunk) [Selling, General, and Administrative (SG&A) Expenses](index=5&type=section&id=SG%26A%20Expenses) SG&A expenses remained flat at **24.6%** of net sales in Q3 2025, with employee-related costs rising due to higher FTE, wages, and bonuses - SG&A expenses as a percentage of net sales were unchanged at **24.6%** in Q3 2025 compared to Q3 2024[13](index=13&type=chunk) - Employee-related expenses (70-75% of SG&A) increased **12.9%** due to higher average FTE and wages, and increased bonuses and commissions[14](index=14&type=chunk) - Occupancy-related expenses (15-20% of SG&A) increased **5.3%** due to general inflation in branch rental costs and higher depreciation from FMI hardware[15](index=15&type=chunk) - Other SG&A expenses (10-15% of SG&A) increased **10.9%**, driven by higher selling-related transportation costs (lease costs partially offset by lower fuel expense)[16](index=16&type=chunk) [Operating Income](index=5&type=section&id=Operating%20Income) Operating income as a percentage of net sales improved to **20.7%** in Q3 2025, reflecting efficient cost management relative to sales growth - Operating income as a percentage of net sales increased to **20.7%** in Q3 2025 from **20.3%** in Q3 2024[17](index=17&type=chunk) [Net Interest](index=5&type=section&id=Net%20Interest) Net interest expense increased to **$0.9 million** in Q3 2025, primarily due to lower interest income relative to interest expense - Net interest expense was **$0.9 million** in Q3 2025, compared to **$0.5 million** in Q3 2024, primarily due to lower interest income earned[18](index=18&type=chunk) [Income Taxes](index=5&type=section&id=Income%20Taxes) Q3 2025 income tax expense was **$105.1 million**, with an effective tax rate of **23.9%**, lower than expected due to tax benefits - Income tax expense was **$105.1 million** in Q3 2025, with an effective tax rate of **23.9%** (vs. **23.1%** in Q3 2024)[19](index=19&type=chunk) - The Q3 2025 tax rate was below the expected ongoing rate of approximately **24.5%** due to a decrease in unrecognized tax benefits and tax benefits from stock option exercises[19](index=19&type=chunk) - The impact of the U.S. One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025, was immaterial to the Condensed Consolidated Financial Statements[20](index=20&type=chunk) [Net Income](index=5&type=section&id=Net%20Income) Net income for Q3 2025 increased by **12.6%** to **$335.5 million**, with diluted net income per share rising to **$0.29** - Net income during Q3 2025 was **$335.5 million**, an increase of **12.6%** compared to Q3 2024[21](index=21&type=chunk) - Diluted net income per share was **$0.29** in Q3 2025, compared to **$0.26** in Q3 2024[21](index=21&type=chunk) [Cash Flow and Balance Sheet](index=6&type=section&id=CASH%20FLOW%20AND%20BALANCE%20SHEET) Fastenal demonstrated strong Q3 2025 operating cash flow, increased trade working capital, continued investment, reduced debt, and returned capital [Cash Flow from Operating Activities](index=6&type=section&id=Net%20cash%20provided%20by%20operating%20activities) Net cash from operating activities increased by **30.3%** to **$386.9 million** in Q3 2025, driven by reduced tax payments and working capital - Net cash provided by operating activities was **$386.9 million** in Q3 2025, a **30.3%** increase from Q3 2024, representing **115.3%** of the period's net income[22](index=22&type=chunk) - The increase in Q3 operating cash flow primarily reflects a reduction in estimated income tax payments and working capital being a modest source of cash[22](index=22&type=chunk) - Net cash provided by operating activities was **$927.8 million** in the first nine months of 2025, an increase of **4.2%** from the first nine months of 2024[23](index=23&type=chunk) [Trade Working Capital and Balance Sheet Changes](index=6&type=section&id=Trade%20Working%20Capital%20and%20Balance%20Sheet%20Changes) Accounts receivable, inventories, and accounts payable all increased year-over-year, reflecting sales growth, inventory build-up, and increased purchases, with net trade working capital up **10.9%** - The increase in accounts receivable balance was primarily attributable to growth in sales with customers, including relative growth with larger customers that tend to carry longer payment terms[25](index=25&type=chunk) - The increase in inventory balance was primarily attributable to adding inventory to support projected business growth and, to a lesser extent, increased valuation from tariffs and general inflation[26](index=26&type=chunk) - The increase in accounts payable balance was primarily attributable to an increase in product purchases as reflected in the growth in inventories[26](index=26&type=chunk) Trade Working Capital Changes (September 30, 2025 vs. 2024) (in millions USD) | Metric | September 30, 2025 | September 30, 2024 | Twelve-month Dollar Change | Twelve-month Percentage Change | | :---------------------- | :------------------- | :------------------- | :------------------------- | :----------------------------- | | Accounts receivable, net | $1,347.3 | $1,200.6 | $146.6 | 12.2% | | Inventories | $1,722.8 | $1,559.5 | $163.3 | 10.5% | | Trade working capital | $3,070.1 | $2,760.1 | $309.9 | 11.2% | | Accounts payable | $344.8 | $301.7 | $43.1 | 14.3% | | Trade working capital, net | $2,725.3 | $2,458.4 | $266.8 | 10.9% | [Capital Expenditures and Property & Equipment](index=6&type=section&id=Investment%20in%20property%20and%20equipment) Investment in property and equipment, net of proceeds, was **$54.7 million** in Q3 2025, with full-year 2025 capital expenditures projected to increase to **$235.0-$255.0 million** - Investment in property and equipment, net of proceeds from sales, was **$54.7 million** in Q3 2025, a slight decrease from **$55.8 million** in Q3 2024[27](index=27&type=chunk) - For 2025, investment in property and equipment, net of proceeds from sales, is expected to be within a range of **$235.0 to $255.0 million**, an increase from **$214.1 million** in 2024[28](index=28&type=chunk) - The expected growth in capital expenditures is due to higher distribution center spending (Utah and Atlanta hub facilities), greater outlays for FMI hardware, and elevated IT spending[28](index=28&type=chunk) [Shareholder Returns and Debt](index=6&type=section&id=Shareholder%20Returns%20and%20Debt) Fastenal returned **$252.5 million** to shareholders in Q3 2025 via dividends, while total debt decreased to **$195.0 million**, representing **4.8%** of total capital - Fastenal returned **$252.5 million** to shareholders in Q3 2025 in the form of dividends, compared to **$223.4 million** in Q3 2024[29](index=29&type=chunk) - Total debt on the balance sheet was **$195.0 million** at the end of Q3 2025, or **4.8%** of total capital, down from **$240.0 million** or **6.3%** of total capital at the end of Q3 2024[30](index=30&type=chunk) - No common stock was repurchased in either Q3 2025 or Q3 2024[29](index=29&type=chunk) [Additional Information](index=7&type=section&id=ADDITIONAL%20INFORMATION) This section provides key operational metrics, including employee headcount, customer site growth, and FMI device installations, highlighting strategic investments and investor communications [Operational Metrics](index=7&type=section&id=Operational%20Metrics) Total FTE employee headcount increased by **3.2%**, with significant growth in selling personnel, **$50k+** customer sites grew by **15.4%**, and weighted FMI devices increased by **8.7%** - Total FTE employee headcount increased by 674, or **3.2%**, over the last twelve months to 21,568[32](index=32&type=chunk) - Selling and sales support FTE personnel increased by 379 to support growth and sales initiatives[32](index=32&type=chunk) - The number of **$50k+** customer sites increased by **15.4%** year-over-year to 2,771[32](index=32&type=chunk) - Weighted FMI devices (MEU installed count) grew by **8.7%** year-over-year to 133,910[32](index=32&type=chunk) Key Operational Metrics (Q3 2025 vs. Q3 2024) (absolute counts, percentages for change) | Metric | Q3 2025 | Q3 2024 | Change Since Q3 2024 | | :---------------------------------- | :------ | :------ | :------------------- | | Selling personnel - absolute headcount | 17,196 | 16,620 | 3.5% | | Selling personnel - FTE headcount | 15,414 | 15,035 | 2.5% | | Total personnel - absolute headcount | 24,438 | 23,518 | 3.9% | | Total personnel - FTE headcount | 21,568 | 20,894 | 3.2% | | Number of branch locations | 1,590 | 1,597 | -0.4% | | Number of $50k+ customer sites | 2,771 | 2,401 | 15.4% | | Weighted FMI devices (MEU installed count) | 133,910 | 123,193 | 8.7% | [Investor Communications](index=8&type=section&id=Investor%20Communications) Fastenal will host a conference call to discuss quarterly results and provides monthly sales information and quarterly presentations on its investor relations website - A conference call will be hosted to review quarterly results and current operations, broadcast live over the Internet at 9:00 a.m., central time, accessible via the Investor Relations Website[33](index=33&type=chunk) - Monthly consolidated net sales information and quarterly conference call presentations are published on the 'Investor Relations' page of www.fastenal.com[34](index=34&type=chunk) [Forward-Looking Statements](index=8&type=section&id=FORWARD-LOOKING%20STATEMENTS) The document contains forward-looking statements regarding future expectations and projections, subject to known and unknown risks and uncertainties as per safe harbor provisions - The document contains 'forward-looking statements' that provide current expectations or forecasts of future events, identified by terms such as 'anticipate,' 'believe,' 'expect,' and 'will'[35](index=35&type=chunk) - Forward-looking statements involve a variety of known and unknown risks and uncertainties, and actual results may vary materially from those discussed[35](index=35&type=chunk) - Factors that could cause actual results to differ are detailed in the company's most recent annual and quarterly reports[35](index=35&type=chunk) [Financial Statements](index=9&type=section&id=Financial%20Statements) This section presents Fastenal Company's unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Income, and Statements of Cash Flows [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$5,116.3 million** as of September 30, 2025, driven by current assets and property, with total liabilities also rising and stockholders' equity growing to **$3,894.5 million** Condensed Consolidated Balance Sheets (September 30, 2025 vs. December 31, 2024) (in millions USD) | Metric | Sep 30, 2025 | Dec 31, 2024 | | :-------------------------------------------------------------------------------- | :----------- | :----------- | | **Assets** | | | | Cash and cash equivalents | $288.1 | $255.8 | | Trade accounts receivable, net | $1,347.3 | $1,108.6 | | Inventories | $1,722.8 | $1,645.0 | | Total current assets | $3,546.1 | $3,211.9 | | Property and equipment, net | $1,112.6 | $1,056.6 | | Total assets | $5,116.3 | $4,698.0 | | **Liabilities and Stockholders' Equity** | | | | Current portion of debt | $95.0 | $75.0 | | Accounts payable | $344.8 | $287.7 | | Total current liabilities | $832.7 | $687.1 | | Long-term debt | $100.0 | $125.0 | | Total liabilities | $1,211.8 | $1,081.6 | | Total stockholders' equity | $3,894.5 | $3,616.3 | | Total liabilities and stockholders' equity | $5,116.3 | $4,698.0 | [Condensed Consolidated Statements of Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2025 net sales were **$2,133.3 million** (up **11.7%**), gross profit **$965.8 million**, and net income **$335.5 million** (up **12.6%**), with diluted EPS of **$0.29** Condensed Consolidated Statements of Income (Q3 2025 vs. Q3 2024 and 9 Months 2025 vs. 2024) (in millions USD, except per share data) | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $2,133.3 | $1,910.2 | $6,173.1 | $5,721.5 | | Gross profit | $965.8 | $858.6 | $2,792.5 | $2,583.7 | | Selling, general, and administrative expenses | $524.3 | $470.5 | $1,521.1 | $1,418.5 | | Operating income | $441.5 | $388.1 | $1,271.4 | $1,165.2 | | Income before income taxes | $440.6 | $387.6 | $1,270.4 | $1,163.8 | | Net income | $335.5 | $298.1 | $964.4 | $888.5 | | Diluted net income per share | $0.29 | $0.26 | $0.84 | $0.77 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was **$386.9 million** in Q3 2025, investing activities used **$54.8 million**, and financing activities used **$280.9 million** for debt and dividends Condensed Consolidated Statements of Cash Flows (Q3 2025 vs. Q3 2024 and 9 Months 2025 vs. 2024) (in millions USD) | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $386.9 | $296.9 | $927.8 | $890.5 | | Net cash used in investing activities | $(54.8) | $(55.9) | $(173.1) | $(157.0) | | Net cash used in financing activities | $(280.9) | $(210.7) | $(732.7) | $(663.6) | | Net increase in cash and cash equivalents | $50.3 | $36.7 | $32.3 | $70.9 | | Cash and cash equivalents at end of period | $288.1 | $292.2 | $288.1 | $292.2 | | Cash paid for interest | $1.5 | $1.8 | $5.7 | $6.0 | | Net cash paid for income taxes | $89.1 | $87.6 | $274.4 | $269.4 |

Core Viewpoint - Fastenal Company is experiencing growth driven by strong demand in the industrial and construction sectors, with a notable increase in sales and profitability [1] Group 1: Financial Performance - Fastenal reported a revenue increase of 12.5% year-over-year, reaching $1.7 billion in the latest quarter [1] - The company's net income rose by 15% to $300 million, reflecting improved operational efficiency [1] - Gross margin improved to 48%, up from 46% in the previous year, indicating better cost management [1] Group 2: Market Trends - The industrial sector is showing robust recovery, contributing significantly to Fastenal's sales growth [1] - Construction activity remains strong, with increased spending on infrastructure projects boosting demand for Fastenal's products [1] - E-commerce sales have also surged, accounting for 25% of total sales, highlighting a shift in purchasing behavior [1] Group 3: Strategic Initiatives - Fastenal is expanding its product offerings and enhancing its supply chain capabilities to meet growing customer demands [1] - The company is investing in technology to improve inventory management and customer service [1] - Strategic partnerships with suppliers are being strengthened to ensure product availability and competitive pricing [1]

Core Insights - Fastenal's stock is experiencing a pullback in October, primarily due to valuation concerns and analysts' sentiment rather than issues with growth or profitability [3][4] - The company reported a revenue growth of 11.5% in Q3, aligning with analyst estimates, driven by an increase in client count and location penetration [6][8] - Fastenal's operating and net income grew at leveraged rates, with net income up 12.6% and GAAP EPS up 12.3%, despite a higher share count impacting GAAP EPS [9] Financial Performance - Fastenal's Q3 results showed strong performance across various segments, with the core fastener segment growing by 14.4% and safety and other segments growing by 9.8% and 10.7% respectively [7] - The manufacturing sector was the strongest end-market, increasing by 12.7%, followed by non-residential construction and other markets with increases of 7.5% and 8.9% respectively [8] - The company experienced margin pressures but managed to improve gross and operating margins by 40 basis points each through price increases and operational improvements [8] Dividend and Shareholder Returns - Fastenal has a dividend yield of 2.08% and has been increasing its annual distribution at a double-digit CAGR for years, with a current annual dividend of $0.88 [11][12] - The payout ratio is approximately 84.62%, which is considered manageable given the company's earnings growth outlook and strong balance sheet [12] - The company has a solid track record of dividend increases, maintaining its status as a Dividend Aristocrat [12] Market Sentiment and Analyst Coverage - Analysts' sentiment is currently cautious, with Fastenal holding a "Hold" rating, but there is potential for bullish revisions as market conditions improve [13][14] - Institutional ownership is high at about 80%, with expectations of continued buying on dips [13] - The upcoming quarter may bring positive changes, especially with anticipated FOMC interest rate cuts that could impact industrial activity [14]

Group 1 - The article emphasizes the investment philosophy focused on small cap companies, highlighting the importance of identifying mispriced securities through understanding financial drivers and utilizing DCF model valuation [1] - The methodology allows for a flexible approach to investing, not confined to traditional categories such as value, dividend, or growth investing, but rather assessing all prospects of a stock to evaluate risk-to-reward [1]